Pod Insights Odd Lots What an Alaskan Furniture Company Tells Us About Tariffs About this episode Alaska is no stranger to supply chain issues and a higher cost of living. Almost everything has to be imported into the state, incurring longer lead times and extra transportation costs — and that’s even before adding in the new tariffs from the Trump administration. In this episode, we speak with Dave Cavitt, the founder and CEO of Furniture Enterprises of Alaska, which owns furniture stores for brands including La-Z-Boy, Mattress Firm, Ashley’s Furniture, and many more. We talk to him about the logistical challenges of selling furniture in Alaska, consumer demand right now, the impact of the tariffs, and much more. Read more:Who Loses the Most From Trump’s Tariffs? Who Wins? US, Japan Working to Announce Reciprocal Tariffs Won’t Stack Only http://Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox each week, plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.
Transcript 7,166 words · 12 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.
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1:35 Tracy Alloway? Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.
1:39 Joe Weisenthal? And I'm Joe Weisenthal.
1:41 Tracy Alloway? Joe, can I start this conversation with what will seem like a random story, but I swear I have a point.
1:46 Joe Weisenthal? Go on.
1:47 Tracy Alloway? Okay, so a long, long time ago, when I was visiting my mother in Beijing one winter, she was working out there. Beijing winters are really cold. They're really dry. And I was sat in her apartment and all of a sudden I hear this giant crack. And I run downstairs and it turns out the console that the TV was on had just like completely split in half because the air was so dry. And it was so freaking cold. And I had never considered that you could have. Weather locations where the weather was so extreme that you actually had to factor that into your furniture.
2:18 Joe Weisenthal? I never thought, I mean, I do have one sort of connection to that, which is we're going to start bragging about our international experiences, et cetera. You know, I mentioned my family lived in Malaysia for a year. We bought this big round table that we brought back with us to Illinois. And I do remember now that there was some discussion about like, oh, this was designed for the humidity of Malaysia, et cetera, maybe have some natural give, et cetera. But it was fine. But it's funny you say that because yes, now I would not have remembered that otherwise.
2:48 Tracy Alloway? All right. Well, the reason I bring it up.
2:50 Joe Weisenthal? We're so sophisticated in international.
2:51 Tracy Alloway? So sophisticated. I hope everyone's factoring in climate considerations into their furniture. But there is actually a reason that I'm bringing that up.
3:00 Joe Weisenthal? Yes.
3:00 Tracy Alloway? Which is we are in Alaska.
3:01 Joe Weisenthal? Yeah.
3:02 Tracy Alloway? And Alaska does have cold, very, very dry winters and it's also very, very large. It's very hard to get things into and out of the state.
3:11 Joe Weisenthal? Yeah.
3:11 Tracy Alloway? And so I think it would be really interesting if we actually talked about the furniture industry within Alaska.
3:17 Joe Weisenthal? We need no more introduction. We need no more. Let's do it.
3:20 Tracy Alloway? All right. So we do, in fact, have the perfect guest. We're going to be speaking with Dave Cavett. He is the CEO and founder of Furniture Enterprises of Alaska. So really the perfect person to speak to. Dave, thank you so much for coming on All Thoughts.
3:32 Speaker 06 Thank you so much for having me here.
3:34 Tracy Alloway? So tell us about Furniture Enterprises of Alaska. What exactly are you doing there?
3:39 Speaker 06 Yep, we are furniture retailers. We have 14 stores under six different brand names. And so we have, our stores are Sadler's Furniture, Williams and Kay Home Furnishings, which is more design and custom order products. Sadler's is mid-market. We have two Ashley stores that are a licensee of them. We have three mattress firm stores, a lazy boy store and a ultimate mattress store, which is a higher end mattress retailer. So what we do is we segment the different demographics in the marketplace and then combine
4:20 Speaker 06 the operations back behind it to be able to deliver the furniture at a lower cost than other companies.
4:28 Joe Weisenthal? And tell us a little bit about, you mentioned the size of the retail footprint. Tell us a little bit about the history. How did you get into this? Are you a native Alaskan? Are you, we learned the term sourdough recently. Are you a sourdough? What's the story of you and your company?
4:43 Speaker 06 Yes, I am a sourdough now. I am 69 years old. I grew up in central California in the farming area and it was not the right fit for me. So two weeks out of high school, I hitchhiked up here, kind of thing, by myself.
4:58 Joe Weisenthal? Amazing, all righty.
4:59 Speaker 06 That, I did several different odd jobs. Short term as a commercial fisherman, but we sunk the boat. That was not good. I was a janitor and bedmaker on the north slope during the building of the pipeline. And then I went as a day laborer to a furniture company and stayed there ever since.
5:19 Tracy Alloway? Hmm, this is already really fascinating. So one thing that Joe and I are learning about Alaska in real time is it is incredibly cyclical and sort of you have these boom bust cycles that are tied to what's happening in the oil industry. So you mentioned making beds when the pipeline was getting constructed. Is it fair to say that furniture sales follow that boom bust cycle as well? When there's a lot of activity, lots of people moving to Alaska and building stuff, do you suddenly see demand for furniture ramp up? And then when it kind of goes bust, do people start selling their, I don't know, their beds on the corner?
5:52 Speaker 06 Yes, we definitely have our cycles. They're not as extreme as it they once were. The largest of those booms and busts was the building of the pipeline. And then the first years of the oil revenue for the state that came in, and then the state built a lot of infrastructure. And those were booming times and there would be whole subdivisions built on spec and that type of thing as it was growing. And then the oil prices dropped to around $8 a barrel and the construction stopped and the people moved out of the state. So back in the mid 1980s, Alaskans knew all the terms of your house being underwater and people mailing their keys back to the bank and that kind of thing.
6:34 Speaker 06 And about a third of the homes in Anchorage at that time were walked out on, vacated by. The owners. So that was worst of the bust.
6:44 Joe Weisenthal? How did the furniture bit, how did you, at that point, had you already started your furniture operations? Like where were you in your career at that point?
6:50 Speaker 06 Yes, I was then a half owner of the furniture company that I'd gone to work for, and it was just terrible. I mean, revenues dropped like 70% type of things. We had 14 banks and savings and loans at that time, and half of them were closed by the FDIC or that, whatever the savings and loan one is called again, at that time. And so, we ended up having to do workouts with the banks and FDIC and people along that line.
7:16 Joe Weisenthal? Sorry, before I forget, were you really on a commercial whaling, or sorry?
7:22 Tracy Alloway? Listeners?
7:23 Joe Weisenthal? Yeah, no, no, no, listeners need no further context.
7:25 Tracy Alloway? Does everyone know that Joe is obsessed with Moby Dick and whaling at this point? To the point where you accidentally introduce it into sentences?
7:33 Joe Weisenthal? You were on a commercial fishing boat. Did it really crash? And were there any sort of, did that, you know, when, is there lessons from business that you can take from the allegory of going down on a ship?
7:45 Speaker 06 Yeah, I think it would be to, it didn't go down with us on it. It did go down. And I think it would be to interview the person leading that I was, I just got up to Alaska. I met another fellow who was the same age I was, but we were both just turned 18, but he had a fishing boat and said that I could work on it. He wouldn't pay me, but I'd get experience. And we went out and he ended up not knowing what he was doing. And we got caught into a storm, heavy seas, and that boat took on a lot of water, and the engines
8:25 Speaker 06 died. And we were hailing a mayday out in the Gulf of Alaska. And luckily, another ship, a tanker, heard it and said, do you want us to call the Kodiak Coast Guard for you? We said, absolutely, because we are sinking. And they came back and said, boys, we've got bad news for you. It's too rough.
8:44 Joe Weisenthal? Oh.
8:44 Speaker 06 They're not coming.
8:46 Tracy Alloway? And they came out and got you?
8:47 Speaker 06 That tanker did.
8:48 Tracy Alloway? Yeah.
8:49 Speaker 06 The Coast Guard, it was too rough.
8:51 Tracy Alloway? Coast Guard couldn't, but...
8:52 Speaker 06 Yeah, couldn't do it. And so they came out and it took us a little while of the boats bumping together. They were 550 feet long, we were 42 feet. And it slapped together at one time and they'd hung a ladder off the edge of that boat. And I saw that and I scrambled up to the...
9:07 Joe Weisenthal? Must have been the most satisfying ladder you've seen in your whole life.
9:10 Speaker 06 Absolutely. We thought we were, we thought we were goners. You know, because you only last half an hour in that cold water, so.
9:19 Tracy Alloway? Okay, so no more fishing. From fishing to furniture.
9:23 Speaker 06 Yep.
9:23 Tracy Alloway? What should people know about furniture sales in Alaska? What are the special considerations versus, say, furniture sales in the lower 48?
9:31 Speaker 06 Yeah, the biggest thing that separates us from the lower 48 is the additional freight cost to Alaska. You know, we're a long ways by road. We only have the one road, the Alaska Highway, which goes through Canada and up to us. And, and only heavy equipment really gets shipped over that. Everything else is shipped to the port of Seattle and then put onto ships. And it takes three days for those shipments to arrive to us. And it's, um, we pay more for that freight from Seattle to Anchorage than we do from the containers that we bring in from China, Vietnam, Malaysia, in those areas. Yeah.
10:10 Joe Weisenthal? So explain that more. Intra-US shipments are costlier than trans-Pacific shipments?
10:17 Speaker 06 Yes, I just checked because I figured it might come up. We're paying currently $1,900 China to Seattle. And then we have to reload that onto a carrier that can bring it up to here. And it's about $9,000 from Seattle to here.
10:34 Tracy Alloway? Wow.
10:34 Joe Weisenthal? Is there a Jones Act thing? Sorry, it's like, I have to, is there a Jones Act angle to this story?
10:39 Speaker 06 Jones Act is... A part of that for sure.
10:43 Tracy Alloway? Jones Act everywhere.
10:44 Speaker 06 Yeah.
10:44 Tracy Alloway? Can you not get shipments direct from China? Could that happen?
10:48 Speaker 06 No, there is nowhere near the volume out of the Anchorage area and where the port goes. There's maybe 650,000 people. We have about 760 in the state, I think. And so we just don't have, there's no economies.
11:03 Tracy Alloway? So I have to imagine that one of the keys to running a successful furniture business in Alaska is you have to be really, really good at shipping and logistics. And to some extent, it sounds like you're basically running a distribution center for furniture, right? Is that the thing that you're sort of competing on? Or is that the area of expertise that you really have to have in order to be successful in this business?
11:26 Speaker 06 I would say yes. We are good at the merchandising. We're good at the market segmentation, the advertising. We're good at everything, but we excel in logistics. We have a full-time person. We're not that big a company, but a full-time person that puts together those and is always negotiating the rates and trying to make sure that every container is filled to the maximum that can be. We can't pay for dead airspace in containers.
11:52 Joe Weisenthal? What was 2021 like? So, you know, we, as a podcast, first started getting really interested in, you know, shipping and logistics and freight is very important because like everyone else, we didn't think about it much in the 2010s when there was plenty of excess capacity. And then what was 2021 and 2022 like during those sort of extreme levels of both inflation and, you know, just bottlenecks in the supply chains?
12:17 Speaker 06 You know, those were trying times for us, but at least everybody was in that same boat.
12:23 Joe Weisenthal? Yeah.
12:23 Speaker 06 Kind of thing. And we had to put out our orders where we usually try to put them out a few months in advance. We were having to put them out up to eight to 10 months in advance. And of course, the freight rates were coming in. We had been paying about $1,700 a container trans-Pacific before that. And I think our peak was around 22,000 for a container.
12:48 Joe Weisenthal? Wow.
12:49 Speaker 06 But the demand was there. You know, and during that time, it was the biggest boom for the furniture industry that's ever been because as people in COVID times could not go to the bars and the restaurants, they weren't traveling and they decided to take that money that they usually spend at other places and put it into furniture. And so we had to pass on those costs to the consumers, of course, but it happened and it worked.
13:17 Tracy Alloway? At times like that, how does it work in terms of getting inventory? Because I imagine it's not just Alaskan residents that want a whole bunch of new furniture because they're stuck inside and everyone feels like redecorating their house at that particular moment in time. People in the lower 48 are doing the exact same thing. There's probably not enough furniture stock to go around at that particular moment. How are you actually placing orders? And I guess, how does it work in general when you're buying inventory from big brands like a La-Z-Boy or like a mattress firm?
13:49 Speaker 06 Right. That's really two different things. One, if we're talking about during the COVID times, we had to align ourselves and ensure that the people that we're placing the orders with would actually ship them. And we put a lot of focus into that. We did narrow down our selection to people that could get it shipped to us finally, even though there was rolling delays on that at all times. And then along with the manufacturing delays, then they would go and put the containers into the Vietnam or China ports and you couldn't get the bookings on the shipping.
14:22 Tracy Alloway? Right.
14:23 Speaker 06 That was overburdened type of thing. But it's different now. It's back closer to how it has been in the past. And we go to the furniture markets. We go to four of them a year and we select the items. And then when we bring something into our showrooms, we start the backup process and ordering in what we think demand is going to be. We do keep those items on our showrooms and then we sell our back stock and we sell into incoming stock. So we're keeping a close hand on when the arrival dates are going to be so that our sales staff can say, this is out of stock right now. It's coming in in three weeks and we can even book a delivery date from that point.
15:08 Tracy Alloway? I didn't realize there are furniture markets, but I guess that makes sense. So the idea is these are big, like wholesale furniture markets where you have the wholesalers sort of unveiling what they might have available to the retailers every year?
15:20 Speaker 06 Yes, there's two in High Point, North Carolina, and then two in Las Vegas that we attend. The ones in High Point, well, you should find out a little bit about it. Yeah, we should. It is just a massive market that's tens of millions of square feet, manufacturers displaying the new products.
15:56 Speaker 00 What's next for virtual assets? I'm Jacob Rees, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.
16:12 Speaker 07 We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high-frequency traders and that sort of thing, and folks who service institutional clients.
16:20 Speaker 00 As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.
16:28 Speaker 08 A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80-year-old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.
16:47 Speaker 00 Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.
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18:50 Joe Weisenthal? I want to talk about the contemporary economy a little bit. One angle that strikes me is very furniture relevant is housing. And due to interest rates, there's a lot of perceived stagnation. I mean, there is a lot of stagnation in the housing industry in general. A lot of people aren't moving due to mortgage lock-in. There's not a lot of new construction happening right now due to financing costs. What are you seeing? Like, I don't know much about the Alaska housing market, but you know, what are you seeing in the Alaska housing market right now? And I have to imagine whatever is happening feeds into the impulse to buy new furniture or not.
19:26 Speaker 06 Yeah, unfortunately, in 2015, Alaska, the oil prices took a dip. And when that went down, then the oil companies laid off their people and a lot of them. And since then, we've not recovered. So we're now in the 10 years of a recession, in my opinion. Home building in Anchorage has been very slight, only a 25 to 50 homes a year have been built in the past decade. And so each one of those is an opportunity for us to furnish, but it's been pretty slow. We've had a decrease in our population from about 305,000 to about 285,000, maybe somewhere
20:09 Speaker 06 in that right now. Home building in the rest of the state has been slow. The only place that is happening is in the Matanuska Valley, which is about 35 miles outside of Anchorage. Land is less expensive there. There's less municipal regulation and that kind of thing. So they're building several hundred homes out there a year, and that's our hotspot right now.
20:31 Tracy Alloway? Talk more about that. So when you see a particular area of Alaska booming, or when you hear that, I don't know, there's going to be, you know, some new oil project built in one particular town or city, do you immediately start thinking like, well, maybe we need to open a store over there? Do you sort of direct your business to where that oil money is going?
20:52 Speaker 06 No. It's a good question, but no. Where the oil is developed is on the north slope of Alaska, and there is no town there. It is just the oil camps. They're the closest to that are some native villages like Barrow, which is now called Yupiavik. And there's another native village up there, but those are a few hundred people kind of thing, so no, no market. All the infrastructure is through the Anchorage area. Talk to us about tariffs. What substantively are you seeing on that front? Tariffs are troubling to me. I lean as a conservative. I'm not really a, I'm not a Democrat
21:36 Speaker 06 nor a Republican. I'm a independent, nonpartisan kind of thing. It's troubling, you know, because we buy product from China, but now there's all the tariffs that are happening there that can price out that product to the marketplace. Today, I heard that India is doubling from 25 to 50%, and we have now switched over, just had recently switched over some of our imports to India. And I was looking at those yesterday and thinking, oh, those are a couple of good bedroom sets.
22:11 Joe Weisenthal? So, planning must be brutal. I mean, setting aside, setting aside cost and we'll get to cost, just the idea of like any sort of forward planning.
22:17 Speaker 06 It's brutal right now. You know, if you're the size of a Walmart or, you know, these Home Depot or something, you can probably get the manufacturers to guarantee you prices. We are way under that level, and we just have to take what they are going to add on to it. But they're into lack of confidence in how things are working out themselves. They're skittish, and so some of them, of the manufacturers, won't ship if they think that there's going to be a sharp increase in the tariffs, because they don't want to ship and then have the people they're shipping to say.
22:51 Joe Weisenthal? Not pay it.
22:52 Speaker 06 Not pay it.
22:52 Joe Weisenthal? Yeah.
22:53 Tracy Alloway? Oh, interesting.
22:54 Speaker 06 Yeah.
22:54 Tracy Alloway? And what about, just in terms of the added price from the tariffs, at the moment, are you planning to absorb most of that yourself, or do you pass it on to customers in a state where, you know, costs are already pretty high, just because it's so remote and everything has to be shipped in?
23:08 Speaker 06 Right. We're having to look at those, and some of them, we go hard back onto the manufacturers, saying they're going to have to take on a lot of that, and they did originally disabsorb portions of that, and then started adding some back to the cost, and then we're absorbing some. In like retail, we are tinging the markups where we can, but in some of it, it's too price sensitive, and we're just having to eat that for right now. And it's too volatile.
23:37 Tracy Alloway? Yeah. I think I told you, Joe, but I went to, it was like a local British import shop. In, I think it was in Vermont recently. And so they import everything from the UK. It's like, come here to get British candy and British groceries. And they basically just stopped publishing their prices because the tariffs were changing on an almost daily basis. And they were like, you know what? It's too much trouble to try to update all our pricing to take this into account. So we're just like, not putting them on.
24:05 Joe Weisenthal? Yeah, say more about, because this is from the perspective of the Fed. I mean, this is the trillion dollar question about the degree to which tariffs can be passed on to the consumer or not, et cetera. And I'm just curious like how you think about like pricing in general and how you sense when there's an opportunity to push price a little bit more, have the customer defray some of those costs or not. Like, talk just a little bit about what you're seeing on that front.
24:29 Speaker 06 Our pricing, even though we're pretty remote and everything like that, goes back to national pricing. And if we get too high in our pricing, then consumers will shop in the lower 48 and pay that additional shipping up to here themselves. So that's always something we always have to make sure that we're, you know, negating that difference.
24:51 Joe Weisenthal? Yeah. Do you sense, just in terms of like the economic cycle right now, like setting aside tariffs, how does end demand feel among consumers in August 2025 than it would have been in August 2024? Is there any slowdown in any of the segments that you perceive? Are there some segments that are more robust than others?
25:09 Speaker 06 Yeah, it's softer right now. And a large portion of that softness, I do believe, goes back to consumer confidence. And whenever the consumer confidence wanes, then they push off deferrable large ticket purchases. And we see that right now.
25:27 Tracy Alloway? Well, one of the reasons we wanted to talk to you is because you have, you know, furniture brands that cover a sort of spectrum of consumers. So you have higher end versus maybe, you know, more budget. Items, do you see segmentation in consumer demand between, you know, maybe people who are buying slightly more modest furniture versus the people who are buying more higher end or custom?
25:48 Speaker 06 Yes, right now, and with my knowledge of the furniture industry nationwide, is that, of course, the higher end is more insulated from that. And when it gets down to the starting price points that we have for people, let's say, that are apartment, you know, dwellers, renters and stuff like that, instead of homeowners, and with the inflation that taking a bite out of their incomes, that's where we're seeing it hit us the hardest.
26:18 Joe Weisenthal? What are you seeing on the labor supply, particularly, I imagine, like movers or people who deliver the furniture, or either retail workers in the showrooms, et cetera? How easy is it to hire right now?
26:30 Speaker 06 Not easy at all. It's a little bit better now than it was a couple of years ago, but it is very difficult.
26:36 Joe Weisenthal? Why? What's the constraint?
26:38 Speaker 06 Well, it's, there's more jobs available than people.
26:42 Joe Weisenthal? What are the sectors that are like, where are they, when you look at like, okay, there's some prospective employee, and they can choose to work between you and someone else, and you're competing with some other employer? What are these sources of employment demand that you're competing with here in Alaska?
26:56 Speaker 06 With us, you know, we're a very non-skilled labor force, and so we bring in the people pre-pandemic. We were starting people at about $15 an hour for any position, and now we're at $21 to $25 an hour type of thing, and they come into us unskilled, and then we have to build the skills with them type of thing. So we're not looking for people with degrees and education and that kind of thing, just workforce. And again, if they don't like being retail, we need to work weekends. If they don't want to work a weekend, they can find another job someplace else.
27:35 Tracy Alloway? Since Joe brought up constraints on labor, I'm going to ask what's becoming, I guess, a classic question in a lot of these episodes. But what would you say is the biggest constraint on your own business? Whether it's finding enough workers, whether it's sourcing enough furniture, whether it's shipping costs, maybe it's regulation that's limiting the amount of homes that can actually be built around Anchorage. What's the biggest one for you?
27:58 Speaker 06 The biggest one for us is the decaying that we've had in the population. And it's now rebounding from that, but it's going to be slow, or it is slow. And so it's just the size of the marketplace. We have stores in Anchorage, Fairbanks, the Kenai Peninsula and the Matanus Valley. And in between that, it's about 550,000 people in our total market that can drive to one of our stores. We do sell some to the people of what we call the bush communities where we sell it to them, but we have to load it into airplanes and that type of thing, and it has to be flown out to them, type of thing. So it is just the population.
28:40 Joe Weisenthal? Is there a rate sensitivity aspect of your business either towards your own cost of capital, or I have to imagine some of the buying is borrowed or the consumer is borrowing money to buy the bed, et cetera? Do you see any sort of clear link between high interest rates right now and how your business operates?
28:58 Speaker 06 The amount of consumers that are financing the purchase that we do do, like the, we have that available for them. And then we run the promotions where we do 36 months up to 60 months without interest that we pay for that interest upfront to the finance company. But that is still, that has slowed way down over the peak that it was pre-pandemic. As people are just not, they're concerned about getting into too much debt.
29:26 Joe Weisenthal? Sure.
29:27 Tracy Alloway? How much of the slowdown in customer demand post-pandemic? How much of that has to do with just people bought a lot of stuff in 21, 22? And maybe you don't need another new bed for a while or another new coffee table or something like that versus actually we are seeing a sort of fundamental structural slowdown in the amount of stuff that people are able to buy?
29:50 Speaker 06 Yes, I am not smart enough to understand that during the pandemic, what we did was made up for past purchases that they didn't make, or if they bought into the future. I really don't know the difference, and maybe a few years from now, some smart people will write something, I'll read it and say, oh yeah, that's it, kind of thing, but it had to do it. Now, furniture, when you buy it, like a dining room table, most people are expecting to get 20, 25 years out of it, unless it splits from too much moisture left in the wood, kind of thing, but furniture does last five to 25 years, so it's a very slow cycle.
30:31 Joe Weisenthal? What would you tell your 18-year-old self about life in Alaska? And doing business and a career in Alaska that is maybe the most surprising, or most interesting, or the most important lesson for that trajectory you've had?
30:45 Speaker 06 All right, so being kind of personal, when I was a teenager and stuff, I had no self-confidence, that type of thing, I didn't do well in school, I didn't understand why, but I have some learning disabilities and that type of thing, I got up here, I thought I'd be a laborer, that kind of stuff. So then, anyway, got into the furniture business, turned out to be pretty good at it, and I run a good business. There still is, the economies come and go to Alaska and that kind of stuff, but the basic of the state has never lost its luster for me. I love living here, I love the mountains, I love the animals. I mean, we have hundreds of bear and thousands of moose that live within the city of Anchorage, and you see them and that kind of thing. I still get all excited about that.
31:28 Joe Weisenthal? I wanna see a moose walking down the street while I'm here.
31:30 Speaker 06 I'm telling you, that can happen, more in the wintertime than the summertime, but in the wintertime, yeah, you gotta break and let them go through, walk through midtown, and they're big animals, too. Anyway, I, good times, bad times, I'm staying here.
31:44 Tracy Alloway? Have you ever had a furniture delivery disrupted by wild animals?
31:50 Speaker 06 Not that I can think of.
31:51 Tracy Alloway? All right, well behaved moose then. I have just one more question, I think, which is the other thing that I think maybe unusual about Alaska is, again, because it's so remote, because it's quite difficult in some respects to get new materials, new items here, I imagine there must be a lot of competition from the used market. So if you have a bed, you know, a bed's not a great example. If you have a couch or a coffee table, you want to buy something new, you're not just going to throw that coffee table away. You're probably going to try to sell it on Facebook Marketplace or something like that. Do you feel a lot of competition from the used furniture segment?
32:29 Speaker 06 It's not that much competition for us, except for it is there and it is. The Facebook Marketplace is where it is. So probably some of these items get bought and sold a few times. But again, that's usually for younger people just getting started and/or a temporary, they're just going to get something to, you know, last maybe six months to a year and then buy better quality furniture once they're established. So yes, it is there. It's off our radar for the most part.
33:02 Tracy Alloway? All right. Well, Dave, thank you so much for coming on All Thoughts. That was really fun.
33:05 Speaker 06 Thank you so much, too.
33:20 Tracy Alloway? Joe, imagine hitchhiking to Alaska to become a commercial fisherman and then get into the furniture business.
33:25 Joe Weisenthal? Imagine getting into the commercial fisherman business, finding someone roughly your age and experience. You know, it's hard not to be, you know, the mind comes to Ishmael and Klee Quang from the 1851 novel by Herman Melville, Moby Dick. And then, and then you're both crashing and then, and then saving your life, etc.
33:50 Tracy Alloway? That's where your mind goes, Joe.
33:51 Joe Weisenthal? It's hard not for the mind to drift there.
33:54 Tracy Alloway? Can I ask, if we go on a whale watching tour, am I just going to hear like Captain Ahab references for three hours?
34:01 Joe Weisenthal? I'm just going to go around to everyone on the boat. I'm going to say either Ahab, the Ishmael, or the Starbuck. And I'm just going to ask, and I'm going to categorize everyone on the boat. But no, that was a great, like, he was a great Alaskan character.
34:13 Tracy Alloway? A great Alaskan character. And also, I still think the furniture industry is such an interesting one to kind of look at the economy.
34:19 Joe Weisenthal? Yeah, yeah, totally.
34:20 Tracy Alloway? It's an interesting lens to look at the economy through. And there were a couple of things that I would pick out of that conversation. So one, just on the tariffs.
34:27 Joe Weisenthal? Yeah.
34:27 Tracy Alloway? There's a theme that we've heard over and over again, which is the big guys probably have the pricing power and the relationship power in order to get a lot of their manufacturers to try to absorb some of the tariff costs in a way that the smaller guys do not have.
34:41 Joe Weisenthal? Well, and to this point, it's really interesting that the manufacturers themselves won't accept certain orders because they're not confident that the economics will make sense at the end and that the customer will just walk away from it, which is just a really interesting dynamic. You're just like, no, you could just imagine it's like, no, I swear I'll pay. I swear I'm going to pay. I'm good for it. And that adds another, and then this gets to like the idea of not just tariff level, but tariff volatility. Just like you wake up one day and the tariffs double on India and then you're like rethinking your planning.
35:11 Tracy Alloway? Exactly. And I suspect, you know, like, the longer the tariff uncertainty persists, like, the more behavior like that you're going to see, where people are just like, I don't know if we want to strike this contract at all.
35:22 Joe Weisenthal? There's like two levels here, right? Because tariffs mechanically raise the cost of doing business. But then, on a more sort of abstract level, is it business gets more costly in this environment? And you know, you always hear of, people hate uncertainty, et cetera. And sometimes there's just this cliche that people say, because whatever. But here it's extremely, extremely concrete.
35:41 Tracy Alloway? The other thing that was really interesting to me, and again, this is a sort of broad theme that comes up quite often on the show, but this idea of, if you're a homeowner in the current environment, you kind of, you have it made, right? I mean, I guess depending on what your mortgage rate is, but if you bought before rates went up,
35:57 Joe Weisenthal? Yeah.
35:58 Tracy Alloway? you have a lot of excess purchasing power with which to buy new furniture for your home versus, for instance, if you're a renter and you're paying those higher rents, you don't have that cushion from like pre-pandemic rates. And so it feels like there's still this issue of haves and have-nots in the housing market that still feeds into something like furniture sales, too.
36:19 Joe Weisenthal? I also think like the economics of population decline are just really interesting because right, small population, that's very hard to reverse because and we've talked about this in other areas, which is that you have some capital stock, right? Like you have 100 houses. Okay. And then you have people move away. Those houses don't just stay there. They deteriorate over time. You don't, you lose that capital stock. And so like, how do you like reverse?
36:43 Tracy Alloway? Especially in Alaska, if you're not doing upkeep.
36:45 Joe Weisenthal? Yeah, that's right. And I mean, we didn't get into this, but like, that is just like a sort of like problem of like, the sort of negative, it's very hard to reverse the sort of decline in any business or any industry because of just sort of the constriction in supply side capacity that occurs from structural decline.
37:03 Tracy Alloway? It's also just broadly amazing how big a deal the 2013, 2015 oil bust actually was. And I guess, you know, we were covering the oil market at that time. And so we wrote a lot of stories about, you know, the feed through into the bond market and stuff like that. But a place like Alaska is really feeling it in a very real way.
37:23 Joe Weisenthal? Till today.
37:24 Tracy Alloway? And still, right, like almost a decade later, or a decade later, I should say. Kind of amazing.
37:28 Joe Weisenthal? Yeah.
37:29 Tracy Alloway? All right. Shall we leave it there?
37:30 Joe Weisenthal? Let's leave it there.
37:30 Tracy Alloway? This has been another episode of the Odd Lots Podcast. I'm Tracy Alockway. You can follow me at Tracy Alockway.
37:36 Joe Weisenthal? And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashil Bennett at Dashbot, and Cale Brooks at Cale Brooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.
37:56 Tracy Alloway? And if you enjoy Odd Lots, if you like it when we go on field trips to far flung places in Alaska, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.
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