During Wednesday’s Senate Small Business & Entrepreneurship Committee hearing, Sen. John Hickenlooper (D-CO) questioned Julie Robbins, CEO of EarthQuaker Devices, about the impact of President Trump’s tariffs.
00:00Great. Thank you, Senator Hawley. And I'll go to Mr. Michelson. We'll start with you.
00:07And Mr. Michelson? Oh, I'm sorry. Oh, oh, so sorry. Senator Hickenlooper.
00:15I must look like the wallpaper.
00:16I missed you. Okay, I got caught up there with Senator Rosen and totally overlooked you.
00:23My apologies. I apologize. My apologies to you, Senator Hickenlooper. You're recognized for five minutes.
00:29Let me start, Mr. Michelson. The SBIC, we've been talking about, obviously, is a cornerstone of so much what the SBA does.
00:39As a small business person myself, I'd gotten laid off without work for a couple of years and took a long time to raise the money.
00:46As I always would say, my mother wouldn't invest. She wouldn't.
00:48I think those private investments with couples coming through the SBIC can really bring, well, it certainly has brought hundreds of millions of dollars into Colorado.
01:00And I've been working with Senator Marshall to further build on that success. I'm sure you're aware of all of the America Act.
01:06So, in terms of your firm operating the SBIC, how would expanding that program broaden access for capital to what are popularly called underserved and lower-income communities?
01:19Thank you, Senator, for your question. It's timely. We actually closed an investment in Colorado last week from an SBIC.
01:26So, your timing's perfect. But, you know, certainly the passage of the Investing in All of America Act, which I know you introduced last Congress, and hopefully it'll get through this Congress, will increase funding to the SBIC program.
01:41So, there will be more opportunities for investment, like the one we did last week in Colorado.
01:45It will also specifically target rural and low-income areas. And so, Midwest Growth Partners invest in rural areas. So, that would give groups like us more opportunities to make those investments.
01:58And then, finally, it would provide bonus leverage for manufacturers. And so, we've talked a lot about the importance of manufacturing.
02:04Right now, 20% of dollars from SBICs roughly go into manufacturers. And so, with some bonus leverage, we would expect that number to go higher because there'd be more capital available.
02:14And so, great. It's okay. You covered it well. I spent a lot of time in West Des Moines. And when I, as an entrepreneur, when I branched out, one of our brew pubs that we opened was in downtown Des Moines.
02:26But it was the Raccoon River Brewing Company in the old Hotel Fort Des Moines.
02:29It's a great spot.
02:30I probably know a number of your personal investors. I got them to help invest in that.
02:33Yeah, perfect.
02:34Ms. Robbins, let me ask you a question. The tariff situation, obviously, is somebody, I can remember every little bit when you're a truly small business, every little bit.
02:44It makes a difference. And I think tariffs went up. Then they've been suspended. Now it's three months. That uncertainty is chaos.
02:55I know how hard that is. How have you guys navigated the uncertainty around the tariff issue and how to make your planning?
03:02When do you make infrastructure investments? And how do you assess that? How are you able to grow?
03:09Thank you so much for your question, Senator. We're not able to grow under the tariffs. The tariffs have created complete uncertainty.
03:21They're changing from week to week. You mentioned that they announced a reduced tariff rate and a 90-day pause.
03:30But I'm still not clear on exactly how much I'm paying in tariffs. Is it 30% plus the 2018 plus the fentanyl? That would put me at 75%. That's still huge.
03:43Yes, we do. We count every penny. And I used to be a financial planner. And as a business, we're planning a year out easily.
03:51And now, I don't know what's happening next week and three months. And it's impossible to navigate these circumstances.
04:00So, you know, we had forecast a price increase.
04:05You know, things had been the same for two weeks. We were going to roll it out.
04:09And now the tariffs have changed. So we're going to hold on to that.
04:13I also know that my customers have been loading in on foreign imports.
04:18My customers are retail stores. They've been loading in on foreign imports during this reduced tariff pause because they're speculating that it's going to go back up.
04:28So just another way this is backfiring and hurting U.S. small businesses.
04:32Right. Good. Thank you. And I love the name Earthquaker. I was an old geologist.
04:36And the Colorado School of Mines has an earthquake center.
04:40And you can get a live feed to see anywhere in the world when a quake happens.
04:44And you ought to stick one of those in your retail sales or your wholesale sales office.
04:52Mr. Riley, and again, a safer bike.
04:55I was a huge bike fan, a huge believer in outdoor recreation.
04:58It's a business. It creates jobs, but it also makes people healthy.
05:01It makes people feel healthy. I mean, it changes their mental health issues.
05:05You had a unique journey. Somehow Mark Cuban never, you know, took the time to let me appear on his TV show.
05:13I'm not sure what he was doing back when I was trying to raise money.
05:16What other suggestions would you give to small business owners who are trying to find capital and to, you know, invest in domestic manufacturing?
05:25Sure. Thank you, Senator. Yeah, I was very lucky to have the opportunity to go on the show Shark Tank and I got an investment from Mark Cuban.
05:35But I think the statistics were something like 80,000 people every year apply to go on the show and something like 50 or 60 actually on a season.
05:43And so I still pinch myself that that actually happened for me.
05:46But I would say, you know, for just general advice for small businesses, I think what we've done is try to create a U.S. factory reshore production,
05:56but really make that a strategic advantage for us and not have it really be all about a tariff advantage,
06:03but actually an inventory advantage, a way that we can, you know, set up the bikes in a really safe way.
06:08The whole brand is built around safe bikes, so a bike is only as safe as it's set up.
06:13You set up the brakes, you set up, you know, every fastener to a certain torque.
06:16So really kind of, you know, telling, for somebody like us, telling that story to investors and getting investors excited about the strategic advantages of building a product in the United States
06:28that are over and above just, you know, tariffs or whether it's going to be a price advantage and these things, that was a really big thing for us.
06:35And we were able to secure capital, you know, not only from Mark Cuban on the show, but from a group of individual investors.
06:42You get a ripple effect.
06:44And that's perfect advice.
06:46I mean, you're exactly right.
06:48Take the advantage you have and then use that to go out and compete.
06:52Yep.
06:52I'm out of time or else.
06:54But anyway, I yield back to the chair.
06:56Do you have another question, Senator Hickenlooper?
