Wednesday, October 17, 2018

Embracing Your Inner Venkman (Tradecraft)


One of my friends loved to play a fighter in our D&D game. He had a high powered job, owned his own business, had a growing family, was active in the community, but had zero time to learn new editions of D&D, so he played the fighter. Run in and smash monsters. Mostly he wanted to hang out with old friends. He and I both referred to him as the Venkman of D&D players.

The character Peter Venkman from Ghostbusters is a brilliant scientist, but he's also a charlatan. He's highly educated but refuses to play his role, which allows him to think outside the box. He kinda knows his trade, but he's highly skeptical and doesn't take it too seriously. As a metaphor, being the Venkman embraces imposter syndrome and turns it on its head. You know you're smart enough for this game and you know everyone is faking it until they're making it. Eventually you'll master what's going on and rise up to save the day. Much like Peter Venkman.

Imposter syndrome is strong in the game trade. Most of my peers are young, often having started in their 20's or early 30's. Most never owned a business before. Many will tell you their previous game trade experience was working a few years in a game store before owning one, or like me, they had never worked in a game store before. I also can't think of any with business degrees, but most have some interesting experience in their backgrounds.

If you've never owned your own business before, let me tell you the the freedom is both breathtaking and terrifying. It's like parachuting out of a plane with armfuls of silk and being expected to knit a parachute on the way down. Will you make it? Nobody cares one way or the other. Society doesn't have a support network for people dumb enough to jump out of planes. For months I felt like the job police were going to come in and tell me to get back to my real job. As you leap out of the plane, you scream, "I don't belong herrrrrrrrrrrrre!"

Those of us who have succeeded did so by quickly seeking out and mastering best practices, not because we wanted to succeed, but because we didn't know what else to do. I learned how to run a store by running a store, losing a ton of money along the way. During this time, many will tell you about their imposter syndrome. For me, I always fell back on Venkman, referring to myself as the Venkman of game store owners. I'm smart, I'm brash, I can figure this out and save the day, but mostly I'm faking it until I've made it. My investor friends, including the fighter, would use the Venkman metaphor in our annual meetings.

Being a Venkman does mean rising to the challenge, rather than just being cynical and cocky. During my first Christmas season, after a month in business, an older woman scolded me for my pitiful board game product knowledge, as I knew perhaps six board games. The next month I started a private board game night, staying late once a week with friends to learn new games. Within a couple years, I had 100 or so board games I could talk about, having played each of them, and probably four times that number I could fudge. Fudging, reading the back of the box, comparing what you don't know to what you do know, is the key to board game sales. There are ten new board games a day. Nobody knows every game. Nobody needs to.


Being the Venkman also means relying on those around you. I'm probably our third best sales person right now, in year 14, but I've got my Egon and Ray to help me out. An important Venkman trait is to surround yourself with people smarter than you. I've got a Magic judge on staff who can answer any Magic question, a board game guru who can sell $1,500 in board games on a busy December day, a manager who can handle any crisis and solve any problem, and support staff who go out of their way to satisfy customers. With such great staff, it turns out I'm still the Venkman.

Sunday, October 14, 2018

Demographics (Tradecraft)

I would rather talk about sex, religion or politics than demographics. Demographics is about class and race and some rather unsavory conclusions about how people spend money. Many new store owners ask about demographics and I'm reluctant to have that discussion casually, because it's nuanced.

Demographics for a game store are how people spend money right now.  We may want people to spend money in a different way, we may (and should) build a store inclusive to everyone as we seek out new markets, but demographics is about right now. How is money being spent on hobby games right now. Who are these people?

Some store owners and even corporate retailers erroneously believe they should place game stores where there's the most money. Games Workshop did this in my region about ten years ago, placing a store in the highest income zone in my region. I laughed, and they were gone in a couple years. I've charted out my customers by zip code and those high income areas might as well be pastures, for the revenue it brought me. 
High income is not the key to demographics. The wealthiest among us tend not to play hobby games, or at least they don't buy them in local game stores. I used to be one of these people before I started, just making six figures, driving a new BMW and wondering why stores weren't catering to me with my particular tastes. It turned out I was an outlier. I was not the target market, and it took opening my own store to realize that. My high income peers spent their hobby money on skiing, buying cars like mine, and travel. The chart above shows hobbies by income (click on it to blow it up).

On that chart, towards the bottom is playing games. It's a past time for those making around $50K a year. However, I would put hobby games a tad hire than that, being a high brow type of playing games, perhaps $60K-$80K a year. This is my tribe. Any higher or lower and I'm spinning my wheels.

I have no way to track education amongst my customers, but my general feel for hobby gamers is they are fairly well educated, but somewhat underemployed. They are smart people underutilized in the work force. What that tells me as a store owner is I seek out high education levels but only upper middle income. A low level of education and a high income is not my tribe, as games for them are Monopoly and they spend money on their Jeeps and jet skis. Low income and high education better be a college campus or I'm sunk there too. An awful lot of store owners are slogging away in communities like this due to the hollowing out of the middle class.

The graphic below is from the Phoenix area (thanks to Michael Bahr for finding it). If I were planning to put a store in this region (which dear lord doesn't need another one), I would be looking for that third tier of income, the $60K-$90K crowd. I would shun higher and lower income areas and hopefully find a central location along a corridor with third tier customers. I could be entirely wrong about the Phoenix metro area, but that's where I would start.


Of course, I would also want to look at the education level of these Phoenicians, hoping they had college educations and they weren't high paid blue collar workers. Now you can see why this is a touchy subject. 

Gender is really only an issue if you're planning to open near a military base (85% male). Our customer base tends to be 75% male, but there's not a good way to build a store around that, since the population is evenly split by gender. Note that college campuses used to attract more men than women, but now women make up 56% of college campuses, with their number expected to rise slightly over time. Gender is a growing segment of hobby gaming, however, but that's more about store design than choosing a location.

Now lets get on to the elephant in the room, race. The hobby game trade does not appeal equally across racial demographics. It just doesn't. Publishers might dabble with themes and concepts within hobby games, but you can't change cultural norms by trying to make a version of Catan that appeals to a new racial group, although games like Yuigoh have somewhat cracked that. If a group doesn't play hobby games, it's going to be tough to change behavior. We explored that a bit when we visited game stores in Mexico and Guatemala this summer, where machismo meets Not Invented Here.

The vast majority of our customers are Caucasian and Asian. I live in Richmond, California which has some pockets of the right income and high education levels, but racially it's primarily African-American and Hispanic (65%) with a lower income threshold. I enjoy living in Richmond, but I wouldn't put a hobby game store here, so I drive 30 minutes a day to where a game store makes sense. As my neighborhood gentrifies, the local people fret, but I see game store opportunities emerging. Maybe another decade. I'm so conflicted on the topic of gentrification as a capitalist liberal.

Anyway, this my impression of what I'm looking for in a game store demographic. There are entire states in this country where this demographic doesn't exist. It's not there, no matter where you look. When you don't get your demographic, you either get wealthy people who couldn't care less about your existence (cater to their children and sell them toys, there are examples of how this can work), or you get gamers obsessed with value-seeking in a salted earth retail environment. I can't tell you not to build a store on salted earth. People want to put stores in the communities where they live. However, If you have a choice, look for greener pastures (but only a few shades, not too green!).

Friday, October 12, 2018

Find Your Tribe (Tradecraft)

When I first started my store, I applied to the GAMA mentorship program. I got a call about 18 months later asking if I was interested, and considering how far I had gotten in my business, and how I had established my support network, I declined. That has been a major shortcoming of GAMA since I began, and it's not much better now.

Although I never had a mentor, I had people in the trade I networked with and followed -- sometimes too closely. Most are gone now, retired, passed away, or they simply stopped doing the thing. Some newer people looked up to me and sought my advice and now they've far surpassed me in the trade and I seek them out. Some are plugging along doing the same thing without much change or growth, and they're no longer on my radar. It's almost always about finding smart people full of good ideas and a positive perspective, and less about comparing bottom lines.

Besides the obvious need to learn how to run a better store, the biggest reason for finding your tribe is temporal displacement, something most Millennials are familiar with. If you do this long enough, you'll likely find yourself in a time bubble. The world around you will continue at a fast pace. Your friends and family with likely make great strides financially and personally. Meanwhile, you've chosen the Slow Path. Relationships and family, home ownership, plans for retirement all take a back seat to the voracious monster you feed each day.

Running a game store might bring you happiness, but the Slow Path certainly doesn't bring riches or leave a lot of time for many personal accomplishments. If you start comparing yourself to those outside the field, you may experience alienation and disorientation. Depression and suicide is not uncommon in small business. That's where a strong support network comes into play.

Finding your tribe is finding like minded individuals to share your victories and drown your sorrows. As I've said before, only other small business owners are likely to understand the lifestyle of a small business owner (those on the outside get upset when I talk like this). Find that understanding to keep you growing, maintain sanity and support your business. Eventually you're likely to get to the stage where you'll poke your head above the trees and see daylight again.

Monday, October 8, 2018

Do What You Want (Tradecraft)

There's a Mark Twain quote, "Find a job you enjoy doing, and you will never have to work a day in your life." He also said, "All you need in life is ignorance and confidence, and then success is sure." That tells me he would have intuitively understood the game trade.

I talk about numbers and metrics and policies and procedures near endlessly. The thing I don't mention, because it seems like we have an overabundance of it rather than technical rigor, is doing what you want. I didn't say do what you love, because passion is fleeting. It comes and goes. You may be doing this because you love Magic or Dungeons & Dragons, but you may have periods in your life where that passion flags and you think about ending the relationship. D&D 4 almost made me pack it in.

Doing what you want is a bit more low key. It means surrounding yourself with the type of product you want to sell. It means being around the type of customers who make you happy. It means choosing staff who enrich your life and help fulfill your vision. I had an employee I let go simply because he made me miserable. Every day my life was worse because he was in it. And you know what? I didn't want to do it any more, so I fired him and gladly paid his unemployment, simply because he was a black hole of human emotion.

Doing what you want also means taking the degree of risk that makes you happy. If you have trust issues, you may never hire more than an employee or two. That's fine. Own it. You're a one man shop. Maybe you get to go home and have dinner every evening and you don't have PPTQ bastards giving you one star reviews because your prize payout is crappy, because you don't run events.

If you really like systems and processes, you may never be happy until you have a half dozen stores. Everyone will tell you such an enterprise is a disaster, but it really means it would be disastrous for them

When it comes to debt, I'm pretty miserable as we reach the half way point paying off our construction loans. I'm miserable because I like a dynamic environment where I can dodge and weave and have various initiatives in the works, all of which cost some money. I've got a white board with $20,000 worth of capital projects and I could easily add that amount just in inventory value without blinking. No money means I have less space to dodge and weave, even though my decisions will have long term positive effects. For me, slow and steady is maddening, but it might be just the thing for you.

So when you're reading my stuff, or getting advice from other store owners, you really need to weigh what they're saying against what you personally want to do. That's because this is generally a bad investment of time and capital. Your time is more valuable elsewhere, your money worth more invested differently. You will likely defer retirement and work many more years than if you had a conventional career. That means you better damn well enjoy what you're doing now, since you'll be doing it for quite some time while others are lying on their beach (if they don't die of stress related diseases from working for others first). 

Friday, October 5, 2018

Tyranny of the Neurotypical

As an owner, the biggest part of my job is creating processes and procedures. I create these by thinking about how my brain would most efficiently perform a task. My brain is fairly ordinary, often described as neurotypical. However, about 10% of the population have some sort of learning disability.

Disability is a cruel label, as the brains of the learning disabled process information differently. Our education system is designed to specifically teach the neurotypical, leaving behind those who process differently. American education declares 90% is a good enough success rate and drags their heels on the other 10%, because that's inefficient in their processes and procedures. Inefficiency, as we know from business, costs money. Even better, if they can call a portion of that 10% cognitively challenged (stupid), they don't have to do anything at all for that child.

I know about this because my own son has learning disabilities and you would be nowhere in my position as a parent, if you didn't learn a bit about how these things work. Amongst my employees, only one of a huge number has ever expressed they have a learning disability, and only after succeeding at the job. The stigma and potential downside of such a declaration must be enormous.

Before I learned about how my son's brain worked, I assumed some employees were just not very sharp, coming to the easy conclusion, like many schools, they must be kinda stupid. This is not surprising, because it's a struggle the learning disabled deal with daily, thinking they're not very sharp, often being told that by their peers and hints that may be the case by their teachers.

The consternation on my part usually arises because the employee is often really, really good in other areas, but they're unable to do some tasks we consider basic. How can this person be so amazing at X, but so terrible at Y? It's a discussion we have at our weekly management meetings. The answer is we are making neurotypical demands and if we just adjusted a bit, perhaps they would be more successful.

This is all my assumption since we don't really have a program where we're up front about accommodating learning disabilities. We've been focused on making a work place safe and comfortable for female employees and customers. It would also be great if we could be better employers for the 10% of people who could use a accommodation with learning disabilities. The goal as an employer is to play to strengths. Employees can work on weaknesses at home, but you shouldn't be asked to play to your weaknesses at work, if it's possible to avoid them.

Anyway, if you know of resources to address this in the workplace, I would love to get more information on how to delicately bring up this topic in a safe, compassionate and legal method. You know, a neurotypical policy and procedure.

Wednesday, October 3, 2018

Wristwatch

Let me tell you about my new wristwatch. No, don't go! Come back!

I accompanied my son's boy scout troop on a camping trip. As this was my first time with them, I went out with a list and bought the gear they were expected to carry. I didn't want to be a burden, and I do love me some gear. A wristwatch was on that list.

I last had a wristwatch ten years ago. I did a little consulting work for a friend, enough to buy a nice watch, and when it broke, I took it in for repair. I never got a call back. At the same time, I enjoyed being free from this bit of technology that had dogged me all my life, staring at me from my wrist. The repair shop didn't call. I didn't call the repair shop. Voila! I no longer owned a wristwatch.

I do have a wristwatch on my wish list. It's a $300, Casio G-shock solar Master of G with a compass, altimeter, barometer, thermometer and sunrise-sunset date. It's a wristwatch that's more Swiss Army Knife, as opposed to the very basic $50 G-Shock I bought for the scouting trip, which is more a single blade pocket knife. The Master of G only reluctantly tells time, as opposed to my basic G-Shock, which has two really cool functions: a) It tells time, and b) It tells time in the dark. The unstated c) is it's classically unpretentious like only a $50 wristwach can be. Respect the G-Shock.

My son is jealous of my basic, $50 G-Shock, as I bought him an even more basic Casio watch at Target for $20. This is a boy with two iPads, an Xbox, and an allowance that's spent entirely digital. A wrist watch is a novelty, an interesting gadget, a link forward to adulthood and a link to the past of a more basic level of technology. His fascination with this tech from the 70's had me thinking about hobby gaming.

Hobby games for most of us older folk has been on a linear historical course, much like wrist watches. I remember when the digital watch was shiny and new, much like I remember how Dungeons & Dragons hit the world by storm. With our linear perspectives, these bits of culture have played one role in our lives.

They've been with us all along, having been initially ridiculed, peaking in popularity, and then falling along the wayside for most people, while we chugged along slinging D&D books through half a dozen iterations. We once kept playing D&D a secret as to not offend religious relatives or bullies looking for easy lunch money. Now the geeks have inherited the Earth and celebrities declare their love for the game on talk shows and publicly display their prowess of Tolkien knowledge.

Discovering hobby gaming had been re-invented, while I was in the hobby, was beyond my comprehension, and of course it did it with a new technology (YouTube). This is a modified Gartner Hype Cycle, where perhaps both digital wristwatches and D&D have been slowly climbing the Slope of Enlightenment to reach a new plateau. Or maybe it's entirely cyclical and we're someplace uncharted. I'm sure there's a fashion industry model that instinctively gets this.

For now I'll be at my desk, planning my Vault of the Drow 5E campaign and trying to figure out how to set the alarm on this damn thing (I'll use YouTube).


Monday, October 1, 2018

Shenanigans to Relevance Ratio

There are 400 or so publishers we represent on our sales floor, of which maybe 30 would make me cry if they suddenly went away. Those 30 publishers are relevant to me. It's not that the other 370 are irrelevant, just that there's always more product I could carry than money available to purchase. If I generate a purchase order from my main distributor this morning (which I need to do), I will see $10,000 of product to buy. My budget is about $2,000 (for the week it's $10,000), so I focus on the more relevant stuff. If you told me I needed to spend $10K right now on inventory, it wouldn't be adding new lines, it would be loosening the tightness on this purchasing. It's that easy.

Those 30 highly relevant publishers have a degree of shenanigans they can pull while still retaining me as a retailer. That degree is determined by my sales levels. A small publisher, with one game that sells a few times a year, is so irrelevant that if a distributor changes the code, I might not even bother looking up the new code. If it's out of stock, I probably won't seek it out elsewhere. My book is in that category for most retailers who carry it, so I regularly mention it's on Amazon, since they know how to sell books properly.

The more money I make off a product, the more shenanigans I'll put up with. But shenanigans is watched closely, as if it's in a debit column of a balance sheet. The more shenanigans, the more sales need to add up to balance it out. You can watch the shenanigans balance sheet and see the inevitable clearance sale in the distance. One misstep and it will snap like a rubber band.

For example, I really like Paizo and just last week dropped all Pathfinder 1.0 in anticipation of 2.0. For many retailers, carrying Pathfinder was in protest, as they watched Pathfinder PDFs sold online, a Paizo online store that discounted game trade product, and a room full of Pathfinder Society players who were using store resources while buying all their game products directly from Paizo. They made enough money to tolerate this ... until they didn't, notably when D&D 5 came out and there was a shift. The shenanigans no longer matched the relevance and the loud thud of retailers nationwide dropping Paizo was deafening, or at least that's what they all said. They did so gleefully because the shenanigans was epic.

Wizards of the Coast is the most interesting in this regards. The relevance of Wizards of the Coast cannot be overstated. It's the only publisher that's actually capable of shaping the retail tier itself. Store owners build stores around Wizards of the Coast. We spent $133,000 on expanding our play space, for Wizards of the Coast events. If Wizards of the Coast stopped publishing Magic, my guess is half the game stores would be instantly out of business, and the other half would be making major shifts, like dropping staff, and not renewing leases in the same location (they would choose to have less game space). Yet the shenanigans level of Wizards of the Coast is breathtaking.

Just to reiterate, they've dropped retailer margin on product twice. They sell Magic and D&D at near wholesale prices on Amazon with no concept of brand value protection. They pick and choose winners, offering products and events to exclusive individual venues. They treat retailers as their marketing arm, judging them and the exclusive product they receive by butts in seats. The ability to continue to survive as a retailer in the game trade is actually dependent on Wizards of the Coast, so it's interesting to see how many debits they can rack up in the shenanigans column before their relevance begins to falter. It's likely if they ever overplay their hand, they won't see it coming.

Some of this shenanigans was practically asked for, even by me. The barrier to entry in the game trade is so very low, the professionalism unexceptional, and Wizards of the Coast is now making it harder to exist as a Magic only store. That's good news for professional retailers! What's not good news is realizing how very relevant they are to us. Last week I looked at Magic sales over the months, single sales especially, which you would think are faltering along with our dying Magic events. I looked at how D&D groups use our event space several nights a week, and whether we could combine more Magic events on one night. I'm balancing my relevance to shenanigans ratio. For now, the relevance is still strong, but the shenanigans is at a level that strategically, I know I can't count on this company in the long term, and that is likely to result in a massive shift not only for me, but most professional retailers who are trying to make this ratio balance.

Every store owner should be looking at what their business would look like without a Wizards of the Coast. They should have cash reserves for when the shenanigans exceeds the relevance. Like I said, most stores will simply be gone, but the other half will adapt. It's the nature of the game trade that diversification within it is without it, meaning real diversification in the trade means not spending more money on new games and play space, but on different wares and a different environment. Give an experienced retailer $50,000 right now, and they're more likely to build a coffee bar than buy new games or expand their space. The relevance is high, while the shenanigans is more predictable.