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This past summer, I took my family to Vienna, and it was incredible. We spent our days wandering the old streets, stopping for coffee and pastries, visiting museums, and just soaking up the history of one of the most beautiful cities in the world. And one of the things that made the trip so special was the home we booked on Airbnb. It had tall windows, beautiful old details, and plenty of space for all of us.
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Find out how much at Airbnb.ca. Hey, just a quick message. If you're building a business right now, imagine getting advice from the founder of TART Cosmetics, or Airbnb, or Patreon, or Raising Canes, or even Sir Richard Branson, or Mark Cuban, some of the greatest entrepreneurs on Earth, people who've actually built billion-dollar brands for nothing. Well, you can get that advice, because all of these founders and many more have already joined me on the How I Built This Advice Line.
Every Thursday, we drop an episode of the How I Built This Advice Line. It's where I bring back a previous founder we featured on a past episode. And together, we help real entrepreneurs, people selling skincare, dog toys, pottery food, whatever. We help them work through the challenges they're facing right now.
And the best part, this kind of advice world-class battle-tested is completely free. All you have to do is call 1-800-433-1298. Leave a message, tell us what you're building in under a minute, and you might be the next guest on the advice line. And your question could be answered by someone who's actually built an empire.
So give us a call at 1-800-433-1298, or send us a voice memo to hibt at id.wondry.com. And tell us how we can help you. I go to New York to sign the deal. One of the investors is on the plane, the lawyer, you know, they're all coming for this big celebration.
Well, I get a call that afternoon, I'm sitting in the hotel room, and she says, hello, my name is Carol Anderson. I'm the senior vice president of something. And I said, no, hi, Carol, I'll probably meet you tomorrow. Just actually you won't.
The deal is off, we're not coming. What? That's what I thought. What?
Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built. I'm Guy Raz, and on the show today, how a casual children's playgroup grew into a national franchise, a stopping ground for kids, and a lifeline for parents. Jim Barrie. Every founder eventually hears a version of the same advice.
Work harder, push further, and don't give up, that it's the combination of discipline and drive that can turn a small idea into a big one. And don't get me wrong, this is not bad advice. But there's also a darker side to that story, because when drive goes unchecked, it can quietly begin to erode everything around you, your relationships, your health, your business, and ultimately, your entire sense of self. Today's story is about that very tension.
Now, if you're younger than, say, 35, it might be hard to understand just how ubiquitous Jim Barrie once was. In the 1980s and 90s, Jim Barrie wasn't just a place you took your kids. It was the place, a brightly colored padded world of parachute games, circle songs, and structured chaos. For many parents, it was also something else, a lifeline, a place to connect with other parents and find community.
Jim Barrie began as a simple idea, get groups of kids to play, and offer classes and activities that would give parents a reason to show up. At its height, Jim Barrie operated hundreds of franchises around the world, along with more than 200 retail locations selling children's clothing. And like so many stories on the show, it started with someone trying to solve her own problem. Jim Barrie was a new mom, living in a new city, far from family, and looking for connection.
She began hosting playgroups at her local Jewish community center. The response was immediate, and the demand was overwhelming. And before long, Jim found herself running a national franchise business. From the outside, it looked like a runaway success.
But inside, there were serious problems. The business wasn't making enough money to pay back investors. The pressure was relentless, and the stress began to take a devastating toll on Jim's personal life and her mental health. Eventually, she was forced to make some incredibly hard decisions about the company and about herself.
But before any of that, Joan grew up in a suburb of Chicago. She studied dance and English in college, where she met a journalist named Bill Barnes. They got married, and after a few years living on the East Coast, they decided to move. I was pregnant, you know, and we didn't really plan it, but we knew we would want to have a family someday, and we'd been married for years, so we decided, okay, we'll go for it.
And I said, I'd like to just pick up and go. And, you know, the East Coast was dreary, and I just couldn't get over the weather. And so we just, you know, packed up everything and just to kind of see America to her and went across the country and thought, well, what about here? And what about here?
And was like, okay, well, let's try the next stop until we ran landed in San Francisco and built that job. For the San Francisco Examiner. Right, exactly. Okay.
With then, I think about a year of moving there, you guys left San Francisco moved outside to suburb in Marin County. Correct. And you are a young mom. This is 1973-74.
And from what I understand, you were kind of lonely. You felt a little isolated at that time. A hundred percent. Lonely and isolated.
1973 was the lowest birth year since forever, and the media had dubbed the families or the people who were living in that era as dinks, double income, no kids. So having kids was against the grain. And so I was looking for comrades. I was looking for people who made the same choice.
My family was a gazillion miles away. His family was in New York. My family was in Chicago. And yeah, lonely and isolated.
So I wanted to meet some people who had made a similar choice. So how did you, I mean, you wanted to meet other moms and kids. So were there play groups and things? I'm assuming they were like play parent groups.
None of that stuff existed. None of it existed. And so I was in a dance company because I was still into dance and a woman there, she had been offered a job at the local Jewish community center to run the children's programming. And she was scared because she had two kids.
And I said, why don't we share it? This was long before job shares were even, even the work job shares that we were really kind of revolutionary. And they, so we did. We shared our big $10,000 a year job and each made $5,000.
And what did that mean? Like seeing a sing along and, you know, coloring and arts. After school programs, you know, the preschool programs, the family programs. My, my colleague took all the Jewish stuff and I took the secular programming.
Okay. Right. And this is, basically this is what you're doing. And I guess at one point, you had just by chance, you had gone to a class at a YMCA in Berkeley.
So on the other side of the day, to, uh, to see this, like a gym, a gym for kids, for little kids that they were doing at the YMCA. Tell me, tell me, remember about that, is it? So, um, one of the women on the board had come into our, at that time we were operating our offices in a trailer because we were building a real JCC. And she came in and she said with her, then two, two, three year old daughter and said she was going to a program called KinderGem at the Berkeley YMCA.
And maybe I ought to come see it with her because it was really special. So I said, okay. You went to go observe this. So what did you see?
So it was in a gym at the Berkeley Y and they had basically had, they were borrowing the UC gymnastics equipment. So there was full-size trampoline, you know, and stuff. And the pommel horse and all those things. All that stuff.
And so they were sort of improvising a way that kids could kind of play on this stuff. You know, all the moms would kind of get around the big trampoline and somebody would, you know, it's just, and I just thought, this is not really kid appropriate. But it could be. And I could just see all this stuff scaled down in bright colors, the little kid size, and some really wonderful upbeat music and a really lively teacher.
And we would have something. All right. So you see in this concept something potentially really cool. Now you are directing the kids program at the JCC in Marin County.
And so tell me what you start to think. You start to think, hey, maybe I can bring this concept and do it there. I did. I thought maybe we could do this at the JCC.
But not this. We could have an opportunity for moms and kids to come together. But instead of having to be with full-size adult gymnastic equipment, we would develop our own equipment that would be scaled down to appropriate size with appropriate kinds of activities to develop. Because play is how kids learn.
And I knew that much. And this would be like kid-sized or toddler-sized trampolines and toddler-sized tunnels and bouncy things and crime image. Yeah. And did this stuff exist?
Did you buy it off the shelf? I found somebody. Well, first I had to convince the board to put up, I think it was $5,000 to buy this stuff, whatever this stuff was. But I didn't know.
I didn't have it priced out because it wasn't, it wasn't like going through catalogs and saying. Just to get custom made. Yes. Some of it was available for special needs kids.
So some of it I could get some bouncy logs and things like that. And I found somebody to make our, quote, propriety products. And we were lucky. I was pretty savvy because of my husband at the time.
I knew how to talk to the press. So I went to the local paper in San Rafael. And I got a big feature story in there. It was even before you started, you had a story about what your plan was.
Yes. And we had pictures of the equipment. We had an open jet, but we had sort of a dry run. And we had a big full-page feature.
You know, 50 years before, social media or 30. All right. I think you opened this up in 1976. It's the first.
You opened at the JCC. Yeah. Originally, you're calling it the Kinder Gym. Yes.
And how did you, right away, people were like, this is amazing. Like they started coming. Right away. From that press story, we were oversold right away.
And how much was it cost? It was like five bucks for an hour or something like that. Yeah. But we would sign up for a session for 12 weeks for 50 bucks or 60 bucks and come once a week.
And this would be moms and their toddlers. Some of the dads. And you would lead them through a programmer. They would just kind of run around and jump around and do whatever.
I hired preschool teachers because I wasn't, you know, I wasn't a preschool train. I was an entrepreneur, you know, whatever. And so I developed with them what they would do and how they would set up the equipment. And, you know, I was winging it, man.
I didn't know. Because underneath all that guy was really the intent to connect with other moms. And that would happen through doing the kids having fun and everybody talking. And in that first year, do you remember starting to develop like a program where the kids would come in and sit in a circle and then they would, or was it just free for all?
No, it wasn't a free flow. And we had the parachute that I had seen at the Berkeley YMCA. Oh, the big parachute that the kids would hold in the corner. Yeah.
So that was an army colored parachute. And I developed a multi-colored parachute, which I did have made, that was very kid friendly. And so every class ended with about 10 or 15 minutes of group time where the kids would run underneath the parachute. We had songs, some of them became propriety songs.
In the beginning, they were just songs that everybody sort of knew, you know what I mean? And so, you know, and then I was aware that parents would feel bad if their kids weren't participating or anti-social or didn't want to be in the group or didn't like were scared of running under the parachute. Or shy, yeah. You know, all that sort of stuff.
So I wanted everybody to feel positive. I wanted this to be a very uplifting experience. How were you able to cultivate? Because I remember taking my kids to play groups and it was really fun.
And I was usually the only dad there because I worked Wednesday to Sunday as an anchor of a weekend program back in the day. And I remember the parachutes and my kids, you know, sometimes they were just shy. They just didn't want to get in the circle. They didn't want to clap and sing and do that stuff.
How would you get parents to feel? I always felt good. It was always fun. But how would you do that?
How would you cultivate that feeling? Well, because we would have the teachers really be very upbeat and positive about whatever your kids doing is all cool. There's so much for your spirits than we are. Some days we don't feel like doing something and we just go sit in the corner and pick your friend.
It's fine. And then we'd have the teachers say, hey, out there, how you doing guy? You know what I mean? And just, you know, be just being.
Just dribble running down my mouth. That's it. You know, I love those days are so fun. All right.
So Joan, you're running this program at the JCC in Marin. And it's a JCC program. You were paid five grand a year running this program. But it was successful enough that I guess at a certain point, maybe a year or so in, the president of JCC approached you and he had been an entrepreneur himself and he said, hey, I think this could be bigger than something here.
Do you want to go into business? And how did that work? Did you start to think to yourself, hey, maybe I should turn this into a business? Or how did you go from running a gym at the JCC to start thinking, hey, there could be something bigger here?
Well, before that, I opened a second one on behalf of the Jewish Community Center in a neighboring community. And when I lived in Mill Valley, which was a lot. So I had two of them and they were really making money. And they were supporting all the, you know, sort of do good programs of other things that the center was doing.
And that's when the guy who had been running these, he was the president of the board. He was all of 32 and I'm 26. And I think he seems like an old man. But he had run these Rickberry basketball camps and he'd sold them.
And he was in a non compete cause. He was looking for something else to do. And he came to me and said, just what you said, I think this could be commercial. I'll put up the money.
You run them. What do you think? And I was completely naive. No, this was not even, I never even thought of it as a commercial venture.
It was all him. And just to clarify, Rick Berry was a legendary basketball player. This guy you're talking about is named Max Shapiro. He had run a chain of basketball camps with this guy.
Rickberry had sold them, had made some money. Yes. And he was looking for something to do. And of course he had seen what you were doing at the JCC.
Yeah, he was, he's seen what we, he'd seen the success of KinderGem. And he was like, I think we could do this commercially. All right. So Max says, hey, there's something here.
Do you want to go into business together? So what did you then do? I mean, you have 2D centers in JCCs. At that point, it's not your business.
So, so then do you say, all right, I'm going to start a business. It's going to be called KinderGem or whatever. Like, is that, did that happen at that point? Yeah.
Well, but I was afraid to leave my job, my, you know, my important $5,000, your job. I just, so I skipped down to south of San Francisco to the peninsula. We call it Sam Mateo to open up the first one. As a business calling a KinderGem, none of this trademark or any of that stuff is even, I think about all that stuff.
And so I open up at a temple. I convinced a temple that we could use their, their social hall a couple of days a week and that we could store the equipment, you know, a little bit here or a little bit of that sort of thing. So that was the model. It wasn't like, I'm going to get a, at least a space.
It was, I'm going to go to a temple or synagogue or church, whatever, use their space and pay them rent. And that's where I'm going to start this openness. Yeah. And I hired somebody with, you know, similar to the teachers I'd hired up in Marin County in the two locations.
I hired somebody with preschool background to run the program and they ran it a little bit of precursor as the franchisees. They put a phone in their home, they run the business part of it and they would teach the classes. They would pick up the calls, you know, and I was able to get a big story in the San Mateo paper, same as I had done in Marin and the same thing is completely filled up. Wow.
Okay. So you, so you start to see this thing as a lot of, there's a lot of potential here, right? Yes. And somewhere along the way, I bought my partner out.
I realized I'm doing all the work. Max, he was a, he was a passive investor and I'm working, I'm working hard. And when the, you know, the setup guy doesn't show up to put up the equipment, you know, I'm putting the toddlers in the car and driving down to San Jose and setting up the equipment myself. And I thought this is no way to run an airline.
So I make my, um, San Mateo partner or, she was an employee at the time. Now she's running like three or these up in Northern California, up in the Northern part of the peninsula. And I have another person down in San Jose who's operating another four or five of these things. And I make them both partners in the business.
You gave them some equity. I gave them some equity, you know, because they, they had an investment in this business. And so they were running. So you're an investor, uh, Max Shapiro, who originally given you $3,000, you decide, you know, he's, he's a passive investor.
I'm doing all the work. I want to try to buy him out. I thought you buy him out. I think you gave him double.
He put in like, I think $3,000 for when I was standing, gave him $6,000 back. I did. All right. So he did pretty well.
He doubled his investment, bought out. Um, and, and, and these places were making money, these, these are gyms. I mean, they were little tiny businesses, but they were, yeah, they were making a little bit of money. Yeah.
I was making some money. And at what point, I mean, did you leave your job at the JCC to start focusing on this? That's a good question. You know, I was trying to remember, I think somewhere around location five or six, I thought, you know what?
This is doing well enough. And I need to focus on really making this happen. So I left the job. All right.
So by 1979, I read just three years in, there's like nine of these locations operating all over, from, you know, Marin County, all the way to Silicon Valley, and, and, and you guys start bringing in, you know, significant revenue, some like over $200,000 a year in revenue. Yeah. A little bit more than that. Yeah.
And your costs were probably relatively low because you're renting out space at churches and synagogues. Correct. And for them, they're happy because it's revenue they didn't even have. Sure.
And you're bringing people in. Yeah. Everybody's happy. I, I imagine that as people start to see how cool this is, people start to approach you to say, Hey, can I, can I open one?
Can I, like, talking up to you about potentially franchising, which was not, again, was not part of the idea that you had, right? Nothing. Everything just sort of showed up. No, I, if none of this was calculated was, you know, I'll get nine locations and then we'll start franchising and we'll be national.
No, it was not. It was not. That was not even a plan. I didn't even know what the word franchise really meant.
Right. And I, you know, I, you know, I was, one thing I will say is that it's best to start a business when you're young and ignorant because I just figured I could figure it out. You know, I mean, when I look back at all the things that I sort of figured out, amazing. So I did.
And I went to the federal trade commission. I got the franchise papers. I was probably the first person, not a corporation franchising. So I wrote up the whole thing and I got licensed to be able to franchise in California.
All right. And so if you go to the FTC office in San Francisco, I'm assuming, correct, and they give you a stack of documents to fill out in order to become a franchisor. And I'm not saying this for any other reason except for I don't think with all of the knowledge I've now gained over 10 years of doing the show that I could fill out those forms. Did you know how to fill out those forms?
I had no idea what I was doing. I just thought, okay, I can read, I can answer these questions. I'll figure it out. And I did.
Okay. So you fill out the forms to become a franchisor, to operate a franchise business, but I guess when they asked for the name of the business or how it would be called, you couldn't trademark KinderGem. Well, I knew enough to know that one of the most valuable things in the franchise is the name. So I thought, okay, I better register a trademark or whatever it's called this name.
KinderGem. Okay. KinderGem. Yeah.
So I tried to do that. I didn't have a trademark attorney. I had nobody to make this work for me. So I'm just, I'm just me filling out the name for the name.
And about a year later, you know, quite a while later, year and a half, I get a rejection. It's generic. You cannot patent that. You can't trademark the name.
You cannot trade that name. And by that time, I had a few franchises operating. And you had all this press attention about KinderGem. All of it.
And we had about four years of operating as KinderGem, both in the company owned locations. And maybe we had, I don't know, four or five franchises at that time. And I thought, you can imagine what I thought. You know, what am I going to do?
That's the end of the business. That was sort of the first big trouble. When we come back in, just a moment, more big trouble, a business model that just won't work in an acquisition deal that drops of a cliff. Stay with us.
And you're listening to How I Build This. Hey, welcome back to How I Build This. I'm Guy Ros. So it's 1981.
And as Joan's business starts to grow across the Bay Area, she discovers she can no longer use the name KinderGem. So I, um, the then husband and I, Bill Barnes and I sat with a broke down a gazillion names and things like that. And then he calls me from a phone booth where he's running around the Embarcadero and said, Ha, ha, ha, Jim Barrie. And I just loved it.
I just loved the sound of it. I got immediately what it meant. And I thought, okay, now I'm going to hire somebody to find out whether this is a good name, how we get the trademark, how we do this properly. And so therefore did all that.
All right. So you trademark this name, this new name, Jim Barrie, and now you're ready to start franchising the business in earnest. And I guess you get introduced to a guy, somebody named Bud Jacob, who had experience in franchising and what he liked your idea. Yeah, he did.
And he liked me. And he was, he was, he was like a dad figure. He was the next generation. He was, you know, considerably older than me, 25 years older.
And Bud had worked for McDonald's in Chicago. He worked for Arby's and then he became a franchisee and he owned about 20 Arby's out of the West Coast. Did you need at that point? Because it's 1982.
Now there's a bigger vision here. Did you need to raise money? Yes. To do this.
Okay. So how are you going to do that? So Bud introduces me to the guy who eventually becomes my primary investor, Stuart Moldow. And Stuart had super success and he was a VC and he, I met him and I told him what I was doing.
He said, I love it. I love you. You go home and write a business plan. If it makes sense, I'll put money in to expand.
Were you at this point opening your own brick and mortar locations or were you still renting out churches? Still renting church halls and community centers. Yeah. By the way, there was a model like that, which is Jazzercise.
I know Jazzercise. Yeah. I know they, you know, the instructors work out of community centers. Okay.
So you write a business plan for this investor. I do. I go to him with a business plan. He says, you got it.
And he just makes me an offer. He tells me he's going to put up $300,000 for 30% of the company. He values the company a million dollars, which is sort of ridiculous. I think, but whatever.
And he put up the 300,000 and said, you go for it. And so then Bud's now working for me. We're putting up a strategy to run franchises across the country and get a foothold in the media market of New York. So we weren't labeled some crazy California phenomenon.
And the $300,000, 30% of the business is being valued a million dollars, which in 1982 was pretty, I mean, it's a pretty good valuation for, you know, what was at that point, you had no assets. We had nothing. And no leases either. I mean, it's like Jazzercise.
I mean, any one of these churches or synagogues or whatever could say, okay, see you later. You know? Yeah. Okay.
So let's talk about the initial plan. Because from what I understand, the model that you and Bud put together was somewhat different. It wasn't like, hey, you want to talk about McDonald's. It was, you really wanted women actually to be the franchisees, particularly women maybe who were not working at the time.
Tell me a little bit about that model that you start to develop. That was sort of the, I think, one of our brilliant moments. What we were trying to do is really replicate people like me, but a little bit younger. Now I'm in my early 30s.
So we're looking for women in their mid to late 20s who were raising a family, but also had ambition for some kind of professional focus. And this was like the perfect business. And so we had a unique strategy because again, this is also pre-social media. We knew that the local newspapers were the next best thing to anything.
I mean, paid ads, none of that was going to work like having a press endorse you and write a big story on you. So we just went about going to the local press and every community that we were thinking about going to and saying, we're thinking about going here and then some story about the neighboring community with the local franchisee and blah, blah, blah, and then people started running. We also ran kind of an interesting strategy. We ran avatars.
Like, like, editorials that were, looked like editorials were actually advertisements. Correct. And the Wall Street Journal so that Daddy could read them on his commute to his real job that he had to do to pay for the family and he'd say, oh my god, this is perfect for my wife. And then they would fly out to California on their own nickel, maybe him too, but definitely her.
And we would sit and we would spend the whole day with them. They would go to a center. Then we'd all have the management team and me. We'd all have lunch in my office together.
And if any one of the management team of the company thought that this person was not a good fit for us, that was a veto. That was very collaborative. Yeah. And was there a certain energy or attitude you were looking for?
Oh, yeah. We were looking for somebody charismatic who was bright, who understood that we were, you know, that this was like a marriage, you know, the success of Jim Barrie was the interaction between the franchise or in the franchisee. And in addition to that, we would also discuss with them how big of a business they wanted. Some of them would have six, seven or eight locations, some would only have one or two.
And from what I understand, you really focused on the East Coast initially. You didn't, you know, you were based in California. You really wanted to push the New York market from the beginning of your venture. Why was that?
Well, first of all, we built out already the Northern California market because I was able to do that on my own even before we were growing. But when we opened in LA, it was a different story and the LA franchisees were extraordinary and they knew how to get all the press and they were part in the film industry. So they were on all the fancy TV shows and they got all the movie stars and their classes and they had about eight locations. And because of their success, we were able to build out the Southern California market because people who were in their classes would say, I want to do this.
So that grew naturally. So the East Coast is where we needed to put our energy, which is when we did the Wall Street Journal ads, I hired a PR firm. They helped us get some big stories and, you know, we were happening. And I mean, this like was hot.
I mean, starting 1982, it was like you were getting all kinds of crazy attention. I mean, because it kind of coincided with this new trend around like child development and better understanding of like play and I mean, this was becoming a thing, especially in affluent communities in the U.S. Like, right, at some point people magazine wrote move over a robber room. All the best babies come to Boogie at Joan Barnes's jimberry.
That was great. Yeah, but how about that? Yeah, we were in U.S. world news report and time and Newsweek and I mean, it was like, it just was not a pinch ourselves to realize we're getting all this press.
Okay. And so basically tell me what kind of, you know, sort of blueprint you gave to the franchisees. Presumably you gave them like, here's how you run a class with this age. Like, were there different classes that they would run for different ages?
And was there a script? Exactly. So we first of all had a week long training program and all the different people on my staff trained different things. I trained them how to find a location.
Somebody else would train about how to set up the equipment. And we also had quality assurance people that flew out to their locations and hung out with them and, you know, made sure they were doing everything well and whether or not we could be more helpful to them, all the marketing material, everything. That's, that's what they bought. Yeah.
All right. So you get, you're really exploding. I think by 1986, I read you had 25 employees in your corporate office. You had about $15 million in revenue and about 400 of these franchisees about these local play centers in, in all across the US, even abroad in some countries.
And I guess they were paying you like 20% or a percentage of what they were bringing in. Correct. Well, we had, in addition to the US franchisees, we had sold Mexico, France, and we'd done those as master franchises. So they were, they replicated who we were and then they would sub-franchise to things.
And all under the Jimberry brand. Okay. And I remember seeing this movie in theaters. It was even mentioned in Baby Boom, the Dan Keaton film.
So you'd Jimberry in that movie. I was at that movie and I heard them say that and people pay as you know, millions of dollars to have their airline put in there and I started screaming. Oh my God. You know, because Diane Keaton sitting there talking to a bunch of women in some upper West Side park and they go, you don't even know what Jimberry is.
I mean, come on. And, and so this really, well, and you, it sounds like you were targeting, you know, sort of affluent places initially in New York and Los Angeles and San Francisco, but you were also in Kansas City and you had, you were all in, you were all over. Mainly in cities, right? Mainly in cities, yes.
Or suburban markets. We were all over suburban Detroit, suburban, Minneapolis, Atlanta, Florida. Yeah. All right.
You get to 1986. This is now four years after you start the franchising. You've got, you know, franchisees operating all over the place. We've got 15 million coming in in revenue, which is from the outside sounds like you guys are doing great.
But on the inside, you know that there's a problem that actually what seems to be a wildly out of control success had some serious underlying structural problems. What, what did you start to realize? I realized that the franchise model was flawed. That no matter how many franchises we had, it wasn't about scale.
The revenues that the franchisees generated are therefore the percent that they would give us of their revenues was never going to be sustainable. How is that just because a franchisee might have three or four open three or four days a week and only bring in a certain amount? And you could see that there was just, you couldn't squeeze them for more. I mean, we already were doing it.
So I'd seen that we had several hundred of these things and, you know, each location would maybe pull in a good one, would maybe pull in a quarter of a million, maybe a year, yeah, and we'd get eight percent of that or whatever the percent was at the time, it was six, who knows? Cause it kept growing over and that just, and in order, because of what I said, earlier guy that the success of the, of the growth of the business was how well we supported the franchisees. So yeah, we could not support them and then we wouldn't sell any far. And so it cost, the cost of actually supporting them and sending out a team to be with them and run trainings for their teachers locally and all that stuff.
It was all well, well thought out and really beautiful, except it cost too much money. So essentially the only way to even break even was to sell more franchises in order to sell more franchises, you had to spend money to service those franchises and to, so it was like a catch 22. Flawed and I realized it was flawed, but I didn't know what to do about it because I couldn't, I couldn't figure it out because there was no way I could charge more or give less service. I mean, I thought of all the possibilities.
Now, my question though is, couldn't you do things like just raise the price, like say to all the franchise, okay, it's no longer $5 a class. You got to charge $8 a class. Well, by that time we spawned competitors. And that's, that's good news because if you're, you know, if you don't have a real business, you won't competitors validate the validity of the business.
So they charged about the same thing. So we really, it wasn't really sustainable for us to, you know, get to a fee where the RA percent was really going to make a difference to us, you know, because it would have been a race to the bottom. Yes. Undercutting.
It's amazing. Cause on the one hand, publicly, you're getting national media attention. You're in baby boom. You're in people magazine.
Everyone's talking about this thing. Every mom's going to it. Everyone loves it. It's so fun for the kids, but the business is barely treading water.
Yes. You can just go to set it better myself. That must have been really, really stressful. It was, I mean, I, I, I'm usually pretty good at fighting at myself out of a paper bag, but this was, this was the only thing I could do was just be honest with the board and say the way we're doing things is never going to have a return on investment for you guys.
We could probably move along as a, as a nice family business. I get paid, the employees would get paid the franchise, but they would never see, they never see a return. It could, they didn't go into this to fund a little family business. I knew that of course.
Okay. So you say this to the board and what do they say? They say, go figure it out. Just no more money.
We're not giving you any money. Go figure out some, some other way. And you know, that was like, um, okay, I'll figure out another way. So I guess you have to start thinking about, okay, maybe there's a product, maybe there's retail, maybe there's other things we could do.
Well, the first thing I thought about was what can we do that doesn't cost any money because they're not giving us any money and I'm not going to be able to go out and raise money when our, when our board is all invested in this thing and they're not putting up any money. So I thought licensing, I was sophisticated enough to know licensing, you know, Jim or we had a really great name. As you said, we've been, we, and a brand and a logo, right? Everything.
And we had a great press and we were, we were, we knew it by this. Everybody knew it by this. Everybody knew it. Go places.
What do you do? I run, Jim or me. I love Jim or me. If you were a parent and didn't know what Jim or me was, you were like really living on Mars.
Yeah, exactly. And so, um, so we were able to secure some very, very prestigious licenses. We had Random House doing our books, Health Text, which was kind of a cool brand for clothing. They ran, they did a clothing line for us.
We also had Connor toys, did some really, like a big climbing gym that you put in your, oh, you can buy like a big, your own climbing. Your own climbing. Really colorful and nice looking and it was sold in Toys R Us. I mean, it was like, wow, we really struggled.
It appeared. And you didn't need any cash to do this because you were just licensing your name. Exactly. But from the consumer's perspective, the peer that Jimbery was even bigger.
Like, wow, look what Jimbery is making. Yeah. Um, but, um, probably a year later, maybe a year and a half later, we were dropped by all of them because we didn't have the sales. We weren't Snoopy.
We weren't Garfield. We weren't Little Princess or whoever the cool product was. We didn't have a TV show. We didn't have nothing.
We just had this live living, breathing program and it wasn't big enough. So even though parents were clamoring to come to the classes, they weren't walking into Toys R Us and going, Oh, Jim, are we toys? I'm gonna buy them. Yeah.
Well, they obviously were buying some, but not enough because these, these licensing companies really want you to be the next gazillion dollar baby. And if you're not, they drop you. They drop you because there's always a million more TV shows that are with a new, with a new product. So we were dropped.
And so now now licensing doesn't work. The franchising, we're still, we're still operating. I'm not, you know, but, but we're not making any money. We're making, we're doing fine.
We're supporting our staff, but we're never going to pay them back. The same problem exists. All right. So this is 1986.
You've got this major problem with the business, but then it suddenly looks like you might get a lifeline, right? You get, I guess you get introduced to someone from Hasbro, which is one of the biggest toy companies in the world, right? And then what I guess they want to make like an investment, maybe even a quarry. What, what's the story?
What happened? Yeah. So first they thought they would do a corporate investment and then they thought they would buy the company. Do you remember how much they're offering?
I don't. I think they had an option. Maybe it was the first they put in an investment and then if we hit certain benchmarks, they would buy it. And so with that, you started to get some confidence that you could at the very least pay back your investors or give them a return.
I just felt like we have been bailed out of hell. And it's raised by the way. Can we sponsor? How crazy that is?
Because everyone who knew you was like, there's Joan Barnes. She's Ron's jimberry. It's the most amazing company and you're like freaking out. I'm freaking out and I'm trying to act like I have it together and I don't want the franchisees to be panicking that we're going under because this is their business to now.
You know what I mean? And so I get this offer. I'm so, I'm so stoked. I get the lawyer.
They, you know, they, they, and their lawyers, they're going back and forth on these documents and I go to New York to sign the deal. One of the investors is on the plane, the lawyer, you know, whatever, they're all coming for this big celebration for us to be partnering slash being bought by eventually with luck Hasbro. Well, I get a call that afternoon. I'm sitting in the hotel room and she says, hello, my name is Carol Anderson.
I'm the senior vice president of something. It hasbro. You don't know me. And I said, oh, hi, Carol, I'll probably meet you tomorrow.
Just actually, you won't. The deal is off. We're not coming. What?
That's what I thought. What? I said, I'm sorry. I said we have our lawyer and our other investors coming.
I'm confused to say, well, I was straightening out. She was really kind of not very lovely person. It's all over. We're not coming.
And you're like, sorry, can you give me any more information? She was not forthcoming. Just that's all I needed to know was that it was off. Was there anyone else you could call?
That was it. She was the kind I said, should I call for whatever the marketing guys name who I really originally connected with? I said, would I be able to speak? She said, nobody's going to speak to you.
I am the, I am the one who's been telling you the news. Wow. I'm sitting all by myself. These people are on the plane.
I'm humiliated. I mean, I thought, OK, this is the end. I can't imagine what we can do from here. The bail out and the board was thrilled.
They loved to ask me. The last one was a big deal. And that was yours. Still a pretty big deal.
It was. Yeah. And so I left a message in the room for the woman investor who came from Montgomery Security, who became kind of a friend. And I said, please come to my room.
This is one of your investors who came out. One of my investors who was coming out for the closing. And she'd been fantastic. You know, she was with Montgomery Securities and she was a peer of my age.
And so she came to the room and I just burst out crying. I said, I'm so embarrassed, Linda. I don't know what to do, you know, all these hot shots are coming. Our lawyer, you know, another investor.
And she said, we'll deal with it. We'll figure it out. And I don't even really remember. I just I just remember.
It's a blur, probably. It's a blur. And I remember finally flying home and going to the Jimberry office and telling everybody that this had happened. And I said, you guys, I know there's an answer, but I don't have it.
And I'm completely spent. I'm going to go to my little cabin in the Sierra to restore. And I'd like it if you guys would take the weekend to get together without it. So I won't inhibit you and come up with the winning strategy.
You basically, you come back and you say to your team, figure it out. I'm done. I'm done. I'm taking some time off.
I'm taking some time off. I'm not done. I just can't. I don't have any, I would be a drag on a creative meeting for what's next, because I was the one that'd come up with all of it.
You know, I mean, I was the one, the big leader and with the insult of Hasbro walking away from the deal, I just felt leveled. I had nothing left. I knew I would, but I needed some time to go be in nature and, you know, whatever. I read that you guys, the Jimberry was down to $50,000 in cash.
Yeah, I think it was even less than that. My CFO came up to the cabin and we sat there at my kitchen table, figuring out how long we had to live. You probably had to lay people off. We laid people off and the ones, but those of us who remained and I called it the life raft, we all took 50% pay cuts.
I took a 75% pay cut and everybody hung in there. It's just all quiet. This was not the papers. It's not publicly known.
Nobody knows nothing. The franchise, nobody knows anything except for me and that in my, my people that work for me, the board doesn't, the board knows, but I said, we're coming up with a, we're coming up with a final and winning solution. You guys, I just, I kept being, I kept putting on the happy face. I mean, it's, it's, it's kind of this classic dilemma.
You had an amazing brand, but you didn't really have a, a retail product. We did not have the money making business. And, you know, I always just say to my franchise, he's the price of admission into the play art of building a business is making money. You can do it for a little while.
It's, it's, you know, social venture and it's fun. But if you can't make money, you can't stay there. Yeah. So when I got back from my cabin, you know, trying to figure out how long there are 50 or 25 grand was going to last and who was going to get laid off and who was going to take pay cuts and all that stuff, I, my desk was a picture of a play center next to a retail store.
Both a graph, a sketch, a sketch. Somebody who, somebody, this is what they'd come up with. Our play centers, instead of being in church halls, we'd rent a space. We'd open a retail store, a jimby branded stuff.
And then in the back of the retail store would be the play program. So we'd rent one space and then all together. Retail stores. Well, that's a big deal, you know, what we'd have to manufacture our own clothes and, you know, sell them in our own blah, blah, blah.
OK, let's put this together. And so just to be clear, the idea was let's have a retail stores. We'll sell over all of our stuff and all the jimby plays are inside. Yeah.
In the back of the walk to the store, the back of the store, but the store would be a new creation. We would, we would design a manufacturer, own apparel and we'd also put some play equipment in. We have, you know, some, it would pretty much be all branded. Maybe in the beginning, we'd have to bring in some other people's toys and things like that, but it would be a thing.
So so the idea would be, hey, they're coming in for the classes. Anyway, but let's make them walk to the gift shop first, right? Yeah, exactly. You have to give shop and you go to class and you got to walk back out the gift shop.
So the gift shop was going to be business. Yes, exactly. But the classes are going to draw people into the stores. Right.
And you like this idea right away? I did. I thought it was. Yeah, but I realized it was going to be we'd have to really come up with the whole plan.
We'd have to do a model of what the store looked like, some prototypes of the clothing, you know, we'd have to do a whole thing and then sell it to the board. But again, I'm young and dumb and you know, just business was not dying under my watch. That's what I can say guy. It just was not going down.
OK, the board previously, like less than a year earlier, had said, go figure this out and no money. Now you're going back and say, OK, we figured something out. I'm going to present this to you and I need money. Is that what you did?