Matt, a small-batch chocolate maker whose production was bursting at the seams when the pandemic hit, now questions his retail space vs. online and tries to understand what government intervention will mean for his business.
Episode 1: Matt at XOCOLATL
Paul: Hey listener, this is Paul Jarvis and you’re listening to Call Paul, business as unusual. I’ve been a small business entrepreneur for the last 21 years, and I’ve always been curious about how other small businesses work and solve problems. Last month I was planning to talk with small business owners who needed help with their ecommerce and marketing strategies. Then the pandemic started and everything changed. We want this podcast to shine light on the stories of businesses adapting in real-time, but we need to start from the beginning -- when the tone of the conversations we were having took a turn…
Matt: In some ways I feel like we’re failing our people. Despite the fact that this is like obviously something we do not have a lot of control over.
Paul: That’s Matt. He runs a company called Xococatl with his wife Elaine in Atlanta and they produced 12 tons of ethically grown chocolate last year. They both left behind separate careers and found a passion for good chocolate on the beaches of Costa Rica. I spoke with Matt on March 17, the day after they decided to close down retail operations. To give you a reminder of where things were at, because it feels like years go by every single week right now, the pandemic was just starting to force decisions in The West. Schools were only beginning to shut down, the borders were open and the Olympics were still happening
Matt: Well. I'm in a quiet office right now. What have we got? One person, Dan is in right now, to get some shipments out. It's also still our factory where we make chocolate and so we actually are still making chocolate in there. But we had five front of house staff. Yesterday was a hard day. We were having conversations and had to basically let them all know that we don't have any shifts for you, starting now basically. And we have a woman who is pregnant and who was going to be our first paid maternity leave and she was going to start next month and we called her on Sunday and said it's your call but we really think you should start tomorrow. It's crazy how fast this stuff is going. Because even on Sunday it was unclear if things were actually going to close or not or what was going to happen I mean, no idea we were going to be anywhere close to anything like this.
Paul: Yeah, I mean we didn't either. Everything has changed.
Matt: Yeah. Trying to do that, and then the tough thing is when you're at home then still being present with the kids and not stressing them out. I find my mind is constantly... We're sitting having dinner last night and they're talking and I realize I totally zoned out and I'm running through scenarios in my head of all sorts of stuff. That just keeps happening over and over again. It's just constant planning. You're not really even planning, you're just sort of running through different scenarios.
Paul: How are they thinking about all of this I’m curious
Matt: They're great. We're really lucky and they're really mature and thoughtful for their age. They are 10 and seven. They're good. They can kind of handle stuff on their own. So we thought we were going to go in for a few hours yesterday to try to straighten things out and we ended up being gone all day and they fed themselves lunch and made it to dinner and were probably like 12 hours of tv or something. But we can't do that every day. I mean, we don't want to do that every day. Now we're trying to figure out how do we, kind of like , being a family business where it’s Elaine and I really trying to figure everything out on both ends at the same time
Paul: What do you say to them about all of this?
Matt: Well, you know, They seem pretty understanding of what's happening. I think right now they're still excited about not going to school. We'll see two weeks from now how everybody feels.
Paul: Yeah. How are you kind of feeling about this change in the way that the business has... Basically the way it has to work at this point.
Matt: Yeah. I mean it's funny, I don't know if it was last Thursday, Wednesday or Thursday, it seems a year ago at this point. But we started a promotion where we're doing 20% off online. The thinking at that time was we weren't expecting to close. I think we were expecting people aren't going to be going out as much and so we're going to have this dip in retail and let's push people order online. We did a 20% off online and got some orders and then by Sunday, I mean only three days later, it became apparent that this isn't just we need to pump up online orders to make up for a little bit of a fall off. This is going to be actually our business now. So that part we're still struggling with. I mean we're just getting... I mean, fortunately I think there's a lot of people that do get that small businesses are getting killed right now. So we've gotten a lot of orders. I mean, I have a lot of friends that I haven't even talked to in a long time that have put in orders online just in the last 24 hours. A couple of friends have posted on Facebook like, "Hey, let's support these businesses." That's been great. But I feel like... That's a little early bump that we've got and now we've got to think about actually doing things strategically that will help reach people beyond just kind of friends and family that are trying to chip in and support right now. I've posted some Instagram live video this morning, which I've never really done before where it's just talking into the camera, walking through the market that's closed and I feel like... I don't know. I was trying to figure out a balance of being open and honest with people about what's happening and kind of being really transparent. We've never done that much online, so we have our website, but we're not selling on Amazon. I know there's some other chocolate makers that are doing that. We're not selling through these other venues. I think now it's time to sit down and figure out, let's get on these other platforms. I guess we'll start running some paid advertising. I don't know. It's a new world for us that we're going to have to learn real quick. It's been kind of the stepchild of our business and now all of a sudden it's the first born, you got to kind of get to college here.
Paul: It's kind of an unprecedented time where there's now a sales channel for I guess businesses that sell physical goods. It's like the choices have been removed here.
Paul: It's hard enough to run a business, a small business, as it is in normal circumstances and now… We don't want to be opportunistic about anything because that's not how we operate. But it's a business. We need to make money. We need to keep things running. That line is hard to manage at the best of times. Now it feels much harder to be like, okay, I do have a product to sell. I don't want to take advantage of this situation by any means, but I still need some of you at least to buy this thing
Matt: Yeah. I mean it's also...trying to figure out like where do we focus our online efforts. Like because we still have basically the same limited resources that we had before to put towards it. I'm trying to figure out how. To some extent, even less so. Usually the kids are in school and Elaine and I are both in here working full time and so we're cut in half in that sense. Even for us just to plan to figure out who's going to do what, we have to try to carve out that time after the kids have gone to bed or something to do it. Yeah. I mean it's also... Like I said, obviously this is just not been the focus for us and so we're just not up to speed on what platforms we should even be looking at and even what advertising strategies would be useful.
Paul: Did you plan for any contingencies before all of this? Obviously not planning for a global pandemic, but in the business, did you ever think this could happen or this scenario can happen and kind of have a plan for that?
Matt: Well, when we started the business, we started it mostly on credit card debt. I mean we were a young family and didn't have a lot of capital. That was five and a half years ago so six years ago maybe. Over the last five years we've been paying that down. It's ironic. Our vision has been, we've got this one retail location, we've got an office around the corner where we do distribution out of now. We added that after maybe two years. Our vision was really to build a chocolate factory and to be open to the public that we could have retail presence at. The next step for us was we're really at the point where our production is bursting at the seams now. I mean our current factory is within our retail store in a food hall. So it's only about 250 square feet of production space. When we started, we were making about... The first year, we made maybe about two tons of chocolate. Last year we made over 12 tons of chocolate out of this 250 square foot space. We just kind of gotten ourselves in the financial position of our debts are down, still paying off some of it, but down. We've gotten a good income revenue base. We had just gotten approved for financing for equipment purchases and some lines of credit to... We were about to sign a lease on a new production space and planning on moving our office and our production space in one space, a much larger space where we could make more and frankly I think better chocolate too. That was our project that we were in the middle of right now. Now that is sort of turning into the rainy day fund instead of the expansion fund. But I feel like we're going to be able to come through it and make it through and hopefully get back to a good place, but things are moving so fast… yesterday morning things were really different than they are now. So I have no idea what it's going to be like a week from now.
Paul: Yeah. I think that's what weighs on a lot of us is this unknown and at the rapid speed at which more and more unknowns are making themselves known to us. What do you think happens next after this passes? How do things get back to some normalcy for the business?
Matt: Well, I think the thing for us is really unknown is the retail side of it. I mean, like I mentioned, we're in a food hall. It's when it's open, it's really popular and it's packed full of people and people are really close to each other the whole time. Just a lot of people in there and it's not a huge space. I don't know when that type of environment is going to be open again. Depending on what happens, I mean I think we're just going to have to evaluate on a week by week basis where things are at.
Matt: Our wholesale, I mean I delivered a wholesale order this morning and so fortunately there are shops that are open that are carrying our bars that are planning on staying open right now. Hopefully we'll be able to continue. I expect it'll be obviously some drop-off, but hopefully our wholesale partners will be able to stay open and we'll be able to keep shipping chocolate out to them. Yeah. I guess because of all the unknowns, I don't feel like there's any way to really plan right now because things change so fast that we're just going to have to evaluate it one week at a time.
Paul: In the past, you have had I guess a plan of attack for how everything's going to work. You said you were saving up for different equipment. I guess it's different too, right, that you always had some sort of plan in place and working towards specific things and it can't be that now.
Matt: Yeah, we had a really clear vision. I mean even from before we even opened of kind of the steps. It was we were going to have this, we always called it a microfactory , with the idea that one day there was going to be a factory factory. We were working towards that. It wasn't a straight line, but had basically always kind of stayed headed in that direction. I'm not giving up on that right now at all. I mean, definitely that's still where we want to go with things. I think if it ever got to the place where we gave up on that, that would probably be the time where we'd be shutting everything down.
Paul: Yeah. I mean that's all any of us can do at this point is just keep kind of working towards what we've been working towards. Yeah, hope that things do turn around as quickly as possible. If not, that the government kind of steps in and there's some system in place to make things right again.
Matt: The number of small businesses that are getting impacted like we are, got to represent such a large portion of the economy as a whole that there's going to have to be something in there to, whether it's zero interest loans or straight up grants or whatever. There seems like there's going to have to be something in order to just get things back to normal once the virus and the public health side of things have been gotten under control.
Paul: Yeah. I mean that's the way that I kind of, the lens through which I see the world because I've been in business for myself for over 20 years now, it's commerce and economics, right? And it's like there's the two hurdles. We have to obviously get over the pandemic side of things, but past that a lot of the economy in both the States, I'm in Canada, and in Canada where I am is, there's a huge portion that is small business. And I don't see a world where small businesses can no longer exist. And I think even the businesses that have been working towards sustainability, like not growing at all costs, but just what can we do to be as resilient and sustainable as possible? There's no way that anybody could have predicted or planned for this. And because there's no scenario where it's like, well indefinitely your profits are going to shrink and your workforce is potentially going to shrink. So I just, yeah, I have hope as well that there will be something that will make basically the backbone of the economy, small businesses right and whole again.
Matt: Yeah. I was thinking this morning about just how fragile everything is. And you see the Hollywood movies like Outbreak or Contagion or whatever about the virus that gets out. And it's always this airborne virus that is super deadly like kills everybody that gets it. And if you're just are in the same room that the virus is in, you're going to die. And then eventually someone finds a vaccine and everybody's okay.It's just destroying the entire global economy.
Paul: Yeah. I don't think science fiction accurately predicted what you're saying, where a virus wipes out all of the economy but doesn't wipe out all of people.
Matt: Yeah. And it just feels like God, this whole system is just so fragile. I mean, I guess to a certain extent, resilient, but right now it doesn't feel very resilient.
Paul: No, I mean even typically the way we get over big things is to come together, right? Whether it's church or community or whatever it is, is coming together. And that's the one thing we can't actually do, right? It's weird too because I think there's all of this talk about, we're all so socially isolated and we all spend all of our time on devices. And now we've all been inside for maybe just a couple of days and it still feels like, Oh my goodness, this is a lot. Maybe there wasn't [inaudible 00:49:56] social interaction before, but now that there's zero, it definitely feels that we weren't built for this long term at all.
Matt: Yeah. Yeah. I mean there's a part of me that wishes we didn't have the business right now, and I could just be at home with Elaine and the kids and working with them on math and doing some jigsaw puzzles and stuff. That's also a struggle is, I'm sure I would go stir crazy when we get out, but we're in this position right now where we still have, I mean, we're still responsible for other people as well outside of our family. And so, going back and forth, to the office or the shop to try to keep the lights on is, yeah. I mean, I saw some other business owners, some posts saying the same thing, like why did we start a business?
Paul: Yeah. I mean even in the best of times, running a business has a lot of weight to it, let alone times like these.
Matt: Yeah. Yeah. It's funny because I'm usually, I'm a very conservative planner. And so I'm always just imagining what I thought I guess were worst case budget situations and things, which are, it turns out they weren't. But I still feel optimistic. And I think part of it is just, this seems all so surreal that I just keep thinking we're still going to get through it. When Elaine and I started, we've always had this idea that we'll figure out a way. When we decided to do this thing in the first place, we had never made chocolate that we had sold to anybody before. We were just learning how to make chocolate when we decided we were all in, this is what we want to do. And we just had this belief that we would figure out a way to make it work. And so I still feel like that despite everything that it seems like it's coming down the pipeline at us.
Paul: I think that's a mark of a good entrepreneur is that, well I don't know how to do this thing, but there's a way to do it. And I could figure it out. And I think that's why a lot of us start businesses because we do have that desire to figure things out and to make things work and to keep things rolling. And I mean I'm the same way. I think that's another misconception about people that start their own businesses is that they're super risky, the most risk adverse person in the entire world. And I would never want to take a risk that would put my house or my family in jeopardy or put my business in jeopardy or anything like that, right? But it's like, I also have no control over some things that have made life inherently risky right now. Where I would never, the way that I run my business is a series of small risks where I can figure things out and if I don't, it's not the end of the world or it's not the end of business. But yeah, I think that it's trying on everybody at this point. But I'm glad to hear that you are optimistic I’m maybe half of the time optimistic today, at least? It literally changes every single day.
Matt: But I still do feel optimistic about the business and what we're trying to do. And our mission, and trying to build something that's based on, just trying to put our values into action. And I mean, I think the challenging thing right now is with, particularly in thinking about our staff, we're not in the financial position to do as much as I wish we could. And I think that's where we really need the government, which is in my ideological world, the government is just us. It's how we treat each other, how we take care of each other, how we regulate what we can all do to each other. And this is too big for any, at least small business to deal with.
Paul: There simply cannot be a world where small businesses cease to exist. Companies like Xocolatl are the backbone of our economy and represent the values we want to support when voting with our wallets. Matt and Elaine can’t sell their chocolate from their micro-factory, or from the open air markets they used to frequent in Atlanta. It’s become harder, but luckily not impossible to keep doing business. We, as entrepreneurs, exist to make things better and brighter… whether it’s selling amazing chocolate or small batch spirits, or repurposing vintage clothes, or making cozy household goods, or whatever else we all do -- this is what we do. And even though everything around is changing, I still have hope that we can collectively rise to this occasion and do what we do best. This is just the beginning of that story… If you’d like a bar of their single origin chocolate, their website is https://www.xocolatlchocolate.com/ which is spelled XO - COL- ATL chocolate dot com.
Call Paul is produced by Ruth Eddy and is a Mailchimp Original Podcast. Subscribe now, so you can get the next episode when it comes out. I’ve been writing a weekly newsletter for the last 7 years called the Sunday Dispatches, and if you want to learn more about my thoughts on business and living online, you can hop on at sundaydispatches.com. Oh, and, we want to hear from you too about how your business is adapting and shining. Send us an email with a voice memo attachment to callpaul at mailchimp dot com (firstname.lastname@example.org).
Things are returning to normal – but that doesn’t mean we should go back to the way things were. Paul Jarvis is back, interviewing entrepreneurs who prioritize passion over profit and renegotiated the status quo.
Things are returning to normal – but that doesn’t mean we should go back to the way things were. Paul Jarvis is back, interviewing entrepreneurs who prioritize passion over profit and renegotiated the status quo.
Matt, owner of Xocolatl Chocolate, discusses business during the pandemic.
Dave, owner of Wayward Distillery, discusses pandemic-driven tough decisions.
Dan and Hillary, owners of Kin Ship Goods, discuss community support.
Archel, owner of Bombchel, discusses working long distance.
Martin, co-founder of Cosmic Kids Yoga, talks viewership during the pandemic.
Peter, CEO of online grocer, SPUD, talks about changes during the pandemic.
Sarah, owner of small agency 816 New York, discusses marketing with integrity.
Tina, a creative force with many successful endeavors, discusses letting go.
Michelle, a race director, explains what it takes to plan and cancel a marathon.
Paul checks in with his first four guests to see how they’re doing.