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Tuesday, August 22, 2017

The Arizona Gamer Story, Part 4: Destiny

Resuming now The Arizona Gamer Story with Part 4, we arrive in May 1999 when business had picked up reasonably well, Pokemon petrodollars were flowing in acceptable quantities, and I was still for the time being a subtenant and not a shareholder in Arizona Gamer Inc.

Magic: the Gathering prerelease tournaments at the time were not held in every store, and there were few stores in any case.  Tournament organizers were subcontracted by WOTC to conduct the events at hotels, college gathering halls, convention centers, and like such.  There would be one prerelease for an entire region.

For Arizona, Ray Powers' Monastery Productions ran prereleases as far back as Exodus, which was at a hotel.  Urza's Saga was at a church auditorium, and Urza's Legacy, though memory fails me, I want to say was at Arizona State University's Memorial Union building.  Funny story about that, somehow several years later ASU still claimed that Ray had an outstanding room rental invoice with them, and Ray sent me on a mission to get the payment put in and confirmed.  "The lady in charge of the rooms can't be reasoned with," Ray warned me. "She is a destroyer of worlds.  Our pleas fall silent before her."  I went to meet this fearsome overlord... and it turned out she was the mom of one of my longest-time friends, and was perfectly delightful to deal with.

Some other reason prevented Ray from finding adequate bookings for the Urza's Destiny prerelease.  It was June 1999, nothing Google-riffic comes up as an event of consequence taking attention at the time in metro Phoenix, but in any case he needed a site.  And although Ray didn't typically give any one dealer exclusive access to the event... this time around, I had a site available for him, for free.  Chocolate, meet peanut butter.
Thus it was that Arizona Gamer hosted the Urza's Destiny prerelease for all of Phoenix, and it was my first experience on the facility side of large event management.

As I've mentioned before, Arizona Gamer at the time could seat maybe 60 players for cards, and had a dozen or so Warhammer tables.  This would not do for a Magic prerelease projected to attract 200 players to a single-flight all-day affair.  I went in search of table rental, and at last managed to scrounge some up.  They delivered a day or two in advance and the tables were just godawful, so we had to use tablecloths and hope nobody got themselves a death splinter.  Table setup left the room grossly beyond fire code limitations and crushed so tightly I knew the air conditioner was going to surrender and flee by noon on the day of.

In preparation for this watershed promotional opportunity, I ordered as much Magic product as I could get my hands on, some woefully small amount of boxes of the available expansions and some woefully small amount of sleeves.  There was no such thing (essentially) as a playmat at that time, nor as a deck box.  RRRRRRIP went the shuffle, at sealed events.  I posted on Usenet about the event, Ray did his own promotion, Wizards of the Coast's web locators of the time pointed people to us, and sure enough, just under 200 players turned out, the effective entire player base for Magic in Arizona at the time.

I have made my peace with the shortcomings of that prerelease from Arizona Gamer's side.  I sold out of every shred of Magic product we had, which was a good thing except there was far too little of it, which made us look like amateur hour compared to Jester's Court, Game Depot, and Arizona Collector's Paradise.  It was crowded.  The event in terms of organization and judging went fine -- Ray and his crew saw to that, and I served in the judge array as well.  We had multiple miniatures players show up and throw tantrums that there were no Warhammer tables available for the day.  They had been warned for at least a week in advance.  Most of them knew and planned around it, but there's always that guy.

A few weeks before this time, I applied for advancement as a DCI judge from level 2 to level 3.  I actually failed the test.  The reality was that although my rules knowledge was current, I needed more time running larger events.  Ray Powers and Dan Gray administered my test and broke the bad news to me, and at the time I was completely crushed.  But by the end of the year, I realized a bit more of the meta-work involved in judging, and they granted me a retry that I passed.  The experience of coordinating to host/stage the Urza's Destiny prerelease at a time when stores simply didn't do such things, surely helped bolster my skill set for that.

I maintain that today's experienced level 2 judges are actually better judges than I was as a level 3.  There is far superior communication now, the rules are better defined and better troubleshot, methods of cheating and misuse of rules are far better understood, and players know more what to expect.

Nevertheless, working as a level 3 judge was something of an epiphany for 25-year-old me at the time, because although I realized like everyone does that there are professions where you basically "get paid to know stuff or understand systems" -- from medicine to accounting to the sciences to law -- none of them seemed attainable to me.  I was inspired by judging to return to college and pursue a career in law.  I got half of that right.  I should have gone with accounting or the sciences.  But understanding how the law works has still served me well, such as in helping DSG navigate litigation and reach a beneficial result.

Destiny is a capricious thing, and experiences that may or may not loom large at the time have a way of informing significant decisions later.  I had cut my teeth in small retail at Radio Shack in 1994-1995, after spending much of my early employment years working in larger retail settings that sucked, or in office settings that sucked.  That led to operating Wizard's Tower and then Arizona Gamer, and a flurry of other related endeavors that in turn became my present-day career as the administrator of DSG LLC.  Meanwhile, becoming a professional tournament judge led to my completing college and literally earning a professional graduate degree.  I spent over seven years as an administrative legal analyst with the Arizona Department of Health Services, from 2007 to 2014.  I am disappointed at how that ended, but I am happy for having been able to work with extremely excellent people while I was there.  Two life threads that developed under the influence of one another, and ultimately formed a braid.

I did not meet with any success in my attempt to become a millionaire rock star, but if you want to have a chuckle and enjoy some sweet tunes, here is a link to my final performance of 2004 at Alice Cooperstown in Phoenix.  Ah, what might have been.

Sunday, August 13, 2017

DSG Chandler FAQ

So how was your week?  Ours was pretty awesome.

We reached our fifth anniversary on Thursday, August 10th.  Hard to believe.  Back in 2012 when we first opened the doors, that date seemed like the impossibly distant future.  But it's here and now we have a new lease in Chandler that doesn't come up for renewal until 2022 and we'll all be Eloi and Morlocks by then.

It happened that our lease finalization occurred just in time for me to make the big announcement revealing the exact location right on the store's anniversary.  I broadcasted a Facebook live video showing the new suite prior to construction, and we had a flood of happy responses and a handful of questions there and in the store afterward.  Thus, this article to respond.
First things first: the new address is 3875 W Ray Rd Ste 7, Chandler, AZ 85226.  It is in the McRay Plaza at the southeast corner of McClintock Drive and Ray Road.

From the north, east, or south, or anywhere north of the US-60, by far the easiest approach is to take the Ray Road exit from the Loop 101 Price freeway, proceed almost one mile west, and turn left into the McRay Plaza.  If you see the bowling alley, you're in right place.

From the west, it depends precisely where you are.  Ahwatukee and all southwesterly approaches are best served to use the McClintock Drive exit off the Loop 202 San Tan freeway.  Proceed two miles north and turn right into the plaza at Ray.  The remainder of approaches from south of the US-60 freeway but northwest of the store, well, you're going to be so close it hardly matters; just take the surface streets.

The new location will open sometime in late September.  The Gilbert location will close in late September as its lease is expiring.  The MTG Ixalan Prerelease will either be the first big event in Chandler or the last big event in Gilbert.  The PPTQ on September 30th will be in Chandler.
Now that the housekeeping is out of the way, here are some Frequently Asked Questions!

Q: Why Chandler?
A: Because Chandler is great!  But seriously, it's already the community we serve to some extent, because our Gilbert location was literally across the street from Chandler's city limits.  I first moved to Chandler in 1995 so I am deeply familiar with the city.  We don't choose a business location based on where we live, which is why DSG started in Gilbert, but this time around the circumstances aligned.

Q: But what I mean is why not stay in Gilbert?
A: We really did explore many options that would have kept us closer, but this is the one that worked out the best.  And Gilbert has not seen the last of DSG.  We have already been approached by developers in the San Tan Village Mall Center plazas about property becoming available late next year.  Branch location, anyone?  Meanwhile, the Chandler location is so easy to reach from the freeway, and so many of our customers already lived west of us along the San Tan 202 corridor, that this represented no real change in distance for most folks.  Even those living to our south or southeast have easy freeway access to the new store.  But we know there are some players in our community who live northeast of the Gilbert store and the new location is basically directly worse for them.  We're really sorry about that.
Q: Why didn't you renew in the current plaza?
A: We tried!  That would have been by far the least expensive option in the short term.  Our landlord was accommodating and gracious and we worked with them for quite a while starting early in 2016 to try to reach a renewal.  The reality was, there was not a suite in our plaza that had the right combination of size, accessibility, shape, and price that we needed, and we could not expand in place because we were blocked on both sides.  So unfortunately we had to look elsewhere.

Q: What other sites did you look at?
A: Commercial real estate is a limited market.  There just isn't that much inventory of available space at any given time, and a lot of what is available is empty for a reason.  We got as far as lease negotiations with seven different locations over the course of more than a year.  The McRay location was the fifth one we contacted, and since they worked with us in earnest the entire time and made it clear they wanted us there, the sixth and seventh options were dismissed fairly quickly when they didn't show that same level of engagement with us.  Among those locations investigated were two great spots that were excluded out by Gamestop, including a great space on Gilbert Road and Germann Road two miles south of the store that I actually showed a photo in an earlier article here.  We also worked on a group of suites on McQueen and Pecos (two plazas) where we couldn't reach a deal.  Other plazas didn't return our calls or once it was clear we were not a Starbucks or a Verizon, they weren't interested.  The retailpocalypse is partly the fault of unrealistic landlords who still think they can rent space like it's 2004.  Fortunately, not all landlords are like that.

Q: Is the new location what you wanted then, or just the last space standing?
A: We really do think McRay is the home run we were after.  Let's go down the list:

  • It's enormous, triple the size of Gilbert and double the size of Tempe.
  • And it's going to get bigger because we have first dibs on adjacencies.
  • The price is right.
  • Great area demographics, family homes and schools in every direction.
  • Abundant parking, which had been a problem at both existing locations.
  • Close to the freeway, one of my key criteria.
  • Close to the Chandler Fashion Center Mall, a strong shopping attraction.
  • A reasonable cost to build it to our specifications, e.g. no kitchen to dismantle.
  • Configuration highly compatible with being our shipping and warehousing hub.  And,
  • With this lease, we have the exclusive plaza rights for basically every product category we sell.

Q: What about DSG Tempe?
A: I may as well address the elephant in the room.  You probably noticed DSG Chandler is conveniently situated more or less right between DSG Tempe and DSG Gilbert.  That was a lucky happenstance.  DSG Tempe's lease is almost over.  We are not going to be leaving the ASU area of Tempe, but the current DSG Tempe site (Tempe Comics) will likely close in a few months.  Our new Chandler landlord owns another plaza near ASU.  He is working out another lease for us as a branch location.  So in all likelihood that will be the new location for DSG Tempe, and we're tracking early 2018 for that to resolve out.  We'll reveal that location when it's finalized.  This does not impact the Superstition Springs plan one way or the other.

Q: Okay, I suppose Chandler's going to be pretty good.  What's in it for me?
A: Glad you asked.  I'm going to take a few paragraphs here just to give you a taste of what's to come and what we have in the works for the near future:

- Magic.  Every major format on the calendar, multiple formats each night and for FNM, gigantic PPTQs with big prizes, the return of major TCGPlayer and Star City events, and Chandler will be the central hub for the combined Magic singles inventory of both Gilbert and Tempe.  In other words, it will be paradise.  Additional great offers from time to time will be announced first to our Facebook MTG group, "DSG Magic: the Gathering Lounge."  Join today!

- Pokemon, Destiny, Final Fantasy, Dragon Ball Super, other TCGs.  Chandler is going to support essentially every major TCG.  We still have no plans to run Yugioh events but the product will be stocked.  Singles are going to be supported for most or all TCGs.  In-store pickup for TCGPlayer orders and DSG website orders will be supported.  We will be buying singles at the best rates in town, just as we do now.

- Video games.  This will be the single biggest growth area at Chandler.  Not only have we been pumping non-stop resources into growing our video game inventory, including very generous buy pricing across the board on top titles, but our DSG Vintage Arcade will be returning!  Pinball and classic arcade games and fighting games and much more!

- Warhammer / Tabletop miniature wargames.  This will be one of the most visible upgrades.  The "Megatables" plan we discussed in our "DSG Wargames" Facebook group (Join today!) is going to happen!  We will also have enough room to stock deep into all of Games Workshop, lots of Battlefoam, all of X-Wing, and much more.  We will also start buying used minis again shortly after we're underway.

- Board games.  Our used board game buy-sell-trade program has been a great success and will continue at Chandler.  With room to grow, the board game stock will get much bigger.  We will continue to run and will be adding organized play from the likes of Fantasy Flight, CMON, AEG, Renegade, and more.  And best of all, we are going to have room for open play for tabletop games in general on Friday nights, rather than players being crowded out by Friday Night Magic!

- Role-playing games.  Much like with board games, Friday night D&D at DSG will finally be a reality, and we know a lot of you have been asking for this.  Bear with us as we find a way to situate tables so that there is some separation between the multiple player groups.  Early on this will likely be achieved with grid dividers or rope-and-stanchion.  Down the line, especially once we add an adjacent suite, actual separate rooms.

- Comics.  It will be nice to have room at last to feature our entire stock of comics.  There are some awesome comic stores in Arizona and we don't have quite their level of deep stock stored away, but we have a lot, and we know many of you have been waiting for this.

- Coffee.  OK, this is for the future, not the present.  We deliberately took a location where there would be an option down the road for us to add a coffee bar.  If this happens we will open early in the morning.

- New categories!  In the months to come you will see us break some new ground.  We're going to go deeper into modeling, deeper into collectible toys and memorabilia, and much more.  We can't wait to show you firsthand what the future of DSG Chandler will be like!

Any other questions, hit us up.  Thank you for celebrating our anniversary and expansion.  Thank you for being a part of our past, present and future.  Desert Sky Games.  New Worlds Await.

Tuesday, August 8, 2017

The Arizona Gamer Story, Part 3: Pokemon

I've been telling the story of the years I spent with Arizona Gamer in Tempe, from 1999 to 2001 in the wake of the collapse of my 1998 game store, Wizard's Tower.

Over the course of 1997 (as a judge and player) and 1998, I ordered product from the likes of non-mainline suppliers like West Coast Cards and Potomac Distribution.  The latter is still around today, ruining every anime TCG by selling boxes at a nickel over wholesale to the public and making sure it's not worth it for stores to carry the game.  Anyway, in their fliers I was seeing solicitations for Japanese trading card games as well as English.  How little I realized what the future held for three titles, only one of which I recognized from importing Super Famicom games: Dragonball Z, something called Yu-Gi-Oh, and a game the sales reps kept telling me I should bring in, and I wish I had: Pocket Monsters.

Pocket Monsters had been a runaway hit game series on the Nintendo Gameboy in Japan.  Nintendo had already localized it with the shortened name Pok√©mon, with the accent aigu presumably telling us to pronounce it "Poh-kay-mawn."  The Gameboy games were just as successful in North America, and soon spread all over the world.  Wizards of the Coast licensed the Pokemon IP to release English, Spanish, French, German, and Italian versions of the Pocket Monsters trading card game.

The English-language Pokemon TCG debuted in the hobby channel and limited mass market outlets in January 1999, and you aren't going to believe this, but nobody cared!  The 1st Edition Base Set was printed in small numbers and sold through those, but the market clamor did not heat up until a month or two after the Unlimited printing landed.  This is why true 1st Edition Base Set cards are so hard to come by, and why the Charizard from that set is among the most valuable Pokemon cards circulating.  Paradoxically, Charizard was a popular card because he is powerful in the video game, but his Base Set card is garbage.  The Haymaker deck or mono-Blastoise deck would make quick work of it in virtually all cases, despite his "fighting" resistance.
In the early going, I was offered a few boxes of Pokemon by West Coast and Potomac and actually turned them down!  I had not yet heard any demand.  It didn't take long for me to regret that decision.  The phone calls, oh Lord, the phone calls.  Imagine the Playstation 2, the NES Classic, and Cabbage Patch Kids all put together, and then forget about it because the demand for Pokemon eclipsed all three combined.  The fad turned white-hot so quickly I was scouring Target stores and buying up every starter deck and booster pack I could find, which were not many.

By around March or April, we had standing orders with every source for any boxes to ship right away and go ahead and charge my debit card.  (Unwise, but it's what I had.  My credit was shot.)  Around this time I actually got an account with Wizards of the Coast Direct and was able to get somewhat more Pokemon product allocated that way as well.  This supply was more than I was bringing in of Magic in a very short time -- believe it or not, Urza's Legacy was not popular on release -- and it all sold right away.

And I left so much money on the table I want to be sick.

So let me set the scene for you.  Every single day there would be calls several times an hour.
CALLER: Do you have any Pokemon cards?
ME: We have singles...
CALLER: No, I mean brand new.
ME: We have starter decks (sometimes)...
CALLER: No, I mean booster packs.
ME: No, sorry.  Sold out.
CALLER: When will you have any Pokemon packs?
ME: I have them on standing order but the trucks come when the trucks come.
CALLER: Is there a truck tomorrow?
ME: It's always possible.
CALLER: Thank you!  (or something less polite.)

Thus it was that there was a line of people at the store every single weekday morning from March Nth until around the end of June, by which time the Jungle expansion had arrived and supply was getting a bit more reasonable.  If we did get a truck that day, and there was any Pokemon order on it, I counted who was in line, ratio'd the packs out evenly, sold it all, and well, made the money.  God bless capitalism.

In the early going, I tried to be the good guy and abide by the $3.29 MSRP on packs.  This was stupid.  I did not win any loyalty.  None of those soccer moms were ever coming back for anything else, and to the extent that their kids did come back, that would have happened regardless of our pack pricing.  The going rate for a booster was truly around five or six dollars, and that's what I should have charged.  All told, given my burn rate on product and how long it took before supply normalized around the end of the year, I calculate my total forfeit at just under $30k in gross revenue, and because we're talking about a margin increment above and beyond most of the part that pays for overhead, I forfeited probably around $11k or $12k take-home.  Much of that would have come back if I had simply sold the boosters for the price the market would bear from the beginning.  Fortunately, the impetus to make that correct move fell into my lap and I couldn't help but do it.

See, In late April, Wizards of the Coast took over the Game Keeper store at Fiesta Mall in Mesa.  I was temporarily without a car, so I had to have a discussion with Jason Barnes that I ended up winning, to our mutual benefit and my great relief.  Our plan was this.  Drive to Game Keeper every day.  Get in line, a line that was always there.  Buy the daily limit of Pokemon per person, usually a box per human.  Take it back to the store.  My cost after tax, around $3.50 per pack.  Mark it to $4.99 plus tax per pack, and still sell out.  If anyone is available, like Anthony or the other part-timer Jason Farmer, or even my ex-wife, we'd get into a car and head back to the Game Keeper and do it again.  We did this every day for as long as packs kept selling out, which, again, was until late June.

The crush flared up again later that fall for the Fossil expansion.  We knew the bubble had popped when the spring of 2000 brought us Base Set 2 and the Team Rocket expansion, and supply was abundant and the lines were gone.  We even had a choking-on-stock experience then, which was unpleasant, and the avoidance of which is one of the most difficult aspects of this industry to master.

Other interesting product consequences from this insane Pokemon crush:

  • The entire industry ran out of Ultra-Pro 9-pocket pages.  Distributors were importing the lowest quality pages they could find from anywhere, which is why every millennial's identical Ash binder has about a 50/50 chance of containing utter garbage page inserts.  
  • Wizards of the Coast also released special deck boxes with key art from the Base, Jungle, Fossil, and Team Rocket sets.  These boxes sucked, but they were what was available and thus to this very day I buy collections still stored in those exact boxes.
  • As you know if you run a store and buy Pokemon cards, most Pokemon players did not use sleeves.  Therefore, only Magic and Decipher players bought sleeves, and Decipher players wouldn't buy Ultra-Pro because the foil brandmark in the corner was in the way of card text on both of the Star games, so they needed those weird off-brand sleeves with the triangle foil brandmark in the middle.  Ultra-Pro moved the blister years later to the "safe" spot on the sleeve face.  And Pokemon cards the world over got shuffle-worn, stored with rubber bands around them, and so forth.
  • Wizards quietly did a Last Call on the MTG Urza's sets late in 1999, and for the first time in memory we had boosters legal in Standard unavailable in distribution.  Boxes were already approaching $200 by mid-2000 and were getting downright silly by 2003-2004, the way boxes of the 2005-2008 expansions are today.  I bought a case of each MTG set as it went to last call, and I really wish I had thought to buy more, but I didn't want to dip into the Pokemon buying budget.

I had to monetize organized play for Pokemon as well, so every Saturday at noon it was Pokemon Constructed time.  This was not my shining moment as a tournament administrator, but from what I understand, I was less bad at it than a lot of other venues that had never staged a tournament before the Pokemon fad appeared.  Despite all that went wrong, it was quite profitable and we all survived.

Five dollars was the entry, and the top finishers got a few boosters if I had any, and store credit if I didn't.  It was not even nearly a 50% value payout.  We would routinely have 25 to 35 kids playing, so my gross margin would be over $100 for the event itself.  The room was dominated by the teenaged players like Chad Mills, David O'Connor, Harry Shipley, and Shawn O'Rourke, who finished in the top few every time.  They weren't the problem, though.  They played to win but played fair and forced their opponents to play by the rules.  These are guys who were within the top 100 nationally ranked.

The younger players were absolute Lord of the Flies despots.  They cheated rampantly, that much was more than any single judge could prevent, but that wasn't the biggest issue either.  See, because the video game has Pokemon trainers winning creatures from their opponent when they "battle," the younger kids naturally assumed the same was true of the card game, and any time a larger tween-ish kid won a game against a smaller or younger kid or a girl, the larger kid would snatch up the loser's deck, flip through it until he found a Charizard, and keep it for himself, and the smaller kid thought they had to allow it.  Like Magic's old ante rule, but much worse.  It took a while and several crying children and angry parents for me to get to the bottom of this and very loudly and publicly ban the culprits, a process that took weeks.  What's more, these larger kids knew that wasn't the rule, because every time the much-older-and-much-larger Chad or David ape-smashed them with a deck full of Hitmonchans and Pluspowers and Bills, they did not lose a card.  It was naked opportunism at its purest, invoking the video game as a pretext to steal cards from other kids in the broad light of day, and it was disgusting to see.  I'm glad I caught it as soon as I did, but it was too late to avoid a lot of bad feelings and lost business.

The tournaments tapered off in the spring of 2000, as the red-hot Pokemon fad diminished and it returned to being merely a solid-selling TCG.  During that time period, Magic was terrible, in the middle of the Mercadian Masques block, and the Star Wars CCG was at its apex, hitting the Death Star II, Enhanced Jabba's Palace, and Reflections releases.  Ever so briefly, Magic was the third-place TCG in the market.  This never happened again, in the hobby trade at least.  In the mass market, Magic has frequently been third behind Pokemon and Yu-Gi-Oh.

Pokemon was what got me into the company at Arizona Gamer, though this didn't happen until later in the summer of 1999.  After getting back from Games Workshop's Game Day, Jason had found us another investor: Golden-Demon-winning miniatures painting master Bryan Shaw.  Bryan and Jason had aims to reopen a mall kiosk at Arizona Mills and expand into a small branch location in north Gilbert at Greenfield and Baseline roads.  That led to a rather gut-checking discussion:

JASON: So we're going to move ahead with these other locations.  If you want to handle Magic at them under our current deal, we can do that.
ME: What about Pokemon?
JASON: ...We're not going to give up any other revenue lines.
ME: So you want to take over Pokemon.
JASON: It doesn't make sense for us not to.

I considered the scenario.  Immediately I could envision a future in which I got shouldered out entirely.  Jason was my friend, but he had a CEO's fiduciary duty to his investors and I knew it.  He could not be expected to relinquish wildly popular Pokemon to a subtenant.  In time, he would be expected to take over Magic and cut ties with the subtenant altogether.  It was inevitable.

Moreover, I had just spent about six months largely erasing the day-to-day life effects of my Chapter 7 bankruptcy from Wizard's Tower.  I had money now, real walking-around money, enough that I wasn't sweating the bills every month.  I had a Capital One card with a massive $500 limit.  My ex Melissa and I had bought a modest car, I had purchased my first two arcade games (Gauntlet and Street Fighter II), and maybe it was time I cashed out my chips ahead and moved on to video-game related pursuits and perhaps found some way to return to ASU.

But even then... business possibilities... There were a bunch of variables bouncing around in my head.  It was one of those moments where you get really dizzy and your field of vision narrows.  There was nausea.  I knew I could land on my feet but there was risk in either direction and a really decent gig was potentially being brought to a premature end.

I tapped out and gave up, and Jason brought me back.

ME: You know, I've had a good run here.  I'm just going to pack it in, "resign," whatever you want to call it.  It's probably time I went back to school anyway.
JASON: Well, wait, though.  We didn't say we wanted you out.  If you still want a piece of all the action, you're going to need real skin in the game.
ME: Well, I'm still rebuilding my cash bankroll.  I don't see how I can buy in.  You know my asset base, all my inventory.  It amounts to maybe twenty grand if we're counting supplies and cash in the till.
JASON: How would you like to own a quarter of the company with your inventory and your sweat equity up until now as your buy-in?

Tough to refuse such a great offer.  I had to hammer out some terms by which I would actually work and get paid, but the end of the conversation was, you've got yourself a deal.  And I became the fifth stockholder-at-large of the Arizona Gamer, Incorporated, after Jason and Jennifer Barnes and Bryan Shaw, and the exited original business partner from Part 1 of this story.  A few other partners came in much later.  To my knowledge, I am one of only two who exited while the company remained active, the first being Jason's original business partner.  That was part luck as my departure was arguably a poor move at the time, and that will be for a later article.

Being a partner in the overall business meant some strong efficiencies would come into play.  Arizona Gamer immediately went to an inventory asset hold of 140% to 150% of what it was.  I was responsible for card procurement and left the Games Workshop to Jason.  The entire business's success was my success and vice versa.  I could coordinate into the part-timers and have meaningful time off, not that I ever really wanted to use it, since there was always another project worth doing.  I got to know everyone on the minis side much better, from the customers on down.  Tenancy has its benefits and sometimes it can be a good arrangement, but when you're vested into the central business, now you're committed.  Duties also attach, and I believe a failure to understand the nature of those duties is at the core of every hobby industry partner split or partnership failure that has ever come about by means other than family or other life emergency.

My entry also came with an immediate requirement: Arizona Gamer needed to get into the video game trade, because that was money we were passing up.  That will be for another article.  It would be the first of my four sojourns in the video game business, and the least successful.  I am still in the fourth today.

Customers had to catch 'em all, and that forced Arizona Gamer to grow up fast and abandon our subsistence farming for a higher-ceiling outlook at greater scale.  This was a tremendous challenge and there was a lot of feeling our way forward.  I wish I had remembered this years later, when we had part of the Desert Sky Games partnership disintegrate largely because there were partners who could not reconcile emotionally with the need to scale up, and the warning signs were there and I missed them.  Had I recognized the source of the apprehension among the partners, I could have addressed it.

Tuesday, August 1, 2017

The Arizona Gamer Story, Part 2: Cash

Last week I told the tale of how my path crossed with that of Jason Barnes and I became a part of the Arizona Gamer business equation.  I eventually "bought in" as a partner to the corporation -- it was actually an Inc. and not an LLC -- and there's a story involved there too, that I will reach in a later article.  But for the first few months I was basically operating a glorified vendor booth within the Arizona Gamer storefront.  There it was that I began scratching my way back to operability.

If one thing becomes clear from the totality of the Arizona Gamer story, it should be that I was not especially good at anything I was doing at that point.  I lacked education; I was a college dropout.  I lacked self-esteem; rather than acknowledging faults, I evaded.  I lacked self-awareness; my own actions often detracted from the business in ways I did not recognize.  I lacked money, of course, having just filed Chapter 7 bankruptcy for the Wizard's Tower.  My home life was a shambles, with on-again and off-again separation from my now-long-since-ex-wife.  I was seriously overweight, I was generally unhealthy, and worst of all, I was causing friction with my family, who had only ever been loving and loyal to me.  It took a while for me to mend that particular fence.

In short, my business was inert, because I was inept.  Fortunately, my business soon became more ert as I became more ept, because I was on my way up from that rock-bottom place of reflection where an individual finally sees himself or herself as the source of the problem and realizes that only a change of behavior to a disciplined and responsible lifestyle will solve those problems at their roots.  It was a little like a twelve-step program, except that I was six years past my brief cringe away from the edge of alcoholism as an undergrad circa 1993.  I am lucky to have learned so early in life that addictive substances were an unacceptable risk for me.

I knew how to do one fundamental business thing to enable sales of product, and that was how to run a tournament properly.  Nobody thinks about this now because between software and a widespread judge program, any WPN-qualified store can run tournaments.  But in 1999, the fact that I was a level 2 judge (and soon level 3) running local sanctioned tournaments was a pretty big deal.  A store couldn't even do it without a certified judge present every time.  Thus, there was no real market resistance to having me monetize it.
Friday Night Magic, which existed even back then, was in the Standard (then called Type II) constructed deck format.  The Standard environment had just gone to hell with the release of Urza's Legacy and the emergency ban on Memory Jar.  Soon things normalized with a metagame of Accelerated Blue (Morphling, Grim Monolith), Stompy Green (Rancor, Gaea's Cradle), and rogue decks.  It was hilarious in hindsight; nobody was even playing cards like Tinker or Yawgmoth's Will yet.  Nobody even cared about them.  The environment contained two Urza's sets, Tempest, Stronghold, Exodus, and Fifth Edition.  Good mana was hard to come by so explosive monocolor decks held sway and Wasteland was a junk uncommon.

And I made the attraction to play FNM at AZG a simple one.  The winner gets $100 cash.  The end.  Second place earns a feeling of profound and bitter disappointment.  In other words, a prize payout precisely the opposite of what any sensible store offers today.  And to think there are people in my own Magic player community right now who claim that I don't understand what competitive players want.

Now, you may be asking yourself, wasn't such a cash tournament illegal then as now?  The answer was something something mumble mumble.  I didn't even check because I didn't care to know.  I assumed, wrongly, that I would be able to stop without any meaningful penalty upon the first warning.  And the fervor and demand for cash tournaments was so substantial that nobody was tattling -- not even my competitors, among whom both other stores holding regular local sanctioned events were also paying out cash.  These were Jester's Court in Phoenix and Arizona Collector's Paradise in Scottsdale.

But yes, it was illegal in Arizona then, and still is today.  Nevertheless, that's what I ran.  Friday Night Magic Standard for a hunnit-dolla-bill, prize guaranteed, no fuss, no muss, so simple.

Jason wouldn't ever be at the store late into the evening, so it was often his part-timer Anthony Turner running the minis side of the register and me running the card side and the tournament event.  I got to know Anthony better and we were fast friends.  He taught me that Wood Elves and Eldar were the armies I wanted if my goal was to prevent the other player from having any fun.  This was back during that time period's editions of Warhammer Fantasy and 40K, of course.  I taught him that Stompy Green or Sligh Red were the decks he wanted to play if he wanted his Magic opponent's first missed land drop to result in a victory practically by default.

Anyway, it worked.  For five bucks a throw, I averaged just over thirty players every week.  That's an obvious fifty-plus bucks gross margin for six or seven hours of work, definitely multiple nickels higher than minimum wage considering I basically pocketed the remainder after paying Jason's commission.  A long run for a short slide?  You haven't seen the half of it.  Booster drafts were ten bucks, profitable but in the order of small change.  Repack booster drafts at five dollars were profitable, again in the order of small change.  Sealed deck for $20 with a Tournament Pack and two boosters was an occasional thing, and lucrative, but tough to get players to join due to the higher cost of entry than everything else on the calendar.

Monetization of organized play was a fortunate thing even at that pittance, because it was difficult to profit on product due to absolutely nothing stopping non-retailers from buying Magic boxes at or near wholesale if they knew who to call.  I did have non-zero sales of singles, some packs, and even the nascent Ultra Pro Deck Protector sleeves in 100-count packs, available in clear, black, red, or dark green!  And that's almost it!  I did not sell board games because Catan was six years in the future and there weren't board games yet as we know them today.  I did not sell miniatures because Jason had that locked down.  I did dabble in other card games; Decipher's Star Trek and Star Wars CCGs saw my shelves, as well as a few also-rans like the original Netrunner, Rage, and Jyhad/Vampire.  Dungeons & Dragons and Vampire: the Masquerade both sucked in 1999, so neither Jason nor I bothered to stock RPGs or dice yet.  Another trading card game soon crashed the party in a big way, but that's for another article.

Players began arriving in pairs and small groups.  There was a group of local younger players whose names I only barely recall, but I think they were Justin, Paul, and Ben.  Then of course Jon Rapisarda, Tony "T-Pup" Pagliocco, Brock Burr, and Brandon Helding.  Drew Durbin, Eric Judd, and I know there was another guy but his name escapes me.  Mitch Ledford and Greg Smith.  Steve Rice, Ed Kenney, Wayne Paden, and Gary Armes.  Justin Poulter and Brandon Beach.  Josh Martin, Sean Fitzgerald, and Ben Robinson.  One day, Harry Shipley, along with Alex and Mitchell Tamblyn -- and those three have probably the most active continuity of any of the Arizona Gamer Magic players from the earliest days.  Dan Voigt, Tim Daldrup, Steve Ward, and Scott Dove arrived around this time.  Scott died about ten years later.  Carol Heady, who also passed on about ten years later.  Matt Mortensen dropped in once in a while when he wasn't playing poker.  Holdovers from the Wizard's Tower days like Matt Stenger, Ray Powers, Jay Webb, and Jim Spiker occasionally joined in, plus Scott Dalton whenever he was on shore leave from the Navy.  Singleton regulars like John Lind, Chris Sadler, David Ong and Chris Piekarski.  As well, there was a Decipher contingent made up of Mike Girard, Brian Garrison, Mike Sinclair, Andrew and Aaron McCormack, Steve Marshall, and Brandon Allen, some of whom played Magic as well.  I'm sure I am forgetting people.  As an anecdote comes to mind during this article series involving specific peeps, I'll try to remember to update this paragraph.  (I'll reach the Warhammer players in a future article, at this point in AZG I didn't really know those guys yet.)

So every Friday night, in practice, the top four always chopped to $25 each and quintupled up their buy-in, unless Jon Rapisarda was involved, because he didn't split with nobody; he expected to win the entire hundred.  If we finished by 11:40 or so somehow, Anthony and a couple of whomever was interested would pile into my parents' borrowed Saturn and we'd head to the Arizona Mills Harkins Theater for a midnight movie.  This was great fun in an era when I had no children and slept late every day.  We all saw The Matrix on opening weekend "blind," with no idea what it was about, and it blew our f**king minds.  It was all we could talk about for a week.  If we didn't finish on time to catch a movie, we'd head over to Mike Sinclair's apartment and play poker, smoke cigars, and drink beer.  I would stagger home around three in the morning and my ex would already be asleep.  Repeat for many months.

Important things I didn't do during the first few months I spent subletting at Arizona Gamer:

  • Consider finishing my education, including learning that being over 23 years of age made me a "financially independent student," and with the low tuition of the time, I could have attended ASU purely on Pell grants and finished my degree for free.
  • Seek out better sourcing for my products, including discovering Talkin' Sports (now GTS Distribution) a mere six miles away from my store, until they discovered me.
  • Model my business financial structure beyond "every Monday I pay my personal bills and spend however much I have left on product, COD cashier's check due in Wednesday or Thursday."
  • Advertise beyond some basic Usenet posts and coat-tailing off Jason's yellow pages advert.
  • Develop my in-store merchandising deployment (though this is partially excusable; if Jason had tired of my presence and decided to make a go of it without me, I would have to disembark quickly).
  • Explore other revenue lines and categories I could bring in.
  • Iterate the infrastructure to add reliability and business continuity.
  • Take seriously and learn the Warhammer side of the business that was moving respectable volume for Jason as the spring progressed.
  • Learn the skill sets underlying commerce in secondhand goods.
  • Understand the supreme importance of Net Income.
  • Much of anything else aside from slow-building capital.

Important things I did do during that time:

  • Remained debt-free, which of course following the bankruptcy was to be expected.  Still, this was an important part of my rebuilding from scratch.
  • Kept up with the Magic rules and rulings at a sufficiently expert level that I passed my second attempt at testing for Level 3 a few months later.
  • Devoted myself to being "reliable" for Jason Barnes, as a part of my personal rebuilding process and something that was within my power to do every day to earn genuine trust.  I had spent years shedding away trust freely offered to me through my own irresponsibility.  It was time for that way of life to be over.
  • Got in roughly hours #2,000 through #3,000 of the ten thousand hours I would need to master the comic and hobby game industry retail trade from a Gladwellian point of view.  Repetitions.  Buying, selling, working my audience, building rapport with my regulars, scratching out my most rudimentary understanding of cash flow economics, and so on.  A lot of things I'm seeing my employees do today.  Some of them have better chops at this point than I had at any time during the Arizona Gamer era.

It is often said that youth is wasted on the young.  Writing this article series, I see that clear as day.  If I had known then what I know now... ah, but that is a parallel history that will never be.

Tuesday, July 25, 2017

The Arizona Gamer Story, Part 1: Origin

I said I would tell this story eventually.  I'm still not quite sure how this is going to go.  There is a lot to tell.  There are a lot of memories and I want to get them out into the written word before they fade away forever.

But, unlike the Tales of My First Game Store of Wizard's Tower in Mesa, I was with Arizona Gamer for about two years, and I was involved in their business for a year after that and remain friends to this day with the principals involved.  Telling the story chronologically is not going to be coherent.  The experiences at the AZ Gamer were extremely sporadic and happened all kinds of times and ways.  The story includes people to a greater degree than Wizard's Tower's story did.  And in reflection to prepare to write this, I found that it represents the point at which my life had already hit its lowest point and these were my first grasps and gropes at learning how to do business for real and work my way back up the mountain both professionally and personally.

This first article of the story includes a lot of background from before I was in the picture.  This includes things I learned after the fact from Jason Barnes and others; any errors are mine alone and no part of the narrative should be construed as an effort to minimize my own faults or mistakes.

So, when we last left off, it happened that toward the end of January 1999, fresh from quitting my desperation job at Office Depot, I went to apply for temporary work at the Adecco agency in Tempe, and there I saw before me Jason Barnes' Arizona Gamer store at 107 East Baseline Road.
107 E. Baseline as seen today.  Corner suite left of the droopy tree.

I walked in, and Jason's employee (another guy named Jason) was sitting there playing Starcraft at the front desk.  I was greeted with a "Hi," after which Lackey Jason returned to his game.  His five- or six-year old daughter played quietly behind the counter with her toys.

Looking around the impeccably clean store, I saw two walls full of Warhammer and supplies, such as it was in 1999, and eight or ten (no kidding) miniatures tables, and that was it.  Nothing behind the counter at all.  No inventory except Games Workshop products.  A glass showcase full of painted armies that were not for sale.  Crickets, no customers.  A demo table was laid out with Bretonnians and Lizardmen, and a second demo table with Space Marines and Dark Eldar (I think).

Bahr: So, you guys carry Magic: the Gathering?

Lackey Jason: Nope.

Bahr: What about Star Wars CCG?  Star Trek?

Lackey Jason: No cards.  Just Warhammer.

I looked at the space they had, it was a 3000-square-foot store with a lot of dead floor.  I had some remainder of the Wizard's Tower product at my home in the form of my own personal card collection, a pile of surplus singles, and I had spent a little bit of time sniffing the ground locally for clearances on trading card games at the likes of Bookstar and Waldenbooks and picking up a healthy bit of sealed Exodus, Urza's Saga, and Star Wars Unlimited Premiere and Hoth.  I owned a cash register and a terrible computer.  I owned two garage racks.

I made a decision.

Bahr: Would you be interested in subletting some space to me so I could join forces with you and be the card guy here?  I met Jason Barnes at my store last fall and I ended up closing, but I still have cards to sell.

Lackey Jason: You'll have to ask Barnes.

Bahr: Here's my cell number.  (Side note: I still have the same cell number.)

(Two hours passed.)

Bahr (to phone): Moshi moshi?

Voice: Is this Mike Bahr?  Jason Barnes calling.  My store manager says you're interested in subletting in my store?

And the bargain was struck.  I posted on Usenet that night that I would be selling Magic cards and running tournaments at Arizona Gamer in Tempe.  I opened for business the next morning, paying Barnes a percentage of my daily gross, in cash.  Run the Z tape, hand over the money, chuck the Z tape because back then I kept records the way Beethoven heard notes, and start again the next day.  I was back, baby.

My first game store had crashed and burned and I left myself destitute.  The day I started at Arizona Gamer I had to make sales first in order to have enough cash in my possession to get lunch.  I was really, utterly, down to the cloth, in a way that motivates me every damned day to press harder and harder to earn money so I will never be in that position again.  Fear is a phenomenal motivator.

I literally had stood at the precipice of homelessness, since I had been staying in a room in my parents' garage, but my parents were just then retiring and in the process of selling their house and I didn't have a backup plan.  I had to bridge a gap, I won't discuss that, and soon landed at an apartment shared with a friend.  This became awkward when I made up with my then-wife a couple of months later and she moved in as well.  Melissa and I had separated briefly in the wake of the Wizard's Tower collapse when the ordeal had all become too much and we needed a breather.  In writing this part of the article, this memory dredged up.  I had not thought about it since then.

But I was back.  Another day with the store doors open and all the potential in the world to flourish!  Capitalism is awesome!

What I did not know then, but what Jason told me later, explains a lot.  So here is the background from the opposite vantage point, and now you will know why my arrival and integration into the business seemed so easy.  It wasn't quite the my-own-bootstraps parable it first appeared, though there was surely some of that.  I had in fact been lucky to gravitate toward an unexpectedly compatible situation.

Jason Barnes is a Native American, 50% by birth, and was adopted and "Americanized" as was unfortunately common at the time, and brought to Arizona away from his tribal home in Oklahoma.  It's actually quite the dramatic story but that's his story to tell.  His real name, which he uses today, is R.J. Harris.  He has been a practicing attorney in Oklahoma these past few years, and punched above his weight class in a long-shot bid for Congress in 2012 but fell short against the incumbent.  For the purpose of this story, I will refer to him as Jason Barnes, because that's how he was known throughout the Arizona Gamer era.

Jason served military time as an air traffic controller and he learned the itch to play miniature wargames.  He got himself posted at the Scottsdale Airpark and took the opportunity to open an independent store for Games Workshop products.  He rented a pop-shop super-kiosk at Arizona Mills Mall, and for three months in the summer of 1998 he made absolute bank.

Flush with funds, Jason and his business partner whose name escapes me, signed a grotesque, landlord-friendly lease for the 107 East Baseline suite.  Games Workshop figured they had a rising star on their hands, so they extended him deep terms and filled up his store with pewter.  He had literally every available SKU in stock, and in depth.

And then disaster struck.

Jason's business partner, something like one week into the new lease, walked away.  Told him he couldn't handle it, he wanted out, he would take a discount on the investment but he did not want to own a piece of that company for another day.  And right like that, the lion's share of Jason's operating capital was gone.

Worse, the partner was supposed to be the guy who ran the shop most of the time.  Jason still had his job at the Scottsdale Tower.  And I don't know if my readers are familiar with the tempo of work when you're pushing tin, but you can't exactly take phone calls or do business on the side.  Air traffic controllers must hyperfocus; hundreds of lives hang in the balance of their every syllable.  They consistently die in middle age because their hearts can't take the years of stress.  Anyway, when Jason was up in that tower, he was gone.  He was unreachable.  This came up a few times in the course of my tenure at AZ Gamer so now you will understand the context.

One of Jason's ascended regular customers from the kiosk term was Lackey Jason, who needed work for whatever reason, so Jason made him a manager.  On salary, even.  He was putting a lot of confidence in this guy.  He kind of had no choice; Barnes was nonexistent for thirty-odd hours every week, but had a public-facing store to run with 99% of its lease still remaining.  AZ Gamer's fortune was placed in the fragile hands of one of its players, whom Barnes barely even knew, and who had no retail or managerial background.  Hold that thought for a bit.

Because then disaster struck again.

Jason and I were salty about it for years, but we recognize now that it was pure competition.  Blunt, but survivable if you knew what to do, which at the time neither Jason or I understood.  The competition decided to wipe him out, to kill Arizona Gamer in its infancy before it could grow strong and seek revenge like Inigo Montoya.

Dave and Patty Pettit are proprietors of the Game Depot, which was located at the time on 7th Street and Forest near ASU, in a building across the street from (eventually) Pop Culture Paradise, which was adjacent to (eventually) Critical Threat Comics, which became (almost) Desert Sky Games and Comics: University, and now sadly sits empty.  For perspective, this is a store four miles away in a metro that only had about seven or eight game stores in it, counting three Atomic Comics locations at the time.  Without a doubt, Jason Barnes had encroached upon the Pettits' turf.  This wasn't like a guy using the urinal next to yours.  It was like a guy attempting to share your urinal.

Dave and Patty decided that Arizona Gamer did not need to exist.  Dave and Patty enacted a blanket 25% discount on all Games Workshop product, effective until further notice.

So running into the fall, school went into session, AZ Gamer did its marketing, and had started to build itself a small base of customers, and all at once they were of a single voice asking Jason for a 25% discount to match what they could get at Depot.  In this era without Amazon and with very little eBay, this was a very deep discount for a product like Warhammer, since there were no dumpers offering a nickel over wholesale out of the back of White Dwarf magazine.  But no: Jason held tight and kept the line at MSRP, emphasizing the spacious and comfortable game room, the painting lessons, all that added value AZ Gamer provided.

Naw man, they all said, we want the cheaper.  And sales slowed to a crawl.

By this time revenue was still nowhere near paying costs, but Jason wasn't quite out of capital yet, so had sales continued to trend upward, with a few extra shifts here and there during his days off from the tower, he could have built a stance and gotten into sustainable territory.  But between the cost of labor for Lackey Jason, and paying a couple of ad-hoc part timers, plus cost of goods and everything else, Barnes was seeing a failure state unfold before his eyes.  And by the way, the Games Workshop extended terms came due for like three whole stores' worth of stock.

Around this time was when Jason stopped in at Wizard's Tower and deemed my first store unworthy as a business, a prediction that time proved correct.

Jason decided he would match the Depot discount.  It would be 25% off everything.

Game Depot then moved their discount to 45%.  In other words, wholesale.

I think the final discount from Games Workshop at the time was actually 42% or 44%, so Dave and Patty were willing to lose money outright.  They had a thriving business in Other Products, from chess sets to nascent eurogames and historical minis, and their revenue included a fair amount of Magic: the Gathering petrodollars.  Depot opened in 1986; they had been in on Magic since literally Alpha.  They survived the 1995 trading-card-game culling by being well-diversified and not plowing too much cash into Spellfire, Sim City, Jyhad, Rage, Dixie, Doomtrooper, Middle-Earth, Illuminati, On the Edge, Dragon Dice, Super Deck, X-Files, Mythos, The Crow, Hyborian Gates, The Highlander, Redemption, Star of the Guardians, Wyvern, Overpower, Shadowfist, and Legend of the Five Rings, and by ordering modestly and sensibly on Magic's ill-fated "Fallen Empires" expansion.  It was within Depot's budget and purview to earn nothing on Warhammer for a few months if doing so crushed the esophagus of an enemy.

What could Jason do?  He matched the 45% discount, and did so during November and December when he was supposed to be able to get healthy from holiday sales.  He took out a HELOC on his home so he could float operating funds into the store.  With the whole nine yards to go on the lease, terminating in breach was not an option on the table.  He literally paid the terms and did not replace the entire volume of what was sold, since Games Workshop was all he had.  SKUs he had stocked six or twelve deep were refilled to twos and threes, though by the time I walked in a month later, it still looked like a ton of inventory to my untrained eye.  He negotiated a rent concession from the landlord that they granted for some reason.  The truth was: Arizona Gamer was on the brink.

January had dawned cold and clear and Depot had backed off their discount to 25%.  Apparently they either had retrospective second thoughts about skipping an entire wargaming Christmas, or they figured the job was done and they could wait for the closing announcement from down the street.  They continued to send their network of spies over to inform them of Jason's every move.  Joke's on them.  There was little for those urchins to report.

Jason took a deep breath and made a decision.  He was going to take the military approach.  Follow the process, follow the guidebook.  Do as he was told by the retail support team from Games Workshop, who had by then extended the terms further into catch-up payments before they were finally paid, long after the merchandise they had purchased was gone.  No discounts, not ever, the end.  If nobody buys, nobody buys.  The store would run demos, would run open play evenings, and would cultivate new customers.  Jason plowed money into a big telephone book advert so that nobody looking for games would miss it.  (Millennials: Okay, before there were Googlenets, you had to get phone numbers out of a big index book with yellow pages.  Verily, this book was called The Yellow Pages.  And if you didn't have a big advert in The Yellow Pages, your business did not exist as far as 95% of the public was concerned.  Yeah, life was basically sticks and dirt in those days.)

Essentially, if he was going to fail, Jason was going to fail by the book, dammit.

I favor the avoid-the-failing-however-you-must plan, but I absolutely respect Jason's move because it also solved the problem of letting a discount-trained customer base dictate the pace of business.  There was no vertical brand reinforcement in 1999.  Leegin v. PSKS wasn't decided in court until 2006.  The internet was a disaster area, you could get Magic booster boxes for forty bucks from basically anywhere.  Mail-order chop shops operating in the back of Scrye and Inquest magazines and posting weekly sale lists on Usenet groups.  Heck, that was my distribution since I had burned my bridges with Zocchi when Wizard's Tower went bankrupt and I did not know about Talkin' Sports or ordering direct from Wizards until half a year later.  I ordered a lot from not-really-a-distributor outfits like West Coast Cards and Potomac Distribution, which is still around today scorching the earth on every new anime TCG.  Back then you had to run lean, hand-sell, and your pricing had to be take-it-or-leave-it.  Jason mastered this before I did.  I lost all kinds of money discounting both during my Wizard's Tower run and while I was at Arizona Gamer, only my cost base was so low at Arizona Gamer I was able to absorb it better.

So with Jason's new year underway and MSRP pricing and sluggish sales (but at full margin), the kind of commission percentage I offered as a sublessor was very welcome sustenance.  Remember when I said how unreachable Jason was at work?  He called me from work, on his 15-minute snack break or whatever it was, I later learned.  That, folks, is urgency.

By the time I walked in that door, Arizona Gamer had been grossing about $150 per day.  Not a typo, one hundred fifty dollars in gross sales each day.  I outgrossed them on my second day, and I had grossed over two thousand dollars by my first Friday Night Magic, which I had the ability to sanction events still thanks to my Wizard's Tower DCI account.  (They eventually migrated it over.)  I was an active Level 2 judge and had some cachet with the local community; area Level 3 judges Matt Stenger and Ray Powers remain my friends to this day, and I joined them at the third tier later in 1999.

For two weeks I did my thing, and I observed that Lackey Jason just didn't do a damned thing but play Starcraft and take care of his kid.  Barnes and I were acquainted now but I rarely saw him due to his work.  His "store" and mine gave each other space and neither business touched the other's cash register.  I was "Wizard's Tower at Arizona Gamer," as it were.  Most weekdays my grosses were anywhere from $300 to $500; I'd pay Barnes his cut and it would represent a non-trivial part of their daily take, but at zero COGS so healthier for them than a normal sale.

Then two Mondays into my tenure, I walked in and Jason Barnes was behind the register.  Lackey Jason was nowhere to be seen.

Bahr: Good morning.

Barnes: Good morning to you!

The store was spotless.  Also, empty.

Bahr: So, is Lackey Jason off today then?

Barnes: Actually I've had to make a change.  Sales aren't there yet, and I can't cover Lackey Jason's salary anymore.  I'll be taking over when I'm not at work, and you'll see my wife Jennifer here from time to time.  I'll see if the part-timers need more hours.

Jason's wife Jennifer was a professional accountant and was barely any more available than he was; they had a four-year-old daughter named Mercedes.  Mercedes is an architect now.  Damn, I'm old.

The part-timers were Jason Farmer (of course another Jason) and Anthony Turner.  I haven't talked to Farmer in 17 years.  I talk to Turner all the time on Facebook.  He's an auto dealer in Virginia.  As you might infer, he and I got along nicely.  The two of them were about 19 years old at the time and were students at a small design college up the street, and of course had found the store within walking distance of the apartment they shared.

Bahr: They have school during the day.

Barnes: Yeah, I haven't solved this yet.

Sometimes you have to make a move because it seems like the right play.  I took a chance that this was a business relationship worth building.  My reward was a lifelong friend.

Bahr: I'm here all day anyway.  I don't know sh*t about Warhammer, but I can cover the point until your part-timer comes in, and instead of payroll you just do the same for me so I can have a day or two off each week.

Barnes: (exhaling) Oh man, thank goodness.  I was hoping you might be willing to do that but I couldn't imagine how to ask it.

Bahr: We're both here to make money, are we not?

Barnes: Indeed.

Bahr: Was Lackey Jason understanding the concept?

Barnes: I don't follow you.

Bahr: I mean, not to talk out of place or anything, but he never really did anything all day.  And payroll is one of the first things a store has to look at when things get pinchy.  I kept wondering how you could afford to have him here.  I'd been meaning to talk to you about it, but you were out of town two weekends ago and I was at the Urza's Legacy prerelease last weekend, so we haven't really had time to talk.

Barnes: What do you mean, he never really did anything?

Bahr: Basically played Starcraft all day.  I'm not a nark or anything, it just seemed strange to me.

Barnes: What about when people came in?

Bahr: He acknowledged them, but most of the time they didn't buy anything.

Barnes: Did he demo the game?

Bahr: I don't know what that sentence means.

(I really didn't.  Lackey Jason had never done it.)

Barnes: SON OF A [expletive]ing [expletive]!

I wondered if I had stepped over a line.  But then Jason just shook his head, took a breath, and nodded to himself.  He stepped around the counter to one of the demo tables.

Barnes: OK, come over here.  These models here are called Space Marines.

And I received my first ever demo of Warhammer 40K.  I didn't absorb a whole lot of it, my mind was really on the business situation, but I knew enough that I could sell the stuff and recognize the difference between an Eldar and an Ork.

After the demo game, I grabbed us lunch around the corner from Someburros and we spent a glorious afternoon merchandising the store, chatting up the occasional customer, making some sales, and plotting world domination.

To be continued!

Tuesday, July 18, 2017

Hiroshi Yamauchi Was Right

I've written at length on how board games have been something of a trickster category at DSG (both locations).  There is observable demand for the product, but there is sharp downward price pressure, and combined with the glut of product being released (10 new games per day in 2016, over 3,600 new SKUs all told) we see a cycle of release-hype-forgotten-clearance.  Moreover, Amazon Prime Now to your door in two hours is a reality here, there are too many stores in this metro, there are already two deeply established board game stores in the area, only one of which is near one of my two locations, and the Pacific Southwest overall is pretty unfriendly to brick-and-mortar retail in a general sort of way.

I've painted that bleak picture over and over here on The Backstage Pass because board games are at the center of our industry's optics and public impression.  Never mind that most stores have subsisted on the cash flow from trading card games -- and this year's softness in that category has been something of a bloodbath, with more to come.  Moreover, as a player, board games are what I get to spend the most time with, perhaps second to video games now that my children and I have enjoyed playing Ori, Bastion, and Rock Band this summer.

However, I believe Hiroshi Yamauchi's approach holds true.  As chronicled by David Sheff in his excellent book "Game Over," Yamauchi, president of Nintendo of Japan, delegated to his son-in-law Minoru Arakawa the task of launching the Famicom in the United States.  The console would become known to us as the Nintendo Entertainment System.  And Nintendo sought to implement control over manufacturing, to prevent the glut of bad software that had caused the 1983 video game industry crash, and control over security, to prevent what had happened in Asia when cheap Taiwanese knock-offs of Famicom cartridges proliferated and led to margin erosion for everyone.  In essence, ensuring great content and keeping bad actors out of the production and distribution channel would be Nintendo's two-pronged strategy for the NES in North America.  Yamauchi would build the infrastructure for it and Arakawa would manage American distribution and keep client vendors in line.  How did they do?  The NES had a peak market share of 97%.  Seems okay.

Applying Yamauchi's principles to the comic and hobby game industry, we are already seeing that whatever else is going on in a category, if the content is great and there are enough ground rules being enforced in the market to ward off the worst of the worst, good things can happen.

My stores are Magic shops.  There is no denying that.  About 70% of my revenue is Magic or Magic-related, such as sleeves and binders.  And in the face of continued soft performance across other categories, I began a contraction in 2016 that persisted until very recently.  The biggest move was that I took a merciless scythe (heh) to board games, clearancing out anything that did not sell a unit in a 90-day span, or the equivalent of four turns per year.  I generated some cash from the winnowing, and I made some room in my hopelessly undersized Gilbert store.  This move was not without drawbacks.  I definitely saw some customer traffic reduction.  I saw more requests for in-print stuff that I did not have in stock.  But I wrote those issues off as the price of no longer being a forward-positioned player in the category.  Basically, I expected to remain stocked on a few select publishers' current games, brand-protected outfits like Asmodee, Mayfair, WizKids, and like such, and the rest just were not viable for me.

Since that time, we have seen some publisher moves.  AEG implemented a MAP policy.  CMON implemented distribution control.  IELLO set up early releases for brick-and-mortar retailers.  We saw ongoing refinements of existing brand protection policies from the likes of Asmodee and especially Games Workshop.

These changes have mostly had time to go into effect, though the bigger part of the Asmodee consolidation is still a few weeks ahead.  And now?  A surprising amount of board games are selling out off my shelves, even when I start deep on quantity, or reload to quantity.  Former deadwood titles like Star Wars Rebellion, Smash Up, and Mystic Vale are hitting turns at MSRP.  All three are excellent games that had had their vitality undermined by deep discounters and dumpers.  Dark Souls, Dice Forge, and The Godfather: Corelone's Empire have been big hits that sold well right out of the gate, and validated the confidence retailers placed in them.  And I started a used board game program that has been successful well beyond my expectations.

What is happening here?  I think we are seeing that Hiroshi Yamauchi was right.  Control content and keep the deadbeats away from your products, and a publisher can enjoy the rewards when a healthy ecosystem emerges.  Titles last longer at the front of the marketplace and have more opportunity to jump to evergreen or at least deciduous status.  Dumpers generally can't dump, and thus can't yank the floor out from under the brand value.  Distributors don't have to clear floor as aggressively or as severely, and retailers are able to get a little healthier, such as it is for this industry.

Despite everything board games have going against them in my neck of the woods, I now have not one but two stores where board games are in a rapid growth cycle and garnering tremendously positive customer reactions.  The category went from out-of-the-top-10 to currently 7th place in a rolling 30 days before today, which amounts to 5th place if you consolidate the Magic-related categories.  Those top the chart, after which follow miniatures, video games, and comics.  Will they pass comics in July?  I don't know, Marvel Legacy is on the horizon, but maybe.  Will they pass video games?  No.  Video games and miniatures are catching up to Magic rather more quickly than I would have expected at this point a year ago.

Yamauchi's principles can apply to any product really.  It is the nature of commerce that someone will try to find a way to undercut someone else on price.  I have a wife and children to support, so I am surely as rapacious as the next guy when it comes to filling that grocery cart.  But those are commodities.  Entertainment products are a luxury, a discretionary expense.  The price of such a thing is an arbitrary amount.  It has some internal skeleton based on physical production costs for the parts and box and so on, freight, then of course paying the designers and artists who brought the game to life, and the administration that pilots the entire apparatus.  But the price tag can really be whatever the publisher wants, that they think a consumer will find agreeable.  How does a publisher cultivate such a feeling of desire and goodwill in the consumer public?  By means of building a brand and identifying that brand with the quality of products sold under its sigil.

After all that work to build, bolster, and promote brands, it is a delight to see more and more entities across each tier of the industry engaged in the process of defending them.

Tuesday, July 11, 2017

FATCQ: Fast Answers to Customer Questions Volume 5: Twitter Rules

It has been four months since the last time I did one of these, so let's let 'er rip with a new assortment of customer questions where I answer under some challenging creative constraint.

In this series of articles, I endeavor to answer any customer question, as long as it is not disingenuous and does not request confidential information.  Feel free to ask questions for future installments right here on this web zone.  These are questions I field from all over: in-store, online, here on the blog, on social media, and so on.

For today's challenge, I will limit all answers to no more than 140 characters, as though I were doing this on Twitter (which I barely use)!  Moreover, I will use normal written English and not SMS phrasing and spelling.

Q: How was business in June?
A: Worse than April or May. Better than most months in 2015 or 2016. Better than any month in 2014 or earlier. Natural growth.

Q: What was the best-selling product in June? Commander Anthology or Nicol Bolas Archenemy?
A: Warhammer 40K 8th Edition.

Q: Yeah, but after that.  Commander or Archenemy?
A: The Star Wars Destiny Awakenings booster reprint.

Q: Yeah, but after that.
A: Used board games. Commander and Archenemy have both done well though. Arch has sold more units, Commander more total dollars.

Q: Are things going to get better with the Asmodee-Alliance consolidation?
A: In my opinion, mostly yes. I'll miss using my other sources for that but health within the category industrywide is important.

Q: Why aren't you price-competitive?
A: We mostly are! For TCG singles, video games, and used board games we're below market and for Warhammer we're at MAP.

Q: But there is other stuff you could be selling cheaper.
A: Someone always has it for cheaper. Rather than sell at unsustainable levels we focus on selection and reliability in those areas.

Q: Your store isn't that pretty or comfortable though.
A: Neither of the locations are right now, and I apologize for that. The move will change many things.

Q: You've been promising for a while now that the move will cure many ills.
A: Indeed I have.

Q: What if the move doesn't work out?
A: The south 202 crescent is my turf. I'm not leaving. If DSG has to make our south Chandler/Gilbert store a branch instead, we will do that.

Q: But returning board games en masse, adding minis playspace, all those grandiose plans...?
A: We can do a lot in a new location that isn't tied purely to footage. Part of Gilbert space problem is room shape and door location.

Q: So you're still going to do everything you want to do?
A: "Everything," we'll see. But we'll do a lot. Magic and minis are positioned well for us now so I'll look to expand board and video games.

Q: What is the best new board game?
A: Dice Forge. Huge hit from day one and you can tell right away it's a winner.

Q: What is the next best new board game?
A: It's anyone's guess, but IELLO's Mountains of Madness looks promising.

Q: What about comics?  Things were looking pretty dire for a while there.
A: Comics are quiet but steady right now, not setting any records but we hope the trend we're seeing amounts to a recovery.

Q: What product are you looking forward to the most in 2017?
A: For the store, the next Destiny booster set. For Magic, Commander 2017. For my own enjoyment, the Xbox One X.

Q: Not Ori and the Will of the Wisps?
A: We don't know whether that will release this year. But it is surely the #1 product I want to buy, and it's not close.

Q: Are you an Xbox fanboy?
A: I don't hate PS4 if that's what you mean. I'll pick one up eventually, it has some titles I really want to play. Same with the Switch.

Q: I call shenanigans.  Name three Playstation 4 games you are planning to play.
A: Journey, The Last of Us (Remastered), and Street Fighter V. Not exactly new releases, I know.

Q: Wait, you haven't played SF5? Didn't you major in Street Fighter in college?
A: I just haven't had the time. I have derped around with it at the store. I really like it, and I also liked the SF4 series.

Q: I'm 16 years old, on summer break from high school, can I have a job?
A: We don't meet the criteria in Town of Gilbert to utilize underaged employees, sorry.

Q: I'm 18 years old, on summer break before college, can I have a job?
A: You're welcome to respond if we put out a recruitment offer, but work at DSG is not entry level, so you'll need to impress us.

Q: Can I pre-order a Super Nintendo Classic Mini from you?
A: I wish I could accommodate you. We're not going to have any access to it in distribution.

Q: Can I pre-order [vintage video game] from you?
A: We'll gladly waitlist it for you; you can wishlist it on our website. But if it's out of print, we won't have it until someone trades it in.

Q: Do you think MTG Standard format is in a good place right now?
A: Doesn't matter what I think, it matters what players think. But I think it's better than most in the community believe.

Q: Do you think MTG Commander format is in a good place right now?
A: They really need to ban Sol Ring and Sensei's Divining Top, but otherwise yes I do.

Q: Are you tired of being in the Magic card business?
A: Yes, but I am still excited about future product. I'm bearish on many things due to the move going so slowly.

Q: What does your extended family think of your profession?
A: They want me to sell the store and practice law. I want to write for a living. Neither pays the bills right now as dependably as DSG can.

Q: Would you sell the store?
A: For the right number, of course I would.

Q: Would you sell just your Magic business?
A: Sure, but to whom? Nobody who needs my stock has the money, and nobody who has the money needs my stock.

Q: What do you think are the biggest question marks in your business aside from the move?
A: Crystal Commerce, the continued softness of the Magic market despite great content, and the cost of labor.

Q: If you could do any one part of DSG over from the beginning, what would it be?
A: I can't give the real answer, so let's just say I would have sought a lease that assumed much less optimistic performance.

...and that's all the time we have today!  Hope you enjoyed, and join us next Tuesday for what I'm sure will be frivolity and exuberance.

Monday, July 3, 2017

Business Components Today

I already run four stores, really.  Or three-and-a-half if you want to be a little more granular in terms of magnitude.  Four permanent facilities and a portable kit, plus two more facilities on the horizon.  DSG has seen the greatest success when I am able to keep its business components integrated for economy of scale but separate enough administratively to track metrics and to insulate each; they can thus share success without sharing as much risk.  This is at the heart of why businesses seek to grow and scale up.

My four stores might more appropriately be referred to as "Business Components."  I have heard them called "modules," though in my mental framework a module is something one level lower that can cross between components.  Administration is a module.  (That's my job.)  Marketing is a module, and unfortunately to some extent that is also, still, my job.  We're not quite at scale to have dedicated marketing staff.  One day, and not long from now.  Organized Play can be a module, but for now is still separate at the physical stores.

The DSG business components are:

  1. Gilbert store (commercial storefront)
  2. Tempe store (commercial storefront)
  3. Mesa store (pending commercial storefront)
  4. Payson store (pending commercial storefront)
  5. Online store (warehouse fulfillment)
  6. Offsite store (portable storefront)
  7. Administrative office (my house)

The Gilbert store, at 2531 S. Gilbert Rd, will soon become the Chandler retail store, located at... nope!  Still can't reveal that yet.  But we expected to be able to reveal it in July and that's still the plan.  Finalizing our lease is taking longer than expected.  The Gilbert store as it exists right now is our original location from 2012 and is responsible for most of our business volume.  Chris Huish is the Gilbert store manager.

The Tempe store, at 1523 E. Apache Blvd, is, in the words of Zohar from Vandal Hearts, "just as you see it."  Formerly Tempe Comics and now our most centrally-located DSG facility, the Tempe store is posting huge year-over-year sales gains now that our trial and error has led us to orient the store with a laser focus on TCGs and comics.  Jake Wachtler is the Tempe store manager.

The Mesa store is still months away from opening, as it is prioritized entirely after the move from Gilbert to Chandler.  It might get pushed into 2018.  But I've already created the business component for it and set up its internal admin.  We already have a sales tax license in Mesa because of vending at Zapcon and last year's Game On Expo via the offsite store module.  We have fixtures to spare and enough inventory to split.  The primary obstacle to this store being open already is the lack of ownership time, attention, and labor available to devote to it, with myself and Griffin and our silent partners all quite busy with existing work and the Chandler move.

The Payson store is at least a year away from opening, perhaps longer.  But like with Mesa, I have created the business module on our books.  It's only a first step, but a significant one.

The online store is the only module aside from the Gilbert store that has existed since the beginning of DSG, and we'd have been better off if I had separated it better from the start.  Online ops are mostly TCGPlayer transactions at this point, with a side helping of eBay.  The online store shares most of its inventory with the Gilbert store, for which it's only a portion of inventory.  The small remainder is solely for eBay listings.  Tanner Gaede is the online store manager.

The offsite store, or "Remote Ops" as we call it in slang, is a portable store location in itself, now with dedicated fixtures and equipment.  We have used it for the past four years at Phoenix Comicon, but we are not planning to renew for 2018 after the fiasco of this year's show.  This makes pulling the plug on the Remote Ops module a realistic option; it justified most of its resources when we had one big show every year to work, and with the move this summer we aren't going to be taking part in Game On Expo either.  Phoenix Comicon was less useful to us each year, and by 2017 most people who saw our booth already knew who we were.  Accordingly, we're out on comic convention appearances from now on.  However, our pop-shop appearances with the offsite store at local festivals and events have been successful, and our appearance at Zapcon 2017 in late April exceeded expectations.  With Chandler and Mesa on deck, I think it makes the most sense to put this business component on ice for the most part.  We have some smaller appearances on the itinerary, and we can worry about doing bigger things in 2018 and beyond.  Our Comics/Media Manager, Dustin Chapman, doubles time as the offsite store manager.

Finally, there is my administrative office and erstwhile storage facility for far too much of the store's gear, and that's my own home in Chandler.  Since I am the statutory agent for the DSG LLC, I also receive governmental mail for the business at home, which is something that has always bothered me.  It's like, come on, you jerks.  Leave me one place I can have some separation.  But I understand why it is done.  An absentee owner or an owner who did not want his employees getting the business's financials or sensitive documents would need them sent somewhere other than the store's mailbox.  And not all businesses are at such scale that they justify a corporate office, even a small one.  Especially not in today's era of cloud computing where just about anywhere can serve as a corporate office.

Late last year I embarked on an ambitious plan to expand to seven store locations.  As it happened, two of the added locations didn't work out, one did, and the rest are still yet to be seen.  But if I look at how I'm running the business today, I don't really need to have notches on my belt to be happy about the way the enterprise has grown.  It helps me sleep a little better at night knowing that it is unusual for all of my business components to be underperforming simultaneously.  That has smoothed out the course of business and our flexibility and resilience.

If your store is starting to get a little out of hand and you find yourself struggling to keep track of it all, consider whether what you really need to do is separate the business components that can, and possibly should, operate under their own horsepower.