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.