Defined Benefit Plans and Taking the Employees Perspective

The Small business show episode 374 for Wednesday, April 6, 2022. Greetings folks and welcome to the Small Business show here at BusinessShow Co where we are small businessing every week. Really we're small businessing every day. We just talk about it on this show once a week. Sponsors for this episode include sky-sale.com Rate Tracker where you can get your free eval of your credit card fees and figure out what's going on there. And bamb.comsmallB A M B E B A M B E E. Easy for me to say.comsmall where you can go schedule your free HR audit. We'll talk more in depth about each of those in a moment. For now, here in Durham, New Hampshire I'm Dave Hamilton.

And here in Lafayette, California, I'm Shannon Jean. You may want to stick around just to learn about those two sponsors because if I had those resources at my disposal a long time ago, I think I would have been far more successful.

I would say certainly, yeah. I mean certainly with the simplified. Simplified success. Yeah, yeah, yeah, yeah, yeah. Especially Ray Tracker, man. Like that one.

Yeah.

Like my fights with authorized net would have been so much easier or at least would have happened so much sooner. I can't promise they would be easier, but you know, that's how it is.

Good. Hey, I happen to be here. This is a fresh squeezed episode since we typically record a week in advance, but today we're just a day in advance.

Well, that's kind of a thing. So I'm curious, have you ever heard, before today, have you ever heard of the term a defined benefit retirement plan?

So I have heard the term but I could not for the life of me tell you the details about it.

Okay, so you are not alone. I had not heard this term before today either and I don't know a ton about it. But when we are doing the show, especially if we're doing a show like, like Shannon, you just said, where we're recording and effectively releasing within 24 hours. I'll go look at Google trends and look for what small business items people are looking for and then if we have an answer about it, we'll talk about it. And like far and away, one of the things that just kept coming up was this idea of a defined benefit plan. And I don't know much about it because I only heard about it this morning. But essentially what it seems to be is a pension plan that you can set up for your small business. A pension being, you know, guaranteed payouts in retirement, essentially Right. And the, the great part up now, you know, I don't know enough about this to even decide if it's good for me or not. I certainly can't decide whether it's good for you. It's, it's worth reaching out to your, you know, your, whoever your retirement consultant is or whatever. I have reached out to mine, but I haven't heard back yet. The huge benefit to it is that you can put away a large amount of pre tax income into one of these things. Far more than appears to be the limit with an individual 401k or a SEP or anything like that. I mean deductions in the hundreds of. Hundreds of thousands of dollars a year if you qualify. I mean it, you know, with a SEP it's like $56,000 and you're done. Right. You know, and, and your 401, your individual 401k sort of counts against that or towards that as do your IRA contributions. If you can still make those. Depending on how much you make. There's, there is a limit to when you can do that too. But yeah, this defined benefits plan allows you to really sock away some pre tax stuff. Now I'm sure that there are, there is a flip side to that coin that there are limitations on how you take this money out. Being a defined benefits plan, my guess is it is very strict. Yeah. But it is something that certainly appears to be very interesting to many people right now given the Google trend search. And it certainly, I don't know if it's right for me, but, but it's worth investigating. I've already, like I said, put a query into my financial planner about this. Yeah.

I think even though I don't know a lot about this particular model, there are certainly, I think the takeaway is asking and doing your own research and then checking with your accountant about, hey, what other ways can we help our business, our personal financial situation and our employees. Right. Because there are all kinds of different ways to do it. We've done 401ks and matching and bonuses throughout the years that have really benefited employees. But there's also a significant benefit to you personally as the business owner. And then when we sold our last business that had a bunch of employees and didn't have them anymore, I asked, hey, well okay, what do we do now? And then we started a solo 401k where there's significant in my, my wife works for the business and you can fund a significant amount each year. Before the end of the year you have to fund their amount and then for your own portion you have until you file your taxes which you can, you know, if you extend out to October, depending on your revenue, there's a pretty large chunk that you can put in there as well. So these things are, could be really powerful and they're not top of mind all the time. They're probably on Google Trends. Because it's April. April 5th.

Because it's April 5th. Yeah, exactly. Yeah. But like, like this one article which I'll put a link to in, in our show notes at BusinessShow Co it gives 2 advance 2 examples of, of clients. Now this is at a place that it wants to administer your, your defined benefits plan. And that's which is fine but they say you know, client one self employed, three year average income of 100 grand as you know like schedule C or K1 and a 50 year old person. So 50 year old self employed person, 100 grand, K1, you know, schedule C income. They say a participant with those parameters can accumulate 1.2 million until they reach an assumed retirement age of 62. So 12 years. This means in the first year a maximum contribution of 80, almost $83,000 can be made to a defined benefits plan. Now that's 83,000 of 100,000. That's a significant percentage. Yeah, that's way more than the 56,000. And, and I mean assuming you can live on, you know, that's right, the.

17 that's left challenge I always face.

Yeah.

Okay. It's December and the, and the accountant says hey, you can put away this huge chunk of cash but you know, the caveat is you have to have the huge chunk of cash.

Right. If you take that same person in their second example here, same age, 50 year old self employed person making more than 265,000 a year, schedule CK1, that person between now and you know, so over the next 12 years can accumulate 2.6 million and in the first year a maximum contribution of 166,000 can be made to the plant. So like these are, these are numbers I did not know were even realistic.

So especially if you haven't, let's say you, you didn't do a lot of contributions when you were younger and you, you're kind of, you're playing catch up. So if you're you know, in your late 40s or you know, 50 and you have the to live and make these large contributions. It's massive, man.

It's massive. Yeah, no, it could be huge. So again, as soon as I saw those two examples it was like okay, I Need to reach out and figure.

Out what's the catch of requirements. Of course, with our solo 401k, we can't own an interest in any other company that has employees or you just can't have one.

Right.

So you have to really kind of thread the needle. But, man, this certainly sounds like it's worth investigating.

And I don't think. I think both my accountant and my financial planner disagree with the statement you just made. And so I think there is. And maybe they don't. I might be wrong on that, but moving from an individual 401 to a sepulcher, you might. There is a path where at least the people who advise me are able to find a way to put that money away pre tax. As long as it's coming from a business without employees, it doesn't matter about your other interests. So, yeah, maybe the SEP is different. The SEP might be that vehicle. That's right. Yeah, yeah, yeah, yeah, yeah. To be fair, definitely worth looking at. But yeah, you got to ask the people that know. Yeah. You need a guide. Yeah.

You have to.

All right, so that's one. The other thing I found while hunting around this week, Shannon was a thing on Twitter. And I follow small business Twitter enough that these things just wind up getting surfaced for me. And it was from a person who says, I got laid off yesterday from a job I really liked for people I really liked. Just a reminder that you are as you. You are disposable as soon as they decide you are. Stop working late, stop reading emails after hours, stop working on weekends. A job is income to live your life, not your life. And this, I mean, they're not wrong like this is. But it's fascinating to see this, this. I'm not sure about that the flip side perspective of. Of an employee, because it's not how you and I think. Shannon.

Let me rephrase this. Let me rephrase this statement.

Sure.

My comp. My company got shut down yesterday, and I really like to work there. But my customers remember you're just as disposable when your customers decide that you are. Right.

Yeah.

So, I mean, I respect and empathize with this thing and I always. I haven't been an employee in forever. Right. And so I have this bias, of course, but it's just a reality of business now. There's certainly ways to handle it where you get treated as a human and the people and, you know, it was crushing to me when I had to let people go. But it is a reality of business and jobs. And I would encourage the, and there's some, we'll put a link in the show notes. So go read the thread and read the responses. There's a lot of them of like, yeah, you're right, don't put it, do anything extra. But there's just equally as many as like, well, hey, I'm sorry this, this happened. But, you know, this is, doing these extra things is often how you get ahead. And, and then a lot of other answers about, hey, now's the time to go start your own business.

Right, right, right, right. Yeah, for sure. Yeah. It was just interesting to see because I, I mean, I'm sure these threads are out there all the time. I don't usually see them. And, and so it was interesting to get a snapshot into this because it's, it's not on the surface, it's not wrong. Right. You know, it's not your business. It's, you know, you are an employee. And it's important as someone who employs other people to understand that at least at some level, this is the message that your employees are seeing at least some of the time. Right. Like these conversations are out there. And so you're right, though. Like, there are, there are times where, and it's hard for us to say this because we're not employees, but, you know, there are certainly, there are times where an employee who steps up and does a little extra, that counts for something, especially on the day when you need to lay someone off. Right. You know, of course, I've been in, I've been in the position where it's like, okay, well, the business has been shrinking cash flow wise. So today is the day that I need to, you know, cut a, an employee, and I have to make a decision about that. And unless someone has put themselves in a position of being the obvious one to cut, well, then it's like, all right, okay, which one? If I can only have, you know, one of these four, or if I have to get rid of one of these three people or one of these two people or one of these four people, well, which ones do I want to be left with? You know, who do I think is going to help me pick up the slack? And that, you know, that does count.

That's the person that worries about the business as much as you do, maybe more.

That's right.

And also, I think the larger the company is you work for, the more common this kind of thing is.

That's fair, human.

It is.

Right.

Where you get from some senior vice president's office, hey, lay off 6% well, we just have to go across the board and lay off 6%, and then maybe it works its way down the scale. But in. In a small business, which is our focus here, I just don't think it. Well, and I can only speak to my bias because I certainly.

That's the problem is we. We see this through our lens. That's right.

Of course.

Yeah. Yeah.

And. But I've always, you know, been taught, and I think it's contributed a lot to the success that I've had, is to make yourself indispensable.

Yeah.

To where you just. The concept of you not being there is just unfathomable for the business owner.

That's right.

Like, no, you know, that's person that. That they control all this. They do all these things. They do all that. And we've talked a lot on the show about, like, and just recently, when you're hiring new people, just automatically getting into that framework of, hey, what do you want your next job to be?

Yeah.

Right. What do you want? Do you want to take my job? Would you want to learn this? What do you want to do? If you're having those discussions in your business with people, some of them are gonna really love that and they're going to, you know, embrace it and move up. Some other people are not. And I would argue that the people that don't and don't change and adapt and help your business grow, those are the people that kind of have to take. Or that have to. They take the hit when your business contracts. Cause believe me, it will. It's not. There's no doubt about it. Things happen.

It happens. It's how it goes. Yeah, yeah, yeah, yeah.

I have. I have a pretty good sense, I believe we are headed into some kind of adjustment in our economy. We already, I think, started. But, you know, there's lots of signs that we're going to be going into a recession.

Yeah.

And if that happens, you're going to be thinking, well, okay, and let's hope it doesn't happen. And let's hope that your business.

I was going to say, even if it does happen, let's hope your business is. Is, you know, outside of. Of the. The prime target of this recession. Yeah, exactly. Or of any recession. Yeah, yeah.

But I see some real indicators and like, I'm involved with a number of nonprofits, and we do things to raise money and hold events. And I can just tell you it's significantly different than a year ago, reaching out to people to get their involvement financially. Significantly different.

Yeah.

And that's a big indicator. But, you know, back to your point, it is a great thread that every employer should read just to get in that mindset of, hey, there are people working for you that think like this and how can you.

Or at the very least, there are people working for you who hear from people who think like this and, and when they, you know, if a better offer comes along. And in today's world, that's a very realistic reality that, you know, if you are not the type of employer who takes care of your employees, you know, I, I enjoy being able to give my employees flexibility. Not just flexibility with their schedule when they work for me, but also flexibility where possible in which work they do for me and how they do their work and that sort of thing. And that, or so I've been told, makes the job fun. It makes it easier to stay here longer. And that has played out. Many people that have worked for me have worked for a decade plus. And, and that's a good thing. So that when that other offer comes along, they think, wow, I really don't want to stop working for this company or this person. Even if there's more money over there. Like, you know, there's going to be things. That's what you hope, right, that lure people away. But you can, knowing that these conversations are happening out there, you can be proactive as an employer and, and do things that make your company a good place to work, make you a good person to work for. And I'm a terrible manager, but I can make things interesting here, and that helps offset how bad I am as a manager.

Well, and I think that you could also. Let me really show my bias here is you could ask this person or these people, hey, if you had that other job offer, would you bail out and leave this small business owner? And again, my frame is small business. And would you bail out and leave this person hanging? Because I've had that happen to me many, many times. Despite the fact that you're trying to create a great culture and a great place to work.

Yeah, it happens.

You know, you gotta walk the walk. So it, it goes both ways.

Oh, for sure.

Often both get left in the lurch. And it is, it's. That's why it's business. It's not called friendship. It's not called family. It's business.

Right.

And, and you have to make tough business decisions for your personal self as an employee as well as, you know, your employer has to do it. So. But it's a great dialogue to.

Yeah, no, it is. It's Good. Yeah, maybe. Maybe it's even worth having, like, with your employees. Like, you know, I see these threads out there. I, you know, I was. I was talking with. With one of my people here who was telling me, this is the longest I've ever worked for one company. And I said, well, that's great. I said, yeah, what's the reason for that? And I said, well, you know, I often get bored. Okay, great. Now we've identified what the leading problem is there might, you know, or the leading. The leading reason. I don't want to say problem. The leading reason is it's like, okay, great. If you ever get bored here, let me know. That's my fault. I'm going to help you fix it, you know? And they said, well, actually, the way this job is organized, it's kind of my fault if I get bored, because I do have the option to do different things and in different ways. And I said, well, that's great. That means that I am doing my job. But if you ever find yourself bored, that's my fault again, you know, come to me. Don't assume that you've just exhausted all of your resources to keep yourself from being bored here. Let me know. Give me the opportunity to help tweak things. Right. And so, like, that was an amazing conversation to have. It was almost accidental, but. But it was a great one. It was like, okay, whoa, good. You know, we. We potentially headed off that reason for someone just leaving by surprise.

It's good. It's smart. It's transparent. We're going to do a show about transparency in the coming weeks.

Next week.

I think I'll lean. Yeah, I think so. And, you know, we can lean back into this because having those kinds of conversations can be really powerful, because many of your employees are. They don't. They're not. They don't have the frame that you think that way.

Right, right. Yeah. You have to say it out loud. Yeah, yeah.

A lot of many employees just think you're only focused on your own self interest. And, you know, it's just the employee employer relationship. When you sign their check, it changes things.

So it does change things. Yeah.

Good conversation to have.

All right. Well, I saw three movies at south by Southwest, the conference that happened in Austin last month, that were very much related to small business. And so I want to talk about each of them, really. There's. There's one main conversation to have and then two sort of sub conversations, so I want to do that. The next thing that I would like to do, though, Shannon, is I Want to tell everybody about our two sponsors, if that's okay for you?

Yeah, let's do it, Dave.

All right. Well, we talk about this on the show all the time. Payment processing is confusing as it is, and so are all the rates and fees associated with accepting credit cards as payments. You know, you, you, are you paying extra because somebody's using a rewards card? And how is that affecting you? And I think all of that stuff is super obscured intentionally in many cases. What if there was a free solution that allowed you to easily and automatically understand your bottom line? Credit card processing rates and fees every month? Well, our sponsor, Rate Tracker, presented by skysale Solutions, is that free and simple way for you as a small business owner to know your cost to accept payments so you don't get lied to or taken advantage of by your payment process. And we all know that there are payment processors out there who are happy to lie to you and take advantage of you. And that's why RateTracker, presented by SkySales Solutions, is here. Rate Tracker makes it super simple for you to understand your cost to accept payments and provides you with free access to trusted payment experts like skysale Solutions that can give you free advice on how to optimize your payment acceptance program. So you're going to visit sky-sale.com to sign up for the only service that's dedicated to helping you know your numbers, keep track of your payment processing costs and alert you immediately if there's ever a rate increase. Go check it out. It's sky-sale.com ratetracker. You can also click on the Show Notes link at BusinessShow Co and our thanks to Rate Tracker presented by Skysale Solutions for sponsoring this episode. All right, so we're out there small businessing doing our thing, but who's running your hr? If the answer is I'll figure it out myself or no one. Well, remember that one employee complaint can turn your world upside down in terms of your business and perhaps even further than that. Right? Bambi, our sponsor. Here is an HR platform built for businesses like ours and like yours, so you can automate the most important HR practices and get your own dedicated HR manager. First, Bambi's HR autopilot automates all your core policies, your workplace training, your employee feedback, and then your dedicated HR manager will help you navigate the more complex parts of HR and guide you to compliance. And those people are available? That person is available by phone, email or real time chat. Listen, you know an in house HR manager can cost up to 80 grand a year. But here's the thing with Bambi. My favorite part about Bambi, I don't know, there's a lot of things I love about Bambi. The way they do it, the autopilot, the fact that you have a dedicated HR manager. I'm burying the lead here because one of my favorite parts is that with Bambi, your dedicated HR manager starts at just $99 a month. You heard that, right? There's no extra zeros. $99 a month, no hidden fees. Cancel anytime. You're gonna love this. You run your business. Let Bambi run your HR. Go to bambi.comsmall right now for your free HR audit. Spelled B A M B e-e.comsmall. that's bambi.comsmall and our thanks to Bambi for sponsoring this episode. All right, so the first movie, the first movie that I saw at south by Southwest, these are movies about crazy people, but that's what we love, those movies. Yeah, exactly. It was a movie called Second Chance. Hopefully it comes out. You know, all these movies that I get to see it at south by Southwest are generally premieres or pre release movies. They might have premiered at Sundance or a different film festival, but. But, you know, they are not yet just out for anyone to see in the theaters. The good news is that unlike 10 years ago now we have all these streaming services that are vying for content. So there's a lot more avenues for these movies to be able to reach people and more and more of them actually do. So this movie is called Second Chance. That the title is 2nd as the first word and then chance as the second word. And it's about Richard Davis, who In the late 60s, he had run several businesses, including a pizzeria where he ran into. This story gets morphed and changed over the years, so no one's really sure what the truth is, but it's fine. He was in a scenario where he was accosted outside of this pizzeria or something that he owned, and he wound up having to pull a gun on one of these people and then one of them shot him. It was this whole thing. From that, his pizzeria bankrupt, he invented the modern day bulletproof vestinating. Fascinating, right? There were bulletproof vests before that, but they were too bulky to actually wear under your clothes or anything. And he figured out how to do this with, you know, special types of nylon that were available and stitching them all together. And to prove that it worked, he shot himself at a police demo for these things. And then Proceeded like he would shoot himself and then spin around and, like, shoot two bottles off of a, you know, off of a, you know, a stand or something like that to show that not only could he take a shot, but then he could react. He wasn't just like, paralyzed and stunned. You know, he could go and, like, take out the perps was sort of the thing that was the demo he would do. In the description for the movie, it says he shot himself 192 times. I think it's well over 200. I think it's like, at 250. Yeah. Right.

Heck of a product demo.

Right, right. As soon as he, like, they were all questionable. I don't think it was his plan at the first one to shoot himself, but he was realizing that he was losing these people and he needed them to believe that this was actually going to make a difference in their lives and their work, which are, you know, completely related when it comes to being shot at work. Right, right. And. And so he has. They started keeping track of how many people were shot, you know, and, and, and survived because they had these vests on. And it was like. I think the book is up to over, like, 3,000 or something like that. And. And so this movie's fascinating because it. It talks about that. The genesis of this business, and then it talks about the evolution of the business and new things that they tried that did and didn't work for them. And, you know, like any other story about a business, there's an arc here, and I won't. I won't entirely ruin the movie, but, yeah, he's a crazy person. I couldn't decide at the end of the movie if he was a good person or a bad person, to be perfectly honest. He obviously created helpful thing. Like, there's zero question about that. But, you know, some of the. Some of the decisions that he made through the process were, you know, questionable at times, but. But that made for a fascinating movie. I highly, highly recommend keeping an eye out for it. Yeah, it's a fascinating thing. Shot himself. Yeah. Crazy.

It is really interesting.

Yeah. Yeah, sure.

Yes, it's. It is. I'm looking at it. Richard Davis. Yeah, yeah, yeah, yeah. It looks like Showtime has bought it.

Oh, great. Okay. Well, there you go. Yeah, yeah, yeah. Great. Okay. Well, then that's. Yeah, that's. That's right. You're right. Yeah, they've got. That's right.

Yeah, he looks like a nut.

Yeah.

But, you know, we need. We need.

Yeah, you need crazy people to. To get things done. Like, that's Just how it. It is. You. You know, it's not gonna. Rarely, first of all, rarely does anyone choose to act in a way that they themselves see as irrational. Okay. And then also rarely are there, you know, evolutions or revel, evolutionary or revolutionary products or services introduced by someone who thinks the same way as everybody else. Right.

Or by committee or doesn't work as well.

No, rarely. That's even less common, I would say. Yeah, right. So it takes somebody that just believes in, yeah, this thing's gonna work. I got this. Let me go. Right. And that's something we talk about on the show all the time, is that mentality is super valuable and also a huge liability when it comes time to delegate. Because you're like, no, I can do it myself. It's like, well, maybe, but probably not as well. So, yeah. Speaking of crazy people, the second and all. In fact, all three of these are stories about crazy entrepreneurs. The second one is called Mickey the Story of a Mouse, which is about the history of Disney, but really told while sort of chronicling or by chronicling the evolution of Mickey Mouse and the identity of Mickey Mouse over the years throughout, you know, throughout the history of the company. Which also then sort of is a bit of a mirror of society at each of those times because there were things that Mickey Mouse used to do that couldn't Mickey Mouse can't do now. And the way they sort of stitched this arc together is the three current animators that draw and are responsible for the likeness of Mickey Mouse were creating a one minute short about Mickey Mouse throughout the years. I think they called Mickey in a minute. And towards the end of the movie, you actually get to see that short. And it was very well done. The whole movie was well done. The short was also well done. And what was great was at least one, if not all three of those animators were actually in the theater during the cause it the world premiere that I wound up getting to see down in Austin. And so it was nice to sort of recognize them for their. For the hard work that they put in to hand drawing this one minute short, which was pretty cool. But it was an interesting movie and was as much about Walt as it was about Mickey and Disney and society. Not the society, but so they do.

The development along the timeline of kind of what's. What was going on at that time.

Yeah, exactly. Yeah. Yes. And you see the evolution of Mickey in this short that's there. So. Yeah, it's fascinating stuff. Really. Yeah, really an interesting.

Looks like it's coming out on Disney.

Plus it will be out on Disney. Yeah. This one you'll definitely be able to see, which is fascinating. That Disney, Disney themselves, while they were intimately involved in the creation of the movie, but they were able to tell the story as a viewer, it did not feel like it was a corporate message flick. That's a good way to say it. Right. It was very much an honest documentary about this. And it didn't always paint Disney in the best light, but it was certainly heartwarming and all of that, which sort of makes sense. I mean, it's Mickey Mouse. Yeah, sure, sure. Exactly.

That's great. Interesting.

The third movie, Shannon, perhaps the craziest person of all was. It's called the PEZ Outlaw P E Z. Right. The, like the PEZ dispensers that we know about.

Right.

This is about this crazy guy named Steve Glue. He lived in Michigan. Lives. Still alive. Lives in Michigan. And he was. This all happened maybe 20 plus years ago. Okay. He was. He lived on a. He lived a meager existence for him and his family. He was a machinist and he, you know, hated the job, but did it every day because that's how he knew how to provide for his family. It also turns out that he's massively OCD and he identifies this way. And he even said early in the movie when they were interviewing him, he's like, yeah, I keep this paper towel in my left hand all the time because that sort of helps me function. It's like, wow. Okay. So that's a pretty significant manifestation, as far as my non professional opinion goes, of ocd. Well, part of this, he wears three pairs of socks all the time, that kind of thing. But he's always been a schemer and a collector. And so he started by collecting cereal boxes simply because he liked them. And then, you know, because. Because you can go to the store and there's like, you know, of Captain Crunch. There might be four different variations on the box. And he loved those variations, right? So he would collect these and some of the boxes he would keep intact, but most of them he would just cut out like the front of it or whatever and then file it away. And he, you know, OCD massively, you know, created this huge library of all these things. But what that meant was certainly back, you know, 20, 30 years ago, he had all these coupons to send away for the little toys and trinkets that would come in the cereal boxes.

Oh, yeah, yeah.

So he would send away for these and get piles of them. And then he realized, he said, wait, these Things themselves are collector's items. He didn't much care about them. But the only way to get a lot of these toys and trinkets was by sending away from the cereal box. So there was no way, if you wanted one of these things, especially one that had already sort of gone through its production and its release, there was no way to buy them in the store or there was no online to buy them from back then. And so there would be these toy conventions that would happen, and he started going to these and selling his toys that he was getting from the cereal boxes and making, you know, a huge profit on this. And this was a great way for him to, you know, enhance his family's income and, you know, financial picture.

Sure.

You know, if you've ever looked in recent years at those cereal boxes, they say, limit one per household. You know, it says that on there. Yeah, yeah, that's Steve Glue's fault. They cracked down. Yeah. But that killed this. This, you know, the side hustle that he had doing this.

Right.

So he went to the. What would hit what he thought would be the final of these toy shows because he had some inventory left over. He figured, well, I might as well, you know, sell this and turn it into cash before I can't get any more. And he noticed people were freaked out over the PEZ dispensers, people paying 25, $30 for a PEZ dispenser. And so he started digging in and asking the people, you know, that were selling this stuff, how, like, what the deal was. And he looks like a crazy person. Big, long beard, obviously has his, you know, three pairs of socks and his, you know, tissue in his or his paper towel in his left hand.

But he.

He definitely has a charm to him. He is very charismatic. And they were willing to talk to him, these people that were making bank on these PEZ dispensers. And they said, oh, yeah, well, if you really want to do it, go to Austria. Because back then, I don't know how it is now, but back then, PEZ Worldwide was based in Austria. PEZ usa, however, it was a subsidiary of them, but had a stranglehold on the US market. Meaning the. The president, president of PEZ usa, decided what. Which PEZ dispensers could be sold in the US and he would only sell the ones that he liked, which meant 10% of the PEZ dispensers that were made were available here in the U.S. so this created this demand for the other 90% that you couldn't get here in the U.S. and again, pre Internet, there was no way. So this guy had never really even left his home state. Flies to Austria with like a map. I mean, again, like this is all super crazy. And somehow finds the PEZ factory and befriends the all the designers there and everything. And on this first trip he went with his son, they give him a. They gave his son, you know, one of like five of a pre production run of something that was never going to be made. It was like a prototype. Not a pre production, a prototype. You know, they gave him one like you should have one of these or whatever. And then. But also he came back with literally duffel bags full of PEZ dispensers that he was paying like 30 cents each for. And then he gets to customs and Customs, you know, he's this crazy guy.

Love those guys.

He acts a little crazy and he's got duffel bags full of PEZ dispensers and they're like, all right, come into this other room. Now. There's an interesting thing about the law, Shannon. I love little nuances like this. You can have a trademark on something and PEZ USA did have a trademark on this. But having a trademark doesn't necess, doesn't mean that you have registered that trademark with Customs as being the only person or the only entity, company allowed to import these things. Right. And so Customs gets this guy. Customs, you know, knows how all this works. They get this guy in a room, they look up PEZ in their big book, whatever it is, and they realize PEZ USA has not registered the trademark with Customs for him. And, and they said, you know what, if they're going to be stupid enough not to do this, we're letting him in. And so they let him in. And the things that he bought for 30 cents each, you know, he was selling for upwards of $300 each. Awesome.

I love it.

His son sold the. He wasn't planning on selling the prototype, but somebody offered him like, you know, 1500 or two grand or something for it. And he was like, I mean this is life changing money. So the guy started making millions, you know, on this because, you know, he would go back and forth, it's for him. But PEZ USA did not like what he was doing.

Of course I don't like it.

No. And it became this stupid, like vindictive battle that the president, as they kept calling him in the movie, the president of PEZ USA was really just looking to crush this guy as opposed to just, well, just register the trademark and all this goes away. That's became this ridiculous game of cat and mouse and this battle that went on for quite some time. And I won't ruin the end of the story about how it sort of plays out, but it's a fascinating business story. And again, just one of these. We talk on this show all the time about how the riches are in the niches and they are, I mean. Yeah, well.

And it's being able. It's also having that, it's kind of a problem solving mindset. Right. That we did a whole episode on recently. It's thinking I could take advantage of this discrepancy or the, you know, what is the opportunity? What's the opportunity to fill this need and how can I do it? And you know, we, a lot of it is being in the right place, the right time, but also taking the initiative there. The majority of people will talk about it.

Yes.

Long time, their whole life, over a beer, sitting on the couch, oh, I could have done this or you know, that kind of thing. But it's, it's the action that's it that you take that makes all the difference. And if you're in the business of battling the, these larger companies over trademark and copyright, you really need to get familiar with the thing, at least in the United States, called the doctrine of first sale. And it can save you because you're talking to somebody who's been far too intimately involved in customs and getting things from various parts of the world into the US and the doctrine of first sale is your friend and can help you tremendously. Because once you own the product, there are limits to what the manufacturer, whoever can force you to do or not.

Do with it once you've been able to bring it in and sell it the first time.

Well, even getting it in, you can, there are ways to at least open the dialogue with using the doctrine of for sale to where you can have it. And I mean legally, like you can't bring a Rolex watch in the US you can't, you can't bring them in.

Right.

That's why people hire other people to fly to Hong Kong and wear, you know, a very expensive watch back to the US So they can get it and sell it. So there's, and I can't stand that kind of restraint of trade and this boat mentality that, hey, I, I own these things, I bought them legally, you.

Know, why can't you resell them? Yeah.

And maybe if I was in the position, I would use these same tools to try to keep control of my market. Of course, you know, Maybe.

Right.

I'm trying to think of my own biases here.

Yeah.

But Bose is the same way. I mean, we, you know, I could tell you stories about trying to sell audio equipment from Bose that would just, you know, blow your mind about the hubris and audacity of the things that they would do. And if you're a small company, it's tough when you don't have the resources to fight, and they know that, and that's what they do. So doctrine of first sale, look it up.

Yeah. Now I put a link in the show notes to the Wikipedia article about first sale doctrine. So, yeah, you mentioned Bose and their hubris. Well, amongst the audio files, there is a phrase that is tossed around all the time. No highs, no lows, must be bows.

Yeah, yeah, yeah.

Bose came out maybe, I don't know, let's say somewhere between, you know, somewhere in the last decade, but probably closer to a decade than, you know, than certainly not in recent years. They came out with their smart speaker line, and I can't remember the name of it, you know, and so I was big, you know, and still am very bullish on. On the idea of getting smart speakers or WI fi enabled speakers. I guess smart speaker has taken on a new term that. That implies now that it has a voice assistant in it. Back then, none of the speakers that we called smart speakers had voice assistants. They were just WI FI enabled. You could control them with your phones. Sonos was, you know, sort of the. The first player in that market. And I got really into Sonos because of that. It really made a huge difference, you know, in. In my ability to consume music out loud, consume digital music, especially out loud. You know, it had kind of been stuck in all of our headphones for so long. And then Sonos came out and it was like, look, we. We've been doing this for a while. You should pay attention. And finally I did, and it was like, oh, it's amazing. And so our listeners to, you know, the macgeekab loved it, and we were bullish on it, but it wasn't. I mean, I like what Sonos has done. I think they've done a fantastic job with it. But it wasn't so much that I was, you know, all in on just Sonos. I was in on the concept. And they were really the only game in town initially to do this. And so when Bose came out with their line, I'm like, oh, man, I'm all over this. And I reached out to them and finally got in touch with their PR people I had a meeting scheduled. They're only maybe an hour south of me here, just outside of Boston. And the day before I was supposed to go to this meeting, they emailed me and canceled. And they even told me the reason that they were canceling. They're like, oh, we realize that you cover Sonos in your podcast, so we're not going to be able to meet with you. And it was like. But it wasn't. I don't think it was the competition of, like, the fact that I had mentioned Sonos before. It was that they realized I was well versed in how Sonos worked and how well it worked, and they knew that if they showed me this, I would see shortcomings. So, of course, I went out and I just got one of these speakers. I didn't have to go see them to get one. And it was like, oh, this thing a disaster. I mean, it was terrible. It just seemed odd to me that a company would have that much hubris, to use your term. But it is an accurate term to say, well, instead of making it better, we'll just only let people talk about it who have never experienced anything that is better. And it's such a weird way to proceed. It was just so bizarre. You know, I had a lot of people, including other journalists, that were like, oh, my gosh, this. You know, this pose. Whatever. The sound source or sound. Whatever is amazing. I'm like, yeah, yeah, okay. Like, compared to nothing. I totally agree. Have you compared it to Sonos? No, I never really got into that. I don't really know that well. Okay, cool. Great. Sounds good.

But great stories. I love, you know, and I've done that kind of thing many, many times in my life. And. And I focus on, you know, focusing on the delta between what you can get it for and.

Yeah.

How you can get it and all that stuff. It's. Those are great entrepreneurial stories that, you know, I love to hear. So thanks for sharing those with us today.

Yeah, yeah, no, it's. It was. It was fun. I love. And, you know, that's one of the things I love about south by Southwest is the serendipity of it. All. Right. Because it. I've joked that I think the people at south by created that whole conference for me because it is. I mean, it's four conferences, festivals that happen at the same time, really. 3. There's the educational one that sort of happens first and then wraps up, but then there is the interactive, AKA the tech one, the film festival, and the music festival, and all three of Those really apply to me, you know, as a, as a human. And therefore they apply to the various things that I produce, you know, in terms of these podcasts and all the content that I do. And. But the serendipity of just being there and going to see a movie, you know, about, okay, this bulletproof vest guy, and then realizing halfway through, oh, my goodness, like, this is a great small business story. Like, you know, but you don't, I don't know, going in, like, I don't select these things and say, okay, I know why I'm going and where I might talk about this. I just follow my interests and invariably they wind up falling into the buckets that work for me. So it's a great. It really is a great conference. And I'm super stoked that I was able to go in person again, because I missed that for two years. And it makes a difference up. So.

All right, good stuff. So, you know, we had a good grab bag today. If you have some more information you'd like to share with us and our listeners about defined benefit plans, and if you'd like to comment about the. That tweet thread that we put in, come come see us on the Small Business show support group at businessshow Co.

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