MDF VI

The partner program was expanding, and outgrowing our Folsom store. So I after a search, I found a flower store that was for sale, with an incredible space, perfect for the partner program. It was also a gorgeous retail space, in the Excelsior neighborhood of San Francisco, and it had been in existence continuously since 1927.

The space was amazing, with a basement, 3 coolers, crawl spaces everywhere, and memorabilia at least 100 years old in places. It was a dangerous place, in a neighborhood that was sometimes dangerous. So we added a 2nd store, that ended up focusing on funerals, and housed the partner program.

The expansion continued, even though there were no profits. The problem was the cost of the flowers. When most companies scale and start to sell more, the cost of the products they sell generally goes down. I assumed this would happen, that the cost of flowers would go down as we purchased more. But the opposite happened; the more we bought, the more the marginal flowers cost. This is because when you go through the market once, you can get the low hanging fruit, the cheapest high quality stuff. But the more you need, the higher you have to pay. I didn’t realize this, because I was new to the business. I always thought that we would find a solution to this problem, but we never did. Our flower cost hovered around 40% when we were small, but as we grew, it ballooned to 65% or more, no matter how hard we tried to use every flower, and have no waste.

We were approached by a building in the Mission, several blocks from us, that was told by the city to have a kiosk outside of it selling flowers (true story). They contacted us, and we agreed to rent the small kiosk, that the florist would have to stand next to all day, for $1,000 per month. I couldn’t decide if it was worth it, but it was in a super high traffic area, and it didn’t seem right for someone else to have it.

Nothing went right with this little space. We did it more for advertising, but even so, nothing much sold. It was understandably difficult to staff, and we needed to train new people every few months. But the worst part was the physical structure; it wasn’t rainproof. And the owner that we rented it from, was a total asshole, and wouldn’t fix it, we would have to sue him. I just gave up & left, broke our lease, and didn’t bother suing him for the $30,000 that we lost overall.