151: On the Brink

It’s been a while since I did an in-depth essay podcast about the business. Episode 132 was tangentially related - the Money one - but before that, it was back in episode 113 that I talked about the first voyage of Isbjorn. That happened nearly a year ago now! Obviously lots has happened since.

I feel like the business is ‘on the brink’ - either we finally get to enjoy all we’ve worked for over the past ten years, living out what I’d only dreamed about. Or, it doesn’t work out, we don’t sell enough bunks to make a living, and we do something else. A few things here or there could tip the scales either way.

All the Feels

I created a little inspirational photo for our Instagram account - it’s @59northsailing by the way, you should all follow it! - with a quote about mountains and the sea. The full quote reads:

“Men go back to the mountains, as they go back to sailing ships at sea, because in the mountains and on the sea they must face up, as did men of another age, to the challenge of nature. Modern man lives in a highly synthetic kind of existence. He specializes in this and that. Rarely does he test all his powers or find himself whole. But in the hills and on the water the character of a man comes out.”

It’s hard to describe how true this quote actually is. In fact, the previously mentioned Bill O’Malley commented to it’s truth on Facebook and said: 

“Yes, well on a mountain you can choose to sit down, wait, hide away somewhere safe or go back down. On the ocean, there is no hiding - just facing and dealing.”

I feel that all the time when we’re offshore, especially knowing I’m responsible not just for the happiness but critically for the safety of the crew who sail with us. This morning I watched the feature movie Everest, based on the book Into Thin Air, which in turn was based on the disaster on Everest in 1996 that killed a bunch of people. Rob Hall, the Kiwi who pioneered guided ascents of Everest for amateur climbers, was the main character of the movie. It was admittedly uncomfortable watching his character make decisions that would literally become life or death for his clients. And I regularly state that what we do on Isbjorn is closer to a mountain climbing expedition than it is to normal day sailing (hopefully with lower stakes than an Everest expedition, but still!). Watching that play out this morning just hits a little too close to home.

Anyway, what follows is a brief look back at how we got here, and a nervous look ahead at what the future might hold for Mia and I and 59 North. 

‘Harnessing Entrepreneurial Manic-Depression.’

At the airport on the way to Sweden I read a blog post that Tim Ferriss had on his website about the mental roller-coaster ride that all entrepreneurs experience. I’ll describe it best I can here, but go to the show notes to see the graphic interpretation.

Basically, entrepreneurship can be broken down into stages, according to Cameron Herold, who actually wrote the piece as a guest post on fourhourworkweek.com titled ‘Harnessing Entrepreneurial Manic-Depression.’ The four stages of the curve are thus:

  • 1. The first stage of the concept is called “Uninformed Optimism”. At this stage on a rollercoaster, Cameron writes, just getting to the top of the rollercoaster, you experience feelings of an adrenalin rush, characterized by excitement and nervous energy. For me, this was the stage in early 2015 when I was browsing the listings on yachtworld.com and looking at the beautiful Swan 48s I found. It was sitting in our living room in the old Lancaster house, listening to music and building an Excel sheet into a business plan. It was all theoretical and all super exciting! No way was anything going to stop that train once it left the station, at that point anyway. 
  • 2. The second stage is called “Informed Pessimism”. As you ride over the top of the curve you now have a bit more information. Feelings of fear, nervousness, and frustration begin to set in. Perhaps you even want to get off of it. So this would have been September, during the big refit. Stuff kept popping up, money kept leaving the bank account and we were putting in 12-hour days working on the boat. For me, this stage wasn’t as bad as it reads here - I was still super-motivated, but definitely had more information! The bottom line on the theoretical business plan suddenly started shrinking as the refit expenses piled up!
  • 3. The third stage is called “Crisis of Meaning”. You’re past scared. You feel despair. It’s as if you’re standing on the edge of a cliff ready to jump, and you begin to think “Today the rollercoaster’s going off the bottom of the track for the very first time.” You feel helpless and you’re both terrified and frozen. Okay, so I definitely never got that dramatic, but can safely say I’ve been to this stage probably three times now - once, after the furler broke on Leg 1; again when we discovered the rudder problem during the race; and recently, when we decided to change the calendar. Suffice it to say, this is not a good place to be - I regretted ever buying Isbjorn and ever selling Arcturus. We had a house in PA, a nice small boat in Sweden and a comfortable and fun living with WCC. Why, I thought, did we let that go?!

At this point, you face a critical juncture. You can come off the bottom of the curve and crash and burn, which is when your business goes bankrupt, you lose your marriage, you start drinking, or you end up in a doctor’s office because of stress. Or you can come around the corner because you’re getting support at “Crisis of Meaning” and you can enter an upward swing call “Informed Optimism”.

  • 4. Informed Optimism. You’re calm. You’re informed. You might even say you are cautiously optimistic. We let all that go because as I said before, that train had left the station. I’m back now, firmly into the 4th stage. We’ve got some real-life data to work with, a much more realistic schedule and  in the past two weeks, several more signups. I felt a little bit of sadness but most satisfaction when we handed over Arcturus to her new owner Neil last week, and not a tinge of regret. 

Mia had a good chuckle when I read this to her. She saw me right there in those descriptions. At the time, right after the Florida trip, after we’d made the schedule change announcement but before we’d gotten firm commitments from the crew who were affected, I was firmly rooted in Stage 3, the ‘Crisis of Meaning’ stage, wandering aimlessly in a state of despair. To her credit, Mia rarely oscillates to the extremes that I do, both personally and professionally. She uses a lot of emotional energy lifting me back up, but she doesn’t expend it on herself so much like I do. I could never - and wouldn’t ever want to - do this business without her. 

I can safely say that right now, as I type this, I’m back on the upswing and into the 4th stage of ‘Informed Optimism.’ The problem is, and I’m only recently aware of this thanks to that article, the stages are not permanent. Cameron, in a cheeky way, finishes the article like this: “This cycle repeats itself. Enjoy the ride instead of fighting it.”

—

So a brief summary on where we’ve been. When I did the Money podcast, most of what I talked about was purely theoretical. It did include the big refit we did on the boat in September, but we’ve since had the experience of actually delivering the trips over the first half of 2016 and getting a real-world idea of what stuff really costs. Running costs and fixed costs, plus some additional (and extensive) refit items that weren’t included in the September refit last fall. 

Between January 1 and June 1, 2016, we’ve spent a lot of money on the boat. The grand total? $96,000. And we’re only halfway through the year!

To be clear, a lot of what we’ve done to the boat since September has been optional - why I recently separated ‘Refit’ expenses from ‘Maintenance’ expenses in our accounting software. Mia and I take no salary from the business yet, instead relying on the World Cruising Club work and the magazines that pay me to write articles about sailing for our personal living expenses. It helps that we’re homeless shoreside - in fact, I’m writing this from our friend Johanna’s apartment in Stockholm. It’s just a cozy little studio, so Mia and I slept in her VW van in the parking lot last night. We’re staying there tonight too. So instead of spending money on ourselves, I’m deliberately taking all of the crew fees we’re collected and dumping them straight back into the boat. Some of it has not exactly been by choice, but most of it has significantly improved the comfort and performance of the boat. Some of that stuff includes:

So where then does the business currently stand? As of Saturday, June 11, we have exactly $15,440 in the business bank account. Sounds good, but then, we also have almost $40,000 in outstanding payments for the ongoing refit projects. On the plus side, we have $8,500 in crew deposits we’ve yet to collect for people who recently signed up for passages, plus another $39,000 in balance payments that come due 60 days before a trip starts. If you do the math, that comes out to a current net +/- of +$22,000. So not a bad place to be, but not much cushion either. And that’s for some passages that won’t happen for more than a year from now - recall that it costs about $50,000 just to maintain Isbjorn (including the mortgage, insurance, storage, charts etc.), and we’re back in the red.

“If I had known then, what I know now…”

I’m positive every small-business entrepreneur has had the same thoughts that Mia and I are going through right now. ‘Gosh, if I’d have known how hard it would be, how expensive…’ You get the picture.

So what’d we learn in the first half of 2016? Broadly, that things don’t always go to plan! Big surprise there! The year got off to a bad start with our trip to Grenada being scuttled by a broken furler and torn mainsail. Leg 2 was uneventful, other than the changed itinerary. Then Leg 3, the RORC Caribbean 600, was marred by the failed rudder bearing, which of course was no fault of the racing itself, but rather was something that Paul Exner, the surveyor, and most importantly myself, should have noticed when we first bought the boat in January 2015. It’s fixed now, better than new in fact, to the tune of $15,000. That wasn’t in the budget!

So, with the benefit of hindsight, would we have done anything differently? I’m not so sure…

Back in September, Mike Meer and I both decided that the old Harken furler was working just fine. So we cleaned and serviced all the bearings and put it back together. It worked fine on the 1500 and for all the weeks of cruising Mia and I did on the boat over the holidays and that my dad and his friends did thereafter in January. Something just stopped working and it seized up on that first leg. So yeah, we probably should have built a new furler when we re-rigged in September, but I don’t think we made the wrong decision at the time.

Likewise with the mainsail. Bill O’Malley, Chuck’s brother at Chesapeake Sailmakers, actually flew down to the boat in January to measure for the new main and genoa’s that we’d already ordered. In an effort to make delivery, fitting and payment easier, I figured the old sails would get us through the season and we could stick the new ones on the boat once back in Annapolis, when Chuck and Bill could come out sailing and properly fit them. Well, that backfired too when on the same leg that the furler broke, the mainsail blew up! Thanks to Chuck and his team at Chesapeake, we did indeed have a new mainsail in time for the Caribbean 600, but there was a lot of effort involved in us getting it. Chuck had it expedited from the sail loft that built it in South Africa. They, in turn, stuck it on a KLM 747 where it flew first to Holland and then across the Atlantic to the Dutch side of St. Maarten. 

Isbjorn, meanwhile, was in Antigua. Antigua, inconveniently, has very high import duty on things like new sails, while St. Maarten, on the Dutch side at least, is duty-free. So, while Clint was still on the boat, my dad flew down to meet us in Falmouth Harbor and we did a quick 250-mile round-trip mission to Simpson Bay and back to get the new mainsail in time to be back in Antigua for the start of the race. Miraculously, the new sail fit perfectly. Clint and I were expecting ten days off to chill out and explore Antigua, and instead were back on the ocean again.

Then came the rudder bearing repair. Remember, Isbjorn was built in 1972 and raced - hard - her entire career. So stuff like this I should have expected. But it’s still inconvenient when it happens. I first noticed the problem after almost 400 miles of sailing in the race. We were in the lee of Guadaloupe, our first chance in a long time to tidy up the boat, eat some proper hot food, and check on things that had been on my mind for a while. One of those items was the rudder. My friend Tom Herrington and I had noticed some rust stains near the rudder stock way back when we first delivered the boat south from Connecticut, but didn’t do anything about it then, nor during the September refit. I just assumed that because Isbjorn is a Swan - and they have such great reputations - that all was fine and I needn’t worry.

In hindsight, I’m glad I didn’t worry, because in reality it did do fine, and probably would have been fine had I not noticed it. But I did, during a routine check of all the critical systems on the boat in that little respite behind Guadaloupe. And that ended our race, while we were in 3rd place, gunning for 2nd, disappointing the entire crew. 

It ended up being perfect timing - Mia flew down after a visit to family in Sweden. We were supposed to have had 3 weeks on the boat just chilling out and decompressing on anchor. Instead, the boat was in the yard getting a $15,000 rudder repair while Mia and I lived ashore in a small apartment behind the Falmouth Marina. But critically, it didn’t affect any of our passages, and now the rudder is bulletproof. By the time we limped back to Antigua, two of our six crew had already verbally committed to racing in 2017. Since then the trip has filled. With new sails and a better boat, we’re gunning for 1st place next year!

Leg 4, the Havana passage, which started in the end of March, was the first leg of the year that went as planned! Perhaps it was also because it was the first leg that Mia was aboard for - I’ll give her superstitious credit for that! By the time we got to Key West, where we had two weeks off so we could attend the festivities of my little sister’s wedding, the bank account was drained, but the crew’s who’d sailed with us were happy. 

Mia and I were - are - absolutely exhausted, realizing how much mental and physical energy that it takes to both run a business shoreside and then deliver these trips offshore to the high standard that we set for ourselves.

Calendar Changes

We changed the calendar in the past two weeks, canceling our planned Trans-Atlantic this summer, to the chagrin of captain and crew alike, in favor of a trip to Newfoundland and back to Annapolis, where we’ll stage for the Caribbean 1500. This time, Mia and I will be aboard to sail Isbjorn back to the Caribbean with the rest of the fleet that we lead as event managers.

Key West was really the start of me subconsciously second-guessing our ambitious calendar for the remainder of the year, but it wasn’t until the Florida-Annapolis passage, and the heavy weather we endured during it, that it became an issue I could no longer ignore.

The decision to change the calendar created a definite turning point in the business, a bigger gamble, perhaps, than starting the business in the first place. The changes affected six crew who had signed up to sail with us - four across the Atlantic, and then two who’d signed on for the trip from Kinsale, Ireland to Lisbon, Portugal. The trans-at crew had paid in full, while the Lisbon gang had paid 50% deposits. In total, $28,500 was in play, as was the ‘trust’ in our current and future crew that we’re going to deliver what we promise. If everybody affected requested a refund based on the change in plans - and I had to expect that, in reality - we wouldn’t have been able to afford to pay them back. 

I knew this of course, but didn’t want to make a decision based on finances. My mom always taught me to trust my gut feelings, and up till now, they’ve served me very well. My gut was practically screaming for the change - the decision had already been made in my subconscious. Now I just had to follow it through, finances be damned.

Long story short, as it happened, only two of the crew requested full refunds while the others changed their own schedules to fit the new calendar. You know who you are - thank you! And those that did request refunds, I absolutely don’t blame you. I would have done the same. They’ve both been paid back in full. 

The new passages we added to the calendar - the Caribbean 1500, and two passages in the Caribbean in 2017 - are already starting to fill. We’re basically back to even-steven on the money we had to refund versus new deposits that have come in. 

The Bright Spots

Since buying Isbjorn last February and delivering her south to Annapolis that April, we’ve sailed over 8,000 miles on her. 8,000 miles in just over a year. That’s a lot of damn ocean sailing! And man, I love it more than ever! And, I’m doing it on my dream boat! Every time I dinghy away or walk away from Isbjorn, I can’t help but turn back and be filled with pride when I look at her. For all her flaws and all the money we’ve poured into her, those moments make it all worthwhile.

We hired an intern in 2016. I say ‘hired’ very loosely, for Liz is not really getting paid, but she’s certainly getting the experience of a lifetime. If you’ve ever looked at the show notes on the podcast, Liz is the one who creates them. She’s doing a lot of behind-the-scenes stuff for us, and we’re trying to get her out on the water as much as we can.

She first came to us at the boat show in Annapolis last fall when we had the open house. Which, by the way, given our calendar change, we’re having again this fall at the boat show, so make sure to check for updates on the ‘News’ page for details on that. Anyway, Liz was super enthusiastic to talk to us and really reminded me of myself at her age. She’s 21 and in college at UConn, studying marine biology, but badly wants to get her foot in the door in the sailing industry and dreams of living aboard her own boat in the not-so-distant future. 

I’d been toying with the idea of creating an internship position for a while now, long before Liz got in touch with us, but never pulled the trigger on it. So in January, when Mia and I were up in Toronto, I reached out to Liz to see if she’d be interested in an internship if we set something up. I later learned that when she saw that email, she was in the car and literally had to pull over she was so excited to read it! 

Liz joined us in Antigua for the delivery sail to Puerto Rico. We stopped off in St. Martin, on the French Side, to revisit our old Broadreach stomping grounds and show Liz around. It was her first offshore passage. After she got home, she had the GPS coordinates of our first anchorage in Marigot Bay tattooed on her ribs, with a little sailboat adjacent to it. Needless to say, Liz is dedicated! 

She proved her mettle on that passage, getting along brilliantly with Mia and I and proving to be an excellent crew member on Isbjorn. Though she never steered by the compass before out of sight of land, Liz immediately grasped the concept, even in 20+ knots of breeze and with a big following sea. 

That first trip was a test of sorts for Liz. She paid her own way, as I did when I was her age looking for my first ocean sailing experience, and she truly earned it. She’s since continued to work with us on the podcast and has been managing the ‘Passage Logs’ part of the website while we’re offshore. Liz will be sailing with us again, this time as 2nd Mate on our passage north to Lunenburg in July. And this time, we’re paying her way home, and have purchased her a set of Helly Hansen foulies for the passage. She’s earned it.

More Creative Projects

Another reason we brought Liz aboard was to help me with some stuff I’m working on that only tangentially related to the passages that we hope will become our ‘bread and butter’ income. 

Liz joined us in Florida recently where we’re filmed the first two episodes of my new video project I’m working on in conjunction with Thierry Humeau of Telecam Films. Thierry is a veteran cameraman and director who works with the most prestigious of television networks, places like National Geographic, Discovery Channel, Al Jazeera and more. He’s an expat Frenchman living in Bethesda Maryland, and ironically has a Jeanneau at Eastport Yacht Center, the same place my dad has kept Sojourner for 6 years and where Isbjorn is currently. Thierry’s been a longtime fan of the podcast, and thanks to Cameraon Deyell, who does the ad music, connected with me about a film project he’s always wanted to do. I’ve long resisted the temptation to get into video, knowing I don’t have the time for it, nor do I have the skills needed to make it high quality.

But Thierry does. He flew to Ft. Lauderdale on his own dime to film a few pilot episodes of what is essentially an on-camera version of the podcast that we’re calling ‘On the Wind: Conversations with Sailors.’ He showed up with two Pelican cases full of expensive camera and audio equipment and we all met at Pam Wall’s house. Isbjorn was docked across the street, and Mia and I were there anyway to get ready for the trip north to Annapolis. Pam graciously put Thierry and Liz up in her house, which we also used as a de facto base for three days, eating breakfast, lunch and dinner there and spending countless hours in her living room brainstorming ideas for the show. In fact, Pam was so excited, she’s now onboard as a producer. 

We also filmed an episode with Etienne Giroire at his ATN Inc. shop down the road a piece. You’ll know ATN for the spinnaker sleeves and mast climber bosun’s chairs he’s known for. Etienne took us all sailing on his Dick Newick trimaran ‘Tricia’ that same evening and then joined us for dinner at Pam’s house where we continued the brainstorming session. Needless to say, it was a fantastic three days and a wonderful chance to work in a group for once on a very cool creative project. I’m very excited to share it!

In fact, if you’re interested in learning more about the show, and being involved in some beta-screenings and providing feedback, go to 59-north.com/tvshow.

There are more projects in the works, which will be coming to fruition around Boat Show time this fall, so stay tuned…

Optimistic

So we’re in good shape, I’m on the ‘Informed Optimism’ phase of the roller-coaster ride and feeling good. But we’re not out of the woods, not by a long shot. I feel very good about our schedule going forward now, and even have an outline through the end of 2019. We’ll be publishing the final version of the 2018 schedule by the end of this summer - and yes, it still includes going to the Arctic! 

We’ve learned a lot about running these trips in reality versus the theory that fits so nicely together on paper. Our initial published schedule was way too ambitious. Isbjorn requires a lot of maintenance to keep her in top form, and I’m continually upgrading her to really turn her into my version of the ideal ocean sailing boat. 

Plus, Mia and I need some personal space, more than I think we initial allowed for. To see friends and family, go running, camping, skiing whatever. Just to unwind and turn off our brains for a bit. For as fun as running this business is, it’s exhausting! At the current pace, we’d never last, and we’re finally realizing that.

Where it truly feels like a turning point for Mia and I now is that, suddenly, what we’ve worked for, consciously or not, over the past ten years is actually happening. We’ve bought the boat of our dreams. Mia finally got her American citizenship, freeing us up to live anywhere we want to between the US and Sweden. We just handed off Arcturus to her new owner this week in Sweden. And we only have two more events left with World Cruising Club before we’re fully on our own with 59 North - the upcoming DelMarVa rally, and this fall’s Caribbean 1500. We’re going to stay tangentially involved with World Cruising Club doing seminars and boat shows, but importantly our monthly salary ends in December, so financially at least, we’re cut off.

So now here we are - it’s everything I ever dreamed about, and I’m almost able to exhale. If it works. That’s the real test. Will we be able to sell 30-40 berths per year now going forward? We had a good start in 2015, and were nearly sold out in 2016 until we changed the schedule (we have 4 left, by the way, between the two legs from St. John’s back to Annapolis starting July 25). And we have a very good start to 2017. 

But I have to admit, I always think the worst, am always amazed when I open my email to find another person has registered with us. And then, inevitably, I have this conversation with Mia (though really I’m talking to myself) about how this is going to work, that we don’t have to worry anymore and can focus on delivering great passages on our beautiful boat. Then, a few days go by, and I’m back to worrying about signups.

So call this the great turning point then. One year from now and I’m pretty confident we’ll know for sure if this is going to work or not. By then we ought to be turning a profit, be able to give ourselves a salary, and afford ourselves the much-needed time off between passages to focus on creative projects and taking care of ourselves. But that’s a year from now, and until then, it’ll still be a giant question mark.