The Coronavirus Pivot : Planet Money Faced with the prospect of shutting up shop because of coronavirus, some companies are retooling and pivoting to keep their doors open and their workers employed.
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The Coronavirus Pivot

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The Coronavirus Pivot

The Coronavirus Pivot

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CARDIFF GARCIA, HOST:

Hey, everyone. We know that these are uncertain and stressful times. And we here at THE INDICATOR feel really fortunate that we're still able to get up every morning and do the work of informing and explaining and just helping you make sense of it all. And one reason we're able to do that is because of your contributions to public radio stations. So we are asking you, if you can, to please donate to your local NPR member station. And to find out how, head to donate.npr.org/indicator. Thank you.

UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

BRITTANY CRONIN, BYLINE: I hear a little bit of background noise.

STEPHANIE LUSTER: Oh, OK. No. You know what? That is me home schooling, and that is my 6-year-old.

CRONIN: Gosh.

STACEY VANEK SMITH, HOST:

That is producer Brittany Cronin, and she is talking to Stephanie Luster. Stephanie Luster is the president of Essations Incorporated. Essations makes hair products for salons like hair spray, shampoo, gel. Stephanie runs the company out of offices in Park Forest, Ill. Well, at least she used to. Right now, she's running it out of her house.

LUSTER: Hi, baby. Can I - can you go in the other room for me, please, while I do the interview?

GARCIA: Essations was started by Stephanie's parents almost 40 years ago. They ship hair products to salons all over the country and internationally. But a couple of weeks ago, Stephanie realized that all of her customers - like, all of them - were shutting down as city after city ordered businesses to close and social distancing rules to take effect.

LUSTER: Things started going downhill quickly. Then I, like - you know what? This is going to get real.

VANEK SMITH: Stephanie realized that all of the stylists and salons who buy and use her products - like, all of her clients - were out of work.

GARCIA: Entrepreneurs and business owners all over the country are in the same position. Their revenue is just gone, up in smoke. And a lot of them are desperately trying to pivot. They're trying to get online, setting up delivery, trying anything and everything to keep some money coming in.

VANEK SMITH: And hopefully keep their workers on. In the last two weeks alone, nearly 10 million people have filed for unemployment. It's estimated the unemployment rate in this country is approaching 10%.

GARCIA: This is THE INDICATOR FROM PLANET MONEY. I'm Cardiff Garcia.

VANEK SMITH: And I'm Stacey Vanek Smith. Today on the show, two businesses that are mid-pivot, hoping to keep their workers on, find new customers and survive in a brand-new and extremely brutal economic landscape.

GARCIA: People like Stephanie Luster of Essations, who saw things going downhill quickly and then got to work.

LUSTER: The way I am, I am a person that tries to think kind of quick on my feet. So when I see something coming, it's not like, oh - I don't get overwhelmed by it. It - I go straight into thinker mode.

GARCIA: Thinker mode - I like that.

VANEK SMITH: I like that, too. And Stephanie says she had a few thoughts while in thinker mode. So first, Essations needed to start selling directly to consumers. Salons weren't buying anymore. And second, she needed a way to advertise to those consumers. Thirdly, though, there was hope because sheltering in means a lot of people are spending a lot of time on video chats, and they still need their hair to look professional and styled in a lot of cases. They just needed to know how to DIY their hair for work.

LUSTER: So the people who are at home and working but still have to do digital calls or have video calling conferences or something like that - they still want to look presentable.

GARCIA: All of these ideas were kind of floating around in Stephanie's head, and then they kind of crystallized. Stephanie thought, the stylists that she works with all have very loyal clients. What if the stylists created videos - home hair care videos - and then posted them on Facebook? Their clients would watch them and then probably share them.

LUSTER: Short videos on different process even just from detangling hair or maybe doing a quick style, giving those small solutions on how to maintain their hair at home.

(SOUNDBITE OF ARCHIVED RECORDING)

JAMILA: Taking down braids is always a hassle, but I'm going to show you some tips that'll make it a lot easier.

VANEK SMITH: And then the stylists in videos like these could feature Essations' products in their videos.

(SOUNDBITE OF ARCHIVED RECORDING)

JAMILA: So now we're going to go through and use the Infusion 365 spray.

VANEK SMITH: At the end of the tutorial, the stylist would give a code, and customers could use that code to get a discount on the Essations website. And then Essations would know from the code which stylist had sent the customer, and the stylist could get a cut of the sales.

(SOUNDBITE OF ARCHIVED RECORDING)

JAMILA: Please visit essations.com and use my discount code, Jamila (ph), for an extra 15% off. Thanks for watching.

GARCIA: The stylists could also use the platform to advertise one-on-one consultations with longtime clients or with new clients and have a source of income while they were at home.

VANEK SMITH: Stephanie says she's hoping that this pivot will help her keep Essations' 29 employees on and also help out the stylists who have supported her business for years.

LUSTER: I want to benefit all of these people out there - these beautiful women that are out here who are used to being in salon and taking care of their clients and they just can't do it right now.

GARCIA: Stephanie says more than 20 stylists from all across the country have made videos featuring Essations' products, and online sales of consumer products are already up around 20%.

VANEK SMITH: Coming up after the break, a small-business owner in New Orleans pivots into making an entirely different product.

GORDON STEWART: What can only be described as the single strangest thing that has ever happened to me in my professional life.

GARCIA: New Orleans is a city that's famous all over the world for its food and music. And Gordon Stewart's business is right in the middle of that.

VANEK SMITH: Gordon owns a distillery in New Orleans called Porchjam. It's the biggest commercial distillery in the state.

STEWART: And we make vodka and gin and rum.

VANEK SMITH: I'm detecting a bit of an accent.

STEWART: Just a wee bit, yeah. I'm Scottish originally.

GARCIA: Just a wee bit. Yeah.

VANEK SMITH: Just a wee bit.

GARCIA: Gordon opened Porchjam two years ago. He supplies a lot of local bars and restaurants, or at least he did until a couple of weeks ago when they all shut down.

STEWART: I mean, everyone in the restaurant business down here right now and the bar trade as well is just - it's in freefall. Their business is just falling apart. We haven't taken a booze order in two weeks.

VANEK SMITH: And for Gordon, the timing was especially bad. He had just been in the process of making deals with a bunch of national distributors.

STEWART: I was in the middle of advanced investment conversations with business in New York and Illinois and Florida and California that we want to execute this year. And then this crazy coronavirus dropped on everyone, and the market crashed, of course. It just went (imitating beep) radio silent.

GARCIA: Gordon was looking at no money coming in and probably having to lay off all of his workers. But then he had this idea.

STEWART: A couple of friends of mine were like, hey, Gordon, it's really hard for us to get hand sanitizer right now. We can't get any. And I was, you know, running around Walgreens with my 7-year-old one day, and it was all gone.

VANEK SMITH: Then Gordon heard that the government had created an emergency regulation that would let distilleries like his pivot to making hand sanitizer.

GARCIA: Yeah, distilleries are perfectly positioned for this because the main ingredient in hand sanitizer is alcohol.

STEWART: So I took it upon myself to look at how difficult it was to make it. And then - I mean, I'm a chemist, of course. Then I realized there was nothing in it that was particularly difficult.

VANEK SMITH: Gordon realized that if he could convert his distillery into a hand sanitizer factory, he could keep on all of his employees, even hire some more employees and also help battle coronavirus.

STEWART: And I said, listen; we're not going to do this half-baked. We're going to literally stop making alcohol. We're going to repurpose our whole business. We're going to war on this thing. This is a wartime effort.

GARCIA: I like his attitude.

VANEK SMITH: I know - wartime effort.

GARCIA: Gordon is currently producing around a hundred thousand liters of hand sanitizer per month, which still is not enough to meet demand.

VANEK SMITH: Have you had a lot of orders yet?

STEWART: Yeah - been destroyed by it, swamped by it.

VANEK SMITH: Gordon says the hand sanitizer is selling for around $35 a gallon. He says it's not hugely profitable, but it is enough to keep his business going.

STEWART: Weren't it for this, it would've been really tough for us to survive. You're a young company, and no demand overnight...

VANEK SMITH: Yeah. Yeah.

STEWART: ...Is not a particularly entertaining cocktail to think about. But the really weird thing about the way this is all beginning to fall into place is that I've had three people approach me to invest in the company in the last 24 hours.

GARCIA: Gordon says they were excited to invest in his hand sanitizer business, and they were even more excited when they found out that he normally makes booze, which I understand. I get the enthusiasm, you know?

VANEK SMITH: Yeah. Who needs a drink?

(LAUGHTER)

VANEK SMITH: This episode of THE INDICATOR was produced by Camille Petersen (ph) and Brittany Cronin. Our editor is Paddy Hirsch, and THE INDICATOR is a production of NPR.

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