AI Unicorns, $3 Trillion VC Deals & 9 Must-Do Steps to Start Your Business | Scrushy on Business

Speaker A: We welcome you into another week, another edition of, uh, Scrushy on Business. We're here to guide you through the process of building your dream, starting your dream or growing your dream. And we do that with Richard Scrushey. Richard, how are you doing this week?

Speaker B: Well, we're doing pretty good. Uh, you know, we had a little bit of a cold spell and that's kind of moved on. How y' all doing up there in St. Louis?

Speaker A: We, we had a 50 degree day yesterday, but today the wind is whipping, as they say it is. Uh, we're getting ready for another cold front to come through, but everything else is. Well, of course we're gearing up for the holiday season. You know, I'm in advertising sales. That's mainly what I do, Richard. And you know, I call this time of the year the get back to me after the holidays. Because that's what you hear from a lot of people.

Speaker B: Boy, I can tell you that it's like the, uh, business kind of shuts down when you start getting into this week. As a matter of fact, this weekend and probably next week. It's going to be impossible to get people on the phone. It's going to be impossible to get people to sit and talk to you about anything because they're really thinking about this time of year, family and getting Christmas presents and you know, the traffic is already building out here. I mean, there's so much traffic, you know, you can't even go to the grocery store. I mean, it's bad, uh, people rushing around trying to get everything done so they can be home with the family. And I don't blame them. It's a great time of the year. Great opportunity to come together as family and friends and, and really just celebrate the year, get ready for the new year. Right?

Speaker A: That's it. And in business there's still a lot of things happening because deals don't stop, right? The uh, communication, if things are, if things are going. And you've been kind of reading up on some things, some action that's been happening in the business community and noticing a, uh, similar trend with a lot of those companies.

Speaker B: Yeah, yeah. You know, I've just really been studying the uh, transactions, the venture capital transactions that have been taking place and how big and whatnot. You know that I was reading recently in the top 100 deals, which is just full of all kind of AI deals, is now valued in excess of $3 trillion. I mean, this is, uh, we're in different times now. Matter of fact, I was looking at OpenAI for Example, valuation on open AI, uh, is $300 billion. That's the current valuation. And they raised $40 billion in funding. Now think about something. And again, I don't know the exact time and when they, you know, the value and the money came in and whatnot, but to put $40 billion in, and so if you took, um, a percentage, you know, of what percent is 40 billion, of 300 billion. I mean, they put 40 billion in and, you know, they got less than 15% of the company. What is that, 9, 10%? I mean, that's incredible. You see what I'm saying? Yeah. These things are different now. I mean, it's just so different. SpaceX is, is now valued at 137 billion. Matter of fact, uh, SpaceX is the most valuable private company globally. And, uh, from a private standpoint, and that's just incredible. Uh, so lots of deals are being done. I looked at a deal, uh, and matter of fact, I talked to the guy raising the money on a deal. Uh, I heard about it. I knew the business, I knew the company. I knew the. Knew the people. You know, I didn't necessarily know the people, but I knew about the company, but I knew, uh, one of the people that are dealing with the folks, uh, raising the money. And so they were talking to me on the phone. I was just chatting with them because I'm curious about all these things. And, and, uh, they were telling me that they were raising $10 million for this company. So I said, well, can I talk to the guy raising the money? That's just how it work, you know, because we've got a podcast and I want to know what's going on out there. Right? And so I'm going to get on here and I'm going to talk. And you're, you and I are going to talk about business and raising money and doing different things. We should be current and know what's going on out there. Well, this particular fund, uh, is putting $10 million in a company that did $50 million last year. Okay. And it's a private deal. They're bringing in and, uh, uh, to help the company. The company, by the way. And Dave, this is. We're in times that are crazy. It's a biological company and it's not profitable. Okay? They're 50, a little over 50 million last year. They're not profitable. Uh, but this company believes they're going to be profitable. Matter of fact, uh, when I was talking to the guy, he asked me, what do you think? And I said, well, uh, I am familiar with the product because I had done a little study on the product, right. Knew some, uh, folks that had used the product. So that was really my interest as well. And I heard excellent things about the product. So I was encouraged. So I told the guy, I said, well, I can tell you this, it's a good product, at least that's what I've been told. And he said, well, we think it's a fair valuation. They started out to raise 7 million, and it ended up they're going to be able to raise 10 million. That was a level of interest. So, you know, I guess what I'm trying to say is that to me, what that says is that the venture capital market for certain things is still very healthy. And, uh, deals can get done and they're being done. But to think about, you know, I pulled up and I looked at like the last hundred deals that were big deals that were done again. And I went through each one of them. I started going through them. I didn't look at them all in detail, but I looked at a lot of them. And, and again, that totaled up with a valuation of over $3 trillion. And that was. Once the money was put in, that was the valuation. In other words, let me try to explain this for our listeners out there so they understand it. Let's say that your company, for some reason, the concept, the potential sales, the leadership, the market, the niche, you know, everything is considered. And let's say the investors come back and they say, your company is worth a hundred million dollars. That's the valuation we're going to put on it, and we're going to put $10 million into it. Okay, well, they just bought 10% of your company. That's how that works. I mean, it's just simple mathematics. So if that's the valuation and that's. Then they'll say, well, that's pre. Well, post is going to be 110 million post valuation. So you got to add the money they put in to what the current bank. Now you put another 10 million in, it's worth $110 million. And so then the question is, now where do we go with that? Okay, so we put 10 million in. What is that 10 million going to do? And that's the real question. And so the entrepreneur, the CEO, the leadership of that company has to be able to say to that investor, you put that 10 million in here, and that's going to take us from being $100 million company to being a $500 million company. And so then that guy says, well, I'm on 10, I'm going to have 10% of 100 million. So 10% of 500 million is 50 million. So I made five times my money. So he thinks I need to be in this deal. Now here's the question. Under the, in the due diligence process, they have to prove to him that they can get to that 500 million and how they're going to get there. So what's the roadmap? What are the milestones? What are the, what is the roadmap? How are you going to achieve that? What's it going to take to get there? And then here's a really big question. Are, uh, you going to need to raise more money?

Speaker A: Right?

Speaker B: Because if you got to raise more money, then we're going to take dilution. So let's say that that 10 million got them to 250 or uh, 300 million, and then they got to raise another 10 or another 20 million. Well, then that guy gets diluted down. So he doesn't quite get his five times return unless he buys into that next round. And, and what they do a lot of times is they, they say, you know, they have a right and a piggyback, right, Or a right to be able to, uh, maintain their percent ownership. So you might say, I want to, I get to keep my 10%. So as they raise another 20 million or 10 million or whatever, uh, he gets to keep his 10%. He, but he has to buy to keep it. Now sometimes, sometimes there are venture capital firms that will say, I want to lock down my 10%. So in the future, no matter how much money you raise, I'm still going to keep my 10%. Well, that, that, that makes life very difficult for the company because now they're out there trying to raise money, they hit a point where they got to raise more money to continue to grow. And that's not a bad thing. Raising money to continue to grow is not a bad thing. It can be a good thing because it might take it from a 500 million to a billion dollars. Okay? And, and you do have to raise money to grow and to buy other companies and to do things like that, that's just part of life. And so, so, uh, when you have a investor that locks in and says, well, I'm not going to, you know, I'm not going to take any dilution, that's what they have, what's called an anti dilution clause in their investment agreement. Can't dilute me no matter how much money you raise. Well, that's just not gonna work. And let me tell you where it really gets to be a problem if you try to take the company public. Because if you go out and you say, well, we're gonna raise $40 million or $50 million in the public market. And, and, and of course you got, everybody takes dilution on that. And, and so if they have an anti dilution clause in there, then that creates a little bit of a problem. I don't wanna get hung up on that. But anyways, valuation, uh, is driven by a whole series of things. Back in the days when I was coming along, it was pretty simple. It was like, okay, what's your profit? You know, what's your ebitda? Uh, you know, earnings before taxes, interest, uh, depreciation and amortization. Okay, what is that? Because that's your cash flow, okay? That's prior to paying your taxes as part of, you know, uh, any depreciation or amortization of anything. So that's real cash flow, okay? So from operations. So they would pay a multiple on that. And that multiple was, was how they valued the company. They'd say, okay, we're going to pay 10 times your EBITDA or five times your EBITDA, three times, whatever it is, depending on industry. Now keep in mind, every industry is different. And that's one of the things we talked about on one of our shows. We said, look, go look at the, uh, airplane industry. Look at Delta Airlines, Southwest, United, all those companies, and look at what their price to earnings ratio is, which is same basic calculation, it's the multiple times earnings, okay? So look at that and then go over and look at the hotel industry and pick out, you know, Hilton and Marriott and three or four others and, and see what their multiple, what their PEs are, what do they trade at. So, you know, public companies trade at a much higher multiple, okay? And they do that because of the liquidity, because you can buy and sell the stock, you can get in and get out. Private companies sell it much lower. So typically you're going to see a private company in a 3 to 6 range. And truthfully, that's where most of them end. So if you're out raising money and you're a public company, you may be trading at 15 to 20 times your earnings. As a private company, you're out raising money, you might be looking at three to six times. Now that's going to determine the valuation and that's the way it was in the early days. But now you get into these biologic companies and these AI Companies and they don't pay any attention to ebitda, uh, or profits or anything saying this thing could be.

Speaker A: There aren't any.

Speaker B: Yeah they're not. Matter of fact I was looking at something that really was fascinating to me. Um, this company Databricks. The CEO um said that his company would be worth a trillion dollars. And he said uh, and they're going to be three things that are going to drive that growth he said. The trifecta of growth he called it. And uh, his name is uh, Ali looks like Galtzi. G8G H O D S I is his name. I'm not 100 sure how he pronounces it but anyways he uh, he says the trifecta of growth will create his value of a trillion dollars. And here's three things he says will do that. Uh, he's in the transactional database business and he said that growth in that transactional database market uh, is going to drive it. And he has a ah, he has a um, platform called Lake Base that is their new product and he made the comment in an article that I read that Oracle hadn't changed in 40 years. You know Larry Ellison's big company, Oracle, Larry Ellison's men in the world. I know Larry personally. I've spent time around him, been to his home. Uh, he and I, you know both are pilots, we both were single pilot rated in the uh, citation jets so we had something kind of in common. Uh, I talked to him a lot about building the first digital hospital, you know fully paperless hospital back in actually in 2000. And so you know we're 25 years out now and we still don't have a fully digital hospital. Um, which I, I had hoped that I'd have the opportunity to do that. Who knows, maybe that'll happen one day for me. But then um, then he has, he said the second thing is his business called Agent Bricks and he says that's going to drive uh, that's a second uh, thing and that has to do with his uh, platform. Databricks is a platform for building AI agents that work with proprietary enterprise data. And so this gets really complex. But he said that's play a major role uh, in, in his ability to be able to become a trillion dollar company. And then he says number three he said that um, he said it involves building applications on top of this infrastructure with developers using AI tools to quickly build applications that run on this lake based platform that he has which are powered by AI uh agents. So he says to get the Trifecta is also to have apps on top of this. And he said now you have to have apps that are vibe coded with the, with the database light base and with agents. And he said there are three new vectors for us in that area and I could go on and on and on, but you know, this, this is a whole nother language here. This is a whole nother thing. And so when we start looking at these at valuation, you know, let's say you're going out here and you're going to build a company, uh, that um, just take healthcare. Let's say you're going to be doing some very innovative health care, home health care, therapy, treatment, uh, maybe, maybe in the wound care area, maybe in the, you know, palliative care or something, I don't know. But anyways, you're not going to get the kind of valuation that these guys are going to get with this new, you know, creation of AI and all these different things. But what was really interesting to me is that looks like to me, Dave, and I'm interested in your thoughts on this. Like the space may be getting crowded because when I looked at that hundred companies, probably a third of them were focused on AI technology.

Speaker A: Yeah. And there's all kinds of issues obviously that, that come up with that of you know, storage and water of all things that you know, I don't think people were thinking about when it first came out. But yeah, it's a lot of copycat. Right. A lot of people jumping in, uh, to be, you know, now specialized in AI in certain categories. And it's not going to surprise me to see a massive growth of businesses using AI. How much of it will be noticeable to the consumer on the other side? Well that you know, that's to be determined. But you know, I had a conversation with somebody the other day about a self driving car. We're getting Waymo here IN uh, in St. Louis. And so you can, you know, it's essentially an Uber without a driver. Uh, and somebody was saying, you know, that makes me nervous to not have that. And then as you start to really dive into it, the instincts of the driver, quote unquote, the computer are most likely, we can all agree, going to be better at most times than a human driver. Right. A human driver gets tired M. An AI driver does not. Right. A uh, human driver has blind spots in the vehicle. The AI driver does not. Right. There's all these things that you start thinking about it and you're like, hm. Now obviously with any sort of transportation you're going to have at some point, uh, some things that happen that aren't good. And then that's going to become the, the big topic. Right. The waymo car ran into a pole or ran into a person just like a car would.

Speaker B: Yep.

Speaker A: But the AI version of it, whether it's in healthcare, transportation, media, it's just determining to what level. Right.

Speaker B: Hey, Dave, look.

Speaker A: Hey.

Speaker B: This morning I'm driving down the road to my house. Okay. I'd been to the gym, worked out, and I was coming back and I met a guy in one of the, uh, Tesla trucks.

Speaker A: Yep.

Speaker B: And he's reading the paper and I, and I'm, and I'm like this. And so I passed him, he had the paper and he was reading a paper and I'm, I went by him. I was like, what in the world? You know, our paper, uh, ran last night and uh, so that local neighborhood paper. And so he's reading the paper.

Speaker A: I mean, that's exactly what it's meant to be.

Speaker B: Yeah. So this is where it's headed. Uh, and you know what's going to, let me tell you, my wife's car, I don't think you can run into anything. It stops. I mean, you back if somebody's coming by you and you're backing out, it'll slam on brakes. It won't be thing. I mean, it's just crazy, uh, protective. And again, you know, like you just said many a time I'm sure she would have backed into something, but that car will not let it happen. And that's what you're talking about with all the different eyes around it and all the different cameras and it senses so many different things. So. Yeah, I don't know. What was your point there? I guess is that we're moving into a whole new age where we're going to have to trust AI, uh, embrace it.

Speaker A: You're going to have to figure out it can help you. There is no doubt, 100%, if you are a business owner, AI can help you. The question is, uh, what do you choose to use it for and how much of that, as I said, is customer facing as opposed to things that can help you with marketing, things that can help you, uh, with back office type of things that you can use AI for? Some people use AI, they don't even know that they're using AI because they're using an app and they call it something else. Not realizing that that is absolutely artificial intelligence that is being involved. But you know, one of the other topics we wanted to talk about this week is really, you Know, kind of taking a complete U turn from where we just were because we get a lot of questions, Richard, uh, to the email infoscrucionbusiness.com that talk about startups, brand new companies that are first getting started. And there are so many things that as a business owner you have to be aware of. We talked about this once before in terms of, you know, from everything, from the very beginning. What's the business called? What does the logo look like? What is the URL Right. Of that business? There are a lot of things that business owner has to think about before they ever officially become a business.

Speaker B: Oh, gosh, yeah, yeah. And that's, that's so important. And you know, uh, if I was to say about maybe nine or ten things that I would suggest to anybody that wants to start a business to think about. Um, and, but first of all, just real quick, uh, traits of a, um, of, of your, of the entrepreneur. So if you're out there and you're saying, well, I'm an entrepreneur, I believe I'm an entrepreneur. Here's a few things that you may want to just throw in your, and think about. Here, here's, here's some of the research that says this. Curiosity. Most, most entrepreneurs are curious. Okay? So, and even, even Albert, uh, Einstein, you know, he made the comment that, that, that he didn't have any special talents. He says, but I am passionately curious. So being curious and thinking about things, okay? Awareness, being aware of things. So being, uh, constantly aware of, you know, how to make it better, how to improve it. Should I do this, should I do that? Can we add this on? Can we add that on? Should we do this, not do that and those things. Uh, and then of course, persistence, you got to be, you really got to be persistent to be successful. And you know, we go back to our buddy Bill Manovich, his company Persistence. We go back to, uh, Hunter Carr, talk about him, we talk about Lamont west who was on our show. These guys were all persistent in building their businesses. You know, uh, adaptivity. You have to adapt to things. You may find yourself in a situation where you're, you're, you have never done this, but yet you're going to have to do that. And uh, you know, because this may be your customer, you know, different types of customers and uh, different situations. So you got to do that, but you have to be creative also. You know that. So that's another real skill. Uh, are you creative? I mean, you know, I think sometimes people get into a rut and you know, what really concerns Me. And I've noticed this, and I got to tell you this. I have friends that are totally connected to Netflix episodes, and that's all they do on weekends at night. So when you, you know, it's like, don't call me. I'm watching such and such tonight. You know, I got. I got, um. I'm in my fifth episode, and I got to see the next one, so. And. And they dial out of the business world. And. And they're not, you know, so if you're all. And. And I almost got caught into some of that. I. I got caught. I found myself, you know, want to watch a certain episode after episode after episode. And. And I think Covid put us into a lot of that back when we couldn't go anywhere, do anything. But the problem with that is if you. If you have entrepreneurial skills and you have the ability to be creative and you get all wrapped up in things that just. What was it that, uh, uh, Warren Buffett said? He said. He talked about poor people have big TVs, right? And so we get focused on that rather than focused on our family building our businesses and whatnot. So if you really want to be an entrepreneur, you got to have to. You're going to have to have some time where you. You have free time to be creative and think and not be thinking about a whole bunch of other things. And you have to have some leadership skills. Typically now there are entrepreneurs that, uh, um, you know, that are visionaries, and some of them have good leadership skills and some of them don't. But this is something that you really need. Leadership skills and building a company are important. Um, I mean, we have seen people create concepts, and we go back to McDonald's. Ray Goff, what did he do? He didn't create McDonald's, but he had leadership skills to take it and turn it into 36,000 restaurants around the world. So. But he wasn't the founder, original founder. He's the founder of McDonald's, but he wasn't the founder, um, of that single restaurant that he bought from those McDonald brothers. And so that's important. And then, last of all, we know that an entrepreneur takes the risk. Takes the risk, and he doesn't have a fear, so he's got to have courage. So if you don't have fear, that I call that courage. And that's so you.

Speaker A: You.

Speaker B: That's. That's pretty typical. So now let's just jump on real quick things that. That you'd want to think through if you're going to start A business. Research. Research. Your idea. You got an idea. Uh, you got a product, you got a market. Who's your audience? Who's gonna buy the product? We gotta, you gotta know all of that. And you got, and, you know, bounce it off of people that you think might be smarter than you. I always did that. I always try to find people that, you know, that would be. Be honest with me. You know, it's like a friend of mine said, real good friend, I tell you when your breast stinks, you know, and, uh, that's what you need to know. People that don't like you, they won't tell you that. So, uh, you. You're going to have to think about, you know, if you're building a product business, you know, how you sourcing, uh, the products and vendors and things like that and cost associated with those kind of things. Those are all real, real important. And then, of course, draft in a plan. You got to, you have to have a plan, and then you got to work your plan. But if you don't, if you don't, and this is, this happens to me, I'll have people tell me, I want to do this, this, this and this. And I said, can you put it in writing? Can you, can you put it in a business plan? Now, what's scary today is that is tell A.I. uh, you know, I want to do this. Write me a business plan, and it'll give you one, right? And it's not really who you are, and it's not really your commitment, and it's not really your understanding. And so you really need to test yourself and think yourself outside of a, uh, we got to learn to think outside of a. We got to think, okay? So if I'm going to build this business, how do I think it ought to be done? I don't need to ask. AI uh is going to tell you. And it might be telling you wrong, by the way. I mean, you might not be able to achieve what AI uh tells you. But then another thing that we talked about, Dave, which, uh, is important, is naming your company, right? I mean, look, there's some great names out there and there's some bad names. You can put a bad name on it and people don't want to pronounce. I always liked maybe one or two syllables. You know, if you make it too long, uh, too big, uh, it's difficult. And so, you know, you see, some of the great companies, uh, in America have names that tell, you know, that are easy to pronounce or catchy or explain who we really are. So if you're looking for that kind of business, you can find it through their name. Uh, so your name is going to be important for many, many reasons. And so you gotta, you gotta work through that. And then, of course, uh, the structure, depending on whether you're a sales company, a product company, a service company, you know, what are you, consulting company. But you're gonna structure the company based on who you really are and what you are. And then that's gonna build, you know, you're gonna have to build that out. So structure and organizational structure, you know, from top down to bottom to whoever's doing the work. And. And, uh, you got it. You got to have a plan. And every venture capital deal I've ever looked, looked at. One of the most important things from raising money, even when you go to a banker, is who's running it, who's gonna run the company, who's going to do the sales, who's going to do the financing, who's going to do the, you know, this and that. And they name all the different things, and you better have who's going, who's in business development, you know. So I found that in raising money on all the different companies that I had invested in in my past, I wanted to have all the shoes filled out. This person's this and this person's that. So I wanted to look at the resumes. I want to say, oh, okay, well, you've got experience doing that. And, uh, you know, I had a call this morning. And you caught the tail end. I had somebody called and asked me about, uh, a guy they wanted to hire to run one of their companies they're buying. And I knew the guy, so I had to give him, I had to give him a reference. And, you know, and I just so happened I knew him and I knew he knew his parents. And I was able to give a very, very good and positive reference because I know the guy has great capability. And, uh, they questioned his, even some of his schooling. You know, I mean, the guy obviously is very capable, but, you know, that's a smart investor, right? He asked all the right questions. So you should expect that you don't need to get mad at them. They're just trying to make sure that they don't make a bad investment and that's it. So you got that, you got your funding and then how you're going to fund it and who's going to help you with that. And, uh, and then something that a lot of people miss is brand strategy. Brand strategy. You're going to be faced with that now because of websites. You got to have a website, you got to have a brand, you got to have a name, you got to have a presence and you got to work that strategy with social media and everything else. And so your marketing department, what used to be hiring a few salesmen to go out and sell your business and it was face to face, totally different world out there. Now you got to, if you don't have a good website, you're not going to get any business because people. First thing going to do is click your website, right?

Speaker A: Absolutely. That's your storefront. Now is the digital footprint with your URL, the way your website looks, social media. Right. All so important these days, uh, you know, how, how you present your business, how you present, uh, your overall marketing strategy, which is, you know, something a lot of people try to get, get away without. Um, these days more than ever. That all has to be planned out

Speaker B: in advance, even down to the detail of your logo. I mean even, even our logo that you can see on the screen now screws your own business. We went around and around about how that was going to the. I mean because we had to think through that and, and everybody does. Uh, and then you know, um, you, so you're going to be asked what is your marketing plan? So you might as well go ahead and have one. How am I going to sell this product? How am I going to sell this service? How am I going to build this business? How's it going to work? These are all things that are very, very, very important. And you know, um, today raising money, um, it really, I mean you've got a lot of smart investors out there and you know, you, depending on what your business is, I mean if it's one, if it's a business that is, like I said, a biologics, a pharmaceutical, a new product, uh, maybe it might be that you're going to lose money for two or three years but you still can raise money if you can show them, you know, that you're going to have a huge, you know, platform and this thing is going to build out and going to be, you know, multi hundreds of millions of dollars or billions of dollars. Uh, it, once it has traction but we're going to have to invest in it to get it to the point that we can have traction. Um, the investors will buy into that, especially if it's a something new. And of course right now like I said, they're all tied into AI and all these AI inventions and new products and the use of it and how, look, they're. The whole robotic industry is now, AI is just going to be huge. And in industry we're going to see more and more robotic workers, uh, and less humans in there. It's really going to happen because, uh, it's easier and they work 24 hours a day and they never stop and they don't have to have insurance and they don't complain. And so all of that's going to drive that industry. Anything that can be robotic, uh, uh, you know, take where they can use robotic technology to do the work. I think we're going to see, don't you think, Dave? I mean, no doubt, no doubt.

Speaker A: It's all going to be about, you know, spending less time, uh, doing things that, you know, something that's automated will be able to do for you. And along those lines, I want to tell everyone about a, uh, supporter of our show, Northwest Registered Agent. Build your complete business identity in just 10 clicks and 10 minutes. Right? You want it to be fairly simple. When you want more, start your business with Northwest Registered Agent. Everything you need to launch and protect your business all in one place. Northwest Registered Agent has been helping entrepreneurs launch and grow businesses for nearly 30 years. In fact, they're the largest registered agent and LLC service in the US with over 1500 corporate guides. Real people who know your local laws and can help you and your business every step of the way. Which is perfect for our topic today of getting started and being, uh, prepared. You can build your identity fast for just $39 plus state fees. You can get an LLC, a domain name, business email, local phone number, a business address, a registered agent and compliance. And Again, we're talking 10 clicks and 10 minutes. Protect your identity. Keep your home address private by using Northwest's address on your state's formation documents. So many things that you can get help with from experts with decades of experience. Don't wait. Protect your privacy, build your brand and get your complete business identity in just 10 clicks and 10 minutes. Visit northwestregisteredagent.com and start building something amazing. Get more with Northwest Registered Agent. Again, that web address. Northwestregisteredagent.com paid. Scrushy and Richard, we thank them for sponsoring our show this week. We want to get to some questions that we have from some of our listeners, like Ryan in Cleveland who wrote in and asked Richard, what daily habits or routines helped you stay sharp. I know we've talked about this once before, but remind everyone, as you mentioned earlier today, you were, you were on the treadmill. First thing you like, to get that

Speaker B: blood flowing every morning. I actually do it seven days a week. Uh, and when I go out of town and visit family and whatnot, it kills me if I can't get to the gym. You know, try to find a place and, you know, if I can, I'll just get out and walk. But, uh, yeah, I think it gets your mind going, I think it gets your blood flowing. And also, you're healthier. I believe it. You know, there are a lot of people that are my age that are not very healthy. I'm running to them all the time. And I've lost a lot of my friends, uh, especially over the last few years, that were actually even younger than me. Uh, but for the last 45, 50 years, I've worked out every day of my life. There's a gym, I go on vacation and hotel or whatever. I get up and get on the treadmill and, um, and then I lift weights and I try to stay healthy and. And, um, it's always hard too, when you travel to, um, you know, eat the right foods, but I try to do that. And, and those things are important. But you know, what other things that are important? Routine. Keep, uh, up with what's going on in the world and be knowledgeable enough of what's going on. And if I know that I'm going to meet with a guy who's, uh, and do some business and he's a huge football fan for some college, you know, I'll. I'll read up on there, on the stats. And so when I get there, I can have a conversation with him when he. And say, hey, how about those guys? You know, how about those, you know, Texans or whoever it is, and be able to discuss and talk about their quarterback and how he's paid a lot of money and these kind of things, you know, you need to be able to have these conversations. But so, but, uh, I try to keep up with what's going on in the world. I try to keep up with the markets. I try to study those things because those things influence business transactions. And I feel like we have a responsibility as a business podcast operation here to have that knowledge. And when people call me because, you know, my phone rings all the time, I talk to people all the time about businesses and startup businesses. And I'll tell you, Dave, a lot of times I tell people I just don't think it's a good business. And I try to, you know, some. Unfortunately, there are people that do have desire to build a business and they, and they want to build a business, but they. They don't have the skill set to determine exactly, you know, the right way to launch the business or even the idea. Sometimes it's just not that good. So, um, I think it's. I think it's healthy to try and keep your brain functioning really well. But at the same time, I think you've got to be fairly well read. You got to know what's going on in the world. You got to understand the business world. But I think you also should take the time. And, uh, that's what I try to do, and that is kind of study the markets and know where money is going and who. Where they're putting the money and what are the valuations and new deals and new things that are. That are coming out. So those are things that I do. And now back when I was running the company, running every day, uh, you know, I had. I had all of my things that I had to look at. You know, Monday, I wanted to see, you know, I wanted to see every. A list of every facility that we had. And I want to know how many patients average per day, what the census were. And then I looked at collections. I wanted to make sure that they were collecting all the money and things. I had a whole litany of things that I looked at all week. And these were my routines. I would come in and I want to see this, this, this, and this.

Speaker A: And.

Speaker B: And, uh, there were certain days and certain times where I said, okay, I'm going to. I have a lot of people wanting to meet with me. Well, Thursday, by the way, was my day. And my administrative assistant knew that they scheduled all of my appointments on Thursday. And then I spent those other four days working on the business. And that Thursday, it was meeting after meeting after meeting. Ran kind of like a congressman's office. And I had people out there would come in and take notes, and I, you know, try to follow through with everything. But I set systems in place and I put myself into a situation where I was able to be functional in running the business. But at the same time, I did all the things that you got to do to run a big business. And in the. In the community throughout the country, I had different people I had to talk to about different things. New, new concepts, new equipment, new technologies. And you just really have to stay on the forefront, and you have a responsibility to do that if you're, in fact, running a big company. So that's just a few of the things that, uh, you have to think about. But I was looking at that question. Ah, Which I wanted to. If you don't mind, can I jump to this one? Because, um, I love that one. Alicia Green from Denver. Please, go ahead.

Speaker A: When structuring an acquisition, she asked, what's your advice for negotiating with an owner who's emotionally attached to the business?

Speaker B: That's really, uh. Um, let me tell you, if they're not, then there's something wrong with the business. You know what I mean? Somebody that says, I just want out of here. Oh, you just want out?

Speaker A: Yeah.

Speaker B: Well, why do you. Why do you want. Why do you think I want to buy it when you're trying to get away from it?

Speaker A: That should have a light or an alarm go off?

Speaker B: Little alarm goes off, you say, I just want out of here, man. I'm done with this. I've had it with this. And look, I've actually been in those meetings, and I said I would ask him. I'd say, tell me why, you know, and of course, they'd spill the beans. And then you were like, oh, okay, well, the price just went down, you know, I mean, if you got problems, I, uh, have no interest in taking those problems on. So, first of all, before I buy it, you got to get rid of all of that. I'm not. I'm not interested in buying into any of that, so. But, um, you do have people that have good businesses that reach a point in their life where they have, uh, an illness in their family. For example. Uh, I had a. One guy that I bought a business from, and he had brain cancer, and he knew he wasn't going to live forever. And, uh, so he told me, he said, look, I just want to get this done before I get too sick to do it. And, you know, I built this company. I don't really even want to sell it, but. But I've got to take care of my family. So I sat down with him. He was very emotionally attached, and I said, let's go through everything that you want to get done and that we have to do to make you happy. And I went through it all, and we. We worked out every deal. And one of the things that the. I'm just going to tell you this because it's kind of fun, is they had an airplane, okay? The company did. And it. But it wasn't a very good airplane. As a matter of fact, it was not even an airplane that I would have bought if I had the money to buy an airplane. Because I've, um, been a pilot. I'm fairly familiar with airplanes, but it was a jet, but it was not one that people bought and they didn't make them anymore. And he said to me, he said, I want my wife to be able to have access to this jet for three years after you buy the company. So I had to agree to that. And so when we bought the company, the jet came with it and we just hangered it. And when she wanted to go somewhere, she got on that jet and she flew it for three years. But, you know, that was. There, uh, was. There were two things that I had to do in that acquisition primarily to get that deal done. And that was a $1.7 billion transaction.

Speaker A: Oh, wow.

Speaker B: He wanted. And you see, so the jet was like a rounding area. Wouldn't that be. I don't think the jet was worth two or $3 million. And we're doing a $1.7 billion deal, so. And so I said, okay, we'll do that with the jet. What is the other one? He said, I want my wife to have those antique rugs in our lobby. And I said, well, hang on, let

Speaker A: me think about it.

Speaker B: Yes, I said, those are hers and those. And it's amazing, you know, but you got to find, you know, what are the points that. And. And he lived about six months after we did the transaction, and we honored his everything, gave his wife the rugs, and. And then, you know, she flew in the airplane for three years, and then after that, we sold the plane, and that was the end of that. But, no, in talking with people, I used to sit down with them and. And I knew that they. They were going to have, you know, all kinds of second, you know, you know, reactions that would come because they, they. They loved what they had built. They really didn't want to get rid of it, but they knew it was time, uh, either because they were in. Some of them, these guys were just too old. They were old and they wanted to get out. I mean, they were. There was time for them to retire, and they knew that. And so. And here's the other thing to their market, their markets where you feel like you peaked. And. And people work real, real hard to build, build, build, build, build. And then they feel like, well, I've done all I can. Keep going it. And so they will have in their mind, I need to sell the business. I feel it's at the peak now. When I looked at it, I was. I was saying, okay, this guy feels like it's at the peak. I'm going to agree with him, knowing that we're going to build our company on for the next 10 years. So, you know, we would structure those deals, but I would try to allow them to work as a consultant, mhm, advisor. Uh, I would maybe pay them out, uh, their salary or for a period of time. And I did a lot of earn outs where I would say to them that you've got to achieve this level of income and you achieve this level income and we'll pay you a little earn out on it. So we did those kind of things that gave them comfort. Uh, some people, um, Dave, I put on the board if I felt like they were of value and they would bring something to the table, really smart people that could add value. I put a couple of them on our board and that worked out. And it would just put them on for a year or two or something like that. I know we have another sponsor. Do you want to go ahead with that?

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Speaker B: That's, uh. That's a great question. I think it probably is different for everybody, but, um, yeah, that's. That's, uh. You know, it's.

Speaker A: It's.

Speaker B: I don't know how to say this, but if you really are truly an entrepreneur, okay, and. And you have a great vision, and let's just say it's. It's. It's given. And I believe God gives us vision and you are just eaten up with it. You know, I tell the story of the guy who was a dear friend of mine. Him and his wife, they used to go out, my wife and I, when I was. Early on, I had, you know, we. I had the idea of starting HealthSouth, and. But I was working for another company. We'd go to dinner, and I'd tell them about Health south, what I wanted to do and how I wanted to start it. And I would go out, you know, every week. We. Every week we went out Friday, Saturday night. You know, they didn't have any children, and at that time, I didn't have any children there, uh, living with us. And. And, um, so we'd go out and I would tell it. And so he. One Saturday night, we're having dinner at a Chinese restaurant. He looked at me and he said, don't you ever tell me about this again unless you go start that business. I have had it with you. I come in here every Saturday night. You're eating up with. This is all you want to talk about this business, this business, but you won't. So I knew then, and so I said, well, I. You know, I've got it. I was so eaten up with it. He was right. And I. And I. The desire was so great. I need to go ahead and do it. And, uh, I had another job. So, you know, yeah, I had to. I had to eat, you know, and I had to fund my family. Unfortunately, uh, that company was sold, and I exited that company with a. With a. With a nice pile of money because I had worked very, very hard, and I had stock options. Stock in the company, and I'd made some nice bonuses, and I was able to leave with money and, uh, and invest it in my. In this thing that was inside of me that was eating me up, that I would have to tell every. About everybody about. Every time I sat down and Talked to them, and finally, uh, this one guy just said. Slapped me upside the head and said, either you're going to do it or don't talk to me about it. And he was a dear friend. Did you know, and I mentioned, I think on the show early on, that five years later he was working for me. He left his job after we built the company, and he came to work for me, working with us. And, uh, he was a great guy. And I'm still friends with his wife, but here's another friend who's passed on, uh, you know. But yeah. So to answer the guy's question, how do you find that purpose when you're just trying to survive? It's in you, and, you know it's there. If you can't find it and you don't have it, then you don't have it. I mean, it's. It's. Even though I was out there working hard, I had a great job, but I traveled all over the country. I, uh, was running a $100 million division in a company in my late 20s, and I was traveling, flying everywhere every week and running that business. But I still had. I still had that inside of me, that purpose, that, uh, concept that I wanted to build this other company, and it was just growing inside of me. So, um, when you're trying to survive, I guess you're saying when you're just trying to make enough money to pay the bills, pay the rent, buy the groceries, um. Yeah. Well, either you have it or you don't. And, uh, I don't know, you're. I guess that's. That's what they're asking. How do you read that question, Dave?

Speaker A: Yeah, I mean, I think it's. You know, some people obviously go into it or start their business because of that purpose, Right. So I think a lot of people have it before, you know, it ever begins. Right. You're starting a company and you want to donate certain parts of your earnings to charity or, you know, it may be some. Any other type of purpose towards that business in terms of finding it within. When you're, when you're getting started, you know, a lot of it becomes about you, your family and the families, uh, of your employees. Right. And what you guys are going to build together. Because the first purpose has to be getting that dang business up and running. I mean, once you jump into it, um, you know, you think having kids changes your life. Open a business, you know.

Speaker B: Yeah. And this guy, you know, he says it. He says, how do. If you're an entrepreneur, well, how do you know you're an entrepreneur? You know, uh, we talked about the traits of an entrepreneur. You know, do you have those traits? Are you willing to go out and take that risk? Do you have the courage to do that? And you know, you may have a desire to go do something, but have you checked it all out to make sure that it's something that would work and something that can be funded and something that would be profitable and, and make sense? Uh, so those are things that, um, you got to go through. So. And uh, you know, you just have to make time, you know. And with this other job, I had to make time. I put a business plan together while I was working a full time job. And, and, and then I was able to, you know, I told the story of me trying to hire somebody. I'm sitting in a restaurant, uh, having breakfast, and I'm in the Greenway Plaza in Houston, Texas, and I'm at Stouffer's Plaza and I'm telling, uh, this guy that what I plan to do and I'm still working for the other company. And then, uh, the venture capitalist from Citicorp Venture Capital was sitting in that restaurant, he heard me telling the guy about what I was going to do and he walked over and gave me a business card and said, hey, I'd like to put some money in your company. I just heard everything you just told this guy and next thing you know, and I said, great. I called him, we set up a meeting, and sure enough, he was the first investor in our company and he just heard me talking in a restaurant. Amazing. But, but that showed you, you know, shows you that, you know, I had a good plan. I had a good plan. I had thought about it, I had structured it, and here I am recruiting a guy. I didn't even have them. Uh, I was going to put them and I did, I put the money in myself. And so that's the thing, you know, in Health South, I put the money in. It wouldn't be, it wouldn't be a company today in Compass Health if Richard Scrushey had not had the vision and pull the money out of his own pocket that he made off of that company when he was at LifeMart. When they sold that company, it wouldn't have happened. I mean, that was. And you know, and again, uh, I was drafting that plan and put it all together and was recruiting while I was still working at the other company because I knew I was going to leave. But let me tell you, I was straight up with the leadership at Health At Lifemark, I went to the CEO, the chairman of the board, and I told him what I was going to do and what I wanted to do, and he fully understood. And he said, um, I'll be an investor. I mean, I love it. You know, I think that's great, Richard. Go make it happen. So I had the support, but I did it while I was working. So, you know, there's, there's. If there's a will, there's a way. You've heard that many times, and I believe you'll find that way. So, you know, to Andre Lewis, if you've got the will, brother, and you've got, you know, the desire, you'll absolutely will.

Speaker A: You will. That's a great place for us to end it this week, and we appreciate everybody tuning in. Of course, you can follow us on social media. You can send in your questions for Richard Scrushy@inforscrushyonbusiness.com and, uh, if you are a, uh, somebody who is starting a business, if you are somebody who is looking to grow a business, maybe even take a business public, Richard is happy to answer your questions. And Richard, I'll give you the final word.

Speaker B: I think that's right. And that's we, Yep, we appreciate people, um, hanging in there with us. The ones that are continue to view and continue to send us, uh, emails and just make really good comments on Facebook, Instagram, TikTok, wherever we might be out there in social media talking about what we're doing. And we're going to try and kick that up to another level coming soon in the future. Uh, we've just been talking about a lot of different things and we got a lot more to come, so we appreciate you viewing. Hope you have a great day.

Speaker A: We will see you all next week. Thank you.