tv Larry Kudlow Others on Small Businesses CSPAN November 1, 2018 9:36am-11:22am EDT
grandparents have known, which is most everything that drives whether or not humans are happiness-- rather humans are happy are intimately connected to place. the four biggest drivers whether or not you're happy statistically, do you have a nuclear family? do you have a few deep friendships not senate friendships, my good friend the colleague from such and such state whose throat i'm about to tear out on the floor. actual friends. and statistically the number one driver of happiness, do you have meaningful work, important vocation and sense of calling. the number one driver whether or not people are happy. not if you make a lot of money or a co-worker who works three cubical that talks loudly and annoys me, not do my knees hurt
me and, if the answer to that question is yes. if the answer is no, you're unlikely to be happy and fourth, do you have a theological frame work to make sense of death and suffering? do you have a worshipping community? community? >> from wages to regulation. before we begin i'd like to thank our presenting sponsor for the event. keiser permanente, you'll hear from them later in the program. and american university washington college of law. and now i'd like to go ahead and welcome to the stage, director of the white house national economic council, larry kudlow, and "the washington post's" robert costa. thank you. [applaus
[applause] >> it's great to be with you, i'm robert costa with "the washington post", a national reporter. and appreciate you coming out to the small business forum. we're so glad to have larry kudlow here, long time cnbc reporter, and president trump's advisor in the white house, focusing on the national economic council. larry, thank you so much for being here. >> my pleasure, robert. starting at the new york fed and open market optioerations, 1973. >> i wasn't going to date you, larry. you're start to go bring up the biography. >> couple since on wall street, yes, yes, yes, appreciate being here. >> host: we appreciate you being here in the "the washington post." i know everyone is paying
attention to the stock market and larry, when you think about the market over the last few weeks, the las few months, is the president's trade war responsible for the dip? >> i doubt it very much. the economy is so healthy right now and profits are soaring. i mean, look, i've said this a bunch. corrections come and go, i mean, i've been around the stock market, i used to work in the stock market as a wall street economist. you can't predict it. you can't predict the top, can't predict the bottom. you buy and hold. and chairman segal, et cetera. and i mean, the closest thing i can see, i'm not giving-- this is my personal opinion. i think a lot of the big, big tech stocks, the fang stocks got pretty toppy and they're due for a correction. that's one man's opinion, not the official white house view or anything like that.
i think they market down, the correction is probably overdue. we had a much bigger one, by the way, last winter. no, i don't think that trade enters into it. >> is this the start of a long-term downturn? >> i don't think so, robert. the case i make is the economy, to me, looks so strong and durable right now. confidence is up, jobs are up. blue collar is up, small businesses are up, we'll get to that, i guess. we're seeing very good business investment, which is really the heart of a solid recovery, maybe a little sloppy in the third quarter, but capital goods orders are huge right now. so it seems to me, you know, again, profits are the mother's milk of stocks. and profits are the life blood of the economy and i think that profits are going to continue to rise. and i think we're hitting on
all cylinders and i do want to mention for our group, i'm sorry you can't see this, you probably have. for small business i'm a great devotee of the nfib, i hope i'm not offending anybody, but do a great work, national federation of independent business. this is their latest chart book for september. here, look at this. look at the optimism index. >> so, you say there's a lot of optimism in the economy amongst small businesses, but small businesses want to know about certainty and there's an election next week. >> yes. >> if the democrats take over the house, what should small businesses expect? what does that mean for the trump economic agenda? >> well, actually on that one, i think inside this correction someplace is some nerves about the election because i think that small business and all
business and frankly, the work force is enjoying a very strong economic boom, which is quite unexpected. our critics said 1 to 2% growth. we've broken out of that to 3% plus. things like corporate taxes, not just the big guys, 21% marginal rate, but also small business estimated to have a 19 or 20% effective tax rate, down from almost 40. that's a huge thing. i think they're worried about that and they're worried about the red tape and regulations, which has been a hall mark of the president's economic growth policies. i think people were very worried about the energy boom, which is another hallmark of the president's economic growth policy. we will be pumping about 15 million barrels of oil per day in about two years, an n i
according to the interior and energy departments. we have so much natural gas that they're flaring it, burning it off and hopefully we can build a lot of pipelines to use that, sell it to europe, undermine russia, sell it to asia, maybe undermine china. so those hallmarks, those policies and we've had health care reform that i think helped small business. i think they're worried about that. i think that everyone is worried about that. why would you want to overturn what appears to be a very strong economic period, backed up by pro growth policies, where-- i don't mean a filibuster, in a minute, where you have a president almost from day one after the election in november 2016, look at this confidence -- i apologize, but this thing
starts to really jump. >> but a lot of businesses, small businesses are nervous about this trade war and they're wondering win or lose the house this week just how far the administration is going with its trade war with chinaments again, folks like a president who ends the war on business. that's the point i wanted to make and that became apparent when these confidence indexes jumped right after the election ending the war on success, and with lower tax rates. you keep more, you're we regarded if you're successful so i think that accounts for the confidence that's so important. now, trade, i understand there's some questions and perhaps some anxieties about trade. i would say, as a free trader, that first of all the president would like to abolish tariffs and non-tariff barriers and
subsidies. he is a free trader, but we're stuck with a lot of foreign unfair trading practices. which-- >> how far do you take it? >> have been harmful to the u.s. work force and the economy and i think, robert, the -- frankly, the principal culprit is china. so how far do you take it? the president has made his statements using tariffs as a negotiating tool as part of his quiver. i don't want to get ahead of the curve. he, i guess, was interviewed a couple of evenings ago and he said, look, if we could reach a deal, a satisfactory deal that helps both sides with china then the tariffs could be pulled. >> what does that mean a satisfactory deal? >> on the other hand if we don't, which includes the intellectual property theft,
technology transfers, lack of ownership, high tariffs on commodities and industry supplies, cybersecurity, the whole list, which is very, very important to us, if they don't make it -- a satisfactory offer the president will continue to aggressively pursue his agenda and i think he's right to do so and i say that as a free trader, but you can't have a free trade with this, china is breaking the rules. and we signed at the u.n. a tr tri-p tri-part agreed with the u.s., japan -- that's an important agreement. that lays out the briefs against nonmarket economies. what did i hear this morning?
did you tell me or somebody told me the ambassadors to france and germany were in china, i hope i get that story right, sending that message, you must change, you must change. how far -- i don't want to get ahead of the curve probably meeting in argentina. >> buenos aires. and what's the significance of the meeting between president trump and president xi, can they make peace on trade or not? >> robert, i don't know the answer to that. my crystal ball is not at all clear. the agenda is being discussed and worked on inside both cam camps. i think it will include trade. i'm not 100% sure. i don't want to get ahead of our curve. >> we're talking about a pull aside meeting this month between president xi and president trump. >> well, actually it would be a very formal bilateral sit-down, a very formal one. there was even talk of a lunch
or dinner. i don't know, ambassador bolten is the lead on that. nec and treasury and we're all working hard on that, the ambassador. i just don't know, i don't know. the president says i don't know xi. i wasn't-- when he came here, i wasn't in the government. so i've never met him. the president says they have good relations, okay? i hope so. i think, frankly, you know, we've been to bee ji-- beijing and they've been to washington. >> what does it mean for u.s. small business if the chinese economy continues to have struggle and their own slide there? >> i'm not going to deny there could be some very modest effect, i underscore very modest. >> on the u.s. economy? >> i know a lot of small businesses, import and export,
i love that, international trading and supply chains. we can do it, we are doing it right now without china, right now. we're doing it without china because we've put up a lot of tarif tariffs, 250 billion-- 210% and the other 50 billion was the 25% though i call it the technology tariffs which is very important. no, i think, you know, we're growing 3.5%, 4.2% in q2, the fourth quarter change is now 3%, which is a milestone. our small businesses are soaring, soaring. they're killing it. that's what these charts show and i apologize, put them up on the screen. >> should small businesses expect 3% growth next year? >> yes, yes, kudlow forecast. maybe higher. yes. >> so that's a baseline for next year?
>> that's right. we will put out our budget, mick mulvaney and so forth. i don't want to give away the family jewels, but 3% is good number to think about. people said it couldn't be done. >> you're the-- >> one of the -- let's pause for a second, robert. i know there's a lot of political stories out there. >> we're talking the economy. >> i know. and you've gotten very good at it, really. i've known him for years and i'm impressed. >> okay, thank you. [applause] >> back to the questions. >> back to the questions. i believe the biggest story in 2018 is an economic boom that almost everyone said would be impossib impossible. >> how are you going to bolster wages though? there's still some nerves about that. >> just, let me just tagline
that last one because there's a million political events and i understand that and some are more important than others, but here is -- and i owe this to "the washington post," excellent reporting -- a couple of factoids i just met the woman. >> heather long. >> heather long wrote a fabulous piece a while back, front page about "the washington post" well-known supply side newspaper -- that's a joke. and she noted the explosion of blue collar jobs which-- people hadn't focused on that, including me, and she went all the way back to reagan in '84 where i was a reagan cub scout, economist in the office of management and budget those days. that's big. that's very big.
and the other factoid, which came from another source, probably our own cea, blue collar workforce, wages are growing faster than the white collar. they're not as high, don't get me wrong, but they're growing faster. that's extremely unusual, and suggests to us that the business tax reforms and tax cuts are really working because kevin hassett, my dear friend and ca chair, who wrote this piece, i don't know, 10, 15 years ago, i've been using it for years, for corporate tax reform. the biggest beneficiaries of corporate tax reform are the ordinary work force and it's kicking in. >> larry, if the democrats take over. >> yes. >> it's going to be divided government. >> yes. >> would you be willing to consider a deal with the democrats, a fiscal deal where tax hikes were involved at some level?
>> you're asking me personally. >> yes. >> absolutely not. >> what about president trump? >> i cannot speak for him. >> he's not-- he hasn't ruled out tax increases as part of a fiscal deal? >> well, look, we just signed the joint statement with congress looking for middle class tax cuts and ways and means chairman kevin brady just got a floor vote on tax cuts, 2.0, which would make the individual tax cuts permanent and some other important savings incentives. so you're not seeing this -- to look ahead, look what we're doing. now look what the president is campaigning on. look what chairman brady is talking about. so i can't predict the world, but i will say at the present time i do not believe we will raise taxes. i do not believe it. if democrats take the house, it's a possibility, i would expect tax cuts to be--
tax hikes, rather, that's what they're running on. they want to overturn the tax bill. it won't get through the senate and if it ever did, president trump would veto it, that's my personal view. hasn't happened, that's me personal view. the senate would probably stop tax hikes and if by chance got through the senate, president trump would veto tax hikes. >> do you think that tax hikes are necessary to address the deficit at some point? >> no. i this i we need ten years or so of economic growth, running about 3% per year, i also think we need to limit spending. you'll see have he tough budget coming from the administration coming from a couple months, again, mr. mulvaney. >> does that cut social security or medicare? >> it will not. it will not. i just want to correct -- i try to do this and correct the record. trying for months, nobody wants to pick it up. in an interview in new york a while back there was some
confusion. the interviewer, a very bright lady and a friend of mine, she was referring to the two big entitlements. i was referring to the remnants of obamacare. i said that's where we're going to go. that's where we're going to go and we got tangled up. but, no, we have no plans to touch the large entitlements. we do have plans, however, to erase remnants of obamacare and provide more market-oriented incentive-oriented health care. >> you've been in the conservative movement for decades. that's been a project for conservatives, trying to pull back long-term federal spending on social security and medicare. now you're saying the president, a republican president won't touch them. >> that's correct. that's the view at the present time and you know, i think he described it aptally. look, president trump is a growth guy. you know, president trump is a
growth guy and his view, which i fully, totally, 100% support, is that these tax cut and deregulation policies are working. the economy has picked up. he believes that can go on. he actually tells me all the time we need to have higher growth than 3%. okay. 3, but-- imagine a big impact on the budget. if the cbo is running a baseline of 2% growth or less, and we get 3% growth over ten years, that's roughly, roughly 3 1/2 trillion dollar reduction and that's -- now, i'm not sayi saying, there's a lot to reduce -- the president has said nondefense, non-big entitlements, everything else to be subject to 5% reduction across the board.
it may not be even. some programs, some useful programs may rise, but most of them are not. you'll see that be the toughest budget yet and he's made that statement and they're fleshing it out at omb. so the combination of lower spending and faster economic growth due to tax cuts is a policy, it's a policy that's working and i think certainly as a share of gdp, the budget deficit will be coming down each and every year. it clocked in at what, 3.8 or 3.9% of gdp. and 100 billion less than cbo thought. too high, don't get me wrong. we're gaining on it. >> you think the deficit is coming down or the administration is committed to having it come down? >> both, both. i think it will come down because of faster economic growth and i think the administration is committed to policies that will restrain government in effect. look. president trump is, as you know, a very successful former
businessman. doesn't care much for waste. he's going to go after -- his promise, what he said a couple weeks ago of a 5% reduction in nonentitlement domestic spending, i can't recall anything quite so tough and by the way, people say well, all the money is in the big entitlements. actually it's not. >> there's a lot of money there. >> yes, there is, but there's a lot of money in discretionary programs and smaller entitlements. >> your argument is grow the economy and not touch the long-term spending programs, touch around the edges. the minimum wage, the democrats are going to come if they get any power on tuesday and say, larry, president trump, we want a $15 federal minimum wage. is there any way you could go up to that level and cut a deal with us in the minimum wage? >> look, i again can't speak for the president. >> is it possible to cut a deal with the democrats on the minimum wage? >> no, my view is a federal
minimum wage is a terrible idea, a terrible idea and will damage, particularly small businesses to force them to take a kind of payroll increase would be silly. idaho is different than new york. alabama is different than nebraska. that's why the federal minimum wage doesn't work for me. now month ago or so, i hope i get this right, amazon raised its corporation's minimum wage to $15, is that right? >> amazon's ceo personally owns "the washington post." >> yes. and so, people ask me. >> no, we have to disclose that. [laughter] >> larry brought it up. >> look, man, it's a supply side newspaper. anyway. >> that's his opinion. we're a nonpartisan newspaper.
[laughter] >> i'm working here. so i applauded it. i applauded it. i applauded it, great. i'm a jack kemp, jfk, my book, jfk and the reagan revolution, which is all about tax cuts, which should be bipartisan in my humble opinion. by the way, you can easily get it, jfk and the reagan revolution, one click on amazon, you can pick i>> so i minimum wage. a private decision. absolutely. ...
people were saying they are agreeing. on the topic we do. but not the federal. i would argue against state and local but that's up to the states and localities. >> speaking of inflation, the federal reserve, a lot of frustration from trump about chairman powell. how's the president considered replacing powell as chairman, keeping him on the board but replacing this chairman? >> no. no, to my knowledge. to my knowledge, no. by the way it would be an impossible task. jay powell is a friend of mine. at that chair can only be removed for cause. >> maybe from the federal reserve board but could you install a different chairman? >> i don't think so. it's a four-year term. i've had to look at the archives on that but but i think it's fr years.
the president has said we're not going there. he has said that. look, speedy has the president have called chairman powell that you knew of and said please don't raise the rate? >> not yet. no. president coming of successful businessman investor knows a lot about this. he's giving an independence. he's giving his opinion. greenspan whose book just came out and he said one way or the other talking, notes, phone calls, president are always getting the bad advice. president trump has not made the call, phone call, but he believes, or he's concerned that the fed is moving its target rate up to high and too rapidly. that's his view. by the way, a lot of distinguished economists hold that view. >> has chairman however called you up and said this is too much, this public pressure?
>> i had lunch with the chairman powell each month and with swap anecdotes and stories. i was just going to say that i believe the fed and the administration has similar goals. that is to say, noninflationary growth. and i think that over time that will become more and more apparent. and also when the plot chairman powell for breaking out of the mold, you know, low unemployment is bad. it's going to cause inflation. no, it's not. if the dollar collapses that will -- [inaudible] >> i believe there's still two appointments to be made, okay? but it don't want to conjecture on that. >> why not put a dozen in the? >> i don't want to conjecture.
>> the president may be open to it? >> i don't want to the workings been on any of that stuff. that's hypothetical. as you know i hate hypotheticals. hypotheticals. to say jay powell has said publicly in his speeches that these old that models, more people working in low employment is bad. he doesn't bite. he said that publicly picky set we don't know what the interest rate is pretty said that publicly. he said we don't know steady-state inflation, why does it have to go about -- so i think he and the president share important goals. that's what i think that the president has his opinion about this. he's not pushing the fed. he's not trying to drive further independence. he's not saying change. he's not making calls, this and that. he's not disrupting their independence. he has said that several times and i believe that myself. he is done giving his opinion. >> since we're hit the
"washington post" our colleague jamal khashoggi children are saudi consulate, what should the economic ramifications before the saudi royal family? >> oh, i don't know. by the way, , again, a tragedy, absolute tragedy, terrible story. so as you know, the investigations are ongoing and as you also know these saudi royal family has actually changed their tune quite a bit and now acknowledges that mr. khashoggi is dead. took a while to get that out. so president trump has said many times let's wait and see what the investigations produced, fax, then consider potential options or not. not to get the facts fully on the table. >> when you think about that arms deal, should it continue to
$110 billion arms deal president trump talks about? is it necessary for the economy? >> the president has said many times he would like that, but he's also said everything is on hold pending this investigation. >> we'll have a couple minutes left. you say you are a supply sider. you had a long time support for immigration in this country and to talk about the closing message may be from your view should be the economy to president trump is focusing on immigration. did you personally agree with them that birthright citizenship should be ended? >> well, you know, i'm not a constitutional scholar. some people i know and respect are, and believe that the 14th amendment deals with that but i'm not a scholar, okay. i do think many of these practices, , illegal practices, have to be curtailed. and i am pro-immigration, always have been, but i am pro-illegal
immigration. the system is broken. the system has been broken for quite some time. and needs to be fixed. the president has made come as you know, a number of proposals to fix that system, border security and different stop at the border, sanctuary cities, hp program of merit points to come into the united states, which many countries successful use. i agree with that. i agree with all that. and trouble is congress never passes. so i'm a supply sider, a free-market guy and i believe, i believe in the free flow of labor and capital. i think that benefits growth but i also believe in legal borders and immigration system. >> final question.
how long do you plan to stay in this job? is that the answer? [laughing] >> i serve at the president pleasure as you know. i love this job. most days, it's the most fun i've ever had. honestly. >> you have your bad days. judge will have the bad day or two, yankee home run hitter but the edges i love the job. he enters the the president han great to me, open, accessible. i see them all the time. i love the work of the national economic council. we are involved in domestic and international policies across the board. i love the committee work. i'm diligent in doing it. i love helping out in the media. it's just a wonderful job. it's like a dream job. my wife said to me when this
came up, the president was calling us back in march and we were considering it. she said, you know, you've been training 40 years for that job, and my saintly wife is probably right, , that i been in the government, omb, reserve, wall street, been a broadcaster 15, 20 years, radio and tv. you study the issues, see it from different perspectives. >> but you don't have a timeline in mind? >> i do not. i do not. i feel great. i just love my job. i mean, i love my job. if i was in that nfib optimism index i would be part of the outline. it really is the most fun i've ever had. >> thank you, larry. larry kudlow, national economic council director. thank you.
>> good morning. my name is have a long and i am an economics course on here at the "washington post." we are excited to continue this discussion about small business with two actual small business owners and two others were on the front lines of setting small business policy in this country. so i'll start by introducing our great painter. just a left year is tom sullivan, the vice president of small business policy at the u.s. chamber of commerce. next to him is mallory shelter, a small business owner who just six weeks ago opened a store here in washington, d.c. called shelter. it's a wonderful jewelry store in the union market area of the city. she's been a creator and design of jewelry for several years and finally took the plunge to open
the business and a brick-and-mortar context. next to her is gary williams, a creator and photographer. is cofounder of creative theory, social consulting and content creation from that he started with a partner in 2015. we are excited to have you here, and you already won best shoes. [laughing] >> thank you. >> hey, come on. >> appreciate that. >> at the competition. last and not least is allen gutierrez, an associate administrator for the office of entrepreneurial development at the u.s. small business administration and he's been traveling the country speaking to small business owners and working to help launch small businesses in this country. i thought i would kick it off by asking each of you to reflect a little bit about why we don't have more small businesses in this country. what people may not know is
small business creation, new business creation is that a 30 year low in the united states right now. it felt pretty sharply during the recession and it just hasn't bounced back which is really baffled many people. there's a lot of theories about why it is that we are not seeing more new business formation in the united states. so i'd like to start maybe mallory construct with you, since it so fresh, you just heard run a business. you are bucking the trend. what was the one or two hurdles for you to really get going? >> well, i was running my business online for a very long time so it was just me, and we were speaking earlier about going to physical location as in much different beast to deal with. and i would say it's definitely access to capital was a huge hurdle for me. i didn't even need that much of it, but -- >> i are we talking about 10,00, 50,000? >> a little more.
you know, , that was a difficult because you have to cover the buildout and inventory buying and a lot of upfront cost to get us started. i think a lot of people just don't have access to that. i was very like i was able to get a business on but i think that's historically been hard for people. and then finding talent. i really struggled with this while having people who are willing to work in a small business and go through all those ups and downs that come with working for small business and be the jack of all trades. you know, , it at times, i feel like there sometimes little payoff for it and think finding the right people to work with, that's been a struggle. i'm lucky that i now have people, but that was definitely a struggle for me. >> how many people have you hired just in the last few weeks? >> seven. >> wow, okay. good job. [applause] >> they are all fantastic.
thank you. >> i forgot to say that you can tweet as questions on the audience here are online. all you have to do is use the #postlive and we will throw some of those at the panel later on. gary, what about you? what was some of the big hurdles for you? >> for us it's different. obviously we are creative consulting company and creation service so we don't really need capital come since we don't need a a brick-and-mortar, we don't need a storefront. we needed office space. for us that's not a heavy lift. it's just raising the capital you need to start a brick-and-mortar. i think for us the main hurdle was the paperwork and starting an llc and getting all that done and then getting a good accountant and things of that nature. and a lot of creative that we talked to an industry, it's a daunting task. they don't necessarily feel like they can do it or have the bandwidth to do it or know the right people who can leap in the
right ways far as accounting and getting paperwork legit. for us it wasn't necessarily a hurdle, it was just the buckle down to let's do the right things to do to make this an official business and then take it one step at a time from their. >> where did you get that help from? was at from friends or -- >> my business partner and i have been working in industry before we were even together in business for a while and so we've made great relationships across the board. we just reached out to our network. with a huge network in d.c., one being a very big developer and one of her clients, and they are amazing and have been a great source for us. if we need something, if they can provide a know somebody who can pick we just have the resources. again, what a lot of creative zone of those resources. we are fortunate enough to know people that could help us out. >> tom, what's one or two policy
changes, baby at the state level or the federal level do you think it really jumpstart business creation in the united states against? >> i think first of all we are seeing record-breaking in small business. we run a quarterly survey of 1000 small business owners, and for six consecutive quarters they had said that they are confident with the economy. and so as far as reversing a 30 year trend of declining entrepreneurship, we believe confidence breeds more folks like mallory and like gary who want to plunge into entrepreneurship. we are very optimistic, kind of like most small business owners. and we think the reason for this conference are a lot of the things larry kudlow just talked about, and those are pro-growth policies like tax cuts, regulatory reform and others. as much as we can have the policy wind at entrepreneurs
max, i think we'll see a reversal in the decline of entrepreneurship. >> what about those paperwork or capital concerns, are you hearing that a lot when you go rent the country? is that still a big hurdle for a lot of potential new business? >> we are, except its lower on the concern list than it has been. i think mary mentioned the work of fib. tax compliance and tax burden for the first time in over 30 years has fallen off the top five issues of concern. they are still there, regulatory paperwork, tax compliance. it's just they are low on the concern list. hiring employees is now number one. and so we've got a lot of small businesses from around the country that are jealous of mallory who can hire seven people in six weeks. >> allen, what about you? what you think the best come some of the best policies for
trump administration has done so far to try to reverse this 30 year trend? >> first of all i'd like to say today is the start national entrepreneurship month, so happy birthday to all those entrepreneurship, entrepreneurs out there. certainly that is what is in the engine of this economy from starting having an idea and going it to fruition like mallory and gary. i would say that one of the things administrator linda mcmahon has been on her tour and what a think she's been recognized and look at, getting feedback from the different entrepreneurs and business owners of what has really helping them in terms of the feedback that we're getting, you know, like tom was saying less tax regulation, the opportunity to be able to be able to then use those additional funds to be able to potentially hire new individuals or potentially buy new machinery that will take you to the next level. one example would be a gentleman down in miami that mention he
has a brewery company and is like look, with this tax cut unable to buy an additional machinery that will be, help me in providing more of my brewery. but also in return also to bring more employees on board as well. those are the things we're hearing out there, aspects are refreshing and good. like tom mentioned, the confidence level, with the confidence level certainly there's an opportunity to take a look at more of a risk. what we say, we're here to help with you to help you start, grow and expand your business and that's one of the main things one of the many things that we're doing at sba under leadership of administrator mcmahon. >> what is your top priority for 2019? seems like a lot of things, confidence is at the what else are you into duke and hoping to do in the coming months? >> a couple things we're looking at, we recognize the opportunity to expand even more in rural
america to really provide those goods and services. recent examples were done, for example, the usda department of agriculture and how we can maximize each of its resources to give to reach out to the entrepreneurs and small business in rural america. also looking at workforce development. what are the things were going to be rolling out in the near future that will work in public-private partnership, working with colleges and private sectors. the president yesterday mentioned about additional working more with private sector and their role as well in terms of workforce development but also how we can work together as a team. >> let's stay on taxes. gary, you go into business for a couple of years now. have you felt the tax changes at all? >> again, for us it's a different. we definitely have but i don't think on the scale that most larger business or maybe mallory feels. so for us and have really good
account -- >> same. >> for us we been able to make adjustments and kind of, won't say fight off, but you know just make adjustments necessarily to withstand those policy changes. and so it hasn't been a very huge factor for us, but again we are in the very infancy stages of our business and i imagine as we scale these will become larger issues for us and will be reaching out for help. >> doesn't enable you to do anything, by new machines or new cameras? >> always. we do buy equipment. we tried to stay up-to-date. as you know it's a very technology driven scale i can feel. for us we try to renew our equipment yearly. there are incentives for that as far as tax breaks and things like that, putting the money back in the business. we do feel relief better. >> what about you, mallory, was
that a factor as you look to expand? >> it's deathly something i take into consideration. i've been lucky to have a profit in my business, but seeing that money be put aside for taxes can hurt sometimes. you know, i wouldn't say that i feel it as much but it is deathly something that i constantly thinking about because every time, you are not getting a paycheck from another person and that's automatically taken out, i i have to accountr my employees taxes, income tax and sales tax and all those things that i need to pull from a a business every month to pay. it's very much top of mind. >> tom, do we need another tax cut? the president has floated the idea that maybe would like to do another i think he said 10% of the middle class. some of that could be for small business owners. is that needed or have we done enough to really stimulate the
economy? >> the lanes we always look through at the u.s. chamber of commerce is growth, and so we see growth happening right now with the tax cuts happen have n christmastime last year and we have yet to see whether or not additional tax cuts are required to keep the 3% growth going in the economy. the are a couple of things that are important in the small business tax world. a lot of these incentives that gary and mallory talked about, they might be going away after 2025. and so the house passed legislation that would make those permanent. we had several hundred small businesses here for our summer just earlier, last month, , exce me, first week of october, and many of them went to capitol hill and the ask congress, make those tax cuts permanent. i'm not sure if that meets the definition of additional tax cuts but it is a priority to the small businesses we talk with. >> and you think that would be a game changer to make those permanent? >> i think so.
like many folks, small business owners would like to have the luxury of planning multiple years ahead. when they're making investment decisions on whether they want to grow their storefront or expand their technology, they want to be able to look past next month, , the what to look past next year. the ability for them to plan past 2025 and count on certain parts of the tax code, taxco changes is very important. >> i'd like to turn to healthcare. i'm surprised nobody has mentioned it yet. that seems to be when i go around the country come something a lot of people want to talk about who our small business owners or even if they are not, about costs rising. mallory, maybe we'll start with you. how are you handling healthcare costs? >> well, i'm lucky that i can get it to my husbands company because i truly don't know what i would do if that were not the case. it's something think about a lot to provide to my employees, and
it's a huge financial burden to me. so right now i have part-time employees at adult provide that too thin. but to retain talent and to get new people to work for you, i think it's something, i have considered offering and it's one of the things i don't even know where to start on. >> you me mean who to go to as? >> exactly. >> gary, what are you all doing? >> so i'm fortunate to be on my wife's health plan, but, i mean, that's the nature of the business, right? obviously, i could talk about scale. we're still in the infancy stage of our business at scaling, w something that we will have to tackle. obviously we want to be able to provide healthcare for our employees when the time comes but when you look at what that entails, it's daunting, it's expensive. but again i'm fortunate to be on my wife's. even when i didn't even have
this business, i was working for myself as entrepreneur, it's expensive. the affordable care act, but i was affording it but at a cost. it was expensive, and so a lot of times i would get paid and majority chunk of that would go to my health care. we talking about great healthcare, just bare minimum. when you talk about health care there's a difference between health care and good health care. obviously when we scale and grow our business we want to provide healthcare for our employees. i don't know where to start, like mallory says but when that time comes, again i will be looking to these guys to help. that will be an important ask when the time comes. >> allen, what is your take on this? what are some of the initiatives and sba to try to make things more affordable? >> i would say certainly the president has been a true champion for small business and we see it every day in terms of
not only from less regulation also the tackling of the healthcare challenge. for me i used to be in corporate and healthcare industry and i remember those days where you have your clients would have an increase of maybe two to 3% on renewal and i was kind of comes like tom minchin, small basis wants to forecast and see what it is for next year, budgets and planning and so forth. but these recent years have been spikes of much it does affect the bottom line for small business and also in terms of the plans. from a leadership from the president consort with the association health plans something will really help in the aspect of really pulling small businesses together and that opportunity to lower that opportunity and keep the benefits at an optimal level. from sba we don't present the policy on that standpoint but we do here that and administrator mcmahon does here that health is also, they tell us less
burden, less paperwork but healthcare is still of a challenge for us. certainly look at these areas in terms of the association i think is is the right step in the right direction. >> people may not know one of the association health plan is, could you say just a minute on -- >> just real quickly in terms of, you as a small business, gary goes in and goes for health insurance plan, the risk will be affiliated only with his pool of employees. let's say ten employees, but if you put altogether all of us have each an individual basis and with ten employees together, then you come together as a plan and then they will have the ability for the healthcare industry to give you a plan to all of us that spreads the risk that slows the cost in that opportunity. that's what is beneficial for small business on because then able to forecast and realize it will not be such a burden on a bottom-line approach. >> i let you jump in.
just want to point out it is controversial pick several states are suing the administration over this change pick . some states do about these types of plans. what gary was saying, speaking earlier, one of the big concerns is some of these plans may not offer what's considered good health care, what's considered a federally acceptable level of healthcare. there's kind of come this is very much fresh in the debate now some glad you brought it at that time, jump in. >> the use chamber is really, really excited about health plans as we work with 1600 state and local chambers of commerce. as as recently as this month and last month, they have been offering association health plans to the small business members. las vegas metro chamber of commerce is one of the first in. then of the chambers in nevada jump in, lubbock, texas, just went online with their association health plan. just yesterday we saw a group of chambers of commerce in north
texas that are offering association health plan. and even the national association of realtors, 1.3 million realtors is looking at an association health plan. >> how do you all respond to that big criticism that what would be offered under this plans is not acceptable, doesn't meet the federal requirements, maybe things like mental health or pregnancy even may not be covered? >> unfortunately, we think the rhetoric about that is part of fake news. we actually believe that secretary acosta crafted the association health plan rule in a way that makes sure all the protections under the affordable care act extend to the association health plan. he's very careful in writing it that way, and so the discussion about skimpy plans, pre-existing conditions, all those things your we think those are not
accurate and also believe that if you follow the models that are happening in the state and local chambers of commerce and you talk to them about the offerings can you actually find out that this is an exciting opportunity to help provide guidance to folks like gary and malik. >> i think that's what's tricky is they become so many different plans so you're trying to navigate. it could be very different from one community to the next entrants of what is being offered but it is a hot issue and we will see how with evils come to put in the courts. if your small business owners o you join this now, join one of these plans when there could be challenged legally or overturned. overturned. we'll see what happens next year. let's turn to hiring. everybody has been very excited. mallory has added some new employees. i know gary works with a number of contractors on different projects. you were saying you are engaged in. everybody is telling us it's super hard to find workers now.
how did you do? >> instagram. >> no kidding? >> yeah, it's a challenge. i mean, in d.c. in particular i struggle because i don't come tom and i were talking earlier at a don't think there's about creative economy that is as strong as other larger cities. and then get on offering a part-time retail position which isn't always the most glamorous. i've been fortunate to find people. i have a lot of people who were working this an addition to other jobs to maintain a lifestyle and afford to live in d.c. or because they're looking for a creative outlet on top of a nine to five job, that maybe isn't like that. so i been fortunate to find those people but i am always fearful that someone will leave i will be shortstaffed pics what something that's on my mind much everyday. >> what about wages? d.c. is an expensive city.
we see other companies, amazon, even the walmarts of the world raising their pay. is it difficult for small business owners like you to compete with that? how do you set wages? >> it is. it's one of the things that i can do to maintain talent. i pay more than the minimum wage because i think that's fair and also acknowledge that d.c. is an incredibly expensive place to live. and i'm lucky that i'm able to do that but again that comes out of my bottom line of cost. it's a huge expense every two weeks when i go to run payroll. it's a big expense for me, but you know, , i also want to be fr fair. >> do you have any concerns, larry kudlow and the panel before was asked about raising the minimum wage, raising the federal minimum wage which is been $7.25 an hour for many years now, over a decade. is there a concern you would
have it to do with a certain l, people pushing for 15 come with that make a difference? >> that's what i pay right now. >> so you think it is doable. >> yes. >> allen, what about you? this whole debate, if the minimum wage goes up, can they calmly handle that? >> i only got to another division of our executive branch to get back to on that. but i would would say from the standpoint what we are saying, and i mentioned about our leader, great leader and champion administrator mcmahon, she's been less than a year already visited 44 states and meeting with all entrepreneurs and small businesses. and that has been a reoccurring that we've been hearing, you know, access and opportunity to hire more. with that, it's in a way a good problem to have as opposed to when the local unemployment rate, lowest and hispanic committed an african american committee for what we do to be there as an agency to assist?
that's what image in terms of looking at the initiative for a look at for workforce development. and partnerships that we really recognize and looking only at irvine but also rural that will offset and we're looking forward to announcing that very soon. >> would you say that's the number one issue you are hearing is this trouble finding workers? >> it's at the top. like tom mentioned, now you have less regulation, less cost per employee, and a good direction. we are not there yet, it cost about $10,000 per employee with a larger employer can observe a. we always want lower the better. i would say that. in terms of development is key for. >> can you give us a hint of what is coming? is it more centered on the grant what? >> through my division, entrepreneur development office, is looking at maximizing our
three lanes can resource partners i have that are external and also looking at extending new partnerships and new strategic alliances i mentioned in the past with colleges and private sector so forth to really make it a win-win for everybody. >> tom, i want to throw it back to you. we haven't talked about tariffs but that pops up on the list of small business owners are talking around the country are concerned about. they are not able to negotiate prices aye larger company can. how concerned are you that we can potentially more tariffs coming on on chinese products? >> we are very concerned. we talked about a major headwind for small businesses, which is finding qualified it will employees. we view the trade war as no one was one of his headwind. like you said, heather, the small businesses don't have the luxury of looking five to seven years out and cutting the contracts with suppliers, small business owners, are much more
beholden to price changes. they would like very much for the negotiations and the tariffs to lead to certainty and to trade deals at the longer this goes on i think the worse off it is for small business. >> because they can't absorb those cosper do think it will start passing the cost along to consumers? are you hearing people say look, i can't afford to pay for high cost for a steel or aluminum, i'm going to need to charge more for my product? >> we were visiting with tracy and lori cassidy up in minnesota a couple months ago, and they do a sheet metal fabricating. they are already passing on their costs to their customers, their supply chain. it's already happening. whether it has boiled down to the consumers, only the data will tell that, but the cost escalation is already happening and we are pretty scared that that would be headwind that would detract from the growth that we're seeing.
>> to wrap it up we'll have a few seconds, by gary and malik and what's the best part of the a small business owner in washington, d.c.? >> you go first. >> for us speak of the then good shoes obviously. >> for us as a company we started out, obviously very involved in the d.c. trade of community and one of our main goals was to represent underrepresented communities in the d.c. area that we knew were creative, talented and deserve a shot. and so for us we were on a contract based business project wise. we get a project once a month or something like that, we try to bring in or source from the local d.c. community to add value to these projects. just last week we wrapped up huge project with you to her we were able to hire an source 20 plus d.c. creators and entrepreneurs for this project. and so for us that is the major thing being able to lift your
community and get underrepresented communities opportunities like this to work with fortune 500 companies. that's a huge benefit to us and that's kind of where we hang our hat on. >> that's pretty inspiring. mallory, wrap us up. >> you know, i think in d.c. as a city it's starting to experience a little bit more of a creative renaissance so i think people in the area are really excited for new businesses. i'm lucky to become i'm located in a business market for this lots of up-and-coming businesses and people are thrilled to have local retail offering. i think on a larger level i am able to support other businesses. i carry over 30 e-mail run jewelry brands in my store and i'm honored to be able to support them and bring it into my store and offer them the opportunity for their work to be seen by other people. so that's pretty amazing that i
can, as a jewelry designer and now a store owner i am honored that i i can help these peoplet as well. >> well, look at new york and l.a. she is coming. thank you so much for your insights today, and stay tuned for the healthcare panel next, key topic. [applause] [inaudible conversations] [inaudible conversations]
>> good morning, everyone. i am ceci connolly. i am the president and ceo of the alliance of community health plans. i also happen to be a former "washington post" reporter, somewhat a trait that i let me back in the building. we are going to talk a little bit about health, health as a business strategy, and i'm thrilled to have your joining me today tom carter. he is a national vice president of the workforce health consulting group at kaiser permanente, and full disclosure, kaiser permanente is one of our members at a chp, and so i think we share a lot of the same values and perspectives on this topic. but i wanted to start a little
bit now that i am in this different role, i am suddenly, i suddenly find myself as the chief executive of a small business. we have 21 employees, and i worry about the cost of health insurance. i worry what do we do with such a small step people are out sick, or taking their kids to a doctor and that sort of thing. so it is definitely on my mind in terms of the cost of health. but why should i care about well-being and the well-being of my employees? i've got a lot on my mind. >> that's a great question, and the movement that happened over a lot of different years is thinking about, we should think a lot about health as an interest decision or benefit to attract and retain your talent, you have to have a good benefits package and things like that. it was basically to indemnify people from a financial risk if they need to go see the doctor.
now we are realizing that people have to be engaged in their health personally and their health care. and there's a proactive approach to that and the benefit of that is if you have a healthy workforce, it's much like having a safe environment for a safe workforce. today we would never tolerate and and safe work environment. we've learned many years ago with formation of osha and other organizations that help us create a safe work environment. now we realize that a healthy work environment is as critical as creating a safe work environment. so when you think about a healthy work environment it's not just the physical health, nutrition that we typically kind of put in a box about thinking of health. it's well-being is more about the social, , financial, people are starting financial in this country. they have student debt, student loans, new employees coming in so there's lots of distractions. there's also a sense of community and purpose that really rounds out your feeling personally.
so at work the small employers especially needs to engage the workforce in a a way that finds that exactly what can help people be support award. we heard mallory described its hard hiring people right now everywhere. and so when you do get these employees in, you want to retain them which means they want to be treated the way they want to be treated. if they don't like the environment, they will go to another organization, other employer. so really focusing on them will get you a long way. >> so tom, i just want to underscore for everyone joining us and out in the world wide web the land, we were talking well-being, he used to a while ago the tram was wellness and so i i really, you touched on it but why is that language change important? >> wellness was come and have been rent as you can tell by the color of my hair, a long time. the move from wellness, it's been around for a number of
years and it was viewed more as a product strategy. you have to offer a wellness program or a wellness product or something along those lines. it's not that easy. it's not that narrow. and so the evidence has shown that the well-being aspect incorporates the physical and nutrition site which is what wellness was focused on it because not everybody, it was motivated to be called and called healthy as it relates to moving more or eating better. and so we had to incorporate those other aspects of well-being which is one of the things that are in the way of that somebody making changes in the life that would benefit them both personally come healthy wise, , and also benefit them at work. people enjoy, as we heard earlier, you know, they enjoy their jobs typically anyone it to be interesting and rewarding for them personally. if your unhealthy or distracted due to something that's happening in your life, you are not can you be as happy as happy
personally. the well-being movement is broadening the discussion to help employers think more holistically about the role of unemployed and how we want to support them at work. >> especially for a small business that clearly doesn't have the resources of large companies that might put entire teams on something like this, do you have a few low-cost or even no-cost strategies that people can start with? >> yeah, this is not about by the shiny object as we're talking earlier, the movement in the digital space and others. there are now well over 70,000 digital applications that consumers are faced with that are all healthy apps. and so buying an app or even an employer thinking of some digital solution that's going to help everybody he is not the
place to start. it might help some but helping everybody means that the first thing, the easy low-cost thing is to engage and have a conversation with your employees about what motivates them, what are the interest income things like that. i've heard a lot of small employers talk about encouraging people to move more, and so with walking meetings. you can describe things. believe it or not a lot of people are still thank you very traditionally like i got to show up, sit at my desk stand at the counter and going to do my job all day. we know that's not good for you. some people stand only so they need a place to sit and relax. other people sit all day and the need to stand up and move more. just thinking differently about what your environment looks like, how you run a meeting, how you serve if you're feeding your employees to work on what are you feeding that were? kaiser permanente used to go i think i gained 15 pounds when first joined because we even
come will bring people in and were not necessary feeding them the best food during long beatings and all of a sudden, i'm looking rankling i didn't do this to myself. i feel like kaiser contributed to my weight problem. a codependence type thing. i need to take accountability so there was some movement there. but more informally, we changed the way we ran beatings. we changed the way we brought in food. we put guidelines in about what kind of future would bring into our employees that would support their health at work? we define what healthy meeting as far as allowing people to go outside the building and walk was okay. you didn't have to be tied to desk all day. if you have had a one-on-one meeting, it's okay to go walk around for half an hour and then come back. those are some easy things come smoke-free campuses believe it or not smoking is still probably in parts of the country significantly and people even
think about just putting in a policy that says at work we want of a smoke-free campus. if you're going to spoke you can go to to have left in the stret and have a break and come back. make it a little challenging but more important just bringing attention to that and just letting people know it's not something i want to endorse at work. now if you want to quit smoking, let me help you with that and there's ways i can engage you, but not having a a smoke-free campus where smoke-free policy, people think it's okay then to smoke at work. >> in all of your work with so many different employers about building a culture of health, give me a couple of surprises, the things that have percolated up that maybe you were not, the walking and the food i think we can all sort of follow that pretty logically but what else? >> this all has come from the small business committee have we been partnering with, there were small, i remember, a brokerage
firm that sells 90 so you can buy house, and when they started on this journey, the simple things they did and the benefit to the business was pretty amazing. the first thing was the fleecing was coming on so there's some really easy things like educating people about either flu shots which and everybody wants to do but i'll tell you, the evidence is in an flu shots work. so kind of destigmatize and that, , getting people to wash their hands so they don't spread diseases at work, cold, flu. >> put the sanitizer right out there on a conference room table. >> believe it or not having a water container with a big jug of water reminds people to stay hydrated during the day which is another easy thing to do. i had an employer tell me they noticed when you put the water cooler in that took about a minute and half for them to fill a water bottle. i thought as long as i have been there for a minute and a half,
they started to put up pictures of what healthy plate of food looked like. just visual. believe it or not half of it has to be clean which is a good reminder, or some colorful thing. not just potatoes and rice and meat. so they started to put the pictures and all of a sudden the infamous watercooler talk started to change about did you notice that picture? how heavy change the way your eating? the other thing i heard from the mortgage broker was refrigerated. what can i do to help you with a personal habits to say i could stay healthy, people said i want to own dinner to work. so he bought a refrigerator. those were all things and even the employees kicked in a little money to open by the refrigerator. he didn't have a lot of money and actually people will contribute to things that are good for the. >> i hear from our team here because in washington, d.c., lunch is expensive. it's not even like you can just
go pick of the sandy for a couple of bucks. in your definition of well-being, which also include financial well-being come some sort of security, just been able to bring your lunch may be saving your ten, dollars a day in washington, d.c. so let's really tie it now, tom, too hard brass tacks. we are business people still at the end of day. can you identify roi on these sorts of my committees? >> -- activities. >> i will extend roi on return on effort. a lot of people try to reconcile that on a balance sheet for the benefit we hear when people focus on supporting the health of the workforce shows up in a couple of different ways. one is imagine having ten employees or even five employees and whoever the key employee goes down unnecessary due to a health condition that maybe could've been avoided.
that's the 20% impact on your workforce. imagine the productivity depend on who the individual is that it's a critical employee, imagine that position going down for an extended time what that would do to your business. that's the first thing, trying to avoid that from happening. stuff happens, we know that. what we want to do is help small businesses understand when you make this investment and supporting the health of your workforce you reduce the risk of that happening for those kind of conditions. so that's one thing. it's impacting productivity. the other one was either employers described customer experience, if the customer is working with you, recognize that your employees feel better about themselves on the phone, they're happier. you are not as stressed out. it shows up in the way you talk, we also find based on customers purchasing our services, so when the customer recognizes that, that was number two, was the
customers experience. and then the morale of your employees. again, back to retention. it's very expensive as you know for turnover. so if you can impact the retention of your workforce in a way that keeps people there, supported the way they want to be supportive, but also a form of return on investment or return on valley that you don't have much turnover which is expensive. >> and other remaining from i want to let everyone know at our twitter handwheel push out this morning and the little fun animated video on well-being should feel free to check it out, share it with your staff can start a little conversation going. tom, as folks later today feeling maybe even a little bit inspired by this, i hope, although the helpful, what's one thing he could just go and get started even this week? >> first of all, think simple,, think easy. as i mentioned earlier the first place to start is not to go find
the shiny objects or to buy something to bring into your workforce for the first place to start is having meeting will bring a few key people in to your world and start asking these questions. is there anything i'm doing as an employer that would impact how you feel about the workplace with the work you do? find out what their interests are. find out what they are worried about picky to be financial. could be aging parents. it could be sick kids, and see if something you could do as an employer or to partner with them or bring in, there's a lot of free resources in the community you could either map people to a bring in for the workplace and so it's just the one thing would be, the more aware about how health is impacting your business and connect with your workers in a way to get feedback so you know where to start. they will give you some great advice. >> please join me in thanking tom carter, kaiser permanente. [applause] >> i believe i am turning back
over to the "washington post." [inaudible conversations] [inaudible conversations] >> good morning. thank you so much for being here. my name is libby casey, on the politics and accountability anchored at the "washington post" and it is my pleasure to be joined your onstage today by by marla beck, the founder and ceo of the mercury. thank you so much for talking with all of us. it's great to have your. >> great to be here. >> bluemercury is a luxury cosmetics retailer founded in 1995 and our very own george tepper marlin and her partner and husband grew the business to a national beauty chain in 2015.
they sold sold the business to macy's, $210 million. we'll talk about what that submit for your job these days. before you begin a look at meiji you can us questions, ask more questions can use hashtag on twitter #postlive. just to start out give us a sense, we'll know the brand bluemercury where it is at now. where did you start versus we are now in terms of what you had, what you are creating and where you are going. >> we started as a beauty e-commerce company in 1999 when i was in my 20s. a long time ago. back during the first.com boom, and we quickly realized we were a little bit too early and so we moved straight from six to bricks and start opening store locations there we started with one store location in georgetown in washington, d.c. and had at one location for a while until we figured it out. so today we're at 180 locations, but it is then a long journey,
we went through two recessions and certainly a.com back bust in 2000 had huge impact on us. but the original idea for e-commerce is really fun because i in graduate school i admit this entrepreneur who came to talk to us about the internet. so this is 1999, and we had, i just got my first e-mail address and google didn't even exist. so here this automobile was talking to us about e-commerce and what it was all about, and i was completely intrigued. he explained how he's going to sell books on the internet. it happened to the jeff bezos. nobody knew and was on was that only 30 30 people showed up foe talk. [laughing] >> i was completely inspired so that's we started as a beauty e-commerce company. i just wanted to bring beauty product to the net. >> remind people under the thee of 30, back in the '90s, that
they of dial-up. you did not shop online yet. you guys are way ahead of your time. >> in fact, we were too early because we launched our internet site in 1999 and nobody was shopping on the internet. we were all shopping, all e-commerce founders were shopping from each other and that was about it. we were almost bankrupt within the first six months because we were too early. >> you had $1 million in investments? >> yes. it was an easy time to raise money. i would say like today, we raised $1 million in two weeks to start the company. ..
the idea of the store was revolutionary. 90% of because medics were sold in department stores. by opening a store in georgetown we were one of the first free stranding stores, and they let you touch customers and were revenue-generating unlike our e-commerce site which did not generate much revenue. they call it a pivot. we had to change our strategy but back then it was called a failure and i love business terms that make it good for failures but we pivoted. >> did you have to convince
investors to make that pivot or trust your own instincts? the internet was a hot thing. >> it was difficult. our first set of investors did not want us to open a store because they believed in pure internet e-commerce plays, they didn't want to change course. we raised money from a separate set of investors. internet businesses were multiple on eyeballs and it was a straightforward metric, how much revenue and capital did you put in and it was too common for investors and change how we were talking about the business and pitching the business and during the nasdaq crash there was no capital so it closed up shop and we ended up banking our inventory.
there was no way to raise additional capital for stores, we had to bootstrap and figure it out on our own. it was a difficult time in terms of raising capital. these were common back then where a bunch of people get together and hear pictures and throw in money. they had been entrepreneurs so they saw how hard it was and they threw in the dinner talk but there's a lot more investment in capital than there was back then. >> i knew from a lot of women in the entrepreneurial world, they see it as transactional, something that is more
corporate and less organic and less real. how do you talk to young entrepreneurs about finding networking in your own backyard realizing there is far more of a strong network potential than you realize. >> i look at the fact you need mentors and champions, find mentors that give you advice, women come up to me at all sorts of events and say i have this idea and what are you saying so a mentor gives you sites, a champion puts you into a new opportunity. i was fortunate to have champions throughout my life that helped me with opportunities. as a young entrepreneur you are looking for mentors and champions. managing director of the department of equity firm helped me to raise money and they introduced me to the angel dinner club. leonard lotter from estée
lauder corporation, i met him when it was a year old, he walked in our first store and was curious what we were up to and i pinched him so hard, i need to carry your brand, we will change the world and he looked at me and said get a couple more stores first. but i kept that relationship going. it wasn't much. i would send a note here and there and ask him to grab a coffee and as an entrepreneur or student, how many doors were open, i think for me, networking sounds scary. i don't like networking, you have to be social with a lot of people you don't like or don't know. for me, that one on one relationship you start to develop with people for chance opportunities and you have to judge whether they can turn from being a mentor to a champion. i look at that as -- in your
personal life. >> your role as a leader or business role model, what is your role in encouraging talent and make sure it is not only white men, women are strong player but how do you make sure you are encouraging other people to stay open for new possibilities? >> it is 93%. we really looked at it from the store perspective so we started with a radical human resources strategy years ago and for us it was all about hiring people into our stores and i remember people in the industry would say you are crazy so you don't pay benefits. i once full-time people who are
dedicated to providing beauty advice. what we did is only hired full timers into our stores. what does that mean? people had a career with us and now we have a ton of people who started as sales associates that are part of our corporate team so i really believe in developing people from the ground up and giving them opportunities no matter what their education is. you can teach leadership and management and it is a really important piece of your job as leader and we are completely open because of our models from the beginning. as a leader your job, has been really strong which is to be the best it can be with beauty advice so that helps people grab onto something, not just corporate numbers. some companies talk about numbers but this is about dream, a vision and you want people to be on your team for that. >> talk about sales to macy's.
was the goal to go through that process. if you could go back and talk to yourself 19 years ago was that part of the dream, getting big enough and successful enough to catch the attention of a major company? >> when you are an entrepreneur, i was inspired by other entrepreneurs, i wanted to change the world. you stick with something for 19 years if you are dedicated to it. for me i builder. i wanted to build a great company. what happened in 2014 is we were getting calls from a lot of different companies and private equity firms interested in investing. the competition started heating up in our industry and i felt we need to scale more quickly. after 14, 15 years in business we had 60 something stores and there were other competitors with 300, 500, 1000 so i felt it was time to scale up. we are building every department from scratch.
you start and you see mallory, and scaling your company, building the technology department or e-commerce department or finance department or hr department, when building everything from scratch it slows you down as you hit a certain amount of it to accelerate the scale. so we will fall behind in technology, the case of technology investment and requirements increasing. macy's was the most attractive because there was number 70 commerce player in the country, they had the hr and finance infrastructure and the supply chain. there was product and goods, 60 stores. if we wanted to go we had to accelerate that so they had a set of resources we really needed and it has been amazing. what was important to me also
was maintaining our dna. we are a family comedy, my husband and i started it, i wanted to keep that family orientation so the promise which they upheld as we could keep our headquarters separate in dc and run our own show. we have been able to use their resources and keep our dna and we scaled from 60 to 100 locations in our internet business that scaled significantly but the technology requirements for any retailer continue to change and evolve. >> it is fascinating that one of the ideas at blue mercury was to break out of the department store, such the product, choose from a variety of products, one counter for a different product, what is it like to see or product in a store like dc and how the relationship works out during standalone --
>> staff are trained in all brands. client walks in and you help with any product and traditionally department stores have been countered by counter brand by brand. what we have done is put blue mercury locations in macy's sites. that is interesting because the client can walk in and they can experience what it is like to shop among brands. what we found is they don't notice they have changed shopping environments. they think it is part of macy's a lot more brand selection. it has been a great partnership. they are applying resource models to their form of cosmetic so it has been a great partnership. what they are learning from us and we are learning from them. >> is it hard to make that decision? it was such a family business you talked about and you and your family are so invested in it. finance is creative control division for it.
>> bloom mercury was our first baby, we had a before we had our three kids. that was a very difficult decision. i was worried i would lose control. as an entrepreneur sometimes people, especially me, you want to control everything you do and i'm a bit of a control freak. but we have been able to maintain that so i feel it was a good decision and i think the competitive pace of business is you have to hit scale more quickly today than you did in the past for some businesses especially large retail chains that are competitive. it was the right decision and the staff is happy and their benefits are stronger than ours so it has given the more of a career path to go from 60 to 180 locations with more opportunities to grow. >> host: you can for your questions and if you are watching online, use the
hashtag coast live on twitter. you are a disruptor when you started this company and there's so much disruption in the industry. how is instagram affecting the beauty business and how are you learning from people like your kids, and teenagers generally preteens are so oriented to what they are seeing online and learning from their peers, how they are learning for role models they find on social media? >> guest: it provides an opportunity where it is very democratic and you have more diversity in terms of what is available on instagram. it is affecting categories as a business. the math category, is so tiny in the business. >> host: like the masks you put on that cleanse your skin. >> guest: they look black and you peel it off after a few minutes. >> shocking to me to learn 13-year-olds --
>> it is a statement, if i take a picture it means i'm taking care of myself. it doesn't mean i found the best mask ever. teenagers are making this to each other, it has exploded the mask business. and the lipstick business has exploded. if i change my lip color i'm changing my instagram picture. it is fundamentally affecting people in the business. instagram first beauty companies also creating new business models. kiley cosmetics builds a $500 million business just through instagram and that would have been unheard of years ago. another brand built their whole business via instagram and they are turning the retail model on its head where they have a store in new york city they charge you to go into the store, $10, but every room is instagramable and this sellable product but it is all about instagram.
it is a new retail, instagram is fundamentally changed, the business models and how people purchase them. >> host: how does it affect your business? how does it affect how you learn about products and what is trending and was might be popular for a couple months, carry it for a little while or learn about it on that is a tried and true long-term seller? >> guest: it gives you such access to customer feedback and increase the pace at which we change our merchandise which is really fun. we went into stores and talked to customers, interviewed them, emailed them. now you get instant feedback. every day you see what is trending. you have to be a merchant and decide what is important but you also get great feedback. by knowing your customer and staying through to your customer you know how to react. >> host: you created your own beauty product line. how much of you goes into that? your testing products, talk
about why you went into the creation business and not just the retail side of things. >> guest: skin care, they come into our stores all the time and fascinated by talking to people. >> guest: it depends. clients come in saying they love natural products but they don't do anything else to my skin. of the clients style of dermatologist doctors brand but they are full of chemicals so we saw needs that were not being met. the most natural line on the market was vegan skincare in 2012 so we created another cosmetics line because cosmetics -- they wanted vegan, low chemical cosmetics. by talking to customers and seeing gaps in the market you bring the product to market more quickly and i active in
every little bit, i do all the product development with our team so something important to me. beauty has always been a great place for entrepreneurs, female entrepreneurs like elizabeth arden started there so for me it is so intriguing to see how many beauty entrepreneurs there are every day. >> host: new entrepreneurs who aren't always, start when you are 20 with a career change or new idea. how do you know, how can you tell someone who has been through this that they are ready? they know the market, they know their product, they know the risks they are taking? what are the signals that someone is prepared for what they are diving into? >> guest: they have a burning desire to solve a problem and nothing is going to stop them. i don't think you have to know everything. i go back to where i was in
20s, and my idea was a total failure within six months. i got in the game and was close enough to the industry, most entrepreneurs, their first idea is usually completely wrong but if you have passion you can stick to it and figure it out. it is all about being ready to just drive. entrepreneurship is tough, elon musk said it is like eating glass. it is really tough. everything goes on for you. you have to have that passion and drive to get through it and the idea itself doesn't matter upfront. >> host: do you have to have passion and drive, passion and drive for the customers, you can see both sides, someone who loves jewelry design and jewelrymaking but has to learn about the market and commerce
versus the other model of someone who might be steeped in business school and know a lot about marketing and how to raise capital but they also need the passion to create something. >> host: hard to stick with it if you don't have that passion. before i started blue mercury i was in private equity and janitorial maintenance companies. i knew a ton about that sector but i wasn't passionate about it. you have to start something you have a passion for. makes it easier so it is marrying business expertise with passion. >> host: any final thoughts? >> guest: we are all entrepreneurs every day of our lives and exercising that creative mindset is important for everyone to do. >> host: a creative job for you. >> guest: a creative job. that is where i get excited. new ideas talking to new entrepreneurs. i talk to new entrepreneurs
every day. being creative is an important aspect of self-actualization so i encourage everybody to be creative. >> host: that is all the time we have this morning, you can watch this later if you like, if you want to share partcreat. >> host: that is all the time we have this morning, you can watch this later if you like, if you want to share part of the conversation@washingtonpostlive .com. thank you so much and thanks to all of you for being here. ♪ [inaudible conversations]
>> the midterm elections, determining the control of congress. election day is tuesday. see the competition for yourself on c-span. watch the debates from key house and senate races. make c-span your primary source for campaign 2018. coming up at noon eastern the heritage foundation will hold a debate on the role of the judicial branch in a democratic system. live coverage begins at 12:00 noon eastern on c-span2. with 5 days to go until the midterm elections, we have more live debate coverage today to tell you about. west virginia senator joe manchin meets patrick morrissey in debate in morgantown, west virginia at 7:00 pm eastern. watch it on c-span. at 8:00 in new york's 22nd congressional district republican congresswoman
claudia tenney faces democrat anthony brandthisy. the candidates in florida at 16th district u.s. house race, congressman vern buchanan and democrat david shapiro debated each other in sarasota, florida. this comes courtesy of wwf be tv. c-span: >> moderator: this is one of the most highly watched contests in the country. donald trump won the district by 10 points, voters on the suncoast of not elected a democratic congress since 1983 but no one motivates democrats like donald j trump and the party, hoping this you will be the year to flip this district which include sarasota, manatee and southern hillsboro county. we would like to welcome congressman vern buchanan who was first elected in 2007 and decr