Business Management

The Nail Hub Podcast Transcription: The Death of Licensing (Part 2)

Elizabeth Morris and her husband Hermann Morris continue their discussion about whether licensing is effective for the nail industry.

Below is a transcribed version of The Nail Hub Podcast, Episode 96: The Death of Licensing (Part 2). To listen, click here.

Elizabeth: Welcome to The Nail Hub Podcast powered by "NAILS Magazine," where you'll find all the business advice, motivation, and nail industry information you need to be a successful nail professional. I'm Elizabeth Morris, and thank you for joining me today.  

All right, we are back. This is part two of our discussion with Hermann about, just the economy concepts in general and, you know, about the whole hot topic of what we would call deregulation of our industry in the United States, and all of the things that factor into that. So, if you guys didn't listen to the last podcast episode, I really encourage you to pause this one. Go back and listen to part one, because we are in the middle of this conversation, we're continuing it, and I don't want you guys to, you know, take a misstep. So, please listen to part one if you haven't already, and then we're gonna continue this conversation today. What Hermann and I are basically gonna be going over is, we're kind of the anti-deregulation mentality. And again, Hermann and I aren't really talking about this conversation from a perspective of, should it be regulated or should it be deregulated? We like to talk about these things conceptually because as Hermann brought up in our last episode which was an awesome concept is, you're talking about compared to what? Right?  

Hermann: Yeah.  

Elizabeth: So, licensing, does it work? Well, really the question is, does licensing work compared to blank? Not in and of itself.  

Hermann: Right.  

Elizabeth: And so, we're not really talking about whether or not licensing works, or if deregulation is the answer, or if licensing is the answer, or if over-regulation is the answer. What we're talking about really is, do all of these things work compared to how it could be, right?  

Hermann: Right.  

Elizabeth: If we were to...  

Hermann: Compared to a deregulated state...  

Elizabeth: Right.  

Hermann: ...or...  

Elizabeth: Or compared to a better situation maybe that we can come up with within our own industry.   

Hermann: Or even compared... let's kind of get back real quick to something that we mentioned in the last episode which was, we are assuming the existence of a working and robust legal system, right?  

Elizabeth: Right.   Hermann: So...  

Elizabeth: So, in this example the United States?  

Hermann: So, right now we're talking about United States but then we're gonna, you know, give examples when we gave examples last time of other places that do have working robust legal systems.  

Elizabeth: Without licensing...  

Hermann: And they don't have licensing, okay. So, imagine that you had a country without a working or robust legal system, right?  

Elizabeth: Right.  

Hermann: Let's call this, you know, country X that is a mess. They don't have, you know, court systems or it might just be so corrupt that there's no rhyme or reason, just whoever has more money ends up winning, you know, because they pay off judges or whatever it is.  

Elizabeth: Right.  

Hermann: So, it's not, again, not a working legal system.  

Elizabeth: Couple of countries come to mind.  

Hermann: And let's say, let's say that... then they ended up having licensing for nail technicians. Would that change anything? No, because they still wouldn't, they wouldn't do anything against the people that did wrong or whatever because there is no...  

Elizabeth: There's no enforcement.  

Hermann: There's no enforcement, right?  

Elizabeth: There's no rules, there's no... yeah.  

Hermann: So again, it's not about the licensing.  

Elizabeth: There's no follow through.  

Hermann: There's not about, it's not about the licensing itself. It's about having a working legal system. Now, if you have a working legal system like you have here in the United States, or any place in developed nations, and even, you know, developing nations, you know, they might be poor for other reasons, but they might actually have a working, you know, legal system. Then, if you have a system of torts which basically is, you know, the things that you're not going to break, you know, you're not gonna hurt you or steal from me, or that kind of stuff.  

Elizabeth: Yeah.  

Hermann: If that already exists, that means that you have legal recourse to go after someone that does do something against to you or your property.  

Elizabeth: Okay, so this is very important. So, let me just recap here so that I understand. So, what you're telling me is that, even if, like United States is like an example, right? Because we obviously have a very robust legal system, we have torts which are kind of...if you boil it down the rules of engagement per se, right? Between two people, or two businesses, or business and a person. So, we have all of these, these rules in place. So, even if I didn't have a license from my state to do nails, and I infected you and your finger fell off, you can still come after me and my business?  

Hermann: Correct. So, there is still accountability, okay?  

Elizabeth: Even without nail tech licenses?  

Hermann: Even if the Bureau of Barbering and Cosmetology did not exist, much less licensing.  

Elizabeth: Yeah.  

Hermann: Obviously that would entail no licenses because...  

Elizabeth: Great.   Hermann: ...that Bureau doesn't even exist.  

Elizabeth: Right.   Hermann: You can still come after me because I hurt you.  

Elizabeth: Interesting.  

Hermann: I broke the law anyway.  

Elizabeth: And I don't think a lot of nail techs know that, a lot of nail techs actually work under the perception that, a license is the only way to make sure that clients have the ability to go after bad nail techs.  

Hermann: Correct. And that's absolutely not the case.  

Elizabeth: Okay.  

Hermann: So, anytime that there's really only people need to understand this and this is, you know, probably a different conversation but just as people really understand this. There's really only four laws that exist. Everything else, they're actually codes and regulations for this or that or the other.  

Elizabeth: Okay.  

Hermann: But there really are only four laws when we're talking about laws. Like think about the law of gravity, why is it a law? Because it's universal.  

Elizabeth: Right.  

Hermann: Right? So, it is what it is. So, there's really only four laws that we would consider laws.  

Elizabeth: Okay.  

Hermann: And those are laws against murder, against assault, against theft, and fraud. That's it. Those are the only real laws that exist anywhere, okay? So, you can't kill me, you can't hurt me, you can't take my stuff, and you can't, you have to keep your word. So, contract law, right?  

Elizabeth: Right.  

Hermann: So, if you say, "Hey, I'm going to do this, and you're going to do this, and we both sign whatever. We have to be held accountable to, you know, being held to our word, right?  

Elizabeth: Right.  

Hermann: And that comes from basically common-law, right? That's the common law system, that's the most pervasive and probably most people that are listening to us live under some sort of common law, right? So, those are really the only four laws that you can enforce. Everything else are codes. So, speeding is a code, it's not a law, right? Because it's completely arbitrary, the speed limit could be 45 miles per hour...  

Elizabeth: It could be 75.  

Hermann: It could be 75. You might not have any, you'd so, all those things are our codes and regulations and those types of things. So, what people think is that, the more codes that you put in that that's going to save us from this or that or the other.  

Elizabeth: Right.  

Hermann: And that's a misconception because that what we wanted to get to in this conversation today is about how we come to think that way, right?  

Elizabeth: Yeah. And how does this mentality start in the beginning? Because I feel, I feel that, and even me, I mean, you know, I think that our knee-jerk reaction as people regardless of what industry we work in. Our knee-jerk reaction as human beings especially human beings who do live in a first world country and have grown up the way that we've grown up. Our knee-jerk reaction is that, the more rules the better, right? And that, those rules are really the only way to make sure that things go the way they're supposed to go. To make sure that people don't get hurt, you know, like you said, you know, having all of these, these codes and all of these things, and all of these licenses, and all of these, you know, hoops that we have to jump through as human beings, number one, we grew up in an environment where all these hoops exist. So, we're kind of used to it, right? We're biased by it so, we're used to it. So, to us it's like no sweat off our back. But number two, if you were to ask any average Joe on the street whether or not they would, you know, think licensing is important or not. Most people say, "Absolutely, we have to protect people." And so, I think that's a really interesting concept to talk about which is, how does someone, you know, even before they're a nail tech, how do they actually kind of buy into this mentality, or how do they how do they inherently have this mentality that license equals safety?  

Hermann: Right. And that kind of, that issue is a much broader topic but I think we can kind of we stay within, kind of what the issue that we're dealing with is. It's definitely a bias, okay? Because again, you mentioned it. We have grown up with certain things.  

Elizabeth: Yeah.  

Hermannn: And it's not just us, it's our parents, and then our grandparents, correct? And sometimes even further back. So, we grow up with certain expectations and with certain experiences that guide our beliefs, right? So, those experiences are what inform, you know, how we see the world today. So, without being too like, you know, I don't want to be a psychologist here or too, you know, crazy but I just want to kind of make the point that, imagine if government was what created, the only entity that made shoes. And so, from your great-grandfather, grandparents to your grandparents to your parents down to you, everybody always just got their shoes from the government shoe store.  

Elizabeth: Okay.  

Hermannn: Okay? So, everybody as far back as you can think, that's where shoes are made. That's it. You have four different styles, four for women in six different colors, four for men in six different colors and that's where we go and we get our shoes.  

Elizabeth: Okay.  

Hermann: Okay. And then imagine one day, I told you, "Hey, why don't, just regular companies like companies that make all the stuff that's in the grocery store, or even heck, the companies that make t-shirts, why can't they just make shoes?"  

Elizabeth: Shoes.  

Hermann: And you'd be like, "Are you insane? What are you talking about? It's the government that makes shoes."  

Elizabeth: It's always come from the government.  

Hermann: That's we've always had it this way, it's always been there. What do you mean? Like, how would they even come? Was like well, they make shirts and pants and people grow, you know, corn and wheat and people make, you know, microphones, and computers, and skyscrapers but they can't make shoes." "Well, that's not how it works, that's just, that's not how it works, and that's what the government is here to make and give us shoes, right?" So again, this happens to all of us because there's a lot of things that blow my mind sometimes. And people well, what if, you know, instead of X we do Y. You're like, well, or easy, easy, you're, you know...  

Elizabeth: I'm out of my comfort zone.   

Hermann: Yeah. You know, you're rocking my world here.

  Elizabeth: Right.  

Hermann: And that's, I think that's one of the things that if I'm so bold to say, that you and I bring to this industry because we're outsiders to this industry.  

Elizabeth: Yeah.  

Hermann: Our experience and history...  

Elizabeth: Oh, I feel like an insider now.  

Hermann: Well now, yeah, more, yes.

  Elizabeth: But yes, technically, yes.  

Hermann: But still, but still, we are technically outsiders and we're trying to build something that you became so passionate about. We're bringing experience from different...from different walks of life, different industries.

  Elizabeth: Yep.  

Hermann: That to us, we recognized immediately, that were either liabilities or shortcomings about this industry. That most people didn't realize because they've been in it for so long. Correct?  

Elizabeth: Yep.   Hermann: And so, mostly people just don't see it. And again, that's not because you and I are better, and we're smarter, and whatever.

Elizabeth: No, we just have an outside perspective.  

Hermann: The exact same way, that when we reach out to someone and, you know someone from the outside. How many people have we consulted with and had help us when it comes to things like, what we're doing right now, with podcasting, with the videos, with all the stuff that we have. These people have nothing to do with the nail industry or whatever it is that we, our background, is and they come in, they make an observation and they're like, "Hey, why do you guys do it like this?" And we're like, "Well, I completely didn't even notice that, that like it makes total sense.  

Elizabeth: Yeah.  

Hermann: Now, that you mention it, makes total sense. That it makes no sense the way we're doing it and the way that you recommended it just makes so much more sense to me, right?  

Elizabeth: Yeah, you just kind of get in the zone.  

Hermann: Correct. We put the blinders on.  

Elizabeth: Yeah.  

Hermann: Right? And you get used to your comfort zone, you get used to that's the way we've always done it type mentality.  

Elizabeth: Right.

  Hermann: You know, yada, yada, yada.  

Elizabeth: Right.

Hermann: Okay. So, that is a big aspect. Again, without going hugely into psychology and all the stuff because there's no sense into getting, you know, into that. Just, that's just in general, what happens when we start getting very, like the concrete starts to set on our minds.  

Elizabeth: Yeah.  

Hermann: The longer we're in one area, right?  

Elizabeth: Right.  

Hermann: With one industry, one line of work, one, you know, relationship.

Elizabeth: Right. It just becomes the way things are done and that's just what normal is.  

Hermann: Correct.  

Elizabeth: And it's comfortable.  

Hermann: And then we need to come, sometimes we need to get, and that's what the entire industry of consulting is built on that. If you're paying people to come to your business with a sledgehammer, to start making cracks on that set cement.  

Elizabeth: Yeah.  

Hermann: Right? And so, that's what we're trying to do here in saying, "Hey, let's break out of that, and let's look at alternatives and see what could be." If what could be is...would it be better, would it help more people, than under the status quo, then let's consider it. Without, you know, resorting to pointing fingers and yelling at people and calling people names...  

Elizabeth: Right.  

Hermann: ...and, and all that kind of stuff, it's let's just look at what the alternatives could be. And if there are empirical, there's empirical evidence in other areas that could show us that, "Hey, we might...we might be wrong about what we thought this could be like." That's why in the last episode we mentioned, "Hey, there's other areas and other developed countries that don't have licensing and don't have as much regulation." And again, you don't have 3,000 X, the amount of people that are poisoned or dropping dead or...  

Elizabeth: Their fingers are falling off.  

Hermann: ...fingers falling off, or this, or that. Then, there might be something to that so.  

Elizabeth: And I think that's, I think that's very important to say again. You know, not beating a dead horse but that, we're not here to inspire people picking sides or creating a war. We're just trying to look at it and go, "Hey, is there something right in front of our face that we're not seeing," right? And also, you know, things are changing and I would consider myself someone who I, you know, Hermann and I both, we both really like advancement. We like trying to figure out new and better ways to do things, and efficiencies, and it is really scary. And Hermann and I often go to bed with stomachaches because we are those type of people that we're constantly turning things upside down and seeing how it works, and taking things apart, and putting it back together again. But I think that that's also a very important thing to do once in a while, like you said is, you know, take everything apart.  

Hermann: Reevaluate.  

Elizabeth: Reevaluate.  

Hermann: Yeah.  

Elizabeth: And see like, oh my gosh, did we miss this because we weren't looking for it or, you know, did we miss it because we had our horse blinders on? Or even if we didn't miss it, maybe there isn't any other better way to do this, at least we can go to bed saying, "We know that without the shadow of a doubt."  

Hermann: Yeah.  

Elizabeth: Because we've actually checked, right?  

Hermann: Yep, yep.  

Elizabeth: We've actually stopped what we were doing. We've stopped kind of just, as drones, you know, doing our thing. We've actually looked up for a second and go. Oh, okay yeah, we actually like, you know, took note of everything and actually made a decision about this rather than just going, "That's the way it's always been done," right?  

Hermann: Correct. And that's why right now, that's why it's important for us to take inventory of everything that's happening. And compare it to, you know, given our current circumstances and compare that to other circumstances.  

Elizabeth: Right.  

Hermann: So, I'm completely, I'm completely amenable to the idea that let's say, again, we're still talking about regulation, licensing, this and that, and the other thing. That maybe once upon a time this actually did create more good than ill and because it did provide a level again of filtering some people out, of accountability, etc., etc.  

Elizabeth: Right.  

Hermann: So now, if we were to re-examine that under today's conditions, like you said, "Let's kind of step, take a step back, let's look around, all that stuff. Well, one of the things that I take into consideration when I think about topics like this, not just in our industry but elsewhere is what are, what are the other external factors that have changed that might, you know, change things overall? Well, to me, there's a few if you think about it. If I'm concerned about accountability about people, being able to be exposed for being frauds, or being unsafe, or whatever down the list, we have probably a thousand times greater capability of doing those things on our own without government than we ever did. So...  

Elizabeth: Yeah, one would be our cell phone, right? I mean...  

Hermann: Well, imagine yourself or everything can be on tape uploaded immediately could be live streamed, blah, blah, blah. You have outlets like, you know, Google, and Yelp, and Facebook, and this and that, where people...  

Elizabeth: Reddit. Twiiter.  

Hermann: Where people just go off when they receive, you know, bad service or, you know, whatever it is. No one, very few people can get away with stuff, nowadays, right?  

Elizabeth: Oh, yeah.  

Hermann: You can...but before the age of information, before technology and the internet and all that stuff, you could go your entire life without having, ever having heard about some company or person or whatever doing something bad, somewhere else in another part of the country or another part of the world. And you'll never ever know.  

Elizabeth: Yep.  

Hermann: Right? And that's that. Well, now that's no longer the case, and now what we're starting to see is that, it's actually the government that's one step behind, because technology is always in front of it. So, when the government starts creating regulations and these type of things, they're doing it based on the current technology that's out there, right? But that technology's already one step ahead.  

Elizabeth: Oh, yeah.  

Hermann: So, then they have to change the law, or the regulation, whatever to catch up to the next one.  

Elizabeth: Right.  

Hermann: And they never catch up, right? So, that's when we start thinking well, is that the most efficient way to do that? Or are we just spinning our wheels? And it's basically when you start looking at it, it turns out that it's really just a way for the, you know, to keep people employed in these agencies, because that's just all they do. So...  

Elizabeth: Right.  

Hermann: What I wanted, since we're talking about mentality, and mindset, and everything in this episode, I wanted to bring it back to something that we mentioned before which is the incentive, right?  

Elizabeth: Right.  

Hermann: Incentive structures.  

Elizabeth: Yeah. And just to kind of clarify on this point, this is where we get into how to drive behavior. A lot of people forget that behavior truly is driven by incentives, not by regulations. And this applies to anything. I mean, even with my mom, who does child, you know, children related stuff, right?  

Hermann: Yes.  

Elizabeth: I mean, the way you get a kid to do something is really not by beating the crap out of them. It's by creating an incentive for them to want to do the thing that you want them to do, right? So, you say, "Hey, if you empty the dishwasher, I'll give you an allowance," right? Or if I do this or whatever, right? So, it's funny because I think people forget...  

Hermann: Well, let's differentiate here because that and of itself is a way of regulating. So, here's what we just have to make sure people understand.  

Elizabeth: Oh, okay.  

Hermann: Okay.  

Elizabeth: Interesting.  

Hermann: People understand the differences here. When we're talking about regulation, okay. We're not talking about no regulation, you know, per se regulations.  

Elizabeth: No, we're talking about incentive driven.  

Hermann: Well, not just that. So, hold on.  

Elizabeth: Okay.  

Hermann: So, regulations, okay, as incentives, which are people voluntarily making certain decisions?  

Elizabeth: Right.  

Hermann: Right? And creating certain incentives, and disincentives, and all that stuff.  

Elizabeth: Right.  

Hermann: That's not what we're talking about doing away with. As a matter of fact, there would be more regulations by people's, the market and people's businesses, and all that kind of stuff.  

Elizabeth: Right, right.  

Hermann: What we're talking about is a centralized regulation which is, one monopoly, that being the government saying, "We tell everybody what to do and how to do it."  

Elizabeth: Right.  

Hermann: That's very different. I'm gonna kind of flesh that out...  

Elizabeth: Well, it could be, it could be any, I mean, when you're talking about one central agency it could really be any agency. I mean, it doesn't have to be government per se because I feel like a lot of people get confused when we use the word government, right? People look at the government as something kind of different. I mean, a central agency could be the Board of Cosmetology. It could be, oh, an agency of people inside of the nail industry. I mean, it could be anything. And the only reason why I want to keep bringing this back to analogies inside the nail industry is just so that people can understand what we're talking about. Because this isn't really, I mean, it is a conceptual discussion, but I don't want people to start thinking that government means something that it doesn't in this situation.  

Hermann: Yeah. And the only reason why I make that distinction and I want to make sure that people realize why it is an important distinction is because when you have that monopoly that we're talking about. The government having in this case...  

Elizabeth: Right.  

Hermann: ...is that it's the only entity that actually has the power for instance to throw you in jail.  

Elizabeth: Right.  

Hermann: Right? So, for instance you said, "Well, what if it was the Board of Cosmetology or it was the some other, that's even a private thing," right? That becomes the most powerful...  

Elizabeth: Right.  

Hermann: You know...  

Elizabeth: An association and...  

Hermann: Association or organization.  

Elizabeth: Yeah.  

Hermann: Completely private, whatever. And you say, "Well, they're very powerful," whatever, yeah, but they still wouldn't have the power to throw you in jail or to do something like that to you, okay?  

Elizabeth: Okay. That's important to understand.  

Hermann: So, that's why, that's why I don't want people to think that we say, "Deregulation, we want no regulation, we just want everything to be chaos." We're not talking about that is, we're speaking about a very specific type of regulation which is a monopoly on regulation and which has a monopoly on coercive power. So, we can coerce you to do this or not do that, okay?  

Elizabeth: Okay.  

Hermann: So, the Nail Hub for instance, we're growing, we might have certain clout in the industry, whatever. But everything that every dime that people give us, and everybody here listening to us, does it voluntarily.  

Elizabeth: Right.  

Hermann: We have zero power to coerce someone to do anything they don't want to do.   Elizabeth: Okay.  

Hermann: Whether they agree with us or not or whatever it is, we and so, in our business we have our own regulations, right? And we regulate certain things, and blah, blah, blah.  

Elizabeth: Right.  

Hermann: That we think are right and that drive the type of business that we want and all that kind of stuff.  

Elizabeth: Right.  

Hermann: So, regulations are important. So, the incentive structure that I... or the concept of incentives that I wanna bring up and you kind of alluded to it before, which is we think that everything is about just convincing people to do the right thing, or to just don't do that, or to whatever. And that we get in most cases, we can just talk people out of things or into things. The sad reality is that you have about 10% of the population on the top end, the positive, what we call the positive outliers who are gonna do the right thing no matter what. They're just wired to just do the right thing, they're empathetic people, they have what's called, you know, whether they be, you know, high intelligence, they have high emotional intelligence, you know, a high empathy, all that kind of stuff that, you know, psychologists and people that study behavior...  

Elizabeth: Really self starters.  

Hermann: ...and personality traits and all the stuff.  

Elizabeth: Go getters, self starters.  

Hermann: Yeah. Then you have at the bottom, 10%. So, the negative outliers, those are the sociopaths and psychopaths. There's nothing you could do to convince them to do the right thing.  

Elizabeth: Right.  

Hermann: They have zero empathy, they don't care about the people around them.  

Elizabeth: They are not interested in better ways of doing things. They are not interested in raising the bar.   

Hermann: Correct. And then you have, most people which are in that middle 80%, okay?  

Elizabeth: Okay.  

Hermann: The best way, and again, in my years and almost decades now of experience in managing people and projects is that the best way, you want to do away with ever even getting the bottom 10%, any of those people in your group, right? You want to make sure that... and that's what you have, that's why you have processes like, you know, like hiring, and interviews, and you have, you know, recruiters...  

Elizabeth: Right.  

Hermann: ...and all that kind of stuff, you know, when you're hiring people and all that stuff because you want to weed out, you know, those people. You want to recognize the top 10% because those are gonna be, again, your high performers, you know, blah, blah, blah. But then, most of the people are gonna be in that 80%. And the worst thing that you can do which is the mentality and the approach that most people take in management and all that kind of stuff, is basically just cracking the whip. And as long as I'm just looking over their shoulder all the time, and I'm doing this, and telling them no, and blah, blah, blah. Then they're just gonna do the wrong... the right thing. Well, that's a full-time job and you don't want that to be the case. You want people to just do the right thing, right? So then, what you do, so you don't have to be looking over their shoulder, and micromanaging, and blah, blah, blah. You have to create a system of incentives around their job.  

Elizabeth: Right.  

Hermann: That gives them no choice but to do the right thing, right?  

Elizabeth: Right. That's the best way you can go about it, to drive that behavior...  

Hermann: Right.  

Elizabeth: ...instead of beating people to a pulp with it, right? And saying, "You must do this."  

Hermann: Yeah. And having to convince them...  

Elizabeth: It's giving them the path of least resistance is the path that you want them to take which is, we want you to do X and making it the most optimal choice for them to do that.  

Hermann: The path of least resistance is the right path.  

Elizabeth: Right.  

Hermann: That's...again, and that's just...  

Elizabeth: Matching that up is the key to that.  

Hermann: Correct. Okay. So, how does that come into play, what we're talking about? So, that was a long way of kinda getting to this, which is when we realize... when we analyze the incentive structure, when we're dealing with a centralized coercive regulatory entity, right? They have no skin in the game. It's a completely outside third party that has no skin in the game, right?  

Elizabeth: Right. They don't care if your business is successful, or not successful, or whatever.  

Hermann: I'll give you an example. We're told, we have to have these regulatory agencies, we're told we have to have licensing, we're told that all of these are just...like the whole world will burn if these things don't exist.  

Elizabeth: Right.  

Hermann: Right? And the last episode, you mentioned there was a salon where someone ended up getting HIV.  

Elizabeth: Yeah.  

Hermann: Okay. So, you have the service provider who did something absolutely terrible, and you have the client who is a victim, correct?  

Elizabeth: Absolutely, yeah.  

Hermann: And then you have the regulatory entity that exists to make sure that that doesn't happen. And yet, it still happened, correct?  

Elizabeth: Yep.  

Hermann: Is anybody in that regulatory agency gonna get fired?  

Elizabeth: No.  

Hermann: Does a regulatory agency have to pay for part of the victim's costs or anything?  

Elizabeth: No.  

Hermann: Right. So, that regulatory agency has no skin in the game, no dog in this fight, and therefore the incentive isn't there for them to do anything of value, right? So, now let's give a similar analogy but with an external agency that has skin in the game, okay?  

Elizabeth: Okay.  

Hermann: Our business and our clients. We provide a service, right? We provide them with products, high quality products for their business so that they can be successful doing what they're doing.  

Elizabeth: Right.  

Hermann: Okay? There's a lot of risk in that, so, what do we do? We reach out to an insurance company.  

Elizabeth: Okay.  

Hermann: And we say, "Hey, can you guys take over this risk for us in case something happens that's out of our control," or who knows?  

Elizabeth: Like an example, just to give it a concrete example would be, let's say, you know, we find a vendor that we love, we get an amazing gel-polish line that we think is the cat's pajamas. We sell it to our nail techs and they get, you know, an allergic reaction or their clients get an allergic reaction. That's kind of the example that I would use, right? So, in that situation of course we have liability insurance for our business to ensure that if that were to happen, we're covered for that, right?  

Hermann: Correct.  

Elizabeth: That's kind of how it starts.  

Hermann: Yes.  

Elizabeth: Okay.  

Hermann: But here's how an entity that actually has skin in the game behaves because of the incentive structure. We go to them and we say, "Can we get liability insurance for X amount of money coverage?" They say, "Not so fast. What do you sell?"  

Elizabeth: Right.  

Hermann: "What industry are you in? Where do you get these products? We want to see who these companies are."  

Elizabeth: Right.  

Hermann: "What is... what are the ingredients in your... in those products?"  

Elizabeth: Right.  

Hermann: Okay? "What countries are they coming from? What internal processes for quality assurance do you have? Let us see it."  

Elizabeth: Yeah.  

Hermann: "We want to make sure that they're up to par with," blah, blah, blah, okay? So, now you're talking about a regulatory "third-party entity" that actually has in the game because guess what? If something goes, something does go wrong who pays?  

Elizabeth: The insurance agency.  

Hermann: They do, right?   

Elizabeth: Yep. But we do too because we're the ones paying our premiums.  

Hermann: Yeah, we're paying premium but...  

Elizabeth: And we have to pay, you know, I'm sure, a portion of what it is.  

Hermann: But for that specific law, so for instance the HIV thing whatever.  

Elizabeth: Yep.  

Hermann: Right. So, they actually are invested in making sure that the people they do business with...  

Elizabeth: Are on the up-and-up?  

Hermann: Are on the up-and-up, they have the proper processes, and systems, and people, and products, and everything, that makes sense. Now, when we're talking about the external entity that we were referring to as the government, they have none of that, okay? So then, that's why we say that there's a false sense of security that there is this entity out there looking out for us when they have no skin in the game, right?  

Elizabeth: Well, and also, and also what you're talking about the full-time job of keeping that watchful eye, right? As an example. I mean, in the years that we had our salon in California, how many times did they come to check on what we were doing?  

Hermann: And I was actually gonna get to that, I'm glad you reminded because I completely forgot. That's a great point too, to again, instead this is the best example of... to highlight the incentive structures being upside down when we're talking about government regulating agencies, right?  

Elizabeth: Yeah.  

Hermann: So we showed you how in the private sector we have the right incentive structure, right?  

Elizabeth: Businesses have to be on the up-and-up.  

Hermann: As provided by the example of the insurance with us and blah, blah, blah, right?  

Elizabeth: Yeah.  

Hermann: Right? Okay. Now I'm gonna show you how it's upside down when it comes to the government. So, they came only like twice I believe...  

Elizabeth: Once.  

Hermann: Actually, I believe it was twice. You weren't there the second time, I was there.  

Elizabeth: Oh, okay. Okay.   

Hermann: Actually I was there alone the first time too. And so, they come, and again, we mentioned this last time, because we hold our selves to a very high standard.  

Elizabeth: Yeah.  

Hermann: None of the minimum regulatory things were ever an issue for us because all of our internal processes and standards were much higher than that.  

Elizabeth: Right. Some of them being things like, you have to have the poster on the wall, right?  

Hermann: Right. To be something as...  

Elizabeth: Something as simple as that.  

Hermann: Ridiculous.  

Elizabeth: Ridiculous or, you know, everything has to be labeled as clean and dirty because, you know, that's really gonna insure the salon follows those things, so yeah.  

Hermann: Right. So, you come and what happens? We get the visit and then, so, they take us to the back office to basically go over the results and flying colors, right?  

Elizabeth: Right.  

Hermann: So, hey, you know, great job, everything goes great, you guys are amazing. I remember the first time even though we were actually pretty new. I think it was like, within our first month or two.  

Elizabeth: Yeah. They came I think 30 or 35 days into us operating.  

Hermann: And the lady was very complimentary about our salon, "Hey, this looks beautiful, you have a gorgeous place, well done," blah, blah, blah. "Thank you, thank you very much." She gave us, you know, whatever documentation and she left.  

Elizabeth: Right.  

Hermann: Right? Now, let's say, she goes down the street. She goes to another salon. Terrible, absolute disaster. They don't take care of their customers, they don't take care about hygiene, and cleanliness.  

Elizabeth: Which we did have one down the street they had cockroaches in their salon and...  

Hermann: Right.  

Elizabeth: ...just disgusting.  

Hermann: So, then that conversation with them is gonna be much different. They're gonna say, "Hey, here all the things that I found," buh, buh, buh, buh, buh. "Here's a bill for $3,000, well, $10,000 worth of fines," okay? Again, that governmental agency has no skin in the game, so, what is their incentive? To create more salons like ours that they get zero dollars from, every time they visit? Or more salons like the one that gave them, gives them $10,000 every time they visit?  

Elizabeth: Right.  

Hermann: It's obviously the latter, correct?  

Elizabeth: Yeah.  

Hermann: And again, why do...why don't they, why do they not shut them down?   

Elizabeth: Yeah, because, I mean, we had for example...  

Hermann: Because they then, they would stop getting $10,000 a pop.   E

lizabeth: Well, yeah. There were tons of salons like that in San Diego for example, that we knew they were getting rated by the inspectors, you know, every so often. And we knew that they were paying fines because we heard about it from the other fellow nail techs and stuff like that. And they were still operating.  

Hermann: Correct.  

Elizabeth: That's the thing I think is crazy. And even that salon...  

Hermann: They don't have an incentive to shut them down.  

Elizabeth: No. There's no shutting them down.  

Hermann: It's a very stable source of revenue for these agencies.  

Elizabeth: Yeah.  

Hermann: Because again, since they don't have a skin in the game in terms of the business themselves, the only incentive is for them to just keep finding the bad ones. And keep buying... but keeping them around. Right? Because then they can count on $10,000 worth of fines with every visit. Times, you know, 300 different salons.  

Elizabeth: Well, and the other thing that's scary to me though to add to this is, that only applies to the salons that they actually catch doing it too. I mean...  

Hermann: Right.  

Elizabeth: Out of...I mean, I forget what I just saw. NAILS Magazine just had their big book come out and it had a list of how many salons are in the state of California for example, it's huge. I mean, there's like 100,000 nail salons or maybe more in California itself. And the last time we were in California, I think there were five, six inspectors that covered the whole entire state of California. So, you're talking about 5, 6 inspectors that have to inspect 100,000 salons on a regular basis. So, I mean to me, it's not only the fact that they're not shutting down the ones that they do discover, that they're making these fines off of and this money that feeds the beast. But also, you add to the fact that, how many other salons aren't even being inspected, right? I mean, so, it just doesn't work from any perspective. There's no way you can actually feed the beast and also have enough people to go around to actually keep that watchful eye.  

Hermann: Well now, now again, we mentioned the whole technology that actually helps them. Because it is so easy to have communication with people, basically the consumers do the work for them. So, you can have just a handful of folks, you know, working for the agency.  

Elizabeth: Right.  

Hermann: And all it takes is for them to be monitoring different, you know, different groups on social media, or whatever...  

Elizabeth: Right. But on that point, on that point, let's say, you know, three consumers go to the salon down the street, you know, ours we get five-star reviews, four-star reviews, whatever. The one down the street gets two-star reviews, three-star reviews, and they've got cockroaches, they're using dirty tools, look how crappy my nails are. I mean, on that point though, with the technology or someone even doing a Facebook Live, you know, of how horrible their nail salon experience was. I mean, isn't that enough? I mean, I mean, why do we need a Board of Cosmetology actually going around and finding these salons? Because everything we've talked about, I mean, really the incentive is to have paying customers come back. So, if you've got one-star reviews on Yelp and you're hurting people, not only is there legal recourse for your clients actually to go in and go against you. But also out in the ether, on the internet, everyone knows that you have a crappy salon.  

Hermann: Right.  

Elizabeth: Right? So, I think it's interesting that we even need the $10,000 fines that don't shut down the bad salons. And also, make it difficult for the good ones because I remember one of the biggest things that they were harping on us about which we didn't even get written up for but they just were fighting us on this thing in our salon was we had those footsie tubs, right? We  had portable non-jacuzzi style pedicure tubs, that had individual disposable...  

Hermann: Liners.  

Elizabeth: ...liners, okay? And we even had I think like 400 or 500 liners in our stock at any given time. So, people could see we have them. Now, I know that there are people who wash those stupid plastic liners and reuse them which is just another whole story. But even at the end of the day, they wanted us to submerge our electrical portable tubs in hot soapy water, wash them, right? Even though the disposable liner is in there, wash the actual tub...  

Hermann: Even though our clients feet never actually touch them.  

Elizabeth: Right. Never touch the tub.  

Hermann: Only the liner.  

Elizabeth: They only touch the liner.  

Hermann: Correct.  

Elizabeth: That were specially made for this thing.  

Hermann: Right.  

Elizabeth: And it cost like nothing. So, I don't see any reason why anyone would need to like reuse them, even if you did, whatever, it's weird. But I mean, we specifically went the route of non-jacuzzi style tubs because we knew all of the issues that were happening in California with flesh-eating bacteria and all of that gross stuff. So again, us, going above the status quo, trying to solve a problem that exists which is providing that security for our clients of having disposable liners in a portable tub that has no jacuzzi jets that's going to harbor bacteria, or infectious diseases, or anything. They get clean every single time. The board was harping on us about submerging our electrical tubs in hot soapy water. And then, rinsing them with an EPA registered disinfectant to boot and keeping a pedicure log. As if, we were using jacuzzi style tubs.  

Hermann: Right.  

Elizabeth: So, we get punished even though, and I say punished, we didn't actually get written up for this but it was something I literally had to fight with them on for several weeks about the stupid pedicure log. Because I was like, "This is ridiculous. It says in your state regulations, in your rule book, that a pedicure log is only necessary for jacuzzi style pedicure tubs because of the ability for stuff to be harbored in the tubes. So, you need a cleaning log for these salons that aren't doing this." But yeah, a salon who goes above the status quo and provides something even beyond that that answers the problem and provides security for our clients, we are getting treated the same as a shitty... I shouldn't say shitty, as a crappy salon that, you know, is doing below the status quo. That is operating in, you know, below what that bar is. And to me, that's the biggest frustration, okay?  

Hermann: Yeah, and I'm going back to what I mentioned earlier. Remember, they're always reactive not proactive, right? So, someone, the initial salons like that, were those big, you know, jacuzzi style tubs and all that kind of stuff. And then someone came up, again, an entrepreneur like us.  

Elizabeth: Yep.  

Hermann: Came up with an alternative, a smaller thing that you can move around, and you can have liners, throw them out, blah, blah blah.  

Elizabeth: It's perfectly clean.  

Hermann: They do whatever, but again, they're one step ahead of it and the regulatory agency is one step behind.  

Elizabeth: Right.  

Hermann: So, their rules, how to apply to the same, to this new thing that completely does away with the concerns that they had about the previous thing.  

Elizabeth: Right.  

Hermann: But they still, again, check the box, same thing, they have to apply it the same way, even though it makes no sense.  

Elizabeth: So how does, how does one kind of going back to our original topic for this podcast because you and I can easily just go down a rabbit hole. So how does, I mean, we've offered up a lot of empirical evidence I would say that, this needs to really be reanalyzed. We need to actually crack this baby open and look at it because to me, it's clear as day that this whole thing that we've got going on is just not working. I mean, I'm not talking about once the nail tech is in the industry then we can inspire them to take continuing education and bring them into the fold. I'm talking about from the day one, this just to me is not working. It's not, it's not allowing people to come in, it's not allow...it's not fostering an environment of actual education and improvement and evolution, it's not keeping the bad so...it's not keeping the bad salons from operating, it's actually allowing them to operate under the premise that they'll just pay for violations. And so, how is it that with all of these things clear as day to me, that most people still think, we've got to have the government giving us our shoes.   Hermann: The only way that we can get away from that I think is by coming up with alternatives. So, I think that the more that entrepreneurs, and just big thinkers, and people that are open-minded come up with different alternatives. Like I said, they can never catch up. But we just move forward so much, that people and as the newer generations are coming up and they're seeing different options and different alternatives. That, that eventually is gonna start going away more, and more, and more. The real and only way where we stay stuck in the status quo is through fear-mongering. Because the fear of someone hurting us, the fear of someone doing something bad to other people, whether it be hurting them...  

Elizabeth: Cornstarch nails.  

Hermann: You know, cutting off their finger, giving them HIV, or fungus, or doing that. That fear is real. And the people that want to regulate everybody know that. So they need to feed and appeal to that fear. And say, but for us existing, you know, you would be, you would be...  

Elizabeth: It would be harakiri.  

Hermann: ...eating, you know, poison sandwiches, your toasters would be exploding, you would, you know, all of this stuff would be happening. You would all be dead.  

Elizabeth: Right.  

Hermann: If we didn't exist.  

Elizabeth: Right.  

Hermann: Now, again, the empirical evidence is out there, in different parts of the world showing that that is not indeed the case.  

Elizabeth: Right.  

Hermann: And that as long as we have a strong, a strong legal system where we can bring those responsible for hurting others, that that is usually all that is necessary for people to know, "Hey, I need to do the wrong thing, otherwise, I'm gonna be taken to task either, I'm gonna, you know, owe that person millions of dollars, or I'm gonna be, I'm gonna go to jail." So, whether it's civilly or criminally, there's, you know, people can take me to task.  

Elizabeth: Right.  

Hermann: Everything that tries to prevent things before they happen, rarely if ever, actually work.  

Elizabeth: Right.  

Hermann: And if anybody wants to look...  

Elizabeth: Like has anyone watched the movie "Minority Report," I mean, it...  

Hermann: Well, that's a different issue, but I'm just talking about something that will keep people from doing right. So, we know that the speed limit is, you know, 65 on the freeway. Do people speed?  

Elizabeth: Yeah, absolutely.  

Hermann: All the time, right? Okay. So...  

Elizabeth: But I would say that people don't go 150 miles an hour. They go what they feel is reasonable.  

Hermann: Oh, some might. Correct. And some might, and some do go 150 miles an hour, but my point is that, for instance, I really suggest that people read the book something like "Freakonomics" is a good...  

Elizabeth: Yeah, "Freakonomics" is awesome.  

Hermann: A good, you know, book that addresses a lot of these things. That deals specifically with incentives. And it, and it shows how for instance, I always got a kick out of this, which say, they showed how traffic laws really don't have that much of an impact on traffic, okay? And so they said that, and they actually did this and for any of you that are even interested on this in YouTube they have a couple of ways that they proved this. One was in Germany, in Bohmte, Germany I believe it's called. And they took all traffic lights, all traffic signs, they took everything for I think like a month or something, just to see...  

Elizabeth: Crazy.  

Hermann: ...what happened? And traffic actually diminished, and people drove more carefully. Why?  

Elizabeth: Because they have to.  

Hermann: Because you have to. You have to make sure, you have to look both ways, you have to do a full stop because, hey, you're worried that someone's just gonna run right through, right? So, everybody was much more careful, right?  

Elizabeth: Yeah, because at the end of the day people don't want to hurt themselves or others. I don't think many people do operate under that.  

Hermann: Right. I mean, remember, the top 10%. The bottom 10%.  

Elizabeth: Sure, sure, sure, but I mean, average Joes...  

Hermann: But again, the 80% in there...  

Elizabeth: We don't wanna hurt people.  

Hermann: The incentive was, be careful.  

Elizabeth: Right.  

Hermann: So, in the "Freakonomics" is, I think it's funny because they make the point they say, "Even after crumple zones when the government mandated crumple zones and they have the cafe standards for safety for..."  

Elizabeth: What's a crumple zone?  

Hermann: In cars, sorry to mention that. In cars, they have crumple zones that make it so that the car essentially becomes an accordion, absorbs all of the impact, and all that kind of stuff.  

Elizabeth: Oh, yeah, yeah. Yeah.  

Hermann: So it's safer.  

Elizabeth: Yeah, yeah.  

Hermann: Well they, they saw that a lot of the accidents were actually becoming more common. Whatever instance, airbags, and then again, it gives you false sense of security. Like I'm in this nice comfy cage that's very safe.  

Elizabeth: Nothing can happen to me.  

Hermann: "Freakonomics" they show, you would actually increase the level of safety in people driving cars if all you did, you took away all crumple zones and airbags, whatever. You put a spike in the middle...  

Elizabeth: Yeah.  

Hermann: ...in the middle of the steering.  

Elizabeth: I remember we talked about this and I was like, what are you talking about?  

Hermann: So, you put a spike, a big fat, you know like, railroad spike in the middle of the steering wheel, people would actually drive more carefully...  

Elizabeth: Of course, because you have to, you don't want to slam on your brakes or anything crazy.  

Hermann: ...than the effect that you get from...  

Elizabeth: Airbags.  

Hermann: ...from traffic laws.  

Elizabeth: Oh, yeah.  

Hermann: Or you know, all that kind of stuff, all those type of, okay? Why? Because people like, "Dude, if I get in a head-on collision, my head's going straight through this thing."  

Elizabeth: Right. 

Hermann: I'm not gonna speed...  

Elizabeth: And that's obviously a very extreme example.  

Hermann: Right. And it's funny or whatever but you get the point. That again, we're talking about incentives and that when we try to build all of these little, we basically create, imagine me, okay? A one, basically a one hallway type labyrinth, right?  

Elizabeth: Yeah.  

Hermann: Where you have, you know, what they do with the rats when they're doing different things and it goes. It starts and they go straight for the cheese, right? And then now, imagine that what we're living in is an actual labyrinth.  

Elizabeth: Trying to navigate.  

Hermann: Trying to navigate through all those things.  

Elizabeth: Yeah, yeah.  

Hermann: Every, every turn of that labyrinth is a bigger expense and a barrier to entry...  

Elizabeth: Yeah.  

Hermann: ...to people who otherwise could be successful, could be out there working, being productive, building wealth, building experience.  

Elizabeth: Right.  

Hermann: Getting out of poverty.  

Elizabeth: Well, and helping to foster our whole environment, our industry, our economy, and that's the thing.  

Hermann: Right. And that, I wanna make sure that people understand this, because usually the number one complaint or retort to people that put forth ideas like what we're doing is well, you're just, you know, protecting and shilling for the big companies that can go ahead and like...no. It's absolutely the opposite.  

Elizabeth: Yeah.  

Hermann: Big, you know, big oil or big this, or big whatever, they don't need us to help them. They're doing just fine, I don't need to be a shill for the rich, or for the powerful, or whatever. I want to deal with the people that could make it up. That can make it out of poverty.  

Elizabeth: Yes.  

Hermann: And I want them to have more opportunities. I want them to not be stopped by silly little regulations and by these little, you know, bureaucracies that they only make... the only thing that they do is come up with justifications for their existence.  

Elizabeth: Well, I wanted to expand upon that because I also think that, it's not just people who come from poverty stricken situations. It's in general, and I've talked about this a lot. One of the biggest things that really alarms me is, how long the average new technician, the average new nail technician spends in this industry before leaving, right? And how many young people are actually coming into our industry. Because this is, you know, exactly the same thing which is, by having those barriers to entry, we're turning away a lot of amazing people who would add amazing ideas, and skills, and everything to our industry, and we're just sit... I mean to me, I feel like our industry is just sitting here aging.  

Hermann: Yeah.  

Elizabeth: You know, and not to say that, you know, I'm not saying, you know, that that's, you know, older people in the industry are bad or anything like that. I'm just saying that, at the end of the day, if we don't have fresh blood coming in, I don't care what age you are. If there's no fresh blood coming into this industry, and we're creating all these barriers, the cement is gonna harden and we're gonna be stuck being, you know, dinosaurs trying to use cell phones. I mean, that's how I look at it, right? It's like, we're not moving forward, we're not advancing, we're getting left in the dust. And I can see the advancement happening and there is always inherent risk with moving forward with stuff. And like you mentioned, it's scary, it's out of our comfort zone, where the hell are we gonna get our shoes if the government's not making our shoes for us? I get that mentality. But, I really wanted to utilize these conversations to encourage people not to go, you know, let's take all licensing away, let's do away with all rules and regulations because that's not the concept that we're talking about. What I really want to foster and what we want to foster is an environment where people actually take a step back and they go, is this what's best for our industry? Not, this is the way it's always been done, or this is what we're given so we'll deal with it, right? Those are the worst responses I hear all the time is, well, it's just the way things are. I hope that I never hear that statement come out of anybody in my industry. That is the most horrible statement you could possibly say. And number two is, well, you know, we just deal with it. It is what it is, right?  

Hermann: Complacency.   

Elizabeth: Complacent, you know, it is what it is, everyone has to go get their license, you know, it's already in place, why change it? Just deal with it, right? And then, we'll fix it after the fact. But, kind of what we talked about our last episode is sometimes after the fact is too late. Someone's already in debt up to their eyeballs, they can't afford to start a business and it's only a matter of two or three years tops before their family says, this isn't working. You need to go get a real job, and they end up leaving our industry. So all the fresh blood is leaving, all the people that were fresh blood, eventually, I feel like are getting kind of ground down or pounded down by just the way things are. And they end up kind of believing in it as well. And I really feel like if there's something that we can do, if there's anything that we can contribute to the advancement of our industry, which I know so many nail techs are so passionate about seeing our industry prosper and move forward, and being recognized as true professionals not the lowest, you know, not the redheaded stepchild of the beauty industry. I think if there's one thing that we can do is really start to take a step back and look at, this is the way that it is, but does this work compared to other alternatives? Is there a way that we could start to infuse other ways of managing safety, educating people, getting people started in their nail careers, are there other ways that we could do this? Does the way that we're doing it today make sense?  

Hermann: Absolutely. And I think that's bear mentioning that what we, what we're talking about here is we're just having a discussion, we want to bring these topics up.  

Elizabeth: Yeah.  

Hermann: And we don't want the take away to be that, "Hey, if you're currently in a regulated... very regulated state, and with licensing, whatever, to also just have the knee-jerk reaction of saying, you know, take to the streets and say, "Deregulate." You have to look at what's going on.  

Elizabeth: Right.  

Hermann: Because let's say, I can clearly see that there could be a situation in which you're in a particular state, all of those barriers to entry are very slight and they actually aren't that onerous. So, people can relatively easily get into an industry.  

Elizabeth: Yeah. Or say, where apprenticeships are more common and there's other alternatives.  

Hermann: Yeah, and it's not expensive or whatever, you know what?  

Elizabeth: Yeah.  

Hermann: It might not, you know, necessitate getting all worked up about it.  

Elizabeth: Right.  

Hermann: Right? Now, if you're in a completely deregulated state, and with no licensing, and no this and that, what the other. Before you jump out the window, analyze the industry and the level of what's happening and say, "Hey, no one's dropping dead, nothing's happening, no big deal, it works. At least here."  

Elizabeth: Right.  

Hermann: Right?  

Elizabeth: And it doesn't mean that...  

Hermann: Don't go, don't go off the deep end.

 Elizabeth: Yeah.  

Hermann: Right? And say, "Oh my God, we're completely deregulated, unlicensed in this state. We have to change this." Again, look at what's happening.  

Elizabeth: Yeah.  

Hermann: And see. Okay, can it be better, is what's happening working or not? And go from there.  

Elizabeth: Yep.  

Hermann: Again, we're not saying everybody go out, you know, tomorrow and picket on the streets to deregulate whatever. Look at your local, okay, you have to start small, you have to start local, you know.  

Elizabeth: Yeah.  

Hermann: Think local, act local, is usually a best way to make change, to affect change. And see what's going on in your industry, in your community.  

Elizabeth: Yep.  

Hermann: And go from there, and make, and hopefully we've opened up, your guys's minds to some of these topics. To think outside the box, as much as I hate that expression. And so, I'll just leave you guys with a couple good real life analogies of how some of this stuff works. And that you see that the interplay between, you know, behavior, regulation, like prohibitions of this and that other thing, okay? So, precisely because in the early 20th century, because of a lot of fear-mongering, by a lot of different groups, we actually prohibited alcohol for 13 years. And most people can't even fathom that, right?  

Elizabeth: Right.  

Hermann: You could not, it was illegal to make sell, produce, buy, anything that had alcoholic in it, okay?  

Elizabeth: Yeah.  

Hermann: So, prohibition lasted from roughly 1920, 1933, okay? Again, because of a lot of fear-mongering and a lot of manipulation of people by bureaucrats and by certain, you know, special groups and that kind of stuff. And it gave us the Mafia, it gave us a lot of the level of violent crime, skyrocketed especially in certain areas like Chicago, and like different areas where, you know, that all that kind of stuff. Until they essentially said, "You know what? This isn't working, let's do away with it," and they repealed it, okay? Similarly, we're going through... it's funny because we're going through a very similar time right now, with the deregulation of other things like drugs and that kind of stuff.  

Elizabeth: Right.  

Hermann: And that's happening. And so, we need to look at those examples, those real-life, real-world examples, and how that works. Because you and I have absolutely, you know, no need or interest in drugs. We don't do drugs, we don't care, we don't, you know, we don't have anything to do with any of that stuff. And yet, for instance, to me it seems that something where there is, you know, no victim, no crime type of scenario. And the deregulation of that has actually had a lot of good effects on a lot of the states and places where that's been done. And to the extent that those places have not reaped the benefits of that deregulation, that prohibition, it has been the ones that have regulated it the most. Meaning, okay, it's legal now. But we're gonna tax the heck out of it, and we're gonna put so many different hurdles in front of these to be able to get this. That they are still a gray market, because the people that were, you know, it's like, okay I won't go to jail if I get caught with this thing, cool right? But I get my, you know, weed or whatever it is for I don't even know how much it costs. Let's just say, 20 bucks for some bag. I don't know, I don't know what any... how to talk intelligently about that stuff. But let's say, whatever little baggy I used to buy from my guy down the street was 20 bucks. Okay, now I don't have to worry about, you know, going to jail. I can go down the street to an actual store, and at least, it's nice because it's clean now. I know that it's pure.  

Elizabeth: Right.  

Hermann: Now I know that it's safe, I know exactly what I'm getting, blah, blah, blah, blah, but it cost me 100 bucks.   

Elizabeth: Yeah.  

Hermann: Because of the regulations and all the licensing that that dispensary has to pay for.  

Elizabeth: And you can't grow your own.  

Hermann: In many cases you still can't grow your own and all that stuff, right? So, the guy says, "Dude, I'll still go to Charlie down the street and get it for 20 bucks as opposed to going, thankfully now I still won't go to jail if they catch me or whatever."  

Elizabeth: Right. Charlie now has to operate in the gray or the black there.  

Hermann: He's still there.  

Elizabeth: Yeah.   Hermann: There's still the incentive for him to operate in the gray market or the black market, right?  

Elizabeth: Yep.  

Hermann: And so, a lot of that in some cases hasn't changed very much because of the hyper regulation, even though, it's definitely better that it's not prohibited. And that you're not throwing people in jail for doing something that doesn't hurt anybody.  

Elizabeth: Well, it's like letting someone run on a leash, right?  

Hermann: Right.  

Elizabeth: It's like letting something out of a cage but then it's on a leash. And it still, it still doesn't allow for the best of circumstances to happen.  

Hermann: Exactly. And that's why just wanna bring up those, those concepts and those analogies, because it's very clear to see how, you know, you can do something better and still yet not reap all the benefits of it. When you still try to get out in front of it, and again, the whole preventing type of mentality...

  Elizabeth: Before it happens, yeah.  

Hermann: ...and trying to do something, to prevent something from happening which almost never works. And the best thing that we can do for people is make sure that the people that do actually commit something, again, a crime against someone that they be held accountable. Once the actual crime occurs, throw the book at them.  

Elizabeth: Oh yeah.  

Hermann: Put them out of business...  

Elizabeth: Shame them within an inch of their life too.  

Hermann: ...shame them, do everything you can to make the victim whole again.  

Elizabeth: Yep.

Hermann: But trying to get out in front of it, rarely if ever works.  

Elizabeth: Yeah, because you're kind of operating under, you know, like we were talking about the 10 on the top, the 80 in the middle, and the 10 on the bottom. Why would we wanna operate as if everyone is the 10% on the bottom?  

Hermann: Correct.  

Elizabeth: And you know, prevent those people from actually being able to do the right thing, from being able to prosper. And again, I just, I see, I, you know, when we talk about the nail industry for example. I see a big sickness inside of it, that really if we don't resolve this, I think is gonna have some very bad implications because we just can't continue to survive under the premise that without being able to prevent these things from happening, you know, people would be chopping people's fingers off. Because there's no way that we can advance as an industry, there's no way that we can prosper as business owners. And it's just getting really expensive for a lot of people to even operate at the status quo, and you know, good nail techs even are losing their businesses or having to turn to other industries because of all of this regulation. And I think also, not only does it affect, you know, the people who are already in this industry. And making it that much more difficult for them to do the right thing and to just operate. But it's also preventing new blood from coming in, it's preventing people from being out in the open, it's making people work in the shadows, which to me is the worst thing that we could possibly do. And I know we've talked about a lot of hot topics on the podcast like Russian manicures, and you know, all of these different types of, you know, cornstarch nails, and all these things that seem extremely scary, new, out of our comfort zone. How could we allow this? How could this be the way that people want to do things? But I think that, it's not to say that bad things don't happen, bad things always happen. The point is, bad things happen whether you have over-regulation or you have under regulation. The difference is, when you have over-regulation not only does bad stuff happen, but none of the good stuff is allowed to happen either.  

Hermann: Correct.  

Elizabeth: And that is, I think one of the biggest issues that we need to really analyze in our industry and really get people, you know, up to par with where we want them to be as an industry, but allowing people to actually do it without all of these barriers. Because to me, I just don't see how we're gonna survive.  

Hermann: And you know, again, as kind of outsiders, recent, you know, people that have come recently into this industry.  

Elizabeth: Right.  

Hermann: We have identified a lot of these issues and what we're trying to do our mission with the Nail Hub, is all of these things that we've identified and there's so many aspects of this industry that are just absolute dinosaurs. The status quo, the business as usual, is just doesn't work in the 21st century.  

Elizabeth: Right.  

Hermann: It just doesn't work and it cannot work. And so, what we're trying to do, is bring this industry into the 21st century through empowerment, through education, through providing the best, you know, quality products. And everything that is gonna allow, this industry to be elevated, and so, anything that we can do to help expedite that to be, you know, positive influences.  

Elizabeth: Yeah, to inspire others.  

Hermann: And everything.  

Elizabeth: Yeah.  

Hermann: You know, we'd love to hear from you, we'd love to hear your feedback, and you know, let's keep the conversation going.  

Elizabeth: Yeah, because Hermann and I don't wanna be standing alone on an island, you know, of advancement. We want people to come with us and we want, Hermann and I want other groups, and other companies, and other businesses to come up. I mean, it's important that we have a bunch of people in the mix. It's important that we have a lot of opinions, a lot of ideas, a lot of inspiration from different perspectives. And it differs so much throughout the world, throughout the country. I mean, state-to-state even, it's so different. And so, it's important that each of you guys are able to look at your local communities, analyze what works best for yourselves, and let's come up with some alternatives, you know, we're not asking to take away all of this stuff that we have in place. But we definitely want to inspire some alternatives, so that we can create some of that natural competition, that natural analysis of what is the best, you know, this is what it is. But, you know, is it great compared to what it could be? And fostering those conversations and, you know, like I mentioned a couple podcasts ago, that I was very honored to be recognized by NAILS Magazine as one of the top 35 people that have helped change this industry. And this is what, this is all about. You know, they even said, "Liz tells it like it is." Well, Hermann and I both tell it like it is. And it is scary for us too because, you know...  

Hermann: You ruffle a lot of feathers.  

Elizabeth: You ruffle a lot of feathers. You bring a lot of, you know, negative attention when you do things like this, when you talk about topics like this. But I think it's so important to just have these types of conversations. I don't know what the outcome is, I don't know what the answer is, I don't think either of us knows exactly what the answer is. But it's very important to have these kind of conversations so that as a group, as an industry, we can start to really take a look at how we can improve upon what we've got going on. So, thanks guys for listening. We really appreciate you giving us your attention. I know both of these podcasts were much longer than usual, but a very, very important topic. I think Hermann and I could talk about this for probably 24 hours if you would let us.

But as always, if you guys have any comments, questions, you know, email us. You can email us [email protected], it's a great email to contact both me or Hermann at The Nail Hub. Also, I post these podcasts on iTunes, Google, Stitcher, everywhere, including YouTube. I recently, you know, within the last several months have been starting to go heavy on the YouTube posting because YouTube does allow for some interaction between me and you which I love. So, if you guys want to hit me up on YouTube, underneath this podcast episode, write some commentary about what your thoughts were, what your concerns are. And whether you're, you know, for the ideas we brought up, completely against them, we would love to hear what your feedback is because having these conversations is the most important. And the more we talk about it, the more we're going to evolve, and make change, and change is very, very important to our industry.  

So, I encourage you guys to interact with me. And looking forward to more awesome stuff in 2018. As I started this year with my first podcast of the year, you know, on Martin Luther King, Jr. day, I talked about, you know, moving forward, right? One of my favorite quotes from him about moving forward whether it's, you know, if you can run, if you can walk, if you can crawl, whatever speed you can move forward at, whatever you can muster up, we need to do this together. And thinking about what kind of mark we want to leave on our industry. What kind of mark do you want to have on your industry this year? What that means to you? And I'm definitely gung ho about, you know, my goals for my industry, so, I hope you guys think about that as we move throughout the year. It's gonna go by really quickly, but I encourage you guys to think about it. And thanks again. Thanks for joining me, Hermann.  

Hermann: Thank you.  

Elizabeth: All right. Bye guys. This is Elizabeth Morris, signing off from The Nail Hub. This podcast is sponsored by NAILS Magazine, the professional nail industry's leading publication. Have a suggestion, question, or concern? Send me an email at [email protected], and don't forget to follow me on Instagram, Facebook, and Twitter at The Nail Hub, and check out The Nail Hub YouTube channel for more episodes and tutorials. Want customized business consulting, access to classes, amazing products, and more? Visit thenailhub.com and check out all the wonderful things we provide. Our goal is to help you reach your ultimate potential. Thanks for listening and I'll catch you in the next episode.

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