#136 - The Soul of Business: Finding Your Ethos w/ Verne Harnish

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I think at some level when you start, if you're not putting in 120 hours a week, you're
not going to get escape velocity.

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you

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All right.

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Hey you all, thanks for tuning in today.

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I'm starting to do more formal introductions because the level of people continue to scale
up.

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So I'm personally excited.

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I hope it says beneficial for you listening today as it is for me on what I'm going to
learn and grow from.

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But our guest today is someone who's had a major impact on how businesses grow and scale.

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Vern Harness is the founder of Entrepreneurs Organization EO.

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We just had some good offline conversation about that.

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It supports over 18,000 entrepreneurs around the world.

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It totally is in line with our podcast and what we do here.

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He's the author of Scaling Up, one of the most practical business books out there for
growth minded leaders.

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spent decades helping companies get clear on strategy, people, execution and cash, and
four things that make or break a growing business.

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Today, we're going to dig into what it really takes to scale with purpose, which I'm
pumped about.

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Stay focused and build something that lasts.

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Vern, welcome to the necessary entrepreneur directly from Barcelona, huh?

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You bet.

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Mark, it's good to be on with you and so much fun chatting with you before.

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And we'll see, we'll see how much he appreciates it with the old anarchist here.

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um There are so many things here, but I want to jump right in.

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You have such a breadth of, and the reason why I'm introductions now is to give the
audience a perspective on who's sharing the information that you've garnered and what

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we're going to learn from you today.

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Cause it's always important to know if people say, Elon, we know that's the guy that
shoots off rockets and he's built these car companies that nobody said he could build.

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have context.

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So it's important to have this context.

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So I don't normally jump in on questions, but I have a big one.

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I hope it's a big one.

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And you're ready to hit this one out of the park.

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Is the key to success, because we're going to get into all the things you've learned and
you know, over the years from being around so many elite people, is the key to success a

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few non-negotiable attributes and skills that we need, or is it more attitude and mind?

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Mark, this is the genius of the end, you know, as Jim Collins would say, so you've got to
actually have both.

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There's a lot, there's a lot of folks that, hey, they want to knock it out of the park.

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as you know, Warren Buffett said, it's what we don't know that we don't know is what ends
up getting us in trouble.

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And this is why, you know, he reads 500 pages every morning.

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You know, Mark Cuban, who was involved early on when I launched YEO.

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I didn't know Mark until I read his book decades later that he commits to reading three
hours every day.

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I mean, we just think he's this amazing entrepreneur that's on 150 different companies and
all of that.

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And when I was talking to Mark about it, he's like, Hey, I'm just looking for one idea out
of that three hours.

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That's going to help one of those 150 companies.

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And, and so we know that leaders are readers, you know, leaders are learners.

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but it's helpful if you're playing to win versus playing not to lose, which is one of the
reasons why I was just with a bunch of uh YPOers and that's a combination of entrepreneurs

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and you know, what we call, you know, the second, third generation leaders and hired guns.

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And you know what entrepreneurs don't appreciate is those folks that have to take over a
family business.

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They're not starting at zero like us.

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So if we lose it all, Hey, we're just back to what we already know.

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But they, they have the family jewels that they are responsible for.

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And the pressure of that is unimaginable to an entrepreneur.

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think they were just handed this gift like Ted Leons, I mean, like Ted Turner was with his
dad's business or even Trump with his, pressure is infinite.

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So, and cause you start playing not to lose instead of playing to win.

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What do think that looks like?

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Playing not to lose versus playing to win?

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there is there practical things that we can?

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Because there's a bunch of stuff that goes through my mind over my 20 year journey, right?

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What's that look like practice?

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Well, our view is the biggest constraint.

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Look, you're always looking for the constraint.

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That's the goal of an entrepreneur is to go find the constraint and fix it.

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You know, that's what Elon does every week in each of his six companies.

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And one of the most significant constraints to success is success.

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You know, you've achieved it and now you get incremental in your thinking.

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Uh, you lose that ambition to go do something big and you've got enough to protect that
you quit playing to win.

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And so what that looks like is you're playing defense.

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Have you ever watched your favorite sports team and they're in this like big league lead,
and then they start playing prevent D.

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mean, Tom Brady counted on this, right.

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And then all he do is just pick you off 10 yards at a time.

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down the sideline and all of a sudden they actually did the research in the world cup and
86 % of the time a team had a lead and started them playing pre-vet D.

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86 % of the time they lost that match.

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So you've got to keep the pedal to the metal.

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So you're making an argument that a hockey team should pull the goalie all the time.

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It naturally, that's a, you know what, would be wanted.

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That's like the, that's like today and in NFL, you should go for the fourth down, right?

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The stats support that.

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Yeah.

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Where do you think, where do you think new thinking comes from when these things that's
been done a certain way, not just by one organization, but in an industry it's been done

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for so long.

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Is it, is it just one individual that thinks different or does something happen in
society?

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How do you think that change happens when they started going for it on fourth down, then,
then the, start talking about the analytics behind it back in the day, Billy Beane, think

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with the Oakland days, even with stats and analytics, where does that thinking come from?

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it an individual?

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Is there something happens in society?

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em Well, I don't know if you've done a psilocybin journey.

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I haven't, but I've heard them all.

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listen to Rogan's podcast.

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You can hear him talk about it every other one.

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You know, I've never done drugs, but I finally, you know, legally there's still a Simon
journey down in Jamaica, the Beckley Institute.

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And, um, you really do connect to what they call the grid.

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And you realize that, you know, Edison didn't invent the light bulb.

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He read about it.

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He just made it better.

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So I think there's a collective intelligence that kind of a group comes to the same point
on, but there ends up being somebody who kind of.

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releases it first and makes it popular.

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look, that's too deep of a question for most entrepreneurs.

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We just want to get on with, you know, solving some big problem in the world.

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But we talk about these high flying billionaires and we always invoke them.

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That's what's so fascinating though.

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Right?

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You have a Jeff Bezos, is it one day or is it day one?

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And there's something about these high flyers that they integrate one idea.

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So you start in the beginning, you just have to do one thing or have one big idea.

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I drive by here, I'm in the Midwest and in Cincinnati and they have the hub of Prime Air
here at the international airport here.

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And you drive by.

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And they acquired hundreds of acres and built the prime.

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And it's actually their main entrances day one Boulevard.

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That awesome.

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Yeah, so it's ingrained.

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There's one idea ingrained in these comp-

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Well, that's the subject of the new book I'm writing.

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And if you look at logos, pathos, ethos, head, heart, and soul, um, the question I've been
asking, uh, entrepreneurs and they don't know the answer to until we take them through a

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process.

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What is the soul of the business and what I'm discovering it's, it's deeper than the
purpose.

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The purpose ends up being hollow.

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If you don't bring soul to it.

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You don't bring this ethos, this, character, this authenticity.

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And I'm discovering that the source of that ethos, the source of that soul is something
that happened to you in childhood.

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And whereas right now we're all talking about, have to, we have to somehow or another
overcome the traumas of our childhood.

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I think this is going to be the one thing that we can celebrate in our childhood.

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And so, you know,

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A simple example is really the ethos that the soul of Apple in a word was always design.

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And that came from the famous painting the fence story where he's painting the fence for
his dad and he doesn't paint the inside.

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His dad's like, didn't you paint the inside?

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Well, nobody can see it.

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says, but you'll know.

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And later Steve obsesses about making sure that the screw heads are lined up.

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inside the devices where nobody can see.

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And that maniacal focus around this one aspect of your ability to deliver on your
products, your services and your purpose.

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And so it's been fun.

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Amy's Ice Cream was the latest one.

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I met Amy who founded Amy's Ice Cream in Austin and we found her, we figured out the soul,
we named it.

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And the minute she did,

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she knew who could maybe take over her company for her and not destroy it.

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So.

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What was their salt?

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Was that private?

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Is that secret?

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No, no, no, no.

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She, if, if anyone's been to Austin, you got to go to Amy's ice cream.

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This is, this is an institution down there.

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She and her twenties, Mark, you maybe know the story.

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She's going to go to med school and she ends up working in this ice cream store.

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And so she puts med school on hold.

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Now let's beat forward four decades later, this institution and she's lamenting.

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I'm having lunch with her lamenting that she didn't have any family members to take it
over, but she knows.

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As most entrepreneurs do you sell your company to a private equity firm or whatever.

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It's over the end.

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And by the way, the new CEO, Howard Schultz is fifth at Starbucks.

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Brian Nicolai thought said something interesting a few weeks ago.

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Said I, says, I think I know what happened.

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Starbucks lost its soul.

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He's really the first leader I've heard use that word this year.

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And so anyway, Amy's like lamenting and I hear her speak.

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She, she does a talk for this group called gathering of Titans.

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And so I sit down with her.

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said, first of all, what's your soul?

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What's the soul of Amy?

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She goes, I don't know.

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No one's ever asked me that question.

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I said, well, I think I know what it is.

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She goes, you got to be kidding.

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And to give you a little context, she said, I don't have any big purpose.

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All we want to change the world.

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I just want to have a wonderful moment.

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First of all, moment is one of the key words.

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I want every customer to, when you experience ice cream, it is a great moment.

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Not life changing, but it's a moment.

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She said, number two though, I want not just the ice cream to be that moment.

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I want everything else that we do in the store to be a part of that moment.

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She used the term other moment.

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And she said, I want that other moment to be irreverent.

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So literally her employees bust on customers.

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They will have ice cream fights in the store in front of the customers.

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There'll be ice cream dripping from this ceiling.

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And I said, Amy, the soul of your business is a reverent other moments.

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And she, I mean, I'm getting goosebumps thinking about it right now.

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Again, that moment when the light went on and then I said the, and I'm equating the soul
mark.

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to the Olympic torch, you know, and I did an AI to say, Hey, design, what would be the
cover of my book around soul?

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gave me a flame.

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And what's cool about the Olympics is the Olympic flame never goes out.

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It stays lit during and between the Olympics.

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And this is the flame that the entrepreneur, the founder, the founder mode has to tend to.

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Soul is like soil.

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We've got to tend to it or our baby, no matter what it gets, will die.

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And so I said, who Amy could carry this torch.

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And that's literally the, the image I'm using.

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Who could carry this torch forward for you?

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It's not going to be a PE firm.

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And at that moment, she goes, my niece.

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go, tell me more about her.

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She's like 20.

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She's been begging to work for the company.

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She's as irreverent as you get.

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It's why I love her.

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You know, and she's like her, like my sister, her mom.

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And I said, so she said, well, I'm telling her to stay, go to college.

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said, Amy, you chose not to go to medical school to run this ice cream shop.

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You need to go back and talk to your niece.

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Now I haven't, I haven't closed the loop to see what's going on, but that's how specific
it is.

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And just to finish it out, I think.

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You're probably maybe like me.

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bet against Apple when Steve jobs died.

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You know, everybody said it was a genius that the thousand helpers, but who carried the
torch for Steve after he died?

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Johnny Ive.

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Oh, well, from the design perspective, we could talk about focus.

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Have you heard that conversation?

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So did he carry the torch from him to Tim Cook?

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Was he the was he?

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No, Tim, my view is you can outsource, you can delegate everything, but the soul.

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And so he did that with Tim Cook.

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Tim Cook ran everything else, but Steve had lunch every day with Johnny Ive.

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Yeah.

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Steve stayed maniacally focused and

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on the

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No, even every word and every ad, it was he who designed the Apple store and cared about
every thing that was in that store.

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Johnny, have you heard Johnny?

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think he was recently, he was in England.

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I don't know which one of the elite universities, but maybe it was years ago, but it's on
YouTube.

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He talks about Steve, what he taught him about focus.

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Have you seen that?

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Yeah, it's, it's spectacular.

220
00:15:13,204 --> 00:15:20,691
And so anyway, Johnny was at Apple the next 10 years when it's market kept from 300
billion to 3 trillion.

221
00:15:20,691 --> 00:15:27,756
And then he left in 2021 and like, don't know, but usually it's about a 36 months from
idea to market.

222
00:15:28,137 --> 00:15:32,962
Apple sure hasn't kind of released anything that interesting recently.

223
00:15:32,962 --> 00:15:36,405
And you guys, you saw the announcement last week about Johnny Ives.

224
00:15:36,405 --> 00:15:37,265
Yep.

225
00:15:37,446 --> 00:15:38,104
Yep.

226
00:15:38,104 --> 00:15:40,007
So why haven't we written the book about him?

227
00:15:40,007 --> 00:15:43,252
Why hasn't Walter Isaacson written that one?

228
00:15:43,630 --> 00:15:44,670
You know what?

229
00:15:44,670 --> 00:15:46,910
He probably is in the middle of doing that.

230
00:15:46,910 --> 00:15:54,810
But now that this six and a half billion dollar purchase for 55 employees, that's, it's
insane right now.

231
00:15:54,810 --> 00:15:57,330
There's something happening back to the thing.

232
00:15:57,330 --> 00:16:03,010
I think what I've discovered is what founder mode means.

233
00:16:03,010 --> 00:16:13,790
The Brian Chesky brought to the world last year and Paul Graham is that there's the soul
that it's the fire that burns within a venture.

234
00:16:14,150 --> 00:16:17,694
And you've got to tend to it and understand it.

235
00:16:17,694 --> 00:16:27,103
we, and we have to quit beating founders up for their maniacal, micro managing ways around
this one area.

236
00:16:27,984 --> 00:16:30,386
Instead of telling them they got to let go of everything.

237
00:16:30,894 --> 00:16:36,374
So what does your brain do in this new world with the conversation around formal
education?

238
00:16:36,374 --> 00:16:38,674
You spoke to Amy, didn't go to med school.

239
00:16:38,674 --> 00:16:41,334
She talked to her niece and said, hey, do you really need to go to college?

240
00:16:41,334 --> 00:16:53,574
You spent a lot of time around these big organizations of Harvard, of MIT, and these
premier development programs about the next giants and who's going to lead the country.

241
00:16:53,574 --> 00:16:59,414
What does your brain tell you now about the moment that we're in with formal education and
higher education?

242
00:17:00,010 --> 00:17:00,370
Yeah.

243
00:17:00,370 --> 00:17:13,830
Well, you're asking me that right at a moment where my youngest 17 has flunked out
spectacularly all his classes at his boarding school, having been sort of kicked out of

244
00:17:13,830 --> 00:17:16,650
his previous boarding school.

245
00:17:16,650 --> 00:17:23,230
And I'm having a conversation with his mother yesterday and it's like, you know what?

246
00:17:23,230 --> 00:17:26,090
It's time maybe just to, it's school's not for him.

247
00:17:26,090 --> 00:17:27,174
Get him out.

248
00:17:27,350 --> 00:17:30,791
In the world, uh, do as gap year now.

249
00:17:30,831 --> 00:17:37,243
So I'm actually looking at it, take, pulling them out and say, son, you're going on the
road with me for the next year.

250
00:17:37,243 --> 00:17:41,154
And we're going to, like, we did that trip around the world for his older siblings.

251
00:17:41,734 --> 00:17:48,396
we use K12 and they did two years of school and like two hours a day.

252
00:17:48,570 --> 00:17:52,517
You know, shows you just kind of what a waste a lot of it is.

253
00:17:52,517 --> 00:17:55,848
And you've seen the moves, what, what IBM's done with P-TECH.

254
00:17:56,014 --> 00:18:00,674
hiring kids at 18, the Peter Thiel Scholars.

255
00:18:00,834 --> 00:18:08,268
And who was the latest one that just announced, who is it, the $5,400 amount internships?

256
00:18:08,268 --> 00:18:09,751
Yeah, I forget.

257
00:18:09,751 --> 00:18:14,681
heard somebody talk about it last week, but this might be in line also with, you know,
University of Austin, what they're doing down there.

258
00:18:14,681 --> 00:18:16,072
That's a whole unique.

259
00:18:16,117 --> 00:18:18,449
No tell me, what's going on there?

260
00:18:18,466 --> 00:18:27,769
Well, you know, previous to a lot of organizations getting a big shakeup, it happens
around political cycles.

261
00:18:27,769 --> 00:18:38,241
But, um, you know, what was happening for a long time, you would get these entrepreneurs
that were elite and high flying that just didn't look at the educational system as

262
00:18:38,241 --> 00:18:40,632
something they wanted to turn their kids over to.

263
00:18:41,332 --> 00:18:41,732
Right.

264
00:18:41,732 --> 00:18:45,813
Um, I'm paraphrasing it, but that's what I inferred from listening to them.

265
00:18:45,813 --> 00:18:47,946
And so they kept looking for these.

266
00:18:47,946 --> 00:18:56,665
Montessorial sort of environments to put them in to learn a different way and a few of
these entrepreneurs got together and they started a university.

267
00:18:56,665 --> 00:19:01,249
It's the University of Austin and it is a different way to teach school and college.

268
00:19:01,249 --> 00:19:02,200
You should you should look at it.

269
00:19:02,200 --> 00:19:12,040
I haven't been down there to see it in person, but when you hear them speak to it about
what they're doing, they're challenging the way that they would challenge an old way to do

270
00:19:12,040 --> 00:19:12,950
business.

271
00:19:13,069 --> 00:19:13,949
Yeah.

272
00:19:14,230 --> 00:19:18,585
And so it's not around these extended four year degrees and five and six year degrees.

273
00:19:18,585 --> 00:19:19,526
It's a new way to learn.

274
00:19:19,526 --> 00:19:23,540
So um it's interesting to see what happens in those moments.

275
00:19:23,801 --> 00:19:25,082
I think about your

276
00:19:25,494 --> 00:19:28,286
I had had drinks with him last night.

277
00:19:28,286 --> 00:19:35,999
Now I'm an investor in uh entrepreneur Christopher Palmer-Rennings venture here in
Barcelona called LearnLice.

278
00:19:36,359 --> 00:19:42,492
And after he was a venture capitalist, did some of the biggest deals in Spain, he and his
wife had three children.

279
00:19:42,492 --> 00:19:47,524
And he's like, I am not going to send them to the traditional school approach.

280
00:19:47,524 --> 00:19:53,026
And so we pulled together literally a brain trust of the top hundred thought leaders
around this space.

281
00:19:53,202 --> 00:20:01,166
And he's launched this, now he's got three campuses called Learn Life and he's building
out 10 more.

282
00:20:02,087 --> 00:20:09,006
everyone who comes to visit Mark, you're blown away that he is doing this radically
different.

283
00:20:09,006 --> 00:20:10,087
You specials about it.

284
00:20:10,087 --> 00:20:11,389
You just came off the dinner with them.

285
00:20:11,389 --> 00:20:15,295
What really hits with you that, that is really different, not just different.

286
00:20:15,295 --> 00:20:21,533
I have this idea that I only think different is good if it really makes change or move
something forward and does something better.

287
00:20:21,533 --> 00:20:23,362
That's the only time difference good to me.

288
00:20:23,362 --> 00:20:24,183
Yeah.

289
00:20:24,183 --> 00:20:30,187
You know, what it reminds me of is finally some of the best parenting advice I've ever
gotten.

290
00:20:30,187 --> 00:20:34,149
And that is you've got to play the way your child wants to play.

291
00:20:35,310 --> 00:20:37,852
And I'll just tell a quick story.

292
00:20:37,852 --> 00:20:43,696
So my oldest at the time was three and he was just a, he was a handful.

293
00:20:43,816 --> 00:20:47,718
And I knew it because I wasn't really being the father.

294
00:20:48,159 --> 00:20:52,632
And part of it came down to is he'd want to play Thomas the train.

295
00:20:52,632 --> 00:20:54,103
And I'm a mechanical engineer Mark.

296
00:20:54,103 --> 00:20:57,455
So I know how trade tracks are supposed to be put together.

297
00:20:57,455 --> 00:20:58,325
Right.

298
00:20:58,345 --> 00:21:00,586
So I'm like taking control.

299
00:21:00,586 --> 00:21:04,459
I'm like, no son, that's not how you let's hook this.

300
00:21:04,459 --> 00:21:11,733
And so then I, I go to this white PO van and I hear this, you got to play the way your
child wants to play.

301
00:21:12,234 --> 00:21:13,834
I'm like, my gosh.

302
00:21:13,834 --> 00:21:16,816
So I go home and like, Hey, let's play Tom.

303
00:21:16,816 --> 00:21:17,887
You want to play Thomas's training?

304
00:21:17,887 --> 00:21:18,497
Yeah, dad.

305
00:21:18,497 --> 00:21:20,278
Um, all right, go.

306
00:21:20,494 --> 00:21:23,594
And I let him put the track together way he wanted to.

307
00:21:23,594 --> 00:21:25,154
Which train would you want me to be?

308
00:21:25,154 --> 00:21:27,154
You always want me to be perfect.

309
00:21:27,594 --> 00:21:31,234
Um, that was transformational.

310
00:21:31,234 --> 00:21:35,234
And I do these crazy dumb dad musings to my kids every Sunday.

311
00:21:35,274 --> 00:21:44,174
I literally wrote about this on Sunday, uh, to them now that it's, you know, 25 years
later and he's getting ready to get married next weekend.

312
00:21:44,514 --> 00:21:48,754
Um, so what learn life I think really ultimately is.

313
00:21:48,992 --> 00:21:57,084
Is let the child learn the way and learn what they want to learn when they want to learn
it.

314
00:21:57,244 --> 00:22:03,866
Nobody had, as Christopher said last night, nobody had to teach a child how to speak.

315
00:22:04,367 --> 00:22:07,427
Nobody really had to teach a child how to walk.

316
00:22:07,807 --> 00:22:14,079
They figure it out if you will just give them a supportive environment in order to do it.

317
00:22:14,079 --> 00:22:17,000
So that's, that's the essence of

318
00:22:17,518 --> 00:22:20,841
Yeah, it sounds like you just have to be there to make them believe and tell them they
can.

319
00:22:22,370 --> 00:22:22,850
Yeah.

320
00:22:22,850 --> 00:22:27,033
So we helped open up the other crazy schools called Sudbury.

321
00:22:27,033 --> 00:22:28,914
It's out of Massachusetts.

322
00:22:29,135 --> 00:22:43,445
And literally they have a story where they had a kid who just fished for 15 years, but
everything he needed to learn the math around that, the language around that, the stories

323
00:22:43,765 --> 00:22:46,777
all came from him just fishing for 15 years.

324
00:22:46,777 --> 00:22:51,080
This, know it sounds anarchist, but

325
00:22:53,854 --> 00:23:00,774
Um, do you think that's an approach that we should take more just to really go all in and
go deep and be singularly focused on?

326
00:23:00,774 --> 00:23:02,240
It seems boring.

327
00:23:02,762 --> 00:23:03,852
One thing.

328
00:23:04,642 --> 00:23:06,743
Well, let's, let's bring it back to entrepreneurs.

329
00:23:06,743 --> 00:23:11,264
So, um, he just re-released his book, Pete Martin.

330
00:23:11,264 --> 00:23:13,395
Have you had a chance to have Pete on there?

331
00:23:13,395 --> 00:23:14,725
So Pete's out of Cleveland.

332
00:23:14,725 --> 00:23:26,988
He, um, has a book called scaling up, scale up faster and what he did, he really did a Jim
Collins like piece of research with the Inc 5000 database.

333
00:23:27,309 --> 00:23:31,270
And he wanted to look at what did the companies do that were not venture backed?

334
00:23:31,270 --> 00:23:32,718
Um,

335
00:23:32,718 --> 00:23:37,078
that were able to get to a hundred million in valuation the quickest.

336
00:23:37,198 --> 00:23:39,698
So that was the, that was the question.

337
00:23:40,238 --> 00:23:53,618
And one of the findings that really struck me, Mark, is that those are the companies that
got to a hundred million valuation quickest, sold only one thing and they sold it only one

338
00:23:53,618 --> 00:23:54,418
way.

339
00:23:54,738 --> 00:23:56,238
That was it.

340
00:23:56,398 --> 00:23:58,898
And you know, I think about, was,

341
00:23:58,988 --> 00:23:59,658
I was lucky.

342
00:23:59,658 --> 00:24:04,531
was, uh, I think I'm still on the masthead is the venture column is for fortune magazine.

343
00:24:04,531 --> 00:24:15,508
But anyway, decades ago, I happened to be at the fortune offices when the Google boy
showed up and folks don't remember, but the original name was back route.

344
00:24:15,508 --> 00:24:18,333
You know, I rub your back, you rub my back.

345
00:24:18,333 --> 00:24:19,870
We're going to use that comment.

346
00:24:20,050 --> 00:24:23,512
And they're like, we want to show you our new thing.

347
00:24:24,153 --> 00:24:26,674
And so we're like, pull up the website.

348
00:24:27,020 --> 00:24:27,430
Right.

349
00:24:27,430 --> 00:24:28,731
That, was the cool thing right there.

350
00:24:28,731 --> 00:24:30,212
It was doing websites.

351
00:24:30,632 --> 00:24:36,515
They pull up the website and all that was there was the box.

352
00:24:36,576 --> 00:24:42,979
Didn't even say Google above it was just a box and a white screen.

353
00:24:43,800 --> 00:24:47,843
And it blew us away and think about it.

354
00:24:47,843 --> 00:24:49,403
One box.

355
00:24:49,904 --> 00:24:54,056
Created a company that's two trillion in valuation.

356
00:24:54,638 --> 00:24:56,893
it was everything that was behind the box, right?

357
00:24:57,186 --> 00:25:03,753
Yeah, but it did just one thing and they really marketed it one way.

358
00:25:03,753 --> 00:25:08,488
So that's something I've been trying to absorb myself more.

359
00:25:09,134 --> 00:25:22,972
So you touched on, we touched on doing things one way, but then he also went into, you
spoke about, um he went in and took that the uh Inc 5000 and what the ones that made a

360
00:25:22,972 --> 00:25:25,243
hundred million or more had in common.

361
00:25:26,725 --> 00:25:28,846
Yeah.

362
00:25:28,846 --> 00:25:35,370
So that goes back to, you know, the idea of one of the books that you wrote years ago,
right?

363
00:25:35,370 --> 00:25:36,330
About.

364
00:25:36,704 --> 00:25:39,599
only a few companies succeeding and the rest don't.

365
00:25:39,981 --> 00:25:45,222
The paraphrase of the topic, but I just broke it down to the average simple-minded people
like me, right?

366
00:25:45,222 --> 00:25:46,674
What...

367
00:25:51,362 --> 00:25:53,787
how do a few make it and the rest don't?

368
00:25:53,982 --> 00:25:57,638
Because that's what we're talking about here about the valuations of 100 million too.

369
00:25:58,028 --> 00:25:58,659
Yeah.

370
00:25:58,659 --> 00:26:08,345
Well, so our, our work, by the way, in our framework, people strategy, execution, cast
that you shared, isn't something that I made up.

371
00:26:08,446 --> 00:26:19,193
You know, it's something that Michael Porter who bear Jolie who turned around Best Buy and
even IDEO, you know, who's launched a hundred companies and supporting another hundred

372
00:26:19,193 --> 00:26:21,114
found that.

373
00:26:21,215 --> 00:26:22,896
Look, there are four decisions.

374
00:26:22,896 --> 00:26:23,717
You got to get right.

375
00:26:23,717 --> 00:26:25,698
There are four jobs of a CEO.

376
00:26:26,146 --> 00:26:31,466
The job of the owners to dry valuation and then choose who's going to be the CEO.

377
00:26:31,466 --> 00:26:36,249
And by the way, a lot of business owners out there need to fire one of those people, by
the way.

378
00:26:36,389 --> 00:26:50,233
And, um, and you've got to get what IDEO found is when they asked the question, which one
of those four mattered the most when they had analyzed what deals succeeded and what deals

379
00:26:50,233 --> 00:26:51,206
failed.

380
00:26:51,206 --> 00:26:52,823
And they found two interesting things.

381
00:26:52,823 --> 00:26:56,094
First, all four mattered equally.

382
00:26:56,162 --> 00:26:58,163
Man, you're missing one of those.

383
00:26:58,683 --> 00:27:01,385
And it's like a four legged table.

384
00:27:01,385 --> 00:27:02,886
That thing falls over.

385
00:27:02,886 --> 00:27:16,493
ah And what happens is a lot of entrepreneurs are really good at like one of those areas
and they don't backfill like their ability to really understand um how to utilize capital,

386
00:27:16,513 --> 00:27:25,238
which is the kind of the cash area is probably one of the biggest weaknesses of
entrepreneurs and why we get our heads handed to us by private equity firms and others.

387
00:27:25,346 --> 00:27:29,188
But then IDO found one other mark and I had to go back and edit my books.

388
00:27:29,188 --> 00:27:35,030
Uh, as a result, they said, but they found one that Trumped the other four.

389
00:27:35,330 --> 00:27:36,731
And I'm like, all right, what is it?

390
00:27:36,731 --> 00:27:38,972
Market timing.

391
00:27:39,312 --> 00:27:43,614
know, the market makes you look smart or the market makes you look dumb.

392
00:27:43,614 --> 00:27:47,956
said they had launched a company that should have been YouTube, but it was too early.

393
00:27:47,956 --> 00:27:51,447
We didn't have the devices that made it easy to record.

394
00:27:51,447 --> 00:27:53,058
didn't have the bandwidth.

395
00:27:53,058 --> 00:27:54,028
There's

396
00:27:54,232 --> 00:27:57,887
There's a timing, like a wave, you've got to catch.

397
00:27:57,988 --> 00:28:01,855
so part of it is luck.

398
00:28:01,855 --> 00:28:05,480
And that's why Jim Collins studied the role of luck.

399
00:28:06,070 --> 00:28:12,810
So can we get as entrepreneurs, can we evaluate this timing or it's just going to be the
roll of the dice, even if it's a great idea.

400
00:28:13,270 --> 00:28:14,030
No, you know what?

401
00:28:14,030 --> 00:28:24,696
So my old mentor, my mentor, Joe Mancuso decades ago, he said, all you have to do is
analyze the trend of newsletters.

402
00:28:24,696 --> 00:28:35,402
Um, if you want to predict what industry is going to be hot next, look at a trend of what
newsletters pop up first, first newsletters.

403
00:28:35,402 --> 00:28:39,524
Then those newsletters would turn into a magazine, a publication.

404
00:28:39,645 --> 00:28:42,369
And then those publications would turn into.

405
00:28:42,369 --> 00:28:43,677
industries.

406
00:28:43,960 --> 00:28:44,963
Shall we frame that now?

407
00:28:44,963 --> 00:28:47,029
What's that look like now with the new age of tech?

408
00:28:47,029 --> 00:28:50,920
What is the new newsletter and then the new publication?

409
00:28:51,146 --> 00:28:55,546
I think podcasts and other media like that.

410
00:28:55,546 --> 00:29:00,213
I think if you would take AI and ask AI what's going to be...

411
00:29:00,213 --> 00:29:02,574
Well, by the way, let me get right to that point.

412
00:29:03,175 --> 00:29:06,517
So what's the largest movie studio in the world now?

413
00:29:09,878 --> 00:29:12,849
Netflix, 20 billion year.

414
00:29:12,849 --> 00:29:13,229
Why?

415
00:29:13,229 --> 00:29:17,260
Not, not the standard guys because they've got the data.

416
00:29:17,260 --> 00:29:24,222
They know what we're watching, when we're watching it, who we're watching, how far we
watched in, da da da da da.

417
00:29:24,222 --> 00:29:26,282
So we have a client.

418
00:29:26,302 --> 00:29:29,043
Let's bring it down to mere mortal status.

419
00:29:29,343 --> 00:29:33,724
we have a client, COE distributing out of Pittsburgh, Pennsylvania.

420
00:29:33,845 --> 00:29:35,735
They distribute office furniture.

421
00:29:35,735 --> 00:29:39,726
They're now one of the largest in the United States.

422
00:29:39,894 --> 00:29:49,902
And one of the things that JD Ewing had the university of Pittsburgh data analytics, a
group of students create for him four years ago.

423
00:29:49,902 --> 00:29:56,047
And by the way, if you looked at AI that would AI years, that would be like 28 years dog
years ago.

424
00:29:56,468 --> 00:29:57,358
Yeah, exactly.

425
00:29:57,358 --> 00:29:58,229
Exactly.

426
00:29:58,229 --> 00:30:04,473
And he said, Hey, if Netflix can predict what movie's going to be hot.

427
00:30:05,115 --> 00:30:09,678
said, the biggest thing we have our challenges predicting what's going to be the hot.

428
00:30:09,678 --> 00:30:16,418
furniture color, what's going to be the right fabric color, what's going to be the right
design for 2025.

429
00:30:16,418 --> 00:30:22,618
And by the way, you can go to a site, codistributingcoedistributing.com and look at what's
new for 2025.

430
00:30:23,438 --> 00:30:31,778
That is AI that is now driving those decisions and is even then creating the images.

431
00:30:31,778 --> 00:30:35,158
He used to have to mock up the furniture and do photo shoots.

432
00:30:35,158 --> 00:30:36,578
It's creating the videos.

433
00:30:36,578 --> 00:30:39,074
It's creating the script and

434
00:30:39,074 --> 00:30:46,161
He's a mere mortal like us, not, you know, a meta or any of those companies.

435
00:30:46,161 --> 00:30:49,834
And so it's that ability to predict is what Dr.

436
00:30:49,834 --> 00:30:52,666
Deming said was the number one job of the leader.

437
00:30:52,787 --> 00:30:54,488
you don't have to be months ahead.

438
00:30:54,488 --> 00:30:56,710
You just have to be minutes ahead.

439
00:30:56,710 --> 00:30:59,212
And so that's where I think we come back to.

440
00:30:59,212 --> 00:31:01,574
You got to, you got to see the wave and catch it.

441
00:31:01,676 --> 00:31:04,826
Why is it just one step ahead?

442
00:31:04,826 --> 00:31:08,005
Why is the job of leader to be?

443
00:31:09,696 --> 00:31:13,024
A highly predictive and capable per why is that the thing?

444
00:31:13,603 --> 00:31:14,385
Well.

445
00:31:16,930 --> 00:31:18,447
No one's ever asked me that question.

446
00:31:18,447 --> 00:31:21,247
It's always, I thought the answer was obvious, Mark.

447
00:31:22,222 --> 00:31:25,016
I don't think it is because you're talking to a mere mortal here.

448
00:31:25,016 --> 00:31:25,296
Yeah.

449
00:31:25,296 --> 00:31:25,476
Yeah.

450
00:31:25,476 --> 00:31:25,696
Yeah.

451
00:31:25,696 --> 00:31:25,877
Yeah.

452
00:31:25,877 --> 00:31:26,167
Yeah.

453
00:31:26,167 --> 00:31:36,224
So, you know, you just, man, if you could have guessed the bell bottoms were going to be
hot and were first in the market with bell bottoms, and then all you want to do is wait

454
00:31:36,224 --> 00:31:39,215
for bell bottoms to come back in fashion.

455
00:31:39,256 --> 00:31:42,297
think it's just, that's the same.

456
00:31:44,679 --> 00:31:54,722
You're just, you're just ahead of the game or you created the game that you can be the
head of, which was, you know, the magic of the Steve jobs of the world.

457
00:31:54,722 --> 00:32:05,306
You know, we didn't know we needed an iPad, every, I mean, iPod, but everyone says that,
but what he was brilliant at, and this is what we teach entrepreneurs is the single most

458
00:32:05,306 --> 00:32:07,567
important strategy question.

459
00:32:07,567 --> 00:32:09,708
And I think it's all about getting the right question.

460
00:32:09,708 --> 00:32:10,839
It starts with strategy.

461
00:32:10,839 --> 00:32:16,331
That's your number one job entrepreneur is you set strategy and what is strategy?

462
00:32:16,331 --> 00:32:18,191
It's answering one question.

463
00:32:18,452 --> 00:32:23,344
What is the job to be done by your product or service by the customer?

464
00:32:23,344 --> 00:32:24,042
So.

465
00:32:24,042 --> 00:32:28,723
If Steve jobs had just shown us this iPod, we're like, why do I need that?

466
00:32:28,723 --> 00:32:30,784
But what was the job to be done?

467
00:32:31,222 --> 00:32:34,765
A thousand songs in your pocket.

468
00:32:34,785 --> 00:32:38,806
Now I knew why I had to have it.

469
00:32:38,806 --> 00:32:42,367
My Walkman is on my pocket, not in it.

470
00:32:42,367 --> 00:32:44,507
It's holding an album.

471
00:32:44,928 --> 00:32:47,609
want a thousand songs in my pocket.

472
00:32:47,609 --> 00:32:48,549
Boom.

473
00:32:48,549 --> 00:32:53,420
And, entrepreneurs, the ones who were able to articulate that and deliver.

474
00:32:53,864 --> 00:32:57,497
on that clearly stated job to be done like ours.

475
00:32:57,497 --> 00:33:05,162
We finally got clear after 25 years, Mark, our job is to help 10X the valuation of the
business.

476
00:33:05,162 --> 00:33:10,595
Yeah, revenue, profit, make it easier, get rid of drama, blah, blah, blah, blah, blah.

477
00:33:10,595 --> 00:33:15,909
But no, we have one job and that is help you 10X the valuation of the business.

478
00:33:15,909 --> 00:33:17,464
And we do it every day.

479
00:33:17,464 --> 00:33:18,935
Hey, thanks for tuning in.

480
00:33:18,997 --> 00:33:24,406
If you like these types of conversations, be sure to follow the necessary entrepreneur on
your favorite platform.

481
00:33:24,406 --> 00:33:26,908
So you never miss out on future content.

482
00:33:27,090 --> 00:33:30,072
Through what entity is that for these clients that you have?

483
00:33:30,072 --> 00:33:30,863
They're scaling up.

484
00:33:30,863 --> 00:33:37,112
That's our global coaching organization, 300 partners, six continents kind of stuff.

485
00:33:37,112 --> 00:33:38,477
Those events looked awesome.

486
00:33:38,477 --> 00:33:43,954
tell you what, whether we call it COVID, whether we call it pandemic, you had them really
rolling through 2019.

487
00:33:44,226 --> 00:33:51,518
We did, we did and having to go online like everybody else did, we were there to support.

488
00:33:52,638 --> 00:34:01,678
I go back to you had a conversation and you can go out on YouTube and find it you had a
conversation

489
00:34:03,434 --> 00:34:08,618
with the founder, if not the founder, the CEO of the container store.

490
00:34:09,219 --> 00:34:11,782
In a conversation with him, I believe it was 2019.

491
00:34:11,782 --> 00:34:13,974
I believe it might've been before.

492
00:34:13,974 --> 00:34:15,524
You probably know in your head.

493
00:34:15,685 --> 00:34:21,620
And he talked about oh the value of people.

494
00:34:23,406 --> 00:34:31,528
And how to identify talent and that he could do what most of us would consider overpaying
them.

495
00:34:31,528 --> 00:34:38,130
But the return he talked about the pay should just be tracked based upon just a percentage
of revenue or percentage of sales.

496
00:34:38,330 --> 00:34:40,001
And then you asked him a question.

497
00:34:40,001 --> 00:34:40,621
He spoke.

498
00:34:40,621 --> 00:34:42,451
said, Hey, look at what Costco does.

499
00:34:42,451 --> 00:34:46,872
They pay their people 50 % more than their competitors and look at the performance in
sales.

500
00:34:46,872 --> 00:34:50,063
Um, so he has the idea.

501
00:34:50,063 --> 00:34:52,631
It's, it's similar to what a wrench of Richard Branson is.

502
00:34:52,631 --> 00:34:55,222
take care of your people, they'll take care of the customers.

503
00:34:55,303 --> 00:35:00,685
I try to poke holes in that all day long, I try to, but is this still just about the
people?

504
00:35:00,685 --> 00:35:08,830
All these ideas, just, it seems like we make it so complex when we should be making it
simple.

505
00:35:09,490 --> 00:35:15,053
Is it just about people and these human connections and what we're doing together?

506
00:35:15,053 --> 00:35:16,874
And is it about the people?

507
00:35:17,228 --> 00:35:18,098
Yeah.

508
00:35:18,319 --> 00:35:18,619
Yeah.

509
00:35:18,619 --> 00:35:20,781
There's a lot to unpack there.

510
00:35:20,781 --> 00:35:23,063
First, rest its soul.

511
00:35:23,063 --> 00:35:26,636
You saw a few weeks ago, Container Store just declared bankruptcy.

512
00:35:26,636 --> 00:35:27,542
It's wild.

513
00:35:27,542 --> 00:35:39,157
You want to, you want to talk about whoever bought them from Kip and Garrett, the
co-founders probably stripped this very soul out of the business and the rest is history.

514
00:35:39,157 --> 00:35:45,832
Um, and remember what their fundamental ideas that one great person can replace three
good.

515
00:35:46,382 --> 00:35:50,401
And by the way, that's the same with CEOs of companies.

516
00:35:50,401 --> 00:35:56,562
Fortune found that with the Fortune 500 last year, there's a group of companies that
outperformed the rest by a factor of three.

517
00:35:56,562 --> 00:35:59,222
You got a credit or not the CEO.

518
00:36:01,102 --> 00:36:02,062
and you're right.

519
00:36:02,062 --> 00:36:08,622
We're all in the same business, which is how do we organize people to serve other people?

520
00:36:08,622 --> 00:36:10,982
Now, fortune added to it last week.

521
00:36:11,402 --> 00:36:15,442
We got to now figure out how we organize people plus AI agents.

522
00:36:15,618 --> 00:36:20,682
You know, it's AI plus a player is one of my latest columns and chief executive magazine.

523
00:36:20,682 --> 00:36:23,784
But let me, let me provide a little bit of clarity.

524
00:36:24,205 --> 00:36:39,197
So August 19th, 2019, the business round table met the top 200 kind of CEOs and said,
maybe for the first time in 22 years, we should update the job of a company.

525
00:36:39,338 --> 00:36:43,380
And up to that point, it was to serve the shareholders.

526
00:36:44,161 --> 00:36:45,144
Exclusively.

527
00:36:45,144 --> 00:36:46,575
There was no mention of customers.

528
00:36:46,575 --> 00:36:47,876
There was no mention of employees.

529
00:36:47,876 --> 00:36:49,457
There was no mention of community.

530
00:36:49,457 --> 00:36:51,158
So they said, we're going to change that.

531
00:36:51,158 --> 00:36:56,961
Now it's customers, employees, shareholders, community, the stakeholder model.

532
00:36:57,242 --> 00:37:01,765
At that moment, I emailed John Cotter at Harvard.

533
00:37:01,765 --> 00:37:05,366
I go, John, you got to either be laughing or crying.

534
00:37:05,767 --> 00:37:07,167
And here's why.

535
00:37:07,414 --> 00:37:11,020
40 years ago, he did the piece of research.

536
00:37:11,020 --> 00:37:17,573
It was a four year study over 11 years, looked at over 200 companies to answer one
question.

537
00:37:17,793 --> 00:37:20,774
Was it the companies who put the employees first?

538
00:37:20,794 --> 00:37:23,956
Did they outperform the companies who put the customer first?

539
00:37:23,956 --> 00:37:27,876
Or did they outperform the companies who put the shareholder first?

540
00:37:28,378 --> 00:37:32,059
And right now, lately I've been having my audience raise their hands.

541
00:37:32,059 --> 00:37:34,210
Nobody, by the way, says shareholder anymore.

542
00:37:34,210 --> 00:37:37,681
That would just would not be politically correct.

543
00:37:37,762 --> 00:37:39,082
I'll get about.

544
00:37:39,542 --> 00:37:50,568
A third of the audience, says customer, and that would be kind of uh a, Fred Reich held
net promoter score fact that companies that have the highest net promoter score in their

545
00:37:50,568 --> 00:37:56,591
industry outperformed the competition by a factor of 5.5 in terms of growth evaluation.

546
00:37:56,591 --> 00:37:57,972
that's significant.

547
00:37:58,493 --> 00:38:08,618
then two thirds of the audience says it's employees, you know, they've kind of come around
and then I asked, but how many you think it's a trick question and.

548
00:38:08,940 --> 00:38:17,157
What, and it is what John Carter's research found is there was a handful of companies that
treated all three equally.

549
00:38:17,157 --> 00:38:23,582
So yes, it comes down to the people, it's everybody employed back to the suppliers.

550
00:38:23,682 --> 00:38:35,813
The reason Dell did what it did, Michael Dell was able to do what he did taught by Tom
Meredith was because they focused on taking care of their suppliers in a way that nobody

551
00:38:35,813 --> 00:38:37,934
else in the industry did.

552
00:38:37,994 --> 00:38:41,651
as well as their employees and their customers and their shareholders.

553
00:38:41,651 --> 00:38:48,453
So here's the sad news entrepreneurs, you have to keep everybody happy.

554
00:38:48,682 --> 00:38:50,188
So why would we do this?

555
00:38:50,188 --> 00:38:51,952
What is wrong with us?

556
00:38:52,718 --> 00:38:53,068
Yeah.

557
00:38:53,068 --> 00:38:55,899
And by the way, entrepreneurs generally don't like people.

558
00:38:55,899 --> 00:39:05,922
I mean, our view is we would love our business if we didn't have employees or customers
interrupting our grand visions for what it is that we want to accomplish.

559
00:39:05,922 --> 00:39:12,384
The reality is we need to do it through and with people and AI moving forward.

560
00:39:12,384 --> 00:39:13,724
Why did we do it?

561
00:39:14,484 --> 00:39:21,582
Back to because there's a problem we see there's a opportunity.

562
00:39:21,582 --> 00:39:24,582
to grab, we're unemployable.

563
00:39:24,582 --> 00:39:27,382
And so let's go fix it.

564
00:39:27,382 --> 00:39:32,202
We, we, we make the change that's necessary in the world.

565
00:39:33,842 --> 00:39:35,865
None of that.

566
00:39:35,865 --> 00:39:37,187
No, we're not.

567
00:39:37,187 --> 00:39:39,201
Everybody else keeps the systems together.

568
00:39:39,201 --> 00:39:43,856
It's like the engines are fired and the flame is carried by these entrepreneurs to your
point.

569
00:39:43,856 --> 00:39:44,176
right.

570
00:39:44,176 --> 00:39:45,988
That is the soul.

571
00:39:46,288 --> 00:39:48,326
Something happened in childhood.

572
00:39:48,326 --> 00:39:52,133
I was with an Indian entrepreneur founder.

573
00:39:52,313 --> 00:39:57,698
identified the moment in her life that ignited this flame.

574
00:39:57,698 --> 00:40:04,324
The company has 1,700 employees going to 30,000 now uh in India.

575
00:40:04,324 --> 00:40:07,145
But yes, we ignite a flame.

576
00:40:08,270 --> 00:40:09,876
Alright, so another question.

577
00:40:12,940 --> 00:40:22,727
Are there a few questions that every CEO, we talked about the four categories, that's
important to answer the question, but is it, are there a few questions that every CEO,

578
00:40:22,727 --> 00:40:26,974
founder, entrepreneur, even though we put them together in the beginning, they're the same
person.

579
00:40:28,738 --> 00:40:34,422
Are there a few questions that that person with all those roles needs to ask themselves
that are essential?

580
00:40:34,443 --> 00:40:38,316
Or is it more important for them to tell themselves a few things?

581
00:40:42,306 --> 00:40:45,769
Well, that is the idea of the lean startup.

582
00:40:45,769 --> 00:40:50,934
know, Eric Kreese got that right, which he really got from, you know, blank.

583
00:40:50,934 --> 00:40:52,486
I forgot just his first name.

584
00:40:52,486 --> 00:40:55,278
I just went blank on it on blanks first name.

585
00:40:55,629 --> 00:40:58,299
We back doing comedy, is that what we're doing?

586
00:40:58,648 --> 00:41:00,859
Yeah, bad, some bad comedy for sure.

587
00:41:00,859 --> 00:41:14,346
But, um, that that's what, um, Brad felt discovered when he co-founded tech stars that
Silicon Valley and he was a student of mine back at that MIT program I launched for EO or

588
00:41:14,346 --> 00:41:23,931
YEO back in 9192 is that Silicon Valley was taken two years and wasting 2 million to
create something that nobody wanted.

589
00:41:24,392 --> 00:41:27,534
And, and there's a lot of entrepreneurs that do that.

590
00:41:27,534 --> 00:41:28,934
And that's why they end up.

591
00:41:28,972 --> 00:41:30,803
Like not making it.

592
00:41:31,003 --> 00:41:37,265
And that's when he said, look, I think you can get it done in two months and 20,000
instead of two years and 2 million.

593
00:41:37,265 --> 00:41:40,506
And that's why he launched tech stars, co-founded it.

594
00:41:40,527 --> 00:41:49,930
And that was that idea that you've got to be in rapid dialogue with the customer of
whatever it is that you're creating.

595
00:41:49,931 --> 00:41:56,393
And, ultimately we think, and that's a measure of intelligence is we have the answers.

596
00:41:56,393 --> 00:41:57,844
It's the question we do not know.

597
00:41:57,844 --> 00:41:59,144
And you've got to get.

598
00:41:59,182 --> 00:42:00,442
The question's right.

599
00:42:00,442 --> 00:42:03,162
So our work is really about just what you said.

600
00:42:03,162 --> 00:42:07,762
And there are four key questions you got to get right around people's strategy, execution,
cap.

601
00:42:07,762 --> 00:42:11,302
Strategy question being, what is the job to be done?

602
00:42:11,302 --> 00:42:13,082
And that was Clay Christensen at Harvard.

603
00:42:13,082 --> 00:42:14,402
Let me give him a nod.

604
00:42:14,402 --> 00:42:16,502
He's the one that popularized that question.

605
00:42:16,502 --> 00:42:20,722
But until you understand the real answer to that, you don't know what to do next.

606
00:42:20,722 --> 00:42:21,922
You don't know where to innovate.

607
00:42:21,922 --> 00:42:24,622
You don't know where to move forward.

608
00:42:24,622 --> 00:42:27,162
So you got to get that question right first.

609
00:42:28,398 --> 00:42:38,638
So when I consistently listen to, you know, Mark Andre said, and all these people from,
you know, VC this world, a guy listening to him.

610
00:42:39,258 --> 00:42:43,178
Um, I don't know if I share any of these things that we try to have as identifiable.

611
00:42:43,178 --> 00:42:43,898
we agree with them?

612
00:42:43,898 --> 00:42:45,738
That guy is just brilliant.

613
00:42:47,058 --> 00:42:48,598
He's just next level brilliant.

614
00:42:48,598 --> 00:42:56,458
But I think I don't want to put words in his mouth, but him and a few others, they don't
necessarily fund the idea and the company.

615
00:42:56,638 --> 00:42:58,278
They fund the individual.

616
00:43:02,441 --> 00:43:03,826
What do you think about

617
00:43:04,578 --> 00:43:15,988
Yeah, it's well, so Brad fell that again, he he's not the one who created this, but he's
the one that said you've got to it's got to pass the three ass test.

618
00:43:16,550 --> 00:43:20,833
You know, you've got to be going after a big ass problem.

619
00:43:21,074 --> 00:43:27,660
And so, yeah, I'm going to I'm going to fund the person, but the person's bringing
something big.

620
00:43:27,660 --> 00:43:29,760
um

621
00:43:29,760 --> 00:43:38,156
I, there's no way I could have gotten the Reagan administration and president Reagan
himself on board with the association of collegiate entrepreneurs.

622
00:43:38,156 --> 00:43:39,857
launched in 82.

623
00:43:39,857 --> 00:43:48,382
If I said I'm, launching a student group at Wichita State University, but I'm going to
build the world's largest entrepreneur organization.

624
00:43:48,543 --> 00:43:59,890
Then I got Reagan and Steve jobs and Michael Dell and ink magazine and venture to all sign
on to a student at Wichita State University.

625
00:44:00,014 --> 00:44:02,775
So I think first you got to go after something big.

626
00:44:02,955 --> 00:44:07,517
Number two, he said, you got to have a kick ass solution.

627
00:44:07,557 --> 00:44:14,791
So yeah, I've got to see that that person has got a different angle on solving that big
ass problem.

628
00:44:14,791 --> 00:44:19,282
And then you've got to have the term is smart ass team.

629
00:44:19,303 --> 00:44:26,846
And it's generally not just the person, you know, what movie we are on like oceans, 28,000
or something like that, but you know,

630
00:44:27,086 --> 00:44:28,652
Ocean 13, I think.

631
00:44:28,652 --> 00:44:29,683
Yeah, I don't know.

632
00:44:29,683 --> 00:44:30,334
don't know.

633
00:44:30,334 --> 00:44:37,372
it's this idea that you just got to get the old gang back together and figure out which
bank you're going to rob next.

634
00:44:38,211 --> 00:44:39,475
So that's talking about talent.

635
00:44:39,475 --> 00:44:40,642
I mean, that's what that is.

636
00:44:40,642 --> 00:44:45,665
Well, it's usually the person is bringing with them their team.

637
00:44:46,286 --> 00:44:47,427
It's not just them.

638
00:44:47,427 --> 00:44:50,610
And so those are the three that I think they really look at.

639
00:44:50,610 --> 00:44:56,584
It's of course, it's easy to say we invest in the person, but I think all three of those
have to be there.

640
00:44:56,706 --> 00:44:57,267
Yeah.

641
00:44:57,267 --> 00:45:06,173
Because you know, Steve, if you read the book, um, since you knew him so, so well, or you
got to know him through, you know, which tall state and well, think there's, but there's

642
00:45:06,173 --> 00:45:07,384
so much information now.

643
00:45:07,384 --> 00:45:10,716
think you can, there's so much out there about the gurus now.

644
00:45:10,716 --> 00:45:14,599
It's as if you know them, if you study them the right way.

645
00:45:14,599 --> 00:45:22,455
And so he hated professional leadership because what happened when, you know, they
convinced him to step aside and they provide and brought in the professional CEO from

646
00:45:22,455 --> 00:45:22,855
Pepsi.

647
00:45:22,855 --> 00:45:24,236
And so

648
00:45:25,080 --> 00:45:26,495
That's a big question about talent.

649
00:45:26,495 --> 00:45:30,386
Does the talent in the previous experience apply to this thing as well?

650
00:45:32,130 --> 00:45:35,631
I'm what I'm that's, that's what I'm looking into.

651
00:45:35,631 --> 00:45:47,894
And what I'm con concluding is if the venture you're going into next can benefit from that
same soul that you put in the previous venture.

652
00:45:47,894 --> 00:45:51,255
So who, who I learned this from was Wayne Hazanga.

653
00:45:51,255 --> 00:45:54,056
know, prior to Elon.

654
00:45:55,496 --> 00:46:01,846
Well, he was, he's the only guy till Elon that built three multi-billion dollar plus
public companies.

655
00:46:01,846 --> 00:46:09,511
and three different industries, waste management, hauling waste, renting videos,
blockbuster, and selling cars, auto nation.

656
00:46:09,672 --> 00:46:14,154
And my second article I ever did for fortune was called grow where you're planted.

657
00:46:14,215 --> 00:46:20,279
Because Frank Carney, co-founder of Pizza Hut, sells to Pepsi.

658
00:46:20,279 --> 00:46:23,501
He then tries fast casual Chinese.

659
00:46:23,501 --> 00:46:25,322
That loses half as well.

660
00:46:25,322 --> 00:46:28,485
He then tries fast casual Mexican.

661
00:46:28,485 --> 00:46:31,016
That lost the other half of his wealth.

662
00:46:31,308 --> 00:46:34,459
And here's a guy that co-founded pizza hut.

663
00:46:34,519 --> 00:46:36,640
There's now broke.

664
00:46:36,640 --> 00:46:39,702
I'm like, how does that happen?

665
00:46:39,702 --> 00:46:42,503
That somebody that talented blows it.

666
00:46:42,503 --> 00:46:45,924
And by the way, that's more the head.

667
00:46:45,924 --> 00:46:47,745
That's more the track record.

668
00:46:47,745 --> 00:46:48,505
Yeah.

669
00:46:48,505 --> 00:46:54,128
Then got it back by becoming the second largest red franchisee of Papa John's pizza.

670
00:46:54,128 --> 00:46:58,740
So his core competency was around pizza.

671
00:46:58,740 --> 00:46:59,850
That was it.

672
00:47:00,142 --> 00:47:10,922
Neil Balcher sold California closets at age 29 and then lost 20 % of his wealth doing a
flexible gold dog leash infomercial.

673
00:47:10,922 --> 00:47:14,894
Now that's a popular product today, but that was not his thing.

674
00:47:14,894 --> 00:47:17,454
Yeah, maybe the timing as well, right?

675
00:47:17,454 --> 00:47:20,214
So not to to interrupt here, but I think this is important.

676
00:47:20,214 --> 00:47:23,878
So Wayne Hizinga, the funny thing about him and take you along.

677
00:47:25,454 --> 00:47:34,949
Do you think you'll find out from all of your research that they were so brilliant that
they found the three different categories of businesses that were ready for their thing in

678
00:47:34,949 --> 00:47:35,639
the timing?

679
00:47:35,639 --> 00:47:45,074
Because there's no way that one individual, the three businesses that they come up with,
the timing is just right for Blockbuster, for Waste Management.

680
00:47:45,074 --> 00:47:46,324
There's no way.

681
00:47:46,384 --> 00:47:47,705
So were they smart enough?

682
00:47:47,705 --> 00:47:50,086
You're not going to hit the lottery three times.

683
00:47:51,544 --> 00:47:54,037
So that's why I went to go see Wayne.

684
00:47:54,037 --> 00:47:57,370
said, Wayne, you're blowing my theory here.

685
00:47:57,370 --> 00:48:01,645
He said, you got to explain to me how you did this.

686
00:48:01,946 --> 00:48:04,808
And he had these piercing blue eyes.

687
00:48:05,029 --> 00:48:08,393
And by the way, it's a stare I've only seen a handful of times.

688
00:48:08,393 --> 00:48:09,912
Michael Dell has it.

689
00:48:09,912 --> 00:48:11,827
Sam Zell had it, didn't he?

690
00:48:12,654 --> 00:48:16,774
You know, it was maybe it's just because of his fan stage.

691
00:48:16,774 --> 00:48:17,894
They weren't as bright.

692
00:48:17,894 --> 00:48:18,834
All right.

693
00:48:18,834 --> 00:48:19,554
Yeah, man.

694
00:48:19,554 --> 00:48:29,774
There's, know, when Jesse eyes, whatever his name, played Mark Zuckerberg in the movie,
Jesse said the toughest thing he had to master was to stare.

695
00:48:31,294 --> 00:48:32,454
There's a handful of these.

696
00:48:32,454 --> 00:48:41,286
So I saw with Wayne is anger is blue eyes light up and he goes, look, Vern, I have more
failures than I have successes and what I learned.

697
00:48:41,654 --> 00:48:49,556
Is I have four rules and if I go into a venture that can't benefit from those four, I get
my head handed to me.

698
00:48:49,556 --> 00:48:57,000
But if I choose a venture that can benefit from those four and I can make it happen, it
goes to the moon.

699
00:48:57,160 --> 00:49:02,162
And so he chose, he learned this the hard way.

700
00:49:02,162 --> 00:49:03,963
What was his filter?

701
00:49:03,963 --> 00:49:07,845
And he chose the next two ventures that fit his filter.

702
00:49:07,845 --> 00:49:11,326
Now AutoNation almost broke his back mark.

703
00:49:11,550 --> 00:49:21,225
It took him seven years to out what I would call the X factor, how to switch the power
from the incumbents to him.

704
00:49:21,225 --> 00:49:27,424
But he finally did in Denver, Colorado, and that went to 10 billion then overnight that
business.

705
00:49:27,598 --> 00:49:35,499
Was that one thing was specific to that business or was there something that he stacked
and compounded on top of all of his learning that he learned that he could use everything

706
00:49:35,499 --> 00:49:35,850
else then?

707
00:49:35,850 --> 00:49:39,314
Was it one thing or was that unique to the car business that he had to work?

708
00:49:39,903 --> 00:49:43,624
It's what I ended up calling in my book, the X factor.

709
00:49:43,925 --> 00:49:51,489
Where is the underlying 10 X or more advantage, hidden advantage over the competition.

710
00:49:51,749 --> 00:50:02,482
By the way, Elon's got it because the Raptor engine was 2 million, Raptor 2 is a million,
Raptor 3 is purportedly something around 200,000.

711
00:50:02,495 --> 00:50:08,598
The fact that your workhorse of your industry is one 10th the cost.

712
00:50:08,846 --> 00:50:14,926
Of what up to this point, competitors were having to pay is the advantage.

713
00:50:14,926 --> 00:50:23,966
So Wayne with Blockbuster, Mark was able to get videos for $6 instead of everyone else
having to pay $65.

714
00:50:24,206 --> 00:50:31,666
So that allowed him to have 10 times the inventory, which meant what was the job to be
done by Blockbuster?

715
00:50:32,466 --> 00:50:34,266
Always the hits.

716
00:50:34,526 --> 00:50:38,566
The thing that frustrated us all is they never had the hit movie in stock.

717
00:50:38,830 --> 00:50:42,530
I remember he said, I only figured out one other thing in Blockbuster.

718
00:50:42,650 --> 00:50:43,830
He had his hand like this.

719
00:50:43,830 --> 00:50:48,550
said, if you only have a mom and pot small store, all your videos are displayed like this.

720
00:50:48,550 --> 00:50:54,270
Now that I've got a big store, I can display the hits like this on the walls.

721
00:50:54,350 --> 00:50:56,230
said, that's it.

722
00:50:56,230 --> 00:50:57,030
Auto nation.

723
00:50:57,030 --> 00:51:03,030
knew he had to fix the, the repeat business, repeat customer ratio.

724
00:51:03,030 --> 00:51:06,010
Every car dealer only has 20 % repeat business.

725
00:51:06,010 --> 00:51:07,910
They have to go out and.

726
00:51:07,912 --> 00:51:11,973
sell their sold to get traffic for the other 80%.

727
00:51:11,973 --> 00:51:14,805
He said, what if I could flip that ratio?

728
00:51:14,846 --> 00:51:19,488
It took him seven years and he finally flipped it in Denver, Colorado.

729
00:51:19,488 --> 00:51:20,829
And then AutoNation took off.

730
00:51:20,829 --> 00:51:26,952
So we always knew that there was a key constraint holding back the entire industry.

731
00:51:27,152 --> 00:51:30,474
And if he could solve it, he would own the industry.

732
00:51:30,474 --> 00:51:31,444
And he did.

733
00:51:32,574 --> 00:51:37,630
Um, well, do you through this process, jumping back a little bit.

734
00:51:37,630 --> 00:51:39,174
uh

735
00:51:40,759 --> 00:51:42,003
What's your soul?

736
00:51:42,990 --> 00:51:43,590
Yeah.

737
00:51:43,590 --> 00:51:49,450
So it's always hard to, you know, we have a core value practice what we preach.

738
00:51:49,550 --> 00:51:52,583
It's super hard for people who coach and.

739
00:51:52,583 --> 00:51:53,865
hard for humans.

740
00:51:54,754 --> 00:51:56,555
to actually do this stuff.

741
00:51:56,555 --> 00:52:02,338
Ours has to do with the authenticity of what we teach.

742
00:52:02,578 --> 00:52:04,434
You know what drives me nuts?

743
00:52:04,434 --> 00:52:13,264
And that's how you know your soul is what drives you maniacally nuts is when my
competitors make shit up.

744
00:52:13,904 --> 00:52:22,189
They want to come up with some six box model or whatever that has no root in anything, but
what the hell they're making up.

745
00:52:22,189 --> 00:52:24,970
You can see it's lighting me up right now.

746
00:52:24,982 --> 00:52:28,644
It's why I reference 40 other books in my book.

747
00:52:28,644 --> 00:52:32,206
It's why I make sure that the question job to be done.

748
00:52:32,206 --> 00:52:36,748
I reference Clay Christiansen and don't claim it's mine.

749
00:52:36,949 --> 00:52:39,750
And this drives me nuts.

750
00:52:39,750 --> 00:52:40,951
So sorry.

751
00:52:40,951 --> 00:52:47,754
But people then can count on that what we teach is we there's a new competitor out.

752
00:52:47,754 --> 00:52:54,732
He's got a book called the science of it's got no science behind it.

753
00:52:54,732 --> 00:52:56,878
He's making shit up.

754
00:52:56,878 --> 00:52:58,958
What is science in QBALT 25?

755
00:52:58,958 --> 00:52:59,358
What is it?

756
00:52:59,358 --> 00:53:01,676
Even using that word, I'm like, what is going on here?

757
00:53:01,676 --> 00:53:02,507
Yeah, yeah, yeah.

758
00:53:02,507 --> 00:53:13,332
So, but ours, our stuff is based on reality and real people and smart folks who smarter
than me that we pulled together.

759
00:53:14,552 --> 00:53:16,984
Ken, is it our job?

760
00:53:16,984 --> 00:53:23,409
And I say, are anyone who's in a leadership position and, know, trying to influence and
help people change their lives.

761
00:53:23,409 --> 00:53:34,958
Um, is it our job to make the complex simple or are we trying to just explain the complex?

762
00:53:36,814 --> 00:53:41,294
Look, as you scale, it gets more complex.

763
00:53:41,294 --> 00:53:46,914
That's the ultimate constraint.

764
00:53:47,274 --> 00:53:54,914
It's why a good size team is, you know, when Steve Jobs came back to save Apple, it wasn't
a team of 500 or 50.

765
00:53:55,014 --> 00:53:56,814
It was a team of five.

766
00:53:56,814 --> 00:53:58,054
And that's what I share with folks.

767
00:53:58,054 --> 00:54:02,574
You don't need 50 or 500 to change an industry.

768
00:54:02,674 --> 00:54:05,954
He put five, he chose Johnny Ive and four others.

769
00:54:05,954 --> 00:54:12,207
And he locked him in his conference room and they met every day for two years until they
got out the one computer.

770
00:54:12,207 --> 00:54:17,559
Remember he came back and he said, I finally learned how to scale a business from Pixar.

771
00:54:18,020 --> 00:54:22,660
Well, the fact that Pixar only had one thing to do, Toy Story.

772
00:54:22,742 --> 00:54:25,323
And they only had to do one thing to do every two years.

773
00:54:25,323 --> 00:54:30,885
And Catmull had 20 of 21 straight number one hits.

774
00:54:30,945 --> 00:54:32,526
So he said,

775
00:54:32,748 --> 00:54:33,938
I'm going to do that at Apple.

776
00:54:33,938 --> 00:54:37,500
And he got them out of handhelds and scanners and printers and everything.

777
00:54:37,500 --> 00:54:40,061
And said, it's back to Pete Martin's research.

778
00:54:40,740 --> 00:54:45,303
The companies have just one thing to sell and one way to sell it.

779
00:54:45,723 --> 00:54:47,124
Books for Amazon.

780
00:54:47,124 --> 00:54:50,645
We're only going to sell books and we're going to sell them online.

781
00:54:50,685 --> 00:54:52,585
You can't go into a store.

782
00:54:52,866 --> 00:54:54,216
That's how you do it.

783
00:54:54,894 --> 00:55:00,267
So you see why so many companies a decade or two later go out of business, right?

784
00:55:00,267 --> 00:55:03,339
Because something evolved and changed and they didn't.

785
00:55:03,339 --> 00:55:04,679
It's a perfect example of Amazon.

786
00:55:04,679 --> 00:55:07,240
They started with books, but look at them now.

787
00:55:07,361 --> 00:55:10,082
But then a blockbuster didn't evolve.

788
00:55:10,082 --> 00:55:13,104
A Kmart didn't evolve when a Walmart shows up, right?

789
00:55:13,104 --> 00:55:18,737
There's something that changes and the old way that made you dominate an industry is not
the new way.

790
00:55:18,737 --> 00:55:24,546
So that's tough for a big established business to understand because we're sitting here
telling them,

791
00:55:24,546 --> 00:55:28,662
just do one thing and do it great and do it really well until when?

792
00:55:29,429 --> 00:55:30,249
Well.

793
00:55:30,423 --> 00:55:33,955
that, the way, that's the, that's the opportunity for entrepreneurs.

794
00:55:33,955 --> 00:55:38,728
That's why we get to pick off these fortune 500 on a regular basis.

795
00:55:38,728 --> 00:55:40,359
But let's come back to Google.

796
00:55:40,359 --> 00:55:42,890
There's the conundrum.

797
00:55:43,030 --> 00:55:46,552
Google had did one thing search.

798
00:55:46,552 --> 00:55:47,333
Yep.

799
00:55:47,333 --> 00:55:53,936
And then they decided to go into all kinds of other things to where they had to create a
new brand called alphabet.

800
00:55:54,297 --> 00:55:56,398
And finally, about a year ago,

801
00:55:56,568 --> 00:56:01,679
They said, you know what, two trillion of our two trillion net worth comes from search.

802
00:56:01,779 --> 00:56:05,440
We think the next trillion is going to come from search.

803
00:56:05,661 --> 00:56:07,421
And they took their eye off the ball.

804
00:56:07,421 --> 00:56:10,102
And that's why the Google boys are back.

805
00:56:10,102 --> 00:56:17,384
Sergey's back in, I understand, programming to see if they can get caught back up to what
happened with open AI.

806
00:56:17,384 --> 00:56:20,585
And now look at Apple having locked Johnny Ive.

807
00:56:20,585 --> 00:56:26,056
And suppose they're getting ready to release a device that will trump

808
00:56:26,605 --> 00:56:27,847
The iSong

809
00:56:28,642 --> 00:56:29,783
Yeah, the new way to search.

810
00:56:29,783 --> 00:56:30,843
We'll find out.

811
00:56:30,843 --> 00:56:34,826
It appears the new way to search is going to be AI.

812
00:56:35,106 --> 00:56:37,728
Some device, one of the systems.

813
00:56:37,728 --> 00:56:43,902
And the way I know it is, it's almost what Warren did when he started his businesses.

814
00:56:43,902 --> 00:56:46,113
He said, invest in things that you use.

815
00:56:46,113 --> 00:56:47,834
I think I simplified it.

816
00:56:48,374 --> 00:56:52,717
Because, right, because humans, think we're so unique, but just work to everybody.

817
00:56:52,717 --> 00:56:54,578
We all have these patterns that are

818
00:56:54,776 --> 00:56:59,656
Well, I tell you what, there's not too many different silos of patterns that I've seen,
and a lot of us fit into one of them.

819
00:56:59,656 --> 00:57:07,510
And so I'm using AI on a daily basis to engage with my device.

820
00:57:07,586 --> 00:57:08,331
Yeah, yeah, yeah.

821
00:57:08,331 --> 00:57:09,384
You got it.

822
00:57:10,040 --> 00:57:10,851
So it's coming.

823
00:57:10,851 --> 00:57:17,320
um It seems now like carrying a big load to stop and type.

824
00:57:18,142 --> 00:57:24,111
Even though we could voice into that bar in Google, it seems like an extra step, whether
it is not, I don't know.

825
00:57:24,111 --> 00:57:26,534
um

826
00:57:28,618 --> 00:57:28,968
Isn't it?

827
00:57:28,968 --> 00:57:29,388
Yeah.

828
00:57:29,388 --> 00:57:30,059
Yeah.

829
00:57:30,059 --> 00:57:40,365
What, um, you've developed some really good high level operational efficiencies, couple of
them throughout your books and scaling up in the businesses and all the consulting work

830
00:57:40,365 --> 00:57:46,029
you do a one page strategic plan and the Rockefeller habits checklist.

831
00:57:46,029 --> 00:57:55,734
See, I like when I see one or two things that I believe I'm like, boy, they have these
practical applications that if you use them, you could really improve your business.

832
00:57:56,716 --> 00:58:01,502
Are those substantial in what you do those two pieces or am I just pulling two out of
many?

833
00:58:01,806 --> 00:58:03,987
Well, there's three.

834
00:58:04,007 --> 00:58:07,789
We have 12 one-page tools, but you're right.

835
00:58:07,789 --> 00:58:11,050
I first became well-known for the one-page strategic plan.

836
00:58:11,050 --> 00:58:19,094
um Second, like a pilot who's making sure the plane is safe and flying, they've got a
checklist.

837
00:58:19,094 --> 00:58:22,595
This was a checklist for us who pilot our companies.

838
00:58:22,595 --> 00:58:25,877
And it's proved to stand the test of time.

839
00:58:25,877 --> 00:58:29,458
And then I think we're super well-known for the daily huddle.

840
00:58:29,878 --> 00:58:33,340
And the fact that if you want to move faster, you need to pulse faster.

841
00:58:33,640 --> 00:58:44,206
And I reached out to Nate, one of the co-founders of Airbnb when they lost a billion
dollars worth of bookings that Friday the 13th of the pandemic.

842
00:58:44,447 --> 00:58:50,971
And so I invited him onto a we spun up a virtual event to kind of help all of us save our
businesses.

843
00:58:50,971 --> 00:58:56,714
And unprompted, I asked Nate in front of everyone, Hey, what's the first thing you guys
did?

844
00:58:56,972 --> 00:59:02,206
And he said, we went into a daily meeting seven days a week, not just five days a week.

845
00:59:02,427 --> 00:59:07,711
first thing Steve Jobs did when he needed to turn Apple around, he's got those five and
put them in and met with them daily.

846
00:59:07,711 --> 00:59:10,954
He had lunch every day with Johnny eyes.

847
00:59:10,954 --> 00:59:21,983
And so this power of, um seeing the pattern in six days instead of six weeks or six months
is really underpins our work.

848
00:59:21,983 --> 00:59:26,726
And that's your biggest leverage you've got that eight minutes saves everybody an hour and
half.

849
00:59:26,930 --> 00:59:30,573
Jamie Dimon speak to this during the financial crisis in 2008.

850
00:59:30,573 --> 00:59:38,118
said him and his team, he said they were staying for 24 hours.

851
00:59:39,119 --> 00:59:39,499
Right.

852
00:59:39,499 --> 00:59:48,826
And so he said, not that we stayed 24 hours a day in the office, but he said it was a year
that we all work different than we ever had when we were already hard.

853
00:59:49,196 --> 00:59:49,567
Yeah.

854
00:59:49,567 --> 00:59:49,897
Yeah.

855
00:59:49,897 --> 00:59:50,808
You got it.

856
00:59:50,808 --> 00:59:51,248
Yeah.

857
00:59:51,248 --> 00:59:52,610
So those are the three.

858
00:59:52,610 --> 00:59:52,930
Yeah.

859
00:59:52,930 --> 00:59:57,234
Those were some one-page Mutejic plan, Rockefeller habits, and the daily huddle.

860
00:59:57,506 --> 01:00:03,975
You think it's important to always operate that way, just not in times of extreme concern
and vulnerability?

861
01:00:05,057 --> 01:00:05,819
Yeah.

862
01:00:05,819 --> 01:00:12,200
no, because if, if eight minutes a day saves you an hour and a half, all we have is that
time.

863
01:00:12,340 --> 01:00:16,921
Why, why not that trade-offs?

864
01:00:17,002 --> 01:00:20,703
And it's one of the reasons I'll side note where I really encourage entrepreneurs.

865
01:00:20,703 --> 01:00:29,525
don't know where this happened, Mark, but somewhere along the way, somebody convinced
entrepreneurs they're supposed to do one-on-ones with their direct reports.

866
01:00:29,605 --> 01:00:32,596
And that is insanity.

867
01:00:32,854 --> 01:00:39,206
And I am so glad that Jensen at Nvidia has got a nine minute video of why Brian Chesky has
now spoken about it.

868
01:00:39,206 --> 01:00:51,249
Mark Zuckerberg in an interview a few weeks ago chimed in that none of these most
successful entrepreneurs, let alone the rest of us mere mortals should be wasting this

869
01:00:51,249 --> 01:00:53,499
kind of valuable time.

870
01:00:53,574 --> 01:01:00,602
And instead let's get on it every day instead of meet formally once every two weeks
individually with the person.

871
01:01:00,602 --> 01:01:02,444
But I could go on and on about that.

872
01:01:02,444 --> 01:01:02,735
Yeah.

873
01:01:02,735 --> 01:01:11,478
Do you think, from what you've seen, because we're always invoking these big names and I'm
wondering.

874
01:01:13,068 --> 01:01:16,661
Are there hundreds of thousands of other people that have similar skills?

875
01:01:16,661 --> 01:01:19,183
It's just their business is different, their timing's different.

876
01:01:19,183 --> 01:01:27,840
Maybe the, but is there something these folks, because there's some nameless people too,
that are highly successful that we never hear about, that we never talk about, that are on

877
01:01:27,840 --> 01:01:29,432
social media, some elite folks.

878
01:01:29,432 --> 01:01:42,272
em But do all these people that get invoked and they're on stages and have built crazy
businesses, these uncommon people, do they have things in common?

879
01:01:42,272 --> 01:01:47,696
Or are they all anarchists and one man and woman shows?

880
01:01:47,696 --> 01:01:50,772
Do they have things in common that we can really clarify?

881
01:01:50,978 --> 01:01:53,439
They do and Mark, you are right.

882
01:01:53,439 --> 01:01:58,342
And that's why in my books, I talk mainly about mere mortal companies.

883
01:01:58,342 --> 01:02:05,947
I give example after example after example of entrepreneurs like us doing exactly these
things and getting the results.

884
01:02:05,947 --> 01:02:13,231
And you probably saw that Mark Andreessen did a video about Elon, how does he really run
six companies?

885
01:02:13,231 --> 01:02:19,404
And what he said is those practices harken back to the industrialists.

886
01:02:19,512 --> 01:02:22,702
the Charles Swabs, the Henry Fords and all of that.

887
01:02:22,702 --> 01:02:27,286
And that's why I called my first book, Mastering the Rockefeller Habits.

888
01:02:27,546 --> 01:02:43,285
There are a common set of practices that haven't changed for a hundred years, let alone in
the last 10 years, that these guys that are achieving massive things are just doing what

889
01:02:43,285 --> 01:02:46,927
the industrialists did back when they were scaling up that part of the business.

890
01:02:46,927 --> 01:02:48,982
So yes, that's why I wrote the book.

891
01:02:48,982 --> 01:02:57,631
And these checklist of habits have been common for decades and need to be in place.

892
01:02:57,631 --> 01:03:05,679
And the good news is our books we talk about and in our talks, more mere moral, like
co-distributing, COE distributing.

893
01:03:05,679 --> 01:03:06,880
He's one of us.

894
01:03:06,880 --> 01:03:13,536
Nobody knows JD Ewing, but this guy, he's ahead of most of us in AI, for instance.

895
01:03:14,575 --> 01:03:21,653
Does the hustle and the grind and the lack of balance, does it ever ease?

896
01:03:23,534 --> 01:03:31,894
Well, you know, there's a joke, you know, an entrepreneur would rather work 16 hours a day
for themselves and eight hours for someone else.

897
01:03:31,894 --> 01:03:35,354
And we like to say at some point that quits being a joke.

898
01:03:35,754 --> 01:03:38,974
And yes, first of all, we don't think it's a balance.

899
01:03:38,974 --> 01:03:44,494
It's always a blend between work, family and self.

900
01:03:44,494 --> 01:03:47,034
And it's a constant, constant move.

901
01:03:47,034 --> 01:03:53,830
And yes, I think at some level when you start, if you're not putting in 120 hours a week,

902
01:03:54,002 --> 01:04:00,828
You're not going to get escape velocity, but at some point and Jamie diamond and others
have talked to it.

903
01:04:00,828 --> 01:04:07,213
If you're working more than 50 or 60 hours, you actually get ineffective.

904
01:04:07,954 --> 01:04:11,076
Your productivity actually begins to drop.

905
01:04:11,417 --> 01:04:21,805
And we know at the end of the day with AI taking over all the administrivia, what we're
going to bring is that last piece of creativity and the creatives, the Picasso's that

906
01:04:21,805 --> 01:04:23,178
Addison's.

907
01:04:23,178 --> 01:04:25,367
all of those historical figures.

908
01:04:25,367 --> 01:04:26,973
don't leave Tesla out.

909
01:04:27,052 --> 01:04:27,352
Right.

910
01:04:27,352 --> 01:04:31,443
But you can't do, you can't do creative work more than about two or three hours a day.

911
01:04:31,823 --> 01:04:35,064
And then you got to go like Elon go play video games.

912
01:04:36,025 --> 01:04:36,965
Right.

913
01:04:38,145 --> 01:04:41,406
Cause by the way, and this is why I think it's a good model.

914
01:04:41,466 --> 01:04:49,068
He's running six companies, essentially running each one a day a week as, as Mark Adresa.

915
01:04:49,109 --> 01:04:50,169
And that's what we found.

916
01:04:50,169 --> 01:04:54,100
You could really run your venture a day a week.

917
01:04:54,466 --> 01:04:59,728
That gives you the rest of the week to do the market facing activities that allow you to
continue to propel it forward.

918
01:04:59,728 --> 01:05:01,692
So that's at the heart of our work.

919
01:05:03,560 --> 01:05:10,058
the right questions have leaders around you leading those companies and meet with

920
01:05:10,058 --> 01:05:11,819
an advisory board.

921
01:05:12,259 --> 01:05:24,664
if I am, if I am on my high horse about something, even with our coaching partners, not
enough of us mere mortals have an advisory board, which is an elite group above our senior

922
01:05:24,664 --> 01:05:26,325
team that we can afford.

923
01:05:26,325 --> 01:05:29,306
These are people we could never afford.

924
01:05:29,306 --> 01:05:37,329
We're lucky to get 15 minutes, but we only need 15 minutes of their insight to save us 15
months of headaches.

925
01:05:37,329 --> 01:05:39,250
getting advisory boards critical.

926
01:05:39,308 --> 01:05:43,105
What are the steps someone needs to build if that's important?

927
01:05:43,105 --> 01:05:48,834
What do they need to do proactively so that so the right people on the advisory board say
yes.

928
01:05:49,442 --> 01:05:55,187
Well, the first thing is they need to identify what are their three to five strategic
pillars.

929
01:05:56,048 --> 01:05:58,220
do we have time for a little side story?

930
01:05:58,506 --> 01:05:59,126
I'm here.

931
01:05:59,126 --> 01:06:02,455
I will let you go anytime you need to, I will spend all the time.

932
01:06:03,150 --> 01:06:08,773
Well, you know, the company that Warren Buffett went all in last year, and that was
Domino's.

933
01:06:09,134 --> 01:06:18,498
I don't like people realize Domino's pizza stock in the last 15 years outperformed the
three eights, Alphabet, Amazon, and Apple.

934
01:06:18,739 --> 01:06:25,763
And part of it is our CEOs and Hubert Jilly said, you do not have a strategy if you
haven't named it.

935
01:06:25,763 --> 01:06:32,494
I want to say that again, entrepreneurs, your jobs have strategy, but you don't have a
strategy if you haven't.

936
01:06:32,494 --> 01:06:34,174
given it a name.

937
01:06:34,414 --> 01:06:45,514
so theirs is a hungry for more and more M O R E stands for the four strategic pillars of
what Domino's is focused on moving forward.

938
01:06:45,514 --> 01:06:50,054
So first thing you have to do is know your four, three, four or five pillars.

939
01:06:50,414 --> 01:07:01,054
Then the question is who's this and you can, you can literally chat GPT this who is the
smartest person in the world on this topic.

940
01:07:01,388 --> 01:07:06,482
So I knew I needed to go global, Mark, that I didn't want all my eggs in the US basket.

941
01:07:06,482 --> 01:07:08,343
So I'm like, who's the smartest guy?

942
01:07:08,343 --> 01:07:10,061
It's Herman Simon out of Germany.

943
01:07:10,061 --> 01:07:12,946
He wrote the book, Hidden Champions, the 21st century.

944
01:07:12,946 --> 01:07:16,789
And I got Herman to come on as an informal advisor.

945
01:07:16,789 --> 01:07:18,990
We knew we had to move our stuff online.

946
01:07:18,990 --> 01:07:25,335
I'm at a conference and I hear this guy speak, ah John Kone, who ran Dell Learning for
Michael Dell.

947
01:07:25,335 --> 01:07:28,517
And he said, all you adult learners don't know how to do it right.

948
01:07:28,517 --> 01:07:29,468
Here's how you do it right.

949
01:07:29,468 --> 01:07:30,268
I'm like,

950
01:07:30,828 --> 01:07:31,899
You're right.

951
01:07:31,899 --> 01:07:41,307
So I went up to John and I got John on my advisory board, but I only needed to call him
for like 15 minutes, but that's the, what are your strategic pillars?

952
01:07:41,307 --> 01:07:43,048
Who's the smartest person you can find?

953
01:07:43,048 --> 01:07:43,749
One last story.

954
01:07:43,749 --> 01:07:46,641
I, so I've got a client, John Mooney out of St.

955
01:07:46,641 --> 01:07:50,234
Louis, their commercial landscaping and maintenance.

956
01:07:50,234 --> 01:07:51,645
He's the best in St.

957
01:07:51,645 --> 01:07:52,535
Louis.

958
01:07:53,517 --> 01:07:56,139
He wants to take his net worth from 10 million to a quarter billion.

959
01:07:56,139 --> 01:07:58,280
We're like, all right, game on.

960
01:07:58,401 --> 01:08:00,502
We already got him halfway there.

961
01:08:00,798 --> 01:08:05,589
Uh, in 28 months, but the key is we put a board together.

962
01:08:05,589 --> 01:08:08,539
He knew he's going to have to do it through acquisitions.

963
01:08:08,539 --> 01:08:12,741
So we got the smartest PE guy in St.

964
01:08:12,741 --> 01:08:14,642
Louis, Tim on the board.

965
01:08:14,642 --> 01:08:24,824
got Bruce who put the two biggest roll-ups in the industry on the board, billion dollar
in, we got Jeff, who is the king of brokering these deals.

966
01:08:24,945 --> 01:08:30,593
Then we brought in a banker because we needed to raise the debt, get the debt in order to
do it.

967
01:08:30,593 --> 01:08:33,817
And then I'm there to help them do the, you know, the integration.

968
01:08:34,378 --> 01:08:41,889
John could not have done this nor his team by himself, but we've been there to educate and
help them and guide.

969
01:08:41,889 --> 01:08:43,051
And that's why it's happened.

970
01:08:43,051 --> 01:08:45,393
So get, get advisory board together.

971
01:08:46,199 --> 01:08:58,741
sat down for breakfast about six years ago, I bought an office building from our, one of
our local billionaires in here in Cincinnati, Ohio.

972
01:08:58,741 --> 01:09:05,217
And we sat down when you do something like that, uh then you show up on someone's radar
and they say, let's go to breakfast.

973
01:09:05,217 --> 01:09:08,300
And you say, yes, to all those.

974
01:09:08,851 --> 01:09:09,694
and

975
01:09:10,350 --> 01:09:17,735
em He said the best advice I can give you is, he said you need your personal board of
directors.

976
01:09:18,796 --> 01:09:20,917
It's your advisor board you're talking about.

977
01:09:21,298 --> 01:09:28,092
And so he said that if he would have done that sooner, he might have taken his billion to
five or 10 billion.

978
01:09:29,314 --> 01:09:39,837
You know, my first student, 1982, Ron Houston out of Denver, uh, built a company that
custom printed circuit boards when it was time for him to exit.

979
01:09:39,837 --> 01:09:46,059
The smartest thing he did is he found this retired investment banker because he didn't
want the guy pitching him.

980
01:09:46,059 --> 01:09:54,541
He found this well-known retired investment banker and he said, would you go to breakfast
with me once a month?

981
01:09:54,581 --> 01:09:56,271
And I want you to beat me up.

982
01:09:56,271 --> 01:09:59,362
I want you to look at my company through your lens.

983
01:09:59,480 --> 01:10:02,174
Tell me the things I need to tweak.

984
01:10:02,235 --> 01:10:08,125
And so when he exited a year later, I think it's why he got an outsized amount.

985
01:10:08,125 --> 01:10:14,164
Because he got some brains bigger than his and his team on the team.

986
01:10:15,662 --> 01:10:17,142
We could talk forever.

987
01:10:17,182 --> 01:10:19,622
This time today is just fantastic and awesome.

988
01:10:19,622 --> 01:10:23,142
What's the advice you, you invoked it, it lines with your business.

989
01:10:23,142 --> 01:10:26,702
A guy's doing 10 million and he wants to go to a quarter of a billion.

990
01:10:27,362 --> 01:10:32,362
What's the, what's the right advice for someone that has a 2 million or a 5 million or a
$10 million business?

991
01:10:32,362 --> 01:10:32,662
Thanks.

992
01:10:32,662 --> 01:10:36,782
They have the right idea to go to 50 or a hundred or 150 million.

993
01:10:36,782 --> 01:10:39,282
It's what you guys specialize in, right?

994
01:10:39,442 --> 01:10:44,382
Without totally breaking down the business is doing a whole marketing commercial, which we
all love doing those.

995
01:10:46,144 --> 01:10:48,426
When someone has the thought, that's what they want.

996
01:10:48,426 --> 01:10:49,306
What's the next?

997
01:10:49,306 --> 01:10:51,436
Because that's what it is.

998
01:10:51,436 --> 01:10:55,521
The entrepreneur had to have the thought, I'm doing 10 million, I want to go to a quarter
of a billion.

999
01:10:55,521 --> 01:10:57,962
He thought that himself, I believe.

1000
01:10:58,030 --> 01:10:58,550
Yeah.

1001
01:10:58,550 --> 01:11:00,790
Net worth, not revenue.

1002
01:11:01,330 --> 01:11:12,650
By the way, valuation, we sold a company with 3 million of EBITDA for 90 million, 30X
EBITDA.

1003
01:11:12,650 --> 01:11:20,526
So first of all, one of the things we teach is, man, if you sold for some industry
multiples, you already screwed up.

1004
01:11:20,526 --> 01:11:21,986
You know, and I want you to continue here.

1005
01:11:21,986 --> 01:11:23,926
You know why I would never, and I would say never sell.

1006
01:11:23,926 --> 01:11:26,566
That's part of the positioning when somebody offers me a billion down the road.

1007
01:11:26,566 --> 01:11:31,086
The reason why I would never sell is I'm always valuing my company based on what it's
going to be.

1008
01:11:31,766 --> 01:11:33,106
I'm so unreasonable.

1009
01:11:33,106 --> 01:11:34,286
I tell people that all the time.

1010
01:11:34,286 --> 01:11:35,506
like, go and talk to someone else.

1011
01:11:35,506 --> 01:11:37,066
Cause I'm so unreasonable.

1012
01:11:37,186 --> 01:11:38,306
And what you have to prove it, right?

1013
01:11:38,306 --> 01:11:40,870
You have to show that that it truly is going to be that.

1014
01:11:41,358 --> 01:11:42,238
Yeah.

1015
01:11:42,238 --> 01:11:58,138
Well, yeah, I know we want to go down this rabbit hole, but I do in my 42 years of hanging
with entrepreneurs, uh, biggest mistake I see is they don't sell soon enough.

1016
01:11:58,138 --> 01:11:59,178
Yeah.

1017
01:11:59,198 --> 01:12:04,378
Um, wealth and it was Ted Leonsis who taught me this wealth is created through
transactions.

1018
01:12:04,378 --> 01:12:09,058
And so Ted Leonsis in his twenties had reggae communications.

1019
01:12:09,058 --> 01:12:11,678
He sold it to Harris for 5 million.

1020
01:12:12,126 --> 01:12:12,986
and

1021
01:12:27,074 --> 01:12:27,880
Yeah.

1022
01:12:42,292 --> 01:12:52,607
I would, you should sell the company if you don't, when you are most excited about it,
because the.

1023
01:12:52,607 --> 01:12:53,921
Is that what you think?

1024
01:12:53,921 --> 01:12:56,597
There's something about the DNA that's worth the most?

1025
01:12:56,704 --> 01:12:59,365
It is because look, the people are going to buy it.

1026
01:12:59,365 --> 01:13:01,076
They can smell it on your breath.

1027
01:13:01,076 --> 01:13:02,107
Wait, here's what happens.

1028
01:13:02,107 --> 01:13:07,207
Entrepreneurs finally hit the curve and they're like, why would I sell it now?

1029
01:13:07,207 --> 01:13:12,042
I'm making so much money, but they hold on until the curve dips.

1030
01:13:12,283 --> 01:13:14,884
And now you don't have a story.

1031
01:13:14,884 --> 01:13:19,246
Remember the valuation is just the sum total, the area under the S curve.

1032
01:13:19,246 --> 01:13:21,147
I could be mathematical here.

1033
01:13:21,147 --> 01:13:23,809
And then you just present value that big chunk.

1034
01:13:23,809 --> 01:13:26,410
And all you do is convince the person who's buying you.

1035
01:13:26,508 --> 01:13:30,260
that you can take this even higher and further than we could.

1036
01:13:30,260 --> 01:13:32,782
But it's all about that trajectory.

1037
01:13:32,882 --> 01:13:39,396
And when you've got it at max trajectory, that's when your story is the best.

1038
01:13:39,512 --> 01:13:41,190
You've been hanging out MIT too long.

1039
01:13:41,190 --> 01:13:43,378
He's bringing the math to us, you all.

1040
01:14:48,335 --> 01:14:50,503
Let's leverage it up with a great plan,

1041
01:15:14,018 --> 01:15:18,418
Hey, Vern, to wrap this up, can you recommend one book for us?

1042
01:15:39,046 --> 01:15:39,966
Um, okay.

1043
01:15:39,966 --> 01:15:41,017
He's given us the advice.

1044
01:15:41,017 --> 01:15:45,612
One thing to do, go read or listen to outsiders.

1045
01:15:46,094 --> 01:15:47,185
Thank you for the time today.

1046
01:15:47,185 --> 01:15:48,786
This was awesome.

1047
01:15:48,786 --> 01:15:50,848
Love the, love the conversation.

1048
01:15:54,390 --> 01:15:56,514
Well, hey, we were happy to have the rambles.

1049
01:15:56,515 --> 01:15:57,357
right.

1050
01:15:57,357 --> 01:15:59,362
Where just give us one place to interact with you.

1051
01:15:59,362 --> 01:16:00,334
Where's the place?

1052
01:16:00,334 --> 01:16:01,026
Make it simple.

1053
01:16:01,026 --> 01:16:03,250
We can come find you and everything you're doing.

1054
01:16:13,132 --> 01:16:19,655
And then if somebody wants to jump online and get some of you all live a little bit and
see what it's about, what's, uh, you have something coming up the next couple of weeks or

1055
01:16:19,655 --> 01:16:20,417
is it consistent?

1056
01:16:20,417 --> 01:16:21,428
What is that?

1057
01:16:35,288 --> 01:16:37,610
We'll find a way to ramble and give you some love.

1058
01:16:37,610 --> 01:16:43,464
Hey, enjoy everything Barcelona's gonna give you here for June.