In this episode of Be Epic, Matt talks to Paul Guess about leaving the corporate environment to start his own businesses and how to adapt to the constantly evolving challenges of owning your own business, from global pandemics to supply chain challenges. Guess is the CEO of Lux Fragrances and Founder and CEO of Deck the Halls Y’all (DTHY) and Guess and Company based in Des Arc, Arkansas.

As I look at the commonality across all of my

businesses, I do not focus on the end result, that end result

being the dollar.

Excellence, professionalism, innovation, and

collegiality. These are the values the Sam M. Walton College

of Business explores in education business and the lives

of people we meet every day. I'm Matt Waller, Dean of the Walton

College, and welcome to the Be Epic podcast.

I have with me today, Paul Guess. And Paul is a graduate of

the Walton College from 1993. He had a career with Eli Lilly,

before starting his own businesses, and he currently

owns three businesses. You're quite busy, Paul with these

businesses.

I am I would say that my days start at 4:30 in

the morning, and many times I'm not done until seven or eight

o'clock every night. You know, what they always say is a blank

mind or an empty mind is the devil's workshop. So I don't

have much time to play around or have an idle mind. So yes, sir.

I'm very busy.

Now, it's interesting. You majored in

small business when you were in the Walton College?

That is correct.

And you graduated in 93. And then you worked for

an enormous company for quite a few years. And then you finally

started your own business. But I'd love to hear what got you

interested in starting your business? And which of those

three did you start first?

it's kind of a combination of all of it. I was

gainfully employed with Eli Lilly and Company for 14 years,

starting at the bottom as a sales representative and rose to

the ranks of upper middle management for Lilly, where I

was responsible for three quarters of a billion dollars in

revenue covering six states with the organization of

approximately 160 people reporting to me, during that

time, I was fortunate enough where Lilly paid for me to go to

the Harvard School of Business, executive education for their

general management program, where there are only 125

students accepted into the program from all over the world,

and only 13 of us from the United States. That piqued my

interest in international business, because in my living

group, I lived with people from India, people from Japan, people

from Switzerland, all over the world. My curiosity led me to

exploring, importing and designing and working in

factories overseas. So that sounds wonderful.

But the reality of it is, when I was a regional for Lilly, there

was a time where I became a little bit bored in my

assignment, and it was in 2008, where the economy crashed. I

thought, you know, I want to test my hypothesis and my theory

of in a retail business, if you offer great product at a

competitive price and great service, can you withstand the

fallout of the economy and still be successful? And so I opened

up a Christmas pop up store, in Searcy, Arkansas where I went

in, and basically, I knew that I was only going to be there for

three months, just in and out. And I was in an old pizza

restaurant, I invested wisely invested roughly $100,000 and

had a 35% net profit return on the money. And at a time where

the economy was down, I thought, wow, there's something to this

Christmas business.

I continued my career at Lilly, and in 2013, we were downsizing

as a company. At that point in time Lilly had asked me to

relocate and I had moved seven times in those 13 and a half to

14 years with Lilly, and I was back home in Arkansas. I did not

want to move again. And so my brother said to me, well, Paul,

why don't you start a Christmas design business and import? And

I said, well, number one, because I'm not a designer, and

number two, I don't know how to import. I know nothing about

that. Long story short, I taught myself how to import and more

importantly, how to put the right people around me to create

the designs fill the gaps of my shortcomings from a design

perspective. So I started a company called Deck the Halls

Y'all. DTHY is what you will see in boutiques and my brand today.

So from there then Lux Fragrances came for sale Lux was

started by Nancy Shine in Marble Falls, Texas. And Nancy asked me

she said, Oh, don't you want to buy my company? I'm ready to

retire. I've known Nancy. She was a senior executive for Estee

Lauder for years. And she said, Don't you want to buy my

company? And I said, no, thank you. I don't want to be in the

manufacturing business. I simply want to design and import. Well,

as time progressed, I decided, yes, I did want to purchase Lux

and relocated from Marble Falls to my hometown of Des Arc. We

hit the ground running, and we have never looked back. Now it's

sold across the entire United States from large retailers to

small independent Mom and Pop boutique type stores. So that is

how I started and pretty much kind of where I am today.

How did the pandemic affect your business?

At first, with the pandemic I thought, gosh, all of

my accounts are closed. And how are we going to be successful?

One of the marketing firms that I use is actually located in

Fayetteville. And they suggested to me to go and get my cell

phone and begin doing videos. And I said, oh, no, no, no, no,

no thank you. I don't want to do videos of candle manufacturing.

And I don't need that, I'm 40. At that time, I was 48. And I

don't, I don't want to do that, I, no thanks. And lo and behold,

I did and I took their advice, and we created a direct to

consumer arm of our business, In Lux. We had historically always

been wholesale and wholesale only. But I knew that for me to

stay alive, my candle business, I had to create another selling

channel. I was the creator of a candle that is poured in a

wooden doble the videos somewhat went viral. As a result, we now

have a healthy direct to consumer portion or arm of our

business, we've sold close to a half million units at this

point. So that's what happened on the candle side of the

business.

In my warehouse sale, which is called Guess And Company

Christmas at the Warehouse. I had to strategically plan

because I knew that Christmas was still coming regardless of a

pandemic. I surveyed my customers and looked at it as an

opportunity to still meet their needs, or hopefully exceed their

needs, and to give them an opportunity to be normal, if you

will. And so at that point in time, we were planning for

18,000 people to come to the warehouse. And so we increased

our number of days. And we had people to sign up for

appointments. And so I thought it was a very interesting

dynamic, that people would still come to our warehouse and

schedule appointments to do so so they could shop safely.

18,000 people did come and actually the pandemic positively

affected my business.

That's impressive. Congratulations. You know,

there's been such a surge in demand. It's hard for the import

supply chain to handle all the volume. How are you dealing with

that?

Uh, why do you think that I am? I don't know that I

am as successful dealing with it from a leadership perspective.

So one of the most challenging and most difficult things that I

have dealt with, because it is somewhat out of your control.

And I have always thought throughout my leadership career

that I can control most everything. My leadership style

can at a minimum influence it. In 2020 containers from Asia,

whether that be the Philippines, China, India, etc. cost on

average anywhere between six to $8,000 in US currency to get the

container from door to door, the factory door to my door. In

2021, it rose from that amount to as much as $32,000 for a 40

foot container. We planned as best we could. We followed the

advice of our representatives from the freight forwarding

companies that we used. I knew that I was going to have to pay

more. We implemented a surcharge on the wholesale side that we

felt was warranted and doable versus just immediately

increasing our pricing. Because we were told that at some point,

the freight charges would go back down. One of the

representatives with the freight forwarders that I use, he said

you need to book your containers, at least one month

in advance. Well, then one month became two months, and then two

months became, you're going to have to pay for what they're

calling expedited freight, just to even get a place on the ship.

I would not tell you that we have been successful. We're

still, as of today, December the 10th of 2021, we're still

waiting on five container loads of seasonal merchandise to

arrive. Christmas is 15 days away. So obviously, we can't

ship that, we'll have to sit on it in inventory. And that's not

my style. My style is one in which I like to turn inventory

back to cash, always and as quickly as possible. So I can't

tell you that we have been very successful with it, I think

we've been more successful than most. It is one of the biggest

challenges that I've ever faced.

So based on your experience from this crisis that

we've seen as a result of a spike in demand, the import

supply chain has been a bottleneck. What do you learn

from that that you could share with our students?

Leadership and planning is not always just in

theory. You must plan ahead as much as you possibly can. But be

prepared to change course, as quickly as you can. Yes, I can

sit here and tell you that this year in 2021, we've had 20 plus

thousand people to come through our warehouse, and you know, the

orders are there and the demand is there. But I can also tell

you, we're a small business. So initially, when I saw the

freight rate increase, I had to go back to my lenders and say,

Hey, this is where the freight is now, we did not account for

that increase as it was happening. And that was to the

tune of a half million dollars only to realize we still didn't

account for enough of the price increase. And so there are times

in business, that you simply can not plan for every single

scenario, you think one thing is going to happen. But yet

something else happened. And then you've got to react. And I

never like to be in a reactive position. I like to be very

proactive. But there are times. And this is one of those times

where I had to react. And it doesn't always feel good for

somebody that's type A.

You bought Lux, and it has grown five times the size

it was when you bought it. You took Deck the Halls from

nothing, and now it's a multi million dollar brand. And your

warehouse 20 plus thousand people came this year, to this

little town in the Delta. You clearly know how to win as an

entrepreneur. What do you focus on to bring about these

successes?

As I look at the commonality across all of my

businesses, I do not focus on the end result, that end result

being the dollar. And I think that goes back to who I am as a

person and what I am personally motivated by. At the core of who

I am, I am amiable and want to please people. I focus on the

experience, let's say with the candle business, the experience

that would be created with that candle. Fragrance or smell is

one of the most important pieces of memory. That is what I

personally, that's what rolls my socks up and down. And that's

what I focus on at the core of who I am whether it is creating

a candle or whether it is people coming to my warehouse sale. My

customers are going to be creating memories for their

families or their friends. And so how can I create and develop

product that will then help my customer? And then how can I

create the experience within my warehouse or within my candles

or Deck the Halls so that that my customers are just

overwhelmed with the ability to create memories. And I give them

more than they ever asked for.

From a competition perspective, you say well, who's your

competition, Paul? In the warehouse sale, it could easily

be someone like a big box retailer like a Hobby Lobby. So

how am I different? What did the displays look by? What do people

see when they come in? What do they hear? What do they feel? If

they feel what I'm wanting them to feel, that inspires them to

purchase. They will go tell many other customers. People in the

state of Arkansas will even come to the warehouse and say, I

never knew about this. And that's because that is a multi

million dollar business, and I spend less than $20,000 a year

in advertising. It's primarily by word of mouth. If you want to

compete in the marketplace today, which is incredibly

difficult to compete in, that's what you have to focus on in how

you separate yourself and differentiate yourself, in my

personal opinion, because anybody can focus on price, but

it takes somebody that is wanting to go the extra mile to

truly create a difference for your customer.

That is good business sense there, so.

It doesn't mean that I'm always successful, please

don't take that that it- but it's what drives me. And the

creative side of me. That's what drives me. I mean, my goodness,

we're in a warehouse, it's got leaks in it in the roof. The,

the warehouse that we're in was built in the 50s. It was an old

Van Heusen shirt factory, and it's been vacant for 25 years.

So you're not walking into a Neiman Marcus. You know, when

people pull up to that warehouse, they think, number

one, where in the hell am I? I'm in a little town in 1700. And

the outside of the warehouse is awful. But when we open those

doors, and people see what has been created for them, they

cannot get enough. It is becoming a destination people

come from a six state area. It is mother-daughter trips, it is

girlfriend trips, it is husband-wife trips, it's- if you

love Christmas, you're coming there. You know, luckily, I had

the opportunity to do some training as well, years and

years ago and worked beside Disney and their leadership

model which you know, they're variations of everyone's

leadership model base. That's, that's where I focus.

Well, Paul, this has been a very insightful

conversation. Very impressive.

Thank you.

On behalf of the Sam M Walton College of

Business, I want to thank everyone for spending time with

us for another engaging conversation. You can subscribe

by going to your favorite podcast service and searching be