David Bolotsky on the Importance of Running Civically Minded Businesses

In 1999, Dave founded UncommonGoods, the pioneering website for handmade and independently designed products.  UncommonGoods became a founding B Corp in 2007, focusing on delivering a positive social and environmental impact, in addition to generating profits. UncommonGoods is independently owned and has taken a “slow money” approach to its business; it has grown gradually, provides stock options to all 200+ year-round team members, runs the business (including warehouse and call center) under one roof in Sunset Park and pays a starting hourly wage of $17 for seasonal workers (year-round workers earn more).  Dave has been actively involved in the successful legislation to provide New Yorkers with Paid Family Leave and a higher minimum wage.  These practices contributed to UncommonGoods being named a 2018 Forbes Small Giant and Dave being named a Business Champion by Family Values at Work.

Dave is a Phi Beta Kappa graduate of Binghamton University, where he managed Slipped Disc, the school's record store, and then put those skills to work at Goldman Sachs from 1987 to 1999, where he was a Managing Director, heading the firm’s research of the US retail industry. 

Dave helped found and lead Comprehensive Development, a non-profit that supports economically disadvantaged students at three NYC public high schools, where he now serves as Chair of the Board of Advisors and a volunteer tutor. Dave is a 4th generation Lower East Sider, where he lives with his wife and two sons.  He leads the Friends of Gulick Park volunteer group, which is responsible for the successful restoration of this inclusive neighborhood gathering place.

Business Today (Rhea Park): UncommonGoods came to life after you visited the Smithsonian craft shows. In your experience, what has been the most effective way to make lasting impacts on the and small business communities you seek to help?

David Bolotsky: It's finding a good partner, an artisan, whose product is aligned with our customer's interests and who we can help build their businesses. We're often working with artisans and makers who have never sold through retailers. As a partner, we give them a lot of exposure too. We try to give them product exclusives so people have a reason to shop at UncommonGoods because they can't find the product anywhere else. We discover a lot of up and coming artists, so the value we get from that is we find products that are relatively undiscovered, and we help those artists and makers get discovered.

BT: What made you think that the craft show market was something viable to capitalize on given that craft shows and retail shows are declining in allure?

“The beauty of the internet is that you can bring buyers and sellers together efficiently through one virtual roof of the e-commerce site.”

DB: People want to express their individuality through products. People don't want to have the same thing that everyone else, and if I'm going to buy you a gift I want to buy you something that reflects my understanding of you as a person. And the beauty of the craft show is that there's no chain store that can manage the inventory in 500 locations of handmade items. But if you could have a national store with only location, then the inventory model works and the demand side should work as well. That was the genesis of the idea. There is demand for it, but the inventory risk didn't make sense for a chain of stores. The beauty of the internet is that you can bring buyers and sellers together efficiently through one virtual roof of the e-commerce site.

BT: How were you able to gain this insight about consumer behavior? Were craft shows always an interest to you?

DB: I'm not much of a shopper. But I was a research analyst at Goldman in the 1990's, and I was very excited. I was writing about the internet and doing a lot of research on internet retailing and was confident that it was going to be a major channel and decided that rather than just writing about it, I wanted to start my own business. I looked at different opportunities. And I started out with  art supplies because I was familiar with this store called Kerl Paint, and I thought that it was a chain of poorly run stores, and there was an opportunity to do that but much better. So then I started looking at where there was additional opportunities and saw that the crafts side of the market was much bigger. But when I looked it was things like silk flowers, craft books, things I really wasn't interested in. And I was talking to someone about it, and they were saying: "Oh crafts! You should go to the Smithsonian craft show!" I thought: "Huh, that could be really interesting!" So I hopped on a train to D.C., and the show was packed. I spoke to lots of customers and artists and came up with the idea that day in April 1999. 

BT: It seems that you started UncommonGoods kind of on a whim. How were you able to get the ball rolling so quickly? What advice would you give to students who also want to start their own businesses?

“The biggest piece of advice...is make sure you have the stomach for it: the determination, the resilience, the willingness to sacrifice, because the only thing easy, in my experience, is failure. ”

DB:I didn't get it rolling so quickly. It was a long, hard road, but I would say that one advantage that I had was that I was working with investors as part of my day job. As a result, the investors that respected me were potentially interested in investing in the company when I told them I was leaving to start a business. Our staff grew pretty quickly. But the internet bubble burst about a year after I started the company. At the time we had 35 people and had to reduce the size of the team to about five people. It took us four years before we made a profit, and it was six years before I drew a salary. It was definitely not an overnight success. But the biggest piece of advice I would give is make sure you have the stomach for it: the determination, the resilience, the willingness to sacrifice, because the only thing easy, in my experience, is failure. Starting a business is easy. My experience was that it was really hard to make it work.

BT: Do you have critics? What do they say, and what would you say to them to help them understand your vision? 

DB: A few criticisms I recall offhand: why are your prices too high, why do you charge for shipping, and why do you sell products from China? In terms of our response: our prices our high because we sell handmade, made in US product, and they cost more. Another one, which is kind of the opposite critique, is why do you sell things that are made in China? In my opinion, it's kind of racist to be opposed to Chinese - people don't complain that we sell Italian or French product. My attitude is that if a product is made in reasonable working conditions, it shouldn't matter where it is made. And why do we charge for shipping? Our shipping costs are much much higher than our full year profits as a company. Our fear is that if we didn't charge for shipping, we would lose money as a business, and that is not our goal. We don't make money on shipping, and we think it's reasonable to charge for costs. But in response to those criticisms, we did institute our own version of Amazon Prime, called Perks, which provides a year of free shipping for just under $15, which I think is pretty affordable.

BT: Why do you think other businesses are not following the idea of the triple bottom line?

“You can’t be genuinely successful unless you have a positive impact on people and minimize your negative impact on the planet.”

DB: Most businesses and most business people are focused on one thing and one thing only, and that is the proverbial bottom line - how much money are you making. I was raised such that there are things more important than money. I don't take my values and put them on the shelf when I go to work. I think many people feel like they have to pray at the altar of the all-mighty dollar at the exclusion of their values. I have the privilege of being the founder and majority owner, so I can make decisions that align our values and are good for the business. The idea behind B-corporation is that in addition to being focused on the financial bottom line, or profits, you need to also be focused on your impact on people and the planet. You can't be genuinely successful unless you have a positive impact on people and minimize your negative impact on the planet. I think it's a philosophical issue, and it's something that has to change in our society.

BT: What is something about UncommonGoods that has exceeded your expectations?

DB:The impact that we've had on legislative initiatives in New York State. Businesses are typically assumed to be opposed to issues supporting workers, and we've been actively engaged in raising the minimum wage in New York state and advocating for paid family leave. And both of those were initiatives that were successful. Because we were a business advocating for worker rights, we were able to be an outside voice. I was really happy to have been able to positively impact those legislative initiatives.