Latest / Success Story with Scott Clary / Tobi Pearce - Co-Founder of Sweat | The Founder Who Sold for $400M Says Most Business Advice Is Worthless

Transcript

Tobi Pearce - Co-Founder of Sweat | The Founder Who Sold for $400M Says Most Business Advice Is Worthless · Success Story with Scott Clary

0:00
You say that most business advice is crap.
0:02
More often than not, it's marketing material and highlight reel.
0:05
Stuff. The majority of the conversation online is often about the story and what happened.
0:10
It's not necessarily about why and how. That isn't valued.
0:13
And people think that's advice, but they often think that the story is the advice.
0:17
The best possible advice you can get in the world is actually free,
0:21
and it is feedback that you get from doing.
0:23
What if the biggest opportunities come from seeing what everyone else ignores?
0:28
Toby Pierce built one of the fastest growing fitness brands in the world,
0:32
transforming a simple idea into a global movement.
0:36
In my second year, we made like 15 mil bottom line, and that was all cash.
0:39
I thought that anything I touched will work here.
0:41
I found out very quickly that wasn't actually true in reality.
0:43
At that point, you're pretty good.
0:45
You're in the top 1% of founders.
0:46
That's actually a really dangerous point to be psychologically.
0:49
When you lose, it becomes abundantly clear why you've lost.
0:51
When you win, it's very hard to know why you win.
0:54
Why do executives get paid a share load more money than you?
0:56
Because they can think better than you can.
0:57
He's scaled businesses and mastered the art of digital growth.
1:01
From entrepreneurship to personal discipline,
1:03
he's learned that growth only happens when you're willing to evolve faster
1:08
than everyone around you.
1:09
At what point on this journey,
1:11
did you figure out that the medical cognition,
1:12
thinking about how you think is more important than the actual tactics?
1:16
So Toby, you see that most business advice is crap.
1:28
Why?
1:29
Firstly, most advice that people get in general
1:31
actually comes from the internet, from interviews like this.
1:34
And more often than not, it's marketing material and highlight real stuff.
1:42
Firstly, and secondly, also, I think that the majority of the conversation online
1:46
is often about the story and what happened.
1:49
It's not necessarily about why and how.
1:52
And so what I mean by that is that your most stories start like,
1:54
oh, we sold a business for this much money.
1:56
We built this company and have this money customers or whatever it may be.
1:59
But that isn't value.
2:01
And people think that's advice.
2:03
But they often think that the story is the advice.
2:05
But the advice actually isn't that.
2:07
The advice is, well, this is what happened.
2:09
But this is why we chose to do it that way.
2:11
And we were presented with these options.
2:12
And out of the options, we used this reasoning and decision-making
2:15
to make that choice to then.
2:17
You do this thing.
2:17
That's actually the advice.
2:18
So the first issue with most advice is that it's not actually advice.
2:21
Right.
2:21
So that's the foundation.
2:23
The second thing is that I think a lot of the time
2:26
when people, so really early on in someone's business journey,
2:30
they're not famous.
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Their story isn't cool or interesting then.
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So they're not giving advice at that point.
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Normally, it's towards the end or even after the end of the business journey
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that they give advice.
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And one of the fundamental issues with that is that they're
2:44
then telling the story and giving advice about,
2:47
especially about how they got started 10, 15 years in the future.
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And from my perspective, I've always tried to be really,
2:55
I guess, brutally honest about the fact that I'm like, honestly,
2:57
I don't actually really remember everything that happened early on.
3:00
I can tell you the cliff notes, right?
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But I can't actually do like,
3:03
hey, while I was feeling this at this point in time,
3:04
and this is how it worked, etc., etc.
3:06
So therefore, even some of the advice about early on
3:08
is you're basing it on memory from 10, 15 years ago.
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So it's not super reliable.
3:13
So to me, the advice that matters, actually,
3:16
is well, when presented with these sort of situations,
3:19
this actually is the way to think about it
3:21
and make these decisions.
3:22
That's advice, a story, and one that's 10 to 15 years later
3:25
isn't actually advice.
3:27
Where do you suggest founders?
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Because I think that's very wise.
3:30
So the people that founders usually look up to,
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they're so far removed.
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From the boots on the ground, bullshit,
3:39
that they had to go through when they started a company,
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that memory is definitely foggy, for sure.
3:46
Now that begs the question, okay,
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so then if not the people that have exited for tens
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or hundreds of millions that are now writing a book
3:54
after they've retired,
3:56
where do they find the best advice?
3:57
Because then you have to weed and sift
3:59
through all the garbage on the internet.
4:01
And you advise founders for a living,
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I'm sure you get a lot of questions.
4:05
Where do you send people?
4:06
The best possible advice you can get in the world
4:10
is actually free and it is feedback that you get from doing.
4:14
Right, so, and that sounds a little,
4:16
like, antithetical or counter-insuitive,
4:18
but the best feedback and door directing
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you can get from, is actually doing things and failing.
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That's the best advice, right?
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Which you can get yourself.
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You can start doing whatever you want.
4:27
In terms of actually trying to identify
4:29
like an individual though,
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your impact is kind of been there and done that.
4:33
I think there's several filters
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that I think you need to put whoever it is
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that you're looking at through.
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I think the first filter is that, you know,
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ideally, they've actually done the thing that you want to do.
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And I think specificity matters here.
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So it's not like you build a business and made money.
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That's very broad in general.
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It's like, oh, well, maybe I'm in, you know,
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direct to consumer, you know, consumable products
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or food products or supplements.
4:55
Okay, well, out of that industry,
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you know, over the last 20 years,
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who are the best 10 people out this?
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So that's big filter, you know, number one.
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And just to be clear, I think even with that,
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you could go a layer deeper again.
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It's like all out of the companies
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or the people who have done that,
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maybe you've got a specific skill
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that you're trying to figure out wholesale
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or performance marketing or sales or whatever it is.
5:18
Like you got to get really specific.
5:19
Yeah, about finding the person you want to advice from.
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That's the first, you know, part.
5:23
I think the second part is that even if you do find those people,
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you kind of need to put them through the screening process
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before, do you actually want to be giving advice?
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Because a lot of people don't really want to be doing it,
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but they still kind of do it.
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You know, so if they don't really get energized
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by like teaching or coaching,
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then you're probably not going to get the maximum value.
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Had something to do that.
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I would say that most people think they want advice,
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but then sometimes they hear good advice
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and they don't actually use it.
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I was going to say that that's the last part.
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Yeah, the last part.
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Cause like, even if you do get to someone who maybe is,
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they're a good educator, they want to be doing it.
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They've got relevant experience.
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But if you at the student are not ready,
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then it's redundant anyway.
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And as goes the saying,
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it's like, you know, the teacher appears
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and the student is ready, right?
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But I think like most of these things, you know,
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and kind of reinforcing that point,
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it's like, if you're a good entrepreneur
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and yeah, that's a loaded, you know, a term, I guess,
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but if you're a good entrepreneur, like,
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you'll figure this shit out.
6:15
You figure out what skill of this you need to learn.
6:17
You'll figure out who's got that skill.
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You'll figure out whether or not you're ready
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and comfortable receiving advice
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that maybe you don't agree with or understand,
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which I think is a critical point too.
6:25
You know, a lot of the advice you get
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from people who have really experienced is very simple.
6:30
And then people are like, oh, well, but it's so simple.
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Like that can't be any good.
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And I'm like, well, it being simple is the point, right?
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But a lot of people want to overcomplicate
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or they'll let their ego, you know,
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get in the way of actually learning.
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Cause you know, and just to be clear,
6:43
this is a fundamental floor, I think psychologically
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a lot of founders experience.
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Once you get past the real Grammy and dirty phase
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of like, call it product market fitter, whatever.
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And maybe you're getting sort of 10 to 50 mil,
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you know, revenue at that point, you're pretty good.
6:55
You're in the top 1% of founders now.
6:57
You've done some pretty good stuff.
6:59
You've clearly got high agency.
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You're clearly intrinsically motivated.
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You've clearly got a good work ethic, et cetera, et cetera.
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That's actually a really dangerous point to be psychologically
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for a lot of people, not all founders,
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but a lot of them get to that point
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thinking they're really good going to get advice,
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but they're not agreeing with the advice
7:13
I'm not using it anyway.
7:14
So we build an ego simultaneously
7:15
that their own success, yeah.
7:16
100% and you I've worked with quite a few people
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over the last few years like this.
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One guy, you're in particular who always comes to mind.
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You know, I was only in great business at the time.
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You're about 35 mil, you know,
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really like profitable service based business.
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And spent a lot of money, not just on me,
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but on other people for advice.
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And I'm not sure any of the advice was ever taken,
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you know, and then you fast forward two, three, four years later,
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business gets a bit bigger,
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gets a bit more complicated,
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didn't do the things a couple of years ago
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that maybe they should have.
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And now that business is effectively,
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it's nearly double the size,
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but actually not making any money.
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Interesting.
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You know, and some like,
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have you actually made any progress
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over the last two or three years
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on a gig for that person?
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No, they've gone materially backwards.
7:58
It's so interesting because you focus,
8:00
even after speaking to you for now,
8:02
two minutes, three minutes,
8:04
you focus a lot on how to think.
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Oh, I think like,
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it sounds like a silly thing to say,
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but I notice it more than others
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who would dive right into the tactics.
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You mentioned, you know,
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what makes a podcast boring
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is just sort of riffing through the origin story
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and then thinking that's the advice.
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But then the layer two,
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like the taking it a layer deeper or a level deeper
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is usually going into the tactics,
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like the actual case.
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So what's, you know,
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how do you have a positive role
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as on a Facebook ads, whatever the thing is?
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But then I actually really appreciate
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where you're taking this
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because this is how this podcast has shifted.
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When I first started this show,
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it was very tactical.
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And it's moved almost entirely,
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not exclusively,
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but almost entirely towards like the mental models.
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Oh, man, medical ignition,
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I think is a really, really big deal.
8:49
And for those that are not familiar with it,
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you know, medical ignition is effectively just thinking
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about the way that you think,
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you know, and trying to improve the way
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that you think to improve your outputs or outcomes
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in your entrepreneurial endeavor.
9:02
And yeah, it's an interesting thing,
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you know, that you call out
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because I think even,
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yeah, like a huge portion,
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arguably the biggest portion of people want the story
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because it's motivating and inspiring.
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Then there's some, you know, we'll call it,
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you know, almost like utilitarian people,
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like, oh, like just tell me what to do.
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You know, I'll go and do the thing,
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which is, you know, that there's some value
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into the tactics and sometimes you just need the answer,
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right?
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But I'd argue that the best of the best people,
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the ones who actually have like a really alternate
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and or a find way of thinking.
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So it's not really about the story or the tactics.
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It's actually, well,
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I don't need the tactics or the answers.
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So I was figuring them out
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because I know how to think about these sorts of problems.
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Yeah, and I think I actually think as well,
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like again, like, you know,
9:41
looking at a broad spectrum of different founders,
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it's very easy to figure out the ones
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who have built the skill, not just the knowledge.
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And so when I frame that, it's like your knowledge
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or what I can take a tactic from you,
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that's a piece of knowledge, right?
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And I can go and, yeah, just copy paste that.
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But that's not necessarily a skill.
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I can't figure out that tactic by myself.
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And may or may not be able to contextualize
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why, why is that a good tactic and all worth doing?
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And I often frame this to people who are employees,
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not, not, not found around entrepreneurs.
10:13
In the exact same way, I'm like,
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well, why do executives get paid
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a share load more money than you?
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And they're like, I don't know how to think.
10:18
Well, yeah, because they can think better than you can.
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They have the capacity to make better judgments than you do
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and that is reflected in their decisions.
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Yes, there's potentially other variables and skills
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and whatnot, but ultimately,
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it's really about judgment, right?
10:30
Yeah, and there's a reason why the executives
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at these gigantic organizations also get paid
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a lot more than any other employee
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because their responsibility is larger,
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but they are trusted with larger responsibility
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because of the decision making skills.
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And they're all is effectively built
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on the foundation of the way that they actually think
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and problem-solve.
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You've had several companies.
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I think there was like 16 or 17.
10:49
Yeah, a lot.
10:50
Many have not worked out.
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Heaps, heaps.
10:52
Learn more from that as well,
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but I'm gonna say in a minute.
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At what point on this journey,
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did you figure out that the metacognition
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thinking about how you think is more important
11:00
than the actual tactics?
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I don't think it was out of the gate, I'm sure.
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No, no, I'd like, honestly,
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I actually think I was almost down the opposite end
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of the spectrum.
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I was very unconscious, you know,
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because I was pricelessly naive,
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you know, in some regards.
11:14
So naive, I was like,
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I'll just do this stuff.
11:17
Yeah, and I was very fortunate early on.
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So I actually didn't really have
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the hard getting started story.
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As in I'd had a reasonably challenging kind of life
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up until that point,
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but I actually got into business.
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The first three things I did all worked
11:34
and made money first go.
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You know, so I didn't really have any of that,
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like, oh, we grind it and had to raise money
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and miss out the other, you know, like in,
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where soon as I got online,
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which was my, some of my third business,
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as soon as I actually got online,
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yeah, in my second year,
11:48
we made like 15 mil bottom line.
11:50
You know, and that was all cash
11:51
because there was no CapEx or inventory.
11:53
It was an info product.
11:54
And so I didn't have any of that.
11:56
It wasn't until later, you know,
11:59
when things got bigger, more complicated
12:00
and I tried to do lots of different businesses
12:02
at the same time, because I thought that, you know,
12:04
I was like, oh, I've got the might as touch,
12:05
you know, anything I touch will work here.
12:07
I found out very quickly that wasn't actually true,
12:09
in reality, but yeah, I'd argue that from the mistakes
12:12
and whatever you learn materially more than winning,
12:14
if anything, I think, you know,
12:16
it's actually a paraphrasing something,
12:18
Bane actually says in Batman,
12:20
which is that he's like, oh, you know,
12:21
victory has made you weak, right?
12:22
And I think that's a really good insight, you know,
12:25
that I think the more that you succeed unknowingly,
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especially early on in the journey,
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the more futile and fragile your success and skill set actually is,
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it's not until you've had some like very meaningful
12:39
when I'd argue, I think public failure is also really good.
12:42
And that's what it sounds like a very strange statement,
12:44
but I think public failure and significant failure
12:46
is really important, both for the psychological components,
12:48
so, you know, build resilience and all this and stuff.
12:51
But I also actually think, you know, when you lose,
12:53
it becomes abundantly clear why you've lost.
12:56
When you win, it's very hard to know why you've win
12:58
and to make all these assumptions and assertions
13:00
about why I wanted to do how good you are.
13:02
Totally, and you see it with all these founders,
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they're like, oh, you know, yeah,
13:05
and our product is different, our community is unique,
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you know, blah, blah, blah, I'm like,
13:08
no, you just got channel arbitrage on TikTok show.
13:11
And in five years time, all those founders
13:13
will be probably realizing that looking back at right now.
13:15
One of my favorite, funniest ideas is that Zuckerberg
13:20
has really only been successful at creating Facebook.
13:22
Everything else has been purchased.
13:23
Or copied, or failed.
13:25
Yeah, yes.
13:26
One of the three.
13:28
He really has not created a second good product,
13:30
which is, I mean, it goes to show, obviously,
13:33
in Greta Bismar guy, you don't actually need repeat successes
13:36
if you ever really need to build inertia.
13:39
But even at that level, it's not like everything
13:42
he touches turns to gold.
13:43
In fact, he just shut down the metaverse, the metaverse.
13:46
Yeah, and all the ocular stuff
13:48
for whatever's been bleeding billions, tens of billions.
13:51
But this is the point too, you know,
13:53
again, to the success piece is like success
13:55
makes a lot of people really blind.
13:57
And it also, it makes people very psychologically fragile,
14:02
you know, because like I've seen this quite a lot,
14:04
like part of the reason, I believe,
14:05
I theorize that a lot of really successful founders
14:08
that have exits, the reason they don't want to go
14:09
and start more businesses afterwards
14:11
is because they've got to get all the way back down
14:13
in the detail.
14:14
And that's the most fragile, vulnerable place to be,
14:17
especially if you were unknowing
14:19
and if you're going to a new space.
14:21
So like I, you went from service businesses,
14:23
you know, to kind of info products online,
14:25
then drove to consumer mobile content subscription, right?
14:30
I don't know anything about any of those.
14:31
And then once I sold that company,
14:32
then I went into marketplaces, professional services,
14:35
you know, all this different stuff.
14:37
But it hadn't occurred to me
14:39
that that was quite different to a lot of people,
14:40
whereas when you look at a lot of founders,
14:41
they'll build and sell one company
14:42
and they go back straight into the same industry
14:44
because it's a safe, you know,
14:45
yeah, easy founders that sell,
14:47
wait for the non-gabit to expire
14:48
and then build the same company.
14:49
I found straight back in it.
14:50
Like a exact same company, not even same industry sometimes,
14:52
it's because it's just a very safe.
14:54
Yeah, and whatever, if that's what you want to do, right?
14:57
And for me, that was the complete opposite.
14:58
You know, of what I wanted to do, I was like,
14:59
I don't know, I want to feel, you know,
15:01
small and vulnerable and going to a spot that's complex
15:04
and learn because to me, that's more stimulating for me.
15:08
If anything, I actually found, you know,
15:11
this is like I've worked on with my coach, you know,
15:14
quite a lot, but I got probably two or three years,
15:17
you know, into building sweat and I kind of go,
15:19
oh, oh, it's very obvious how this goes.
15:22
Now I can see the next three to five years of this.
15:25
Oh, that's actually not really that interesting.
15:26
I mean, like sure, we'll make lots of money
15:28
and that's great, you know, but I was like,
15:30
oh, like I'm not really actually learning anything anymore.
15:33
And so I tried very hard.
15:36
You know, from a humility standpoint,
15:37
I was like, oh, I'll focus more on, you know,
15:38
kind of financial management, you know, ops,
15:41
you know, leadership, I will try to lend those skills more,
15:44
but like the actual business itself
15:45
and the business model industry, I was like,
15:47
oh, I can see exactly where this is going.
15:48
And that was a real problem for me
15:50
because I got very disengaged, you know, by the idea,
15:52
and at this point, the business is still,
15:54
you know, rocketing along doing this,
15:55
but it just wasn't, there was no intellectual excitement for me.
15:59
You know, one of my, one of my really good friends,
16:02
he sold the company for, you know, in the hundreds of millions
16:05
and he said, before he exited,
16:08
he could like go home at lunch and take a nap.
16:10
Like there was nothing for him to do anymore,
16:12
like at that point, you have so many smart people
16:15
that are behind and if you're good at hiring,
16:17
we can chat about even that.
16:19
But he said there was nothing to do before he exited.
16:23
But this is also like part of the point, right?
16:25
Once you've built inertia and you have a repeatable model
16:27
if you're a systems thinker,
16:28
because not everyone is a systems thinker,
16:30
but businesses are just big systems, right?
16:32
They should be.
16:33
We can talk about most important mental models
16:35
and I'm sure that's definitely one of them, but 100%.
16:38
And so, yeah, it's a similar thing for me.
16:39
You know, towards the end of my time,
16:42
you know, it's where I was really running
16:45
almost the whole company in about five meetings a month.
16:48
Like, you know, yes, there's other bits and bobs outside of that
16:50
and very, very, you know, it's a small part,
16:52
like 90 plus percent of the influence and decisions
16:55
that I would either wield or make,
16:58
pretty much were concentrated into, you know,
17:00
five, like primary meetings.
17:03
And I'd argue too that in a general sense,
17:06
that should probably be the goal for most people
17:09
in management anyway.
17:10
And when I say that, I don't mean necessarily
17:11
going home at lunchtime, you know,
17:13
but like in a general sense,
17:14
like you want to build redundancy,
17:16
like so for redundancy in some regards,
17:17
like you want things to mostly be able to happen without you,
17:19
whether that's through policy or process
17:21
or systems, whatever it may be.
17:23
And I'd argue culture is the biggest amplifier,
17:25
you know, for good decisions,
17:26
but like realistically, that should be the goal.
17:29
The goal shouldn't be that things are dependent on you,
17:32
even if you're the CEO of founder,
17:34
I'd argue that the best leverage is leveraging yourself
17:36
out of the business.
17:38
And that makes the asset most sellable too.
17:40
I agree.
17:40
I was earlier on my career as part of a company
17:43
where the founder was an incredibly strong entrepreneur,
17:46
but there was always a ceiling.
17:47
And he was closing him,
17:48
so it was the company's doing 11 million.
17:51
And he was, he was personally closing
17:52
six million of that 11 million himself.
17:56
It was the right limiter.
17:56
It was a big belly run, my favorite right limiter.
17:58
And I was part of the early on in my career,
18:01
I joined the company, they hired me on
18:02
and I saw him go through the process
18:04
of hiring all these incredible executives,
18:07
prepping for the exit, finally sold the private equity.
18:09
But even after the sale,
18:11
I looked at that company a couple of weeks ago
18:13
and they're completely one bankrupt.
18:15
It was a traditional case of...
18:17
Pump them.
18:18
Yeah, basically.
18:19
And it was like,
18:20
it was a significant multiplier on that exit.
18:22
I think they sold for just over 90.
18:25
And, you know, fast forward whatever, 10 plus years
18:27
and there's nothing left of that.
18:29
And there's, you know, all these creditors
18:30
are trying to get the money back.
18:32
It's like most of the COVID businesses in general,
18:33
it's well right, you know.
18:35
But the point is he did a,
18:37
he did a sort of a quick job of trying
18:41
to remove himself from the business.
18:43
But it wasn't obviously a successful job longterm,
18:46
but it was candidly enough for somebody to buy it.
18:49
I was going to say it depends on what the objective is.
18:51
You know, like if you're trying to build something
18:53
that is enduring, you know, and sustainable,
18:55
whether you're selling it or not, you know,
18:56
but if you're trying to build something enduring
18:58
and sustainable, then, yeah,
18:59
building a culture that is non-reliant
19:01
and found or agnostic or even CEO
19:03
and executives who make agnostic is hard.
19:05
Like that's hard, but I'd argue
19:06
that would probably be the right thing.
19:08
But, you know, if your goal is really like,
19:09
oh, I've got a timeline here.
19:10
One or two years, this industry markets about to peak.
19:13
Like, you know, let's liquidate.
19:15
If that's your goal, then it's not as relevant.
19:18
But for the people that acquired it was.
19:21
Yeah.
19:22
Not the bad.
19:23
The different problem for them.
19:24
And, you know, it's interesting, right?
19:25
Because like, you can make heaps of money doing that.
19:27
If you understand the cycle and all the psychology of like,
19:31
you know, VC, private equity, et cetera, et cetera.
19:33
Like, is that that's all a game
19:36
and respectfully a bit of a Fagazi?
19:37
It's a game of musical chess, really.
19:40
And even what's going on now in the AI space,
19:42
you know, we'll look back on this in 10, 20 years time
19:44
and go, oh, okay, cool.
19:45
There was like 150 players, these two survived.
19:48
Everyone that was died.
19:49
But that's also just the nature of the beast.
19:51
You know, that that's part of the game
19:52
and it's also part of capitalism, right?
19:53
Yeah, there's enough money to go around
19:55
to get a whole bunch of people to have a crack at solving
19:57
a particular problem.
19:58
And obviously, there'll be a few winners.
19:59
And even for them, I'm sure they bet on 10 different companies.
20:02
And yeah, like, you're not spending that kind of money
20:05
and just human bet.
20:06
No, no, no, not at all.
20:08
And if anything, especially the VC game,
20:10
it's all pretty much like probabilistic.
20:13
It's a very different game to, you know, private equity,
20:16
like private equity and VC.
20:17
You were private equity.
20:18
Sorry.
20:19
You're the people that quite, you know,
20:20
you're the people I was strategic.
20:21
Yeah, we're strategic.
20:22
Which again, you know, that is a great competitive
20:24
for the PEs and you know, what in that space anyway,
20:26
but the actual investing game for private equity
20:28
and VC is like fundamentally different.
20:30
But again, like, these are things that as well,
20:33
I really just didn't understand the first time going through
20:35
this.
20:35
I was a complete rookie.
20:36
You know, and you're kind of like,
20:38
it's sort of like you're in the middle of like a storm
20:40
in the ocean, you just kind of go on with the waves, right?
20:42
But if you really know what's coming on
20:44
and I absolutely had no idea, we just get a surfboard out
20:47
and you know, to what you go.
20:47
But for most people, much more like me,
20:50
you know, the first time they go through that style process,
20:52
it can be a quite violent experience
20:54
and a very like emotionally exhausting
20:56
and crushed soul-crushing one.
20:58
Was yours?
20:59
Oh, massively.
20:59
Yeah, we, so the long and short of it was,
21:02
I, you know, had, you got infatuated with your idea.
21:06
You know, like selling businesses after spending a lot of time,
21:08
you know, in the States.
21:11
Being in Australia, and that's a very different,
21:12
you know, quite eye-opening experience.
21:14
And so you went through that process.
21:16
And as I said, first time around,
21:18
we tried to sell, got rejected by 120 plus,
21:21
you know, different, different firms and funds,
21:22
you know, in a couple of weeks.
21:24
Um, had one person who ended up,
21:26
you know, wanting to buy the company,
21:28
literally got paperwork signed,
21:30
everything executed all the way right to the end,
21:32
was sort of 36 hours out from like literally
21:35
getting the first 50 mil US cash payment
21:37
at the bank account and they pulled out, right?
21:40
And so, and it's just to be clear,
21:42
this is because I was much younger and hopefully less wise.
21:45
The name now, but, you know, I'd told the entire company
21:47
that we'd sold, you know, we'd, we'd recruit it into this
21:52
because part of this was also a primary,
21:54
like capital injection to grow the company,
21:56
as well as a love secondary coming off.
21:58
So we'd opened the new office into state,
22:00
it recruits to 30 or 40 people,
22:02
they pulled out of the deal,
22:03
obviously didn't get any of the money,
22:04
spent sort of nearly $11 million
22:06
getting the company prepped, you know, for the deal.
22:09
And then a few weeks later, COVID hit.
22:10
So this all, this all happened, you know,
22:12
like at the same time.
22:13
So, from what I'm able to understand
22:17
and what I've been able to like sort of deduce
22:19
from what had gone down.
22:20
So the guy who was running the deal,
22:22
it was just been promoted to managing director
22:24
and this was the first deal that he was going to be
22:27
the guy like making the decision on,
22:29
which the whole way throughout the process,
22:31
there was some, you can see he was sort of
22:33
struggling with some of that.
22:34
And then we got literally right all the way to the end
22:37
and then most of the kind of going through
22:38
like the network and capital adjustments,
22:39
they're certainly at the like,
22:40
do the final pricing for the actual transaction
22:43
to, you know, complete your illegal terms.
22:46
Some of the numbers weren't adding up
22:48
between like financials they'd been given
22:49
by one of the big four, which was representing us.
22:52
And then like other financials would provide to them.
22:53
And as he thought that was like,
22:55
there was something going on there.
22:56
When every other day, it was just
22:57
they were looking at different, you know, different factories.
23:00
So that kind of like, at the very last minute,
23:02
freaked him out and then whole deal
23:05
was pulled out from underneath me,
23:07
which again, because later going,
23:09
we went back to market later and sold the company
23:10
and whatever, which was positive.
23:12
But again, I'd argued that experience
23:14
taught me a lot more than actually.
23:15
I was going to say like, what's the lesson there
23:17
for founders?
23:18
Because there's more there, so you sold for 400.
23:21
And that was still like a great multiple.
23:24
And I think there was a hundred million in revenue.
23:25
Yeah, we're doing about a hundred and five years,
23:28
maybe a hundred and twenty top line,
23:30
you know, I think at the time, give or take.
23:32
But transparently like realistically,
23:35
and I say this with, you know, great humiliation
23:37
reflection now, the business probably shouldn't have been
23:40
bought in the way that it did in the structure
23:43
that it did, you know, at the particular time.
23:44
And again, I say that being able to very honestly reflect
23:48
on what was going on in that kind of post-COVID environment,
23:51
this particular industry and space, capital markets,
23:53
all this sort of stuff, all these, you know,
23:55
movements at the same time, I've had to be
23:57
created what I would now refer to as a very frothy,
24:00
you know, like investment space.
24:02
And in Australia, I can't exactly what the status,
24:06
but it's some crazy thing from the three years post-COVID
24:09
out of every like hundred dollars
24:11
that was publicly listed on the Australian stock exchange,
24:15
85 cents out of every dollar is gone.
24:17
Because of the prices of all the companies
24:19
that listed have gone down by 85% some of them are dead now.
24:23
And I think specifically in the fitness space as well,
24:25
because a lot of this stuff was like,
24:26
oh, we're locked down, we've got to like stay indoors.
24:28
Well, at home fitness became the most popular thing overnight.
24:32
And so this was a lot of the success we were having,
24:34
not that this makes me happy,
24:36
but it wasn't real success,
24:37
but that was an inflated success period
24:39
of what was happening there.
24:40
Absolutely. And so then obviously,
24:42
there was a huge normalization effect in sort of 2022
24:45
and 2023, which I was already kind of long gone by this point,
24:48
but nonetheless, you're not the best asset
24:51
to buy that particular point in time.
24:52
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24:56
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25:03
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26:49
Okay, so let's go into lessons from both of those transactions.
26:52
So people can understand.
26:53
So the first one, it didn't work out.
26:57
You learned more from that than you probably did
26:59
from the successful one.
27:01
What was the lesson to take away for somebody
27:03
that is actually looking to sell their company,
27:04
going through the process for the first time
27:06
that you had to deal with?
27:07
Yeah, so I think, yeah, no, but I think,
27:10
I think you need to understand the game you're playing, right?
27:12
And what I mean by that is that,
27:14
yeah, when you're selling a business or raising money,
27:16
or selling and raising, or publicly listing,
27:18
publicly listing and raising,
27:20
there's all these different variables of the experience
27:22
that you can have.
27:23
It's super important to understand
27:25
like what it actually is that you're selling, right?
27:27
And so if you're, if you're, you know,
27:30
start up early on and you go into a venture capital firms
27:33
try to raise money, you're selling yourself.
27:35
I'm a great founder.
27:36
I'm gonna make your heaps of money.
27:37
There's a good chance of this wins.
27:39
And this idea is a reasonable idea in this market.
27:41
It's big and we can do some stuff, right?
27:44
But if that's, you know, you're super early on,
27:46
if you're at the opposite end of the spectrum
27:47
and you're like, oh, I hate like where a business
27:48
does, I'm gonna call it 10 mil, you know, a bazaar.
27:53
I want to sort of private equity firm.
27:54
Okay, cool.
27:55
Well, you're selling the huge cash flow of the business,
27:56
which means the proposition of you being there
27:58
is probably actually less interesting.
28:00
So you want to go to sort of the asset
28:01
as if I'm not going to be here.
28:02
It's not dependent on me, right?
28:04
Because if it is dependent on you,
28:05
you're going to be massively discounted.
28:07
Whereas if you're doing venture raising,
28:08
you want it to be dependent on you
28:10
and you want the venture capital funds
28:12
to be invested in you, right?
28:14
And I'm not saying that there's one rule for, you know,
28:16
all types of deals or whatever.
28:17
It's like my way to think about it for sure.
28:18
It's a really important thing to understand.
28:20
And I often, so I actually refer to this whole thing
28:23
as like end game theory, and I position as end game theory
28:26
because I don't think that all of the ends of this game
28:29
are actually exits.
28:30
Like I actually think for a lot of founders,
28:31
the end is just you not working there
28:33
and it becomes an asset that you hold
28:35
and you have an employee CEO or GMMD, whatever it is
28:38
that you want to have.
28:40
Because ultimately for all founders,
28:43
oh, sorry, maybe I should condition this.
28:44
For most founders, ultimately,
28:46
you want to make money, right?
28:48
But making money in deal exits
28:51
is actually very different in reality
28:53
to what, you know, the headlines, you know,
28:55
state, you know, a friend of mine
28:56
who sold his business for 600 million,
28:58
you know, deal value got 300 million cash up front
29:02
and got not zero but close to zero of the remaining part
29:05
because of, you know, deal structures and whatever.
29:08
You know, I have another friend, you know,
29:09
who's sold their business for $25 million
29:11
and ended up getting five.
29:13
You know, and so like, if you come back to the first principle
29:16
that, you know, the goal here is to make money.
29:17
An exit is an option.
29:20
It's not the option.
29:22
And I think this is saying that, again,
29:24
societally, you know, entrepreneurs,
29:26
we like a fantasize and, you know,
29:28
about what this looks like.
29:29
But again, you know, like most things are in our mind,
29:32
they're not necessarily as good as, you know,
29:33
in reality is what they actually, you know, end up being.
29:35
And so I think, but yeah,
29:38
overarching to answer your question in short,
29:40
they're overarching insight really is,
29:41
I think you need to know what game you're playing
29:42
and or what you're selling.
29:43
If you actually intend on getting a good outcome,
29:45
both psychologically and financially.
29:47
Now, this may seem like a silly question
29:49
because you ended up selling for $400 million,
29:51
but are you happy you sold?
29:54
Yeah, I think the conflating variables at a time,
29:58
it was the right choice, you know,
30:00
for me at that time, both personally and for the,
30:02
for the business as an asset.
30:04
I think, I think, like you're looking at other businesses,
30:09
you know, I either started or ones I've invested in now,
30:11
like this is another company that I actually found
30:15
during my time that I was working at SWET,
30:17
which is, it's so funny, I was referred to as like
30:19
the boring business that's going to make me heaps of money,
30:21
which is we basically broke our driving lessons, right?
30:24
And so like in Australia, you know,
30:26
just in Australia alone, you know,
30:28
we'll do about 35 million, you know, of lessons this year.
30:32
And it's really interesting because when I look at that company,
30:35
I've got some other investors in that.
30:36
I'm like, hmm, I'd probably consider buying you out
30:39
and I might stay in because I look at that.
30:42
I'm like, oh, like a lot of people go,
30:43
oh, there's driverless cars coming blah, blah, blah.
30:45
I won't go into the reasoning as long reason here,
30:47
but I'm not really worried about any of that
30:48
for this particular business.
30:49
And so when I look at this company, I'm like, oh,
30:51
wow, marketplace, hard to penetrate, hard to compete
30:53
with incredibly resilient, boring industry
30:55
with low competition, low technical sophistication,
30:59
incredibly high margins, great cash flow.
31:02
But like what, unless I was going to sell that
31:04
for an eye-watering multiple,
31:05
financially, it just doesn't make a lot of sense.
31:08
There's no incentive for me to sell.
31:10
But if you'd have asked me five years ago,
31:11
I'd be like, oh, no, I'm building sale, I'm making money.
31:13
And yeah, let's go.
31:14
So.
31:15
Do you think most founders could be better off
31:18
holding the asset, like you mentioned before
31:19
and unhiring somebody to take it over completely?
31:21
Like walk me through the map because I've,
31:23
I know stories like this where people have this great,
31:27
great exit on, well, that exit and air quotes.
31:30
I say I should put great in air quotes.
31:31
They have an exit, it looks good.
31:35
They can talk about the numbers with their friends
31:37
and they can maybe they'll even get a, you know,
31:40
a Forbes article written about them,
31:41
but like how much money do they actually walk away with?
31:45
Even if you look at, I don't know,
31:48
Hermosi's exact numbers,
31:50
but I'm pretty sure that most of his money
31:51
he was taking distributions while he was still actually
31:53
building his gym company versus what he actually got
31:57
after he sold it.
31:58
Yeah, yeah, yeah.
31:59
No, yeah, it's super interesting.
32:02
Like I definitely offended a few people going through this
32:06
before unintentionally.
32:09
But the way I, the way I look at this is,
32:12
if you were to do almost like a pinnacle-esque version
32:16
of your exit right to assess it,
32:18
like a post-exit analysis, if you will,
32:21
for most people, and again, countries, tax rates,
32:25
you know, all this and stuff.
32:26
If you sell a business for,
32:27
let's call it 24, 25 million bucks,
32:30
you're gonna wave goodbye to 30% of that straight up the top
32:34
because you're gonna pay, say for example,
32:36
Australia, subject to most of the rules,
32:38
you pay about 25% capital gains tax,
32:42
call it another 5% in fees, lawyers, accountants,
32:45
you know, they set the other on whatever.
32:46
And then let's assume that the business actually has
32:48
like enough work and capital to run itself.
32:50
So there's no work and capital adjustment either,
32:52
which a lot of the time founders have actually
32:54
like sucked all the work and capital out of the business.
32:56
So then they end up having to, you know,
32:57
put money in that comes out of the dual, I do a bit.
32:59
Let's give it simple, right?
33:00
24 million bucks, you know, 30% gone.
33:02
So you've gone from 24 to 16.
33:05
Normally I then say, well, most people,
33:07
at least in my experience, most people then go,
33:09
oh, well, I'll spend 5 million of that, I'll buy a car,
33:13
I'll give my parents some money,
33:16
I'll buy myself a house for a couple million bucks.
33:18
Yeah, well, whatever it looks like,
33:19
but let's just call it, you spend 5 million bucks one way or the other.
33:21
So you end up with, you know, call it 11 million dollars,
33:24
which I have often said, I'm like, firstly,
33:25
you're in the top like a 0.1% of founders
33:27
if you achieve that.
33:28
And that's an incredible achievement, right?
33:30
But most people think that selling a 25 means
33:32
that then you're like on private jets
33:34
and you're like yachts off the coast of the med,
33:36
you know, Italy, you know, for the summer each year.
33:39
But when you look at like 11 million liquid,
33:43
for me, and also pretty much everyone that I ever spoken to
33:47
that has achieved like an exit with like a meaningful,
33:49
you know, liquid liquid capital on the other side,
33:51
almost all of them have the same experience.
33:53
And then it's like, oh my god, yes,
33:54
I've exited, holy shit, I do not want to lose that money, right?
33:58
And so with 11 million bucks, you know,
34:00
you're two or three bad choices away from nothing.
34:04
So then most people, and that's if you are
34:06
reasonably responsible and you're reasonably good investor,
34:09
most people are going, well, I want to invest this,
34:12
you know, call it $10 million,
34:13
I want to invest this to fund my life.
34:15
And you go, okay, well, firstly,
34:17
the predominant like return investments people get
34:20
from things like, you know, stocks and property
34:23
and whatnot is actually in capital growth,
34:25
which means if you want to get that to spend it,
34:27
you have to then sell it.
34:29
It's not cash.
34:30
Then if you are investing, that's just called all in bonds
34:34
and you're making a 5% you're in that yield,
34:36
you're making half a million dollars a year,
34:39
you know, on the 10 mil pre-tax,
34:41
because that'll get income taxed.
34:43
So if you lose half of that income tax,
34:45
you end up with a quarter a mil, you're a year,
34:47
not a lot of money.
34:48
Which again, just to be clear, it is, but it isn't,
34:51
that's the same time.
34:52
I'm not plugging the stick at that.
34:53
Yeah, for a lot of people,
34:54
that would be life changing itself,
34:55
ignore the 25 million,
34:56
even getting a quarter million dollars a year
34:57
on repeat, doing no work,
34:59
would be life changing.
35:01
But I think that the fantasy that that 25 million
35:03
means you're on your own jets of yachts,
35:05
or you've got like 10 cars and a massive like mansion,
35:07
that's not necessarily real.
35:09
And to be clear, that might not be the goal for some people.
35:12
And if it's not, that's also great.
35:14
If you're super happy living on 50 grand a year,
35:17
that's amazing.
35:18
But we're not talking about that.
35:20
We're talking about people who want to sell the business, right?
35:22
And so the reality is that, you know,
35:24
from 25 mil you end up getting not actually a huge amount
35:27
of your real financial freedom.
35:29
I'm just to put this into perspective,
35:31
especially in a major US city, New York, Miami, LA, SF.
35:34
What is $250,000 is I don't even think considered.
35:38
No, you'd be technically, you'd be in the top few percent.
35:40
But that's not, again, it's the issue is that
35:43
it's the top few percent of world statement
35:45
is not represented in lifestyle
35:47
by what people think the top few percent of lifestyle is.
35:49
And just going back to that too,
35:51
if you've sold a business to 25 million,
35:52
let's just say you were doing like a boring service-based
35:54
business, changing tires on cars, for example,
35:57
you're going to sell that for maybe five times
35:59
EBITDA are multiple.
36:00
And if you're making $5 million a year EBITDA
36:02
with a nice translation to free cash flow,
36:06
I can't imagine any world where I'd be selling that
36:08
for 25 mil pre-tax, pre blah, blah, blah,
36:14
to then end up with a little bit of income.
36:15
And again, maybe the industry is an interesting cycle,
36:17
blah, blah, blah, maybe you want to get out,
36:19
maybe you want to retire, sure.
36:20
And there's other variables as the reasons why you may.
36:22
But generally speaking to me,
36:23
that math is not super inspiring relative to,
36:27
well, I could just have the five million cash a year.
36:29
I agree with that.
36:30
That makes it something no investor is no partner.
36:32
Yeah, yeah, sorry, yeah.
36:34
Well, not only that, yeah, if you were selling it
36:36
25, but assumes you're only 100%,
36:37
which a lot of the time is not true, firstly.
36:40
And number two, it also assumes that you've got no debt,
36:43
because debt is also normally like an exit adjustment,
36:47
you have to value.
36:49
Three, it also assumes that the deal is you sign,
36:52
you get 25 million cash liquid,
36:53
which I have not actually seen a deal of that side.
36:58
Oh, yeah, there's no script for script role over,
37:00
so into public equity,
37:02
or some sort of like vendor financing or contingent income.
37:06
So like a lot of the deals you see, not all,
37:08
but a lot of the deals are like,
37:09
oh, we'll pay you $100.
37:10
I'll give you 30 bucks in cash today.
37:13
Yeah, I'll give you 30 bucks in a year or two,
37:15
which is effectively vendor finance.
37:17
And you have to do really well
37:18
when the business grows XYZ.
37:19
I'll give you another 30 bucks.
37:21
But the reality is a lot of the people
37:22
that are doing these deals and pricing them
37:24
and structuring that way, they're like,
37:25
oh, well, if I'm going to give you the contingent income,
37:27
the extra 30 bucks for performing against these KPIs,
37:30
well, I'm going to make $100, so that's okay.
37:33
But then on the off chance that we don't make that,
37:35
I want downside protection,
37:36
and then I get a 30% discount on your business.
37:39
You know, and so like again,
37:40
come back to the point before knowing what you're selling
37:42
and like what the game actually is.
37:43
A lot of money, especially in private equity,
37:46
a huge amount of the money that these guys make
37:48
is through financial engineering.
37:49
And engineering happens at the deal level.
37:51
But that's traditionally, it's a little,
37:53
it's a bit like black box slash opaque,
37:56
you know, to people who are not in that industry or game.
37:58
And a lot of people lose a lot of money
37:59
as a result of that,
38:00
but they're very unconscious about it on the way in,
38:02
which is not their fault.
38:03
Like how the hell do you...
38:05
No, you know that first of all.
38:06
You're a...
38:07
Well, I mean, you have good people around you, hopefully.
38:10
But I mean, like you said before,
38:11
you had a company that was doing about 120 million.
38:15
And you still didn't have people,
38:16
well, you had some people,
38:18
obviously to help you structure a deal.
38:19
But you still said you felt like you're flying
38:21
a mostly blind.
38:22
Well, but this is part of the interesting aspect
38:24
of like having good advisors, right?
38:26
You know, I had a great legal team, really good at law.
38:30
You had a great finance team,
38:32
and I can't think, really great at finance and accounting.
38:34
I had a great person doing tax, really great at tax.
38:37
But was there anyone who was actually saying,
38:38
who will hold on for you as the guy
38:41
who's about to actually make money?
38:43
Does this actually make sense?
38:45
I can tell you the lawyer will say,
38:46
legally, this makes sense and is normal.
38:49
The tax person will say,
38:50
legally, this is the right tax structure.
38:51
But who's actually saying, well, hold on, no dude,
38:53
like for you as an individual and shareholder,
38:55
like, is this actually a good idea?
38:57
And that advice at the concept of this advice
38:59
almost doesn't exist.
39:00
Because even if you go to a wealth fund,
39:02
you know, to work with wealth managers,
39:04
respectfully, I'm painting a very broad brushstroke here.
39:08
Yeah, but like, respectfully,
39:09
they actually give a shit about what return you get.
39:11
That entire industry,
39:13
and I'm just super clear to someone convinced me otherwise,
39:15
that the entire industry is based on what,
39:17
if the value of your investments go up, we get paid.
39:22
The value of your investments go down.
39:24
We get paid, you lose money.
39:27
But either way, we get paid.
39:29
Yeah, and so like a lot of the advisory industry is about,
39:31
if you do a shit deal as a lawyer, I get paid.
39:34
As a tax person, if you do a shit deal, tax wise,
39:36
and you lose all this money and tax, guess what?
39:38
I still get paid.
39:39
Yeah, and so like a lot of the industries
39:40
not actually shareholder or founder friendly,
39:42
and it's not designed to be.
39:43
It's interesting.
39:44
That's scary for a first time founder.
39:46
I think that as people are listening to this,
39:48
they're trying to figure out now.
39:49
Okay, so who do I talk to about my first transaction?
39:53
My bits is going well.
39:55
Is it about maybe just self-advocacy?
39:58
Maybe, maybe it's maybe,
40:00
and not to bring up another meta-cognitive insight
40:04
or mental model, but is there a framework
40:07
that you use to evaluate how to navigate,
40:10
I mean, even your own goals as a founder,
40:11
as opposed to outsourcing that decision to somebody else?
40:14
Yeah, honestly, the way I've often thought about this,
40:17
and this is actually an overarching insight
40:19
about business in general, I think it's not that complicated.
40:22
I think most aspects of business are not that complicated,
40:24
but people don't want to actually spend the time
40:26
thinking and reflecting.
40:28
They want the answer, which comes back to a point
40:31
we're talking about earlier.
40:31
They're not actually interested in generating the skill.
40:33
So like, for example, it's like,
40:35
oh, what's a really sophisticated framework
40:37
you can use to think about exits?
40:38
It's like, well, what do you want to achieve?
40:41
Like what in your life, what do you want?
40:43
It's like, are you seeking to retire
40:45
and you need like a lump of cash?
40:46
Are you seeking to like liquidate your assets
40:48
so you can kind of get some money and then go again?
40:50
You're like, where are you at?
40:51
And based on that, like, what actually are your goals?
40:54
Number one, get really refined about that.
40:55
And not just like, I want to sell for a hundred million.
40:57
It's like, no, like, actually think about it.
40:58
You know, I do an exercise a lot of people that I work
41:01
with called the Personal P&L,
41:02
which is like, put me together your personal P&L
41:04
based on your current lifestyle,
41:06
and then put me five or 10 years into the future
41:08
and then design me the best possible life
41:10
you think you'd live within reason,
41:12
the best possible version of your life?
41:13
Let's figure out how much that costs.
41:15
And then we use that as the foundation
41:17
to actually calibrate what are not deals
41:18
and what not make sense.
41:20
Because if it doesn't actually serve your life,
41:22
which to be clear the overarching question
41:23
is how does this serve me, right?
41:25
If it doesn't actually serve your life, what's the point?
41:27
And then all of the other,
41:29
once you've gotten really kind of structured around
41:30
what that looks like,
41:31
all of the other stuff becomes easy.
41:32
It's like, I'll, a whole bunch of people have come with me.
41:34
I've got three offers of my business.
41:36
I was like, okay, well, does it help you achieve that goal?
41:38
Yes or no?
41:39
You just frame all decisions through that.
41:41
A hundred percent.
41:42
Most people don't do this at the front,
41:43
which to be clear,
41:44
I wasn't super sharp about that.
41:46
I was like, so almost deer in headlights.
41:50
Cause like, as I was like in my early, mid 20s,
41:52
when we first started going through this deal exit process,
41:55
even if you see $50 million cash presented to you,
41:58
it's like, whoa, right?
42:00
And I was very fortunate early on.
42:02
Like I made a lot of money on,
42:06
from your distributions really early on.
42:08
Like by the time I was 22, 23,
42:10
I'd already taken nearly 30 million bucks out of the business.
42:12
And so I'd been very, very fortunate.
42:14
That's not the common experience.
42:16
A lot of founders don't make money early on.
42:17
They have to make it on the exit, if that makes sense,
42:19
especially these sort of, you know,
42:21
tech startups and whatnot.
42:22
But, and I had no idea.
42:25
I had no focus going into that deal
42:27
other than let's sell the business.
42:30
Was there an event or an inflection point
42:33
that forced you to think differently?
42:35
Yeah, it was the first transaction failing.
42:38
Because it's been so much of the company's capital
42:41
getting ready for the deal.
42:43
And it was a slap to the face.
42:44
Oh, huge slap.
42:45
And also like very humbling,
42:46
you're in a really good way.
42:48
And, you know, this is a sort of time
42:50
where I was like, you know,
42:52
my living costs are going up,
42:53
you know, like a whole bunch of other things
42:54
were going on in the year kind of in the background outside of work.
42:56
And then I was like, oh, shit, actually,
42:58
if I keep running this way,
42:58
that actually won't work.
43:00
Yeah, and so this is another really interesting insight
43:04
about a lot of founders.
43:06
And I'd argue also a lot of like an influencer founders,
43:09
specifically, you know,
43:11
that they're not necessarily always
43:14
very conscious business people.
43:15
They're great promoters and marketers
43:16
and maybe even sometimes good product people
43:18
where they're not great business people.
43:20
You know, and the difference between that is
43:21
they're not like financially literate
43:23
and or financially conscious.
43:24
And so for all these people,
43:25
they build great businesses with two, three, four, five years.
43:27
But then they get to that point
43:29
where it's matured a bit, it's slowed down.
43:30
They can't really sell it.
43:31
They have no real exit.
43:32
It's not making much bottom line
43:34
and they get this really stuck, you know, position.
43:36
And that happens to quite a lot of people.
43:37
You have been there with other businesses too.
43:39
But it's hard, you know, it's simple, but it's hard.
43:44
I want to change gears a little bit.
43:48
When we first started speaking,
43:49
I hope this isn't too much of a stretch,
43:50
but I think you'll understand where I'm going with this.
43:52
So when we first started speaking,
43:52
we were talking about where to get advice from.
43:54
And you were describing the perfect person
43:56
to get advice from.
43:59
There's through lines between the person
44:01
that you look for to get advice from
44:03
and somebody who you'd want to hire to work for you.
44:05
A lot of the personality traits you were describing,
44:07
because even before we press record,
44:09
we were thinking, you know, what should we chat about?
44:10
And you're like, well, let's talk about culture
44:12
and hiring and delegation and finding A players.
44:14
And, you know, everyone says they want an A player,
44:16
but they don't know what that actually means.
44:18
But when you were actually describing
44:20
who to look for for advice,
44:22
you were actually, in my mind, describing somebody
44:24
who is like an A player personality.
44:27
But you've obviously figured out how to do that
44:28
from an advice perspective, somebody who's like a mentor
44:30
or somebody who's sort of succeeded.
44:33
The other thing that you like to speak about,
44:34
which I think is very valid,
44:35
and we should speak about it,
44:36
is how to find that person to bring into your company.
44:39
Like what is it, we can talk about,
44:41
you take whatever way you want, you want to talk about A player
44:43
and hiring with talent or culture or both
44:45
because I think they are one of the same.
44:48
Well, yeah, I don't think you can hire good people
44:50
without having a really clear understanding
44:52
of what you're called to do there.
44:53
Yeah, sure.
44:54
And this has all been a really,
44:57
I think you're interesting like your topic of debate.
44:59
Again, there's so many of these like books on culture
45:01
and all these podcasts on whatever on culture.
45:03
There's so much of them and I'm like,
45:05
and the cut for all these people is,
45:07
I'm like, well, define for me what culture is in one sentence.
45:10
And if you can't, then you don't know what it is, right?
45:13
And I would do better.
45:14
I would define it in one word, culture,
45:15
it's just your standards.
45:17
That's it.
45:17
It's your standards for how you work,
45:19
it's your standards for how you behave,
45:20
it's your standards for your goals, all these things,
45:24
but it's the confluence of your standards
45:26
universally in your organization, right?
45:29
And part of the reason why I think that you can't really recruit
45:32
good people or maybe I would rephrase that as like the right,
45:34
good people near for your business,
45:36
if you don't have a clear understanding of your culture,
45:37
is that the whole interview process is like speed dating.
45:40
And what you're trying to do to some of the points
45:42
before around advice and mentoring and whatnot,
45:44
as you're trying to say, well,
45:46
have you done what I want you to do
45:48
if that is findable if those people exist?
45:50
Like have you done the thing that I want you to do?
45:52
And if you have, it's all about,
45:53
do I think you have the right behavior
45:55
and attitude to fit in here?
45:56
If you can't perfectly screen for have you done the precise thing
45:59
I want you to do for whatever reason,
46:00
because sometimes this thing hasn't been done before
46:03
or those people are not available
46:05
where you live or whatever country you're in.
46:06
Well, then you go to put specificity,
46:08
you go to the side and you've got to hide broadly and generally
46:10
and you go, okay, well, what are the raw skills that I need?
46:13
You do do this.
46:13
And so as soon as you've screened
46:14
for the raw skills and capabilities,
46:16
then it's all back to behavior and attitude.
46:18
You're effectively trying to personally map
46:20
you to the business, right?
46:22
And the simplest example of this is computer scientists
46:25
who works in the government doing whatever it is that they do,
46:27
a computer scientist who works in the gigantic corporate,
46:29
doing what they do.
46:30
Computer scientists who's like a CTO co-founder
46:32
for a startup company, they're three quite different people.
46:36
So even if they all program in, I don't know,
46:40
objective C or Ruby or whatever it may be,
46:43
it doesn't matter, right?
46:45
Because they're completely behaviorally,
46:46
they're completely different people
46:47
and more often than not on average,
46:49
they would fail if they moved to one of the alternate options.
46:53
And so when you're screening for things like behavior and attitude
46:56
and you're trying to find an A player,
46:57
presuming that they've either done what you want to do
46:59
or they've got the right raw skills to do it,
47:01
or all of that screening is really a pressure testing
47:04
like relative to the standards that we have,
47:06
is this relationship you're actually going to work?
47:08
And it's no different to your intimate relationship,
47:10
but you would reframe it as values.
47:12
It's like you can have all the likes and interests
47:15
and commonalities with the other person,
47:17
but if you're not compatible with a values level,
47:20
like you fundamentally see the world in a similar way
47:23
and you value similar things,
47:24
well, the relationship is doomed from the start.
47:26
And so to your point before,
47:28
and like recruiting A-grade players,
47:31
I think that's a bit of a fugazi.
47:32
You know, like there's like it doesn't exist
47:35
the way that people think it exists.
47:36
Yeah, and for a few basic reasons, like one,
47:40
and you said this before, which is really great frame,
47:42
I said the best, the best, the best A-grade players
47:44
are probably working for themselves.
47:46
Right, not all of them, but let's assume
47:48
that they're meant to get.
47:49
I've always thought that the best person you can hire
47:50
is an entrepreneur that for whatever reason,
47:52
the season of the life that they're in right now
47:55
does is not conducive.
47:56
Yeah, entrepreneurs.
47:57
I know it's kids age, whatever.
47:59
I want an entrepreneur that needs a paycheck
48:01
because he just had a kid.
48:02
Like that's who I want,
48:04
but it's hard to find those people.
48:05
Of course, and then, you know,
48:07
outside of the entrepreneurs,
48:08
there might be other like really, really good people.
48:11
And you know, I like to, not always,
48:14
but very often rationalize my numbers, right?
48:16
So let's just say that an A-grade player in theory
48:21
or a conceptual level is out of 100 people
48:26
that you could work with, you know,
48:27
from a capability wise,
48:28
however you measure that in one specific field,
48:30
there at least one, if not two standard deviations
48:32
above the norm, right?
48:34
So purely based on that,
48:35
they're 85 to 95% of people in that 100 are not A-grade players.
48:40
It's like immediately from the start,
48:41
which means that if you're interviewing
48:43
for however many roles,
48:43
you're gonna have to interview thousands of people
48:45
just to find a handful of them, right?
48:47
So mathematically, you can already see
48:49
that the likelihood of you achieving that is low, right?
48:53
Then when you layer on another concept that's like,
48:56
oh well, the best players are probably gonna get incentivized
49:00
the best and or there'll be more people wanting them,
49:03
which means there's gonna be a concentration of capital
49:06
when other like non-capital benefits for those people.
49:09
So where does, for example,
49:10
like the best tech talent will not,
49:12
sorry, not the best,
49:13
but a lot of the best tech talent will,
49:15
the same way as this go.
49:16
And they're paid an eye-watering amount of money.
49:18
So if you assume that not all,
49:20
but a huge portion of the A-grade players
49:22
are incentivized by money
49:23
and other like non-financial benefits,
49:24
they're gonna get the majority of that
49:26
in certain parts of the board and certain companies.
49:28
So if you're a small to medium sized business,
49:30
make in 10 to 25 million bucks a year,
49:31
the likelihood that you've ever met one is low,
49:34
that you can afford them.
49:35
Here's even lower again.
49:36
And there's the right stage of their life
49:37
that you can afford them.
49:38
You've met them and they wanna work for you
49:40
is very, very, very low.
49:41
Now does that mean that you can't,
49:43
it really is, right?
49:45
But does that mean that you can't get like,
49:46
really good people to work for you?
49:47
No, it doesn't, but it's just the idea of like,
49:50
A-grade players are gonna qualitative
49:52
and quantitative level is actually very unreasonable.
49:56
Instead, you just want good enough people.
49:59
They don't need to be the best,
50:00
and I would argue the best validator of that idea
50:02
is that when you're small,
50:04
and everyone who's had a rapidly growing business
50:06
can relate to this.
50:06
When you're small, you recruit these three people,
50:08
oh man, they're so good.
50:09
There's so much better than the last people
50:11
we have for these roles.
50:12
Oh, this is gonna be great.
50:13
And then the business three X's and size
50:14
and 12 months later you're like,
50:15
you bring in a new person like,
50:16
oh, they're so much better than those three people.
50:18
And so this is idea of relativity.
50:20
You're like from a skill set, a competency level,
50:23
and also relevance to the size of the business.
50:26
You could be a great engineer at a $5 million a year business
50:29
and put the same person into a $105 million
50:31
a year business and they could be terrible, right?
50:33
And so I think, again,
50:35
this is a society at large.
50:37
We wanna simplify and be reductive with our ideas
50:41
because we don't want to actually think
50:43
through a conceptual level of what matters
50:44
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50:46
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50:47
if they don't have the relevant skill,
50:48
they have incredibly good role skills
50:51
and capacity to think.
50:53
And they are beautifully aligned culturally.
50:55
That's what an A-grade player is.
50:57
It doesn't need to be anything else outside of that.
50:58
If you wanted to make it actually understandable
51:00
and usable on a day-to-day basis.
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53:13
The thing that I see people being concerned with
53:16
in not pursuing this unicorn mythical A-grade player
53:21
is that it grades the culture and the quality
53:24
of the business and then it turns these,
53:28
again, mythical A-grade people away from the business
53:31
and it, there's a quote or a saying,
53:34
it's like A-grade people, attract more A-grade
53:37
but then like B-grade will only hire C-grade.
53:39
Like something along the way.
53:40
A-grade is recruit, A-grade is B-grade is recruit,
53:42
C-grade is.
53:43
Is there any validity to that?
53:45
I think so, but again, without, you know,
53:51
yeah, without like, shunning orthodoxy here
53:53
a little bit too much, you know, I think what will,
53:56
let's get rid of A-B-C, right?
53:58
And let's say experienced leaders will recruit better
54:02
than inexperienced leaders.
54:04
So regardless of whether you're an A-B-C grader,
54:06
whatever it's like recruiting is a skill.
54:07
Leading and managing is a skill.
54:09
And if you're good at those things,
54:09
you'll probably recruit better people.
54:10
If you're not good at those things,
54:11
you probably won't recruit good people.
54:14
But then I would also go so far as to say,
54:15
it's like even if you're a good leader, manager, A-grade,
54:18
or whatever it may be,
54:20
if the organization is not incredibly clear on the culture,
54:23
how do you recruit good people in general any level?
54:28
And just to be clear,
54:28
there's a thank you see in small to medium sized businesses
54:31
because they're not, they haven't like codified,
54:35
you know, they're like organization of culture.
54:37
So they're really good at recruit people,
54:38
anyone's a match, right?
54:39
And it's kind of like young people on the dating scene.
54:41
It's like early when you go to date, different people,
54:43
you go to kind of what, how do I want to live my life?
54:46
I'm like, who do I get along with?
54:47
Well, you kind of got to go through that process, right?
54:48
But the issue is that founders and the good founder entrepreneurs,
54:52
they'll sit in hundreds of interviews,
54:54
they'll recruit lots of people,
54:55
they'll set the other,
54:56
and they'll fail with that a lot.
54:57
But then they expect that they can recruit a junior person,
54:59
train them up on that person
55:00
who's never recruited the person in their life.
55:02
Is going to be a good job at recruiting the next person.
55:05
I was just listening to an interview with Brian Jasky
55:08
and he says he still focuses all of his energy
55:11
and time on recruitment.
55:12
And I think he made a point and he said,
55:15
if there's a person, he's talking to a C-suite.
55:19
He says, if there's a person who you feel
55:21
like you can recruit without my help,
55:23
they're not good enough.
55:25
So he sees recruitment as the most important.
55:28
It's a little bit like, it's a bit like product, though.
55:31
Like I know, there's a lot of this all the time.
55:33
I found I was like, oh yeah, yeah.
55:35
It's been so much time working in product.
55:36
I'm gonna recruit someone to come and take it off my hands.
55:38
I'm like, why the hell do you think the business is successful?
55:41
Like you see and understand things in this particular arena
55:44
that other people don't and what you think you can employ
55:46
a person, there's these sorts of ideas
55:49
that just make no sense here when you shine a light on it.
55:51
But there's like ideologies that a lot of people want
55:53
to run their business behind it again.
55:55
As a founder, you can't do everything.
55:57
No, that will try.
55:58
Yeah, that's an impossibility.
56:00
But I think the people thing is a really, really big deal.
56:04
And one that's very often misunderstood a lot of the time
56:06
employees will fail in inverted commas
56:09
and then they get you know, terminated and managed out.
56:10
I'm like, well, if you did like an analysis
56:13
of that like a post-exit analysis,
56:15
do you think that person was right to begin with?
56:17
So if you get all the way back to like,
56:19
when you recruit at them, were they a good choice then
56:20
and maybe they were.
56:21
Then the next question is, well,
56:22
were they on boarded and actually like set up
56:24
to succeed, you know, well at the very beginning.
56:27
And then if not, it's like, well, are we surprised?
56:29
Seven, eight, nine months later,
56:30
that they've been terminated or we've,
56:32
all they've exited, is that a surprise?
56:34
And a lot of the time, not all the time,
56:35
but the majority of the time people go, oh yeah, look,
56:38
I mean, I probably shouldn't have recruited them
56:40
and they weren't the right person.
56:41
Oh, they go, oh, you know, well,
56:42
I really didn't actually like manage them well.
56:45
No, because we get so excited after we find the right person
56:48
and then because at least something that I'm aware
56:52
of for myself, I can't speak for everybody.
56:54
But sometimes I get so excited hiring somebody
56:56
because they're so competent.
56:57
And I'm like, oh, they're hired, they're competent,
56:59
great, go do your thing, I don't want to micromanage.
57:02
You don't hire a great person, a micromanage,
57:04
but there's a difference between micromanaging
57:06
and being overbearing versus onboarding them properly.
57:11
Totally.
57:11
And also too, I think like micromanage is a broad term.
57:16
So like for me, I'm like, I am fanatical about detail.
57:20
Like unfairly in lots of scenarios,
57:23
having most good sounders out to be honest.
57:25
Well, yeah, but this is what I was about to say.
57:26
I was like, but there's certain areas,
57:28
well, you have to be.
57:29
Well, and so yes, you might not want to be overbearing
57:31
for like a management, you have a perspective
57:32
and be literally peeping over the shoulder
57:36
at this screen for eight hours a day.
57:37
But I think you're like, whether you're on product stuff,
57:40
customer stuff, brand positioning stuff,
57:42
whatever it may be, is there certain things
57:43
that's like, you can't really get worried
57:44
about upsetting people with detail and micromanagement.
57:47
Like if you want to win, you put a win.
57:48
And like when you look at a lot of the society
57:52
would call a lot of the best founders,
57:54
like what do you reckon, like Elon Musk
57:55
is like, arm zinc from the detail?
57:56
No, the dude's literally on the production floor.
57:58
Like Steve Jobs, same thing, Bill Gates,
58:01
not as publicized, same thing, Jeff Bezos,
58:03
not same thing.
58:04
And this is why I actually think they get a bad rap
58:06
because they are so into, like Elon will learn everything
58:09
about things that he knows nothing about
58:11
just so we can have an educated conversation
58:13
with the person who's responsible.
58:14
Which again, and maybe not everyone is blessed
58:17
with the intellectual faculty that he has,
58:19
but I think in a general sense,
58:20
for most of what small to medium sized businesses do,
58:23
and which is respectfully nowhere near
58:24
is complicated as building rockets and sending it to space.
58:27
But for most of what small to medium sized businesses are doing,
58:30
I think people can learn all of that.
58:33
And at least learn enough to have a reasonable conversation,
58:36
you know, performance marketing, branding, content,
58:39
some basic finance stuff.
58:41
Like I think that's all the majority of the population
58:44
can at least understand the fundamentals of that
58:45
enough to have a conversation with the people
58:47
that they work with.
58:48
And I think if not respectfully,
58:50
you potentially being a little bit lazy.
58:52
I agree with that.
58:53
I think that all the business, like to get my side
58:57
of the business is the sales marketing
58:58
a little bit of product less technical,
59:00
even though I was running companies that were technical,
59:03
so I have to understand a bit of it.
59:05
But from my experience personal and with like the people
59:10
that were my peers on the sales and marketing side,
59:14
the companies that were successful were led by founders
59:18
who learned all these skills at least
59:19
a rudimentary level, especially sales, which is very important.
59:24
All the companies that I ever saw being successful
59:26
were founder companies, like founder of the companies,
59:28
and the founders started off selling the product.
59:31
They understood how to develop demand,
59:34
build a pipeline, close a deal,
59:36
and then they took that, and then they hired,
59:39
once they had too much demand,
59:40
and they couldn't jump on the calls
59:41
or speak to all the customers,
59:43
then they hired somebody to help with that part
59:45
of the business, but what they didn't do was say,
59:47
I'm a technical founder, I'm a product founder,
59:49
I don't know nothing about sales,
59:50
let me go hire a VP of sales, and then just figure it out.
59:54
But entrepreneurship is kind of,
59:56
in one way, shape of form is really this idea
59:59
of ultimate accountability,
1:00:01
and if you're just just to make it reductive,
1:00:03
if you're a solo founder, even more so,
1:00:06
because a lot of the time,
1:00:08
you'll have a product or tech guy
1:00:09
and a marketing, a sales guy, and then they'll be friends,
1:00:12
or you have an operator and a product person,
1:00:13
whatever, there's a few different combinations there,
1:00:15
but if you are a solo founder,
1:00:17
you kind of got to understand a little bit about all of it.
1:00:20
And also too, I would argue that not even just getting
1:00:24
to a point where like, okay, called checkbox,
1:00:26
like I understand this thing, that's fine,
1:00:28
but you still need to have some persistent degree
1:00:32
of curiosity about all areas of the business over time,
1:00:34
and also argue too, as a point before,
1:00:36
like we get excited to recruit a person,
1:00:38
if you become not at all curious about an area of the business,
1:00:41
because you recruited someone to manage it,
1:00:43
no matter how good that person is,
1:00:45
one way or another, they're gonna end up off-pieceed,
1:00:47
because you're not in the detail enough
1:00:49
to maintain alignment, and I think it's like
1:00:52
maintaining alignment thing is huge too,
1:00:54
so you can get really good people,
1:00:56
do a smart hard work and all that sort of stuff,
1:00:57
but if you haven't been like really clear
1:00:59
about where you're going and why,
1:01:00
then you end up, everyone ends up running
1:01:02
off in slightly different directions, right?
1:01:04
I want to speak about some of the mental models
1:01:08
that have been most useful to you,
1:01:11
and I think this will be a great way to just like,
1:01:13
close it out with some strong ways to think.
1:01:17
So are there certain ones in particular?
1:01:18
Frameworks, I mean, whether or not you want it to be
1:01:21
like first principles thinking,
1:01:23
like you pick the ones that have been the most useful
1:01:25
to you on your journey,
1:01:27
because I think the goal of this podcast,
1:01:29
you've gone into a few different things,
1:01:30
but ultimately I want to leave people with
1:01:32
how do they actually think through problems,
1:01:34
because that will probably be much more beneficial
1:01:36
and useful to them.
1:01:37
No, no, totally, you know, look,
1:01:39
there's an unlimited amount of things here.
1:01:41
The ones for me that I find myself using the most often,
1:01:45
so this idea of like inversion,
1:01:46
like the inversion principle,
1:01:47
Eric and I would use that five plus times a day easily,
1:01:51
and when I'm referring to that,
1:01:53
I mean, something on the lines of gel a lot of the time
1:01:56
in teams, we'll talk about like,
1:01:57
hey, is this the right decision?
1:01:59
Right, and we'll go, okay, well, yes, I think it is.
1:02:00
Okay, why is that the right decision?
1:02:02
I think it's the right decision because of these things.
1:02:04
And it's all about, well, I think this is right,
1:02:07
so I'll convince you it's right, right?
1:02:09
Which leaves you then incredibly vulnerable
1:02:11
to, well, how could it go wrong?
1:02:13
Right?
1:02:14
And so a lot of the time I will invert,
1:02:16
you know, those conversations as someone goes,
1:02:17
hey, this is the right thing,
1:02:18
and I'm like, well, what would need to be true
1:02:20
if this was definitely wrong?
1:02:21
Right?
1:02:22
And so I will reverse reason.
1:02:23
Yeah, with a lot of these topics,
1:02:24
because I think, again,
1:02:26
came back to the point before,
1:02:27
and failure makes everything really clear.
1:02:29
I think if you position this decision immediately
1:02:31
into failure and then try to like solve back from it,
1:02:33
that makes things a lot easier
1:02:35
from a problem solving perspective.
1:02:37
So I think that's one thing.
1:02:39
I think the second thing like along that line too
1:02:41
is there's this idea that a lot of people make
1:02:45
like decisions agnostic of commercial logic and reasons.
1:02:49
There's like, oh, is this campaign a good idea?
1:02:51
You know, is this brand activation and good idea?
1:02:54
And we go, yeah, this is a cool idea.
1:02:55
It'll be great.
1:02:56
I'm like, okay, but what are we getting from this?
1:02:58
And so I refer to this as like the car principle,
1:03:00
the car framework, which is really basic.
1:03:01
It's just the cost, the assumptions and the return.
1:03:04
Right?
1:03:05
I like that aspect.
1:03:06
Yeah.
1:03:07
It's something I came with, I think I came up with it.
1:03:08
I don't know, but like a long time ago,
1:03:10
and so I will very often say to people that I work
1:03:11
or they present me a great idea.
1:03:12
I'm like, okay, well, convince me like,
1:03:14
what's this going to cost?
1:03:15
What are you assuming is going to happen?
1:03:17
And then base of that,
1:03:18
like what's actually going to be the return on the other side
1:03:20
and coming back to a point that we were talking about
1:03:21
earlier around judgment.
1:03:24
My job or a manager's job or an executive's job
1:03:26
is then to look at that kind of car proposition,
1:03:29
if you will, from your particular employee
1:03:30
and go, okay, well, three really basic questions.
1:03:33
Like, one, do I think that those costs are reasonable
1:03:35
and right?
1:03:36
Yes or no?
1:03:38
Two, do I think the assumptions they've put
1:03:40
are reasonable and right?
1:03:41
Yes or no?
1:03:42
And three, base of the assumption the cost,
1:03:43
do I actually think that this return is likely to generate?
1:03:46
So it's a really simple, like, reductive way,
1:03:48
both for really junior, like, young employees
1:03:51
right at the beginning of their career,
1:03:52
all the way up to executives,
1:03:53
you can have varying degrees of sophistication
1:03:55
of how you present it, but at a conceptual level.
1:03:57
To me, that's probably one of the best models
1:04:00
to get teams to adopt,
1:04:02
because what's the issue with a lot of junior employees?
1:04:04
Everyone goes, oh, they have no commercial argument
1:04:06
and blah, blah, blah.
1:04:07
I'm like, how do you think they get that?
1:04:09
Like, teach them.
1:04:10
You know, so for me, this is really good.
1:04:13
And I think these two things in combination.
1:04:14
So, you know, I'll get people to,
1:04:17
we use this framework or the one three, one framework.
1:04:19
You know, show me the idea that you've got,
1:04:21
give me three different solutions
1:04:22
or like, you know, potential outcomes here
1:04:24
and then recommend one to me.
1:04:25
But when you're recommending it to me,
1:04:26
recommend it to me showing the cost,
1:04:27
the assumptions that return.
1:04:29
And then when you come to me,
1:04:30
I'll try to prove to you that you're wrong,
1:04:31
which is inversion.
1:04:32
And so this creates culturally,
1:04:34
it's a really good idea, but pragmatically,
1:04:36
it creates a decision making environment
1:04:38
that's effectively based on, well, I explored model options.
1:04:41
I think I found the best one.
1:04:42
The best one is based off of these cost assumptions of returns.
1:04:45
Now, your job is to try to convince me it's wrong.
1:04:47
And if we can't say that one of the other three options
1:04:50
is better and we can't convince you
1:04:51
that the cost assumptions of returns are silly,
1:04:53
well, then we should just do this thing.
1:04:55
Right.
1:04:56
And so it makes this decision making velocity feedback loop
1:04:58
and your education piece like ingrained
1:05:00
to the way a company operates.
1:05:02
As opposed to, I'm big dog, I want this option.
1:05:06
You're no one really learns from that.
1:05:08
And also too, then when it fails,
1:05:09
I go, oh, well, you gave me a shitty recommendation.
1:05:11
So it ends up being culturally bad.
1:05:12
But if you, I think you do things this way,
1:05:14
with inversion, one, three, one, and you're the car principles,
1:05:17
the decision making becomes very rigorous
1:05:19
and it's incredibly valuable for employees
1:05:21
from an educational standpoint.
1:05:22
It also removes emotion.
1:05:24
So yeah, yeah, sorry, yeah.
1:05:25
I mean, I'd start from a position of no motion, but yeah.
1:05:27
No, I think, you know, I didn't mean to,
1:05:30
yeah, I didn't mean to say that you've left that part out.
1:05:31
I think that it's just an important piece of it
1:05:33
because I think that how every time you speak
1:05:35
about a principle I'm thinking about,
1:05:36
okay, so why don't people use this already
1:05:39
because a lot of what you teach
1:05:40
is very logical and pragmatic,
1:05:42
which is hard for all the people, right?
1:05:43
Like, as in, it's easy and this comes back
1:05:45
to the point before around your knowledge and skill.
1:05:47
I can say this here is this knowledge, right?
1:05:51
And you can even take that away
1:05:52
and put it in a document and then give it to an employee, right?
1:05:54
But there is skill to using the knowledge,
1:05:57
you know, to then actually make your decisions
1:05:59
and the skill normally gets becomes redundant
1:06:03
because of bias and emotion, right?
1:06:06
And yeah, it's always been a fascinating thing to me.
1:06:08
I mean, I am the way I am and, you know, that is me.
1:06:12
But that sort of stuff from a decision-making point of view
1:06:15
was never really like a huge meaningful blocker to me.
1:06:18
Awareness was a big blocker,
1:06:19
but the emotional stuff not so much.
1:06:21
But yeah, with a lot of people I've worked with,
1:06:22
it's a really good point you raised
1:06:25
that sometimes they find it hard to be objective
1:06:28
or at least as objective as, you know,
1:06:29
we ever think we're back.
1:06:30
I noticed it this morning.
1:06:31
I pointed something out and somebody took offense to it
1:06:33
because there was a personal skill that they had built
1:06:35
and I said that the execution of said skill
1:06:38
was not entirely appropriate
1:06:40
for what we were trying to accomplish for a client.
1:06:42
And for me, it was such a, it was,
1:06:46
it was, there was such an obvious error.
1:06:49
And but I realized that the error
1:06:52
and the communication of me pointing out the error,
1:06:55
it was like a video edit that we did.
1:06:56
We screwed something up.
1:06:58
And I realized it by pointing out the error,
1:07:02
the person, the editor didn't see the error.
1:07:05
They saw me questioning their skill set.
1:07:07
Yeah, which is within emotion.
1:07:10
Yeah, which is fascinating, right?
1:07:11
And I actually have found that normally
1:07:14
the really skilled experience people, not always,
1:07:16
but normally the people who are really skilled
1:07:18
in the experience, they can often actually take to feedback
1:07:22
more emotionally than someone who's a beginner.
1:07:24
Because the beginner, if the, you know,
1:07:27
a self-aware that they're a beginner,
1:07:28
you know, they normally go, okay, well, I'm a beginner.
1:07:30
You're not a beginner, thanks for the feedback.
1:07:33
Right, whereas if someone who's like super experienced,
1:07:35
you say, I'll go away and do this thing.
1:07:36
And you go, oh, actually, yeah, no, that's wrong.
1:07:37
And they're like, oh, well, it's not actually.
1:07:39
You know, and all you have, you have like emotional,
1:07:42
you know, responses, which to be clear,
1:07:44
I'd argue that, and I've always argued this,
1:07:46
business is actually relatively straightforward,
1:07:48
simple, mathematic, in most cases, not all.
1:07:51
Yeah, brand product, there's this,
1:07:53
some kind of nuance and qualitative stuff.
1:07:55
But this thing that makes it really complicated,
1:07:58
there's actually people, both inside the business
1:08:00
and outside the business, and just to be clear,
1:08:02
when I said that, I'm not talking about the customers,
1:08:04
because that's a skill set to work with that.
1:08:06
But like, I think internally, you're getting
1:08:09
10, 50, 150 people of different personalities,
1:08:11
backgrounds, values, and beliefs to align, you know,
1:08:14
on a goal, work on that respectfully, you know,
1:08:17
provide feedback and receive it, you know,
1:08:19
with best intent, you know, these sorts of ideas,
1:08:21
they're actually really bloody hard.
1:08:23
What would be one mental model
1:08:25
that you are currently applying to yourself,
1:08:26
not your business at this age in your life?
1:08:29
So something I touched on before in a few different ways
1:08:33
was this idea that, you know, of like a frailty
1:08:37
or fragility, like of the situation that you're in.
1:08:39
And I think one of the things that I try to reflect on
1:08:43
all the time is that the better I get, you know,
1:08:47
however you receive that, so knowledge, skills,
1:08:49
result, sort of, maybe the better that I get,
1:08:51
I have to match that with an increase in humility.
1:08:55
Because the more you learn about things,
1:08:58
it's really easy to fall into this thing of like,
1:09:01
I know now, and I'm experienced, right?
1:09:03
And so I've often tried to sit with this, like,
1:09:06
concept and idea of like, you know,
1:09:07
be like a perpetual learner, but a perpetual beginner,
1:09:10
you more specifically.
1:09:12
And that's saying that I've gone through
1:09:14
sort of multiple different ways with my co-like,
1:09:15
I really understand this topic now,
1:09:17
but I'm like, but I don't want to think that and feel that
1:09:18
because it makes me blind to the obvious stuff.
1:09:23
And when you're early on at something,
1:09:25
the stupid shit is obvious to you
1:09:26
because you're learning like,
1:09:27
what the hell do we do that and people go,
1:09:28
oh, yeah, actually, I never ever want to lose that.
1:09:32
And so yeah, for me, I'm spending a lot of conscious time
1:09:35
and effort trying to bring myself back to like,
1:09:36
yeah, always try to be a beginner.
1:09:38
First of all, working people connect with you.
1:09:39
Yeah, I'm following you online,
1:09:40
LinkedIn and Instagram.
1:09:42
Love to kind of connect with anyone that,
1:09:44
yeah, he's a kind of chat business.
1:09:45
So I just love this stuff, man.
1:09:47
So no, I appreciate you.
1:09:48
You were fun to chat with them.
1:09:49
What's next for you?
1:09:51
What do you want to work on?
1:09:52
Is it just building another 17 businesses or?
1:09:56
No, yeah, look, I've learned heaps from that.
1:09:59
But no, I think for me now,
1:10:01
I'm in the transitional phase of my career
1:10:04
from being a founder operator to an operator investor.
1:10:10
And so I'm operating a few businesses at the moment,
1:10:13
but I'm also investing in a whole lot.
1:10:15
And I would have thought that,
1:10:16
you know, over the next five or 10 years,
1:10:17
if I'm kind of reasonable of that,
1:10:18
I probably end up being almost exclusively an investor
1:10:21
is where I would like to end up.
1:10:24
Wildly different skill set.
1:10:25
Honestly, yeah, talk about going back to being a beginner.
1:10:29
You make a bit of money from an accident.
1:10:30
You're like, oh, cool, I'll invest that whole hold on.
1:10:32
What the hell is this?
1:10:33
Yeah, and it's like it's a completely different world,
1:10:35
but it's what I'm really passionate about.
1:10:37
And I hope that bringing the founder operator aspect
1:10:40
gives me some sort of advantage at that.
1:10:42
Other to people who are just professional investors, basically.
1:10:45
I will hope that when you figure out that craft,
1:10:48
you can come back and do another episode.
1:10:49
Yeah, we'll be back here.
1:10:51
I appreciate you so much.
1:10:52
Last thing I like to end with,
1:10:53
if you go back and tell your 20 year old self
1:10:55
the most important piece of advice you've learned,
1:10:56
why would that be?
1:10:57
Yeah, honestly, care less about what other people think.
1:11:01
Yeah, I think especially in my early 20s,
1:11:04
I was so convinced that I didn't care what other people thought.
1:11:08
Yeah, and then by my mid to late 20s, I was like,
1:11:10
oh, shit, actually, no, I really care what people think.
1:11:13
And then you get to my 30s and I'm like,
1:11:14
okay, I'm starting to get a hold of what I care,
1:11:17
you know, about other people's thoughts
1:11:18
and how I separate my own self-assessment,
1:11:21
you know, relative to that.
1:11:23
But yeah, I think like, you know, to me,
1:11:26
I think I would have done lots of other stuff faster
1:11:29
and I think would have done lots of other stuff better.
1:11:31
Yeah, if I was actually just focused on that stuff,
1:11:33
you're not focused on how other people might, you know,
1:11:35
consider all or look at that.
1:11:36
And again, you're different in every country
1:11:39
for every person, every life.
1:11:40
But for me, I definitely feel like that's saying
1:11:41
they're like, help me back from a lot of decisions,
1:11:43
not from making the decisions,
1:11:45
but from making them quickly.
1:11:46
You know, I think speed is the game of entrepreneurship.