$400M Founder: "Not Everyone Should Be An Entrepreneur" & Why Most Fail

Speaker A: This is a pivotal conversations podcast.

Speaker B: To be a good leader, you absolutely need to be in and understand the detail. If you are not in the detail, who the hell is?

Speaker A: Introducing Toby Pearce, the entrepreneur who sold sweat to US giant for a reported $400 million.

Speaker B: One of the most obvious ones is that people run on the assumption that recruiting a new employee is going to add any value to their business. You'd be surprised how much you can not do in business and still make progress. Treat them well, give them engaging work and give them a degree of autonomy. Help them win and they'll be more engaged than not. You've got comfy bean bags and fruit plates every morning.

Speaker A: What about if I said a statement of like, some people are made for it and some people aren't.

Speaker B: I completely disagree with the idea that everyone could, would and should be an entrepreneur. Uh, most founders or management level employees think that they are very good at what they do and the reality is that they're okay. They go, oh, I've been doing this for 10 years. I'm, um, a specialist. That's a complete lie. That doesn't make you a specialist. It doesn't even make you half good at it.

Speaker A: The next topic I want to talk about, you mentioned earlier, which is risk. Can you talk to that a little bit?

Speaker B: But if you live in a fear mindset where you're not willing to risk anything forever, regardless of your context, and you're not going to get very far. There is so, so much productivity leakage in business that comes from fear and avoidance as opposed to honesty and courage. Don't expect extraordinary outcomes unless you are, uh, capable and willing to do extraordinary things.

Speaker A: Loneliness in business, how do you think about that and how did you deal with it?

Speaker B: Especially in business, Loneliness isn't the absence of people, it's the absence of connection or capacity to relate. A lot of this loneliness comes from a lack of courage and a lack of self belief.

Speaker A: What are some of the common assumptions that you think people make when it comes to those decisions?

Speaker B: I would argue that one of the of the biggest traps that almost everyone falls into is.

Speaker A: Welcome back, mate.

Speaker B: Thanks for having me again.

Speaker A: It's been a while. I was trying to think back to when we, we did the last one, but it's, it's probably been two years now.

Speaker B: A couple of years. We're uh, in a sunnier state now as well.

Speaker A: Yeah, yeah, yeah, we're in the, we're in Gold coast at the moment. I, uh, I definitely, on my plane ride home, when I'm checking the Weather of what I'm about to walk out to into Melbourne. It's definitely, I think, you know, thoughts go through my head of like, what. What am I actually doing, man?

Speaker B: I never realized. So I live like most of my life in Adelaide, other than a lot of travel for. For work. I never realized until I was doing kind of weekend, a week in Gold coast and a week in Adelaide, how much I actually really enjoyed the sunlight, number one. But number two, how much it wasn't really that sunny and warm for a huge part of the year in Adelaide. It never really occurred to me until moving.

Speaker A: It's. I am like in that mode right now, which I'm sure you would have went through of. Should I, like, should I move 100? Should I do like 100? Ah. And I'm just like, like, even the sun coming up early here is just a massive, huge, huge.

Speaker B: And also going down a bit earlier too, because in Adelaide we used to have like really light sunsets during summer. Like literally like 8:39pm it would still some nights be quite sunny. Yeah.

Speaker A: Yeah. And that's. That's a problem. We're going to dive straight into it, mate. Big question that. I mean, we've had a few conversations off air, but the idea of. And it's something that I've. I mean, even me now going through what I'm going through the measurement of success when it comes to financial investments. And also one of the big questions that has been playing on my mind is it's all good. Measuring success in retrospect. Yeah, but, but how do you understand, like, what's the framework of making a, uh, financial investment in your business, something that, you know, might be an investment into the future, you know, something that will bring you a return later on. Because that's something that, you know, it's been top of my mind. M. Am I doing it right? Am I doing it wrong? But would love to kind of touch on that with you.

Speaker B: Yeah, look, um, it's important in, in these discussions. Uh, it's important to remember that context matters a lot. Yeah. When making these decisions. So if you're right at the beginning of your journey, uh, you don't really, truly actually have a lot to lose. Yeah. So you kind of should risk it for the biscuit, if that makes sense. But if you're kind of already, uh, an organization that's trading, growing, hopefully making a bit of money and a bit of profit, um, I think the situation changes just a little bit. So I've said many times before, uh, every decision in business is an investment decision. And the important thing here is not to get caught up in the idea that, uh, investments and speculation are the same thing, because they're not. And what I mean by that is that most people start their investment decision process from saying, oh, uh, well, where am I going to put my money? Where am I going to deploy my capital to make the best return? A much better way of thinking about this is where am I going to put my money where I won't completely destroy it and hopefully I'll also make a return on the other side. And this, uh, you know, this adopts, ah, an idea from a very famous book called the Intelligent Investor, written by Ben Graham, who was a guy that, um, Warren Buffett learned a lot off about investing in general. And yeah, the simple principle is that the biggest risk in investing is actually that you destroy your money. Right? Because if you lose 50% of your wealth, you have to make 100% return to get back to the start point M. Right. As opposed to making 0% return but not losing any money. You're still at the starting line. Right. And so from a business perspective, um, I've always tried to train my management team, uh, to think about this in a really simple way. You've only got three primary considerations. You know, what's the rough cost going to be, what assumptions are you making? And therefore what do you think the return is likely to be as a result of that? And obviously where most people get caught up here is the assumptions. So we can quantify how much this will cost. We can roughly determine what it will return if the assumptions are reliable. Um, and most people truthfully haven't spent enough time trying to develop the skill and capability to determine, well, what are the appropriate assumptions and are these actually reliable? And so as a result of that, their decisions actually become speculation, not investment, because it's not based on thorough analysis. So it's literally, you may as well be kind of striving to win the lottery. You're not really actually making a conscious, uh, investment decision, if that makes sense.

Speaker A: What are some of those, like, I mean, obviously context matters, you said it before. But what are some of the common assumptions that you think people make when it comes to those decisions?

Speaker B: Yeah, there's heaps. So I mean, one of the most obvious ones is that people run on the assumption that recruiting a new employee is going to add any value to their business.

Speaker A: Right.

Speaker B: And I know that might sound counterintuitive, right, because people know, like, oh, we're growing, we're kind of getting more Employees. But you'd be surprised how much you can not do in business and still make progress. But a lot of people attach this almost, uh, you know, kind of a reliance on like, oh, if I can't get this done, I'll just get more people. More people, more money will solve the problem. Uh, but that's almost never true. Um, yeah, another one is, you know, like, oh, we'll have like a really beautiful looking office because that will engage our employees more. Like there's, you know, treat them well, give them engaging work and give them a degree of autonomy, help them win. And they'll be more engaged than whether or not you got comfy bean bags and fruit plates every morning. You know, like, um, so people like, you know, and this is the whole idea here, right? Like, what actually, what is the value that you get back, you know, from a lot of these decisions? You know, having more employees doesn't make you more money. Having a nicer office almost doesn't never really makes you more money either. Um, you know, people will want to invest in huge amounts of like, branded material, you know, branded pens, branded books, branded bottles, branded this, that and the other and whatever. Uh, in some cases that's useful. But in a general sense, the majority of the time it's like, that's not only, uh, often a waste of capital, it's also a massive distraction. Like, you know, are they the greatest priorities in your business right now? Like, is that going to kind of get you where you want to go? And one of the really important lessons here is also not only whether or not a investment is good, bad or otherwise, it's, is this the right time to make that investment? So, uh, yeah, like, context is really important with decision making. This can be a really, really thorough, rigorous analysis process we've gone through to make a really great decision. But we're not going to do it now because the timing is wrong. And in the same way that you can have. This is the right time to making these decisions, but make a terrible one.

Speaker A: Yeah. Do you have any, like, frameworks around that or like benchmarks? Um, so maybe from a numbers perspective, like.

Speaker B: Sure.

Speaker A: I mean, the way I kind of have always thought about it in my head is like, okay, um, you know, maybe you could be like a percentage of profit in some sort of future investment. But is there any way that you kind of think about that? Because that's me just.

Speaker B: Yeah, yeah, yeah, sure. So if, um, again, like, there's a lot of context and detail that matters here. Uh, but I think in a simple Sense. So ah, one organizations that I own um, sell was about sort of $30 million a year give or take worth of product. And we know in that particular organization based on a couple of different expense lines. Uh, but by the time we kind of get down to the bottom, just to keep it simple, by the time we get down to the bottom if they're making about a 20% EBITDA margin that's good so long as the amount uh, of money that we're spending on capex or like kind of large forward looking investments is not sort of above 20 to 25% of that EBITDA. Right. So because a lot of time people get caught up and be like oh we're making heaps of profit because we just capitalize these expenses and remove them effectively from uh, our P and L and they hide them and they're not really conscious of what's happening. And so when we look at this from a capex perspective or from an investment perspective, I'm m normally saying so long as we don't go too far from 20% EBITDA margin in this company and we don't go too far above this percentage of CapEx and we believe from analysis that we're going to kind of 3 to 5x our money from that investment over a three year period, well then that's a great decision that we can make. If those things aren't true then either one it's not going to suit our organization or two, there has to be some other significant variable that sits outside of that that uh, we need to understand that's going to kind of assist us in making that decision. And what I mean by this is a lot of people will justify. So like the trap, right, the investing trap that people fall into is that they go I'm going to spend this money today for this return in the future. But they're not able to bridge that equation by saying well these are the reliable assumptions and data points that are going to make that happen. And so then if you say well we have to maintain this profit margin, I won't make an investment unless we can maintain this profit margin. Or there is some outstanding information that says we should make it, that removes a lot of those silly ideas that frankly kind of shouldn't really ever happen in the first place. Right? But a lot of people won't have that discipline. They'll go oh we can sacrifice 5% profit this year because it's for a three year, five year return. Can't tell you how it's going to return. Can't tell you when, can't really tell you why or exactly what that's going to look like, but I can just tell you.

Speaker A: Um, and that's where that 25% mark, uh, comes in because it's a benchmark.

Speaker B: It's.

Speaker A: Yeah, it's like cool. We've got this spend. It kind of creates restriction.

Speaker B: Yeah, well, I was going to say the inverse is true. Right. So just, ah, one other rule that I have is I have uh, every company that I am a major shareholder in or have some kind of management input, I force them to make a slush fund.

Speaker A: Right.

Speaker B: Every year in their budget. And depending on the type of company.

Speaker A: I like the sound of that by the way.

Speaker B: Yeah, it's not a, it's not boat parties, you know, it's not boat parties, but it's. But yeah, the slush fund basically is, you know, depending on the business, somewhere between 0.5 and sort of 3% of revenue. So this money is just kind of parked aside and it's in the budget and we assume every year we're going to kind of spend that money on something. Right. But that is after all of your other functions, expense lines are already taken care of. So the only way you get access to that money is if it's a significant over and above investment opportunity that you can convince the whole management team will have this return based on this reasonable set of assumptions. Um, and the benefit of that also is that then you're not kind of trying to scrape money away from the profit margins. It's just baked into the way that the company operates. So every year we know we're going to have, depending on the size of the company, 50 grand, 500 grand, a million dollars or whatever it may be of just money that we can invest, but there's a predefined set of criteria that have to be checked to unlock that money.

Speaker A: And do you think about it in the sense that you would have different cadences for different sizes of the company?

Speaker B: Yeah, yeah. Um, so to keep this kind of reasonable, I would normally say you're probably removing a whole bunch of like angel seed size companies, like small sized companies. You're probably removing them. So these businesses are probably already doing a few million, maybe 3 to 5 million in revenue or more, um, anywhere up to hundreds of millions in revenue. Um, but ah, and the, the one of the benefits that you get of trying to run a business this way is as a founder or shareholder, you don't have to rely on you being the wise, intelligent one that has all the ideas and does all the thinking. You've built a beautiful framework that actually helps develop other business people in your company. One of the principles I run by from a management perspective in this regard. I always say to management, uh, teams, I'm like, don't worry about being the best marketer or the best product person or the best finance person. Worry about being good at those things but becoming the best business person that you can. Because you can only be so good as a marketer who doesn't understand the business. You can only be so good at ah, product if you don't understand the business. Right. And when I say understand the business, I mean um, what are the impacts of everything that your skill set currently does M on the entire organization? How is this going to change the current and near term or long term future state of the business in its entirety? Not just can you build a better product or can you run a better ad? If that makes sense is that you

Speaker A: just mentioned like you the word the business. Right. Be good at the business. And that makes a lot of sense. But is that, and then you kind of the follow up to that. I just would love to clarify. You mentioned your skill set. So is that individual to the person like M. Some people, you know, like more sales, you know, they're more sales led. Some people would be, um, more product led. Like is it, is it, is it relative to the individual or is there a specific set of skills? And I'm sure it's probably a little bit of both. But is there like what are those skills?

Speaker B: Yeah, there's a bit of a Venn diagram if you want to think of it in that way. So to give a couple of examples, you know, the common ones that people fall into. Right. Normally advertising and marketing people will go like, oh, we're winning. Our CAC is great and our ROAS is great. But they have no actual consideration for margin. And so if they're not considering the product, you know, the kind of average cost price versus average sale price, marketing expenses, therefore kind of gross margins and contribution margins, they have no way to actually make an intelligent marketing and advertising decision. None. All they can do is score against themselves, but they can't score the business. Is the whole business doing well? Right. In the same way, you know, a product person, God, this is, you know, this is the best product ever. Yeah, yeah. We're going to enter the market, be super competitive on um, price. This is what we're going to sell it for. So hold on, but like what's it cost? How much did it cost to get to our warehouse, what was the packaging, uh, so on and so forth. I will, well, crap, if it's going to roughly cost us this much to sell it, it's not actually really any margin left over. Right. And then uh, but that supplier has a minimum order quantity of 20,000 units. Oh, that's going to suck up 40% of our free cash. So like if you're only thinking about your immediate functional responsibilities, you end up leaking a lot of value. And the problem that people experience in business from this is that not all of your bad decisions in business are going to be visible now or soon. Most of your bad decisions in business won't be visible for three years. And that's only going to happen if you're paying attention because a lot of bad decisions remain invisible for two, three, four, five years. People don't know normally until it's way too late by that time.

Speaker A: Yeah, that rings true. It's like a naivety, isn't it? And you said you don't really realize or if, if the uh, if you actually want to realize your mistakes probably sooner I would assume.

Speaker B: Yeah, 100%. And this is the whole idea of be a better business person. Don't just be a product or sales and marketing, you know, individual. And that like, that goes for management teams and the founders as well. Because practical reality is that most people start with a specific skill set and then they build towards a general skill set from a founder's perspective. What I mean by that is that there's not many people that have a general, well rounded business set and then go, I'm going to found a company. Now the majority of founders are either very product oriented initially and then they become business people or they're very sales and marketing oriented and they become a business person over time. But until they kind of start to and or get over that hump of transitioning to a business person, they're not aware of all these considerations and the lack of awareness there is then what kind of kills them two, three, four years down the line. And maybe at that point, like I was saying, most of these bad decisions don't become visible for two or three years. And that might be the point when you want to go fast, but you can't go fast now because you weren't paying attention or didn't have the appropriate knowledge earlier on.

Speaker A: Um, we're putting together a dashboard, right? A business dashboard. What are we tracking for like. And you know, maybe let's cap it to like, I don't know, what do you Think's a reasonable number in terms of. There's obviously so much you can track. But like, what are the, what are the big rocks?

Speaker B: Well, I'll just give you a headline example, right. For most econ businesses, I think there's about 55 to 60 core metrics that they need to be across.

Speaker A: 50, 60. That would hurt a lot of people's hearts.

Speaker B: It would, Right. And you know, just to be clear, you could, uh, you could massively shorten that list and with that small core set of metrics, you could have a general idea about what's going on.

Speaker A: Right.

Speaker B: But if you truly want to understand, then you need more layers. So like, just to give you a really great example, right. A lot of people will look at the E commerce business model and go, oh, traffic multiplied by conversion rate multiplied by AOV winning. That's what it is, right? And you go, okay, but the average order value, simplistically is constituted by average number of units per order and the average sale price per unit. You go, okay, but those two things, sorry, the latter of those, the average price per unit or average sale price per unit, however you want to look at it, that's dependent on the product mix. So do you have, uh, your products roughly all the same price or do you have some very cheap and very expensive products? Because that's going to massively and are some different margins. This is the next point. So then, then even if that's what they sell for, well, what's the incremental margin of those? And, but then you've got shipping and the average shipping cost. So, uh, what percentage of your orders are free shipping versus paid shipping? If they are paid shipping, what are they? If they're free shipping, what's the cost that you wear? Yeah, so the list goes on. Right. But if you were building a more simple dashboard for a business, you need to start by having a few headline financial metrics, which is you're normally going to look like revenue cogs and gross margin, cost of sales and contribution margin, you know, OPEX and ebitda. They're kind of your hygienic, very basic financial, uh, metric list from. Depending, uh, on the business model, you also probably want to have a series of operating, what I refer to these as operating metrics, which will normally be a combination of, uh, so if you were looking at an E commerce business, kind of, you got traffic customers, repeat purchase rates, order values, those sorts of things. And you could probably get away with about 10 or 15 of those if you wanted to. And if you had nothing Else other than those, you could have a really good read on that business. Right. But the success in business doesn't come from having a good dashboard and looking at it. The success in business comes from knowing what those things mean and then being able to appropriately dictate tactical action or remediative action in real time. And this is the big gap that you see with a lot of founders and management teams is they think that knowledge wins, but skill does. Knowledge doesn't actually get you the game.

Speaker A: Right.

Speaker B: Uh, skill or your capacity to apply that knowledge in real time for the benefit of the business is what gets you the gains. And a lot of people know what CAC is or traffic or conversion rate. Not a lot of people know how to diagnose the issues in real time, figure out what's going wrong and why, and then take action immediately to resolve it. There's a huge difference between the two.

Speaker A: It's kind of, you know, just as you were talking, I'm just keep thinking about that, that word naivety. Right. It's like because you want to, you want to have that short refractory period.

Speaker B: Yeah.

Speaker A: I feel like that's probably like for me being the thing that I'm starting to understand now is like okay, mistake you don't make, you know, like you gotta do everything you can not to make that again. And you only do that from actually applied learnings there. So.

Speaker B: Well yeah. And you know, I would argue that one of the biggest traps that almost everyone falls into is the very poor estimation of their own degree of mastery in a subject matter. So. Mhm. Most founders or management level employees think that they are very good at what they do and the reality is that they're okay. That's it. Right. And the, the simplest way of you know, thinking uh, about this is that well, not everyone that plays a sport becomes great. We know that not every business that ever starts becomes great. So we can accept in those simple ideas that not everyone that does those things is great. But for some reason people think that in business in their field, whether it's accounting or marketing or product, they go, oh, I've been doing this for 10 years, I'm a specialist. That's a complete lie. You've been doing this for 10 years. And if you're like most people, you've probably been repeating roughly the same thought patterns for 10 years. That doesn't make you a specialist. It doesn't even make you half good at it. But um, people don't want to accept that. And this comes back to an idea. We've spoken about a couple of times before, which is that the actual knowledge required in business, it's large, but it's not unfathomable, it's not impossible to attain. The biggest barrier is actually the emotions in business. Because if people are able to start their journey in any skill set, marketing, sales or product, and go, I don't know a lot, and five years later still say, I still don't know a lot, that's really emotionally confronting. But most people don't want to do that. And even less founders want to do that. Because if you empathize with them and their experience, they started this business, it's successful because of them, they're winning their right. And there's a whole bunch of people, if they've been fortunate enough to build a team, I'm the reason they're all here. When almost none of that's true either.

Speaker A: Right.

Speaker B: But they don't want to acknowledge that or the potential for that because that's vulnerable, that requires courage. And it also, a lot of people would interpret, uh, that as poor leadership and management. Whereas in my own journey, I realized over time that being vulnerable and honest and saying, I have really no idea here is actually a far better way to lead than not. Because people kind of see through the fake confidence and the crap really quick. Right. But when they see you say, I'm not actually too sure, but I believe in our team's ability to figure it out. That's actually much more inspiring and motivating to be around than someone who pretends that they always know and then momentarily screws it up.

Speaker A: Yeah. And I could imagine that it would become a, uh, self fulfilling, you know, prophecy.

Speaker B: Self fulfilling prophecy.

Speaker A: You know, like with people like as. Because look, as you get bigger and bigger and you earn, you know, your earnings go up and up and up, that's probably the one thing that I reckon you constantly got to catch yourself

Speaker B: 100 as a founder.

Speaker A: You know, that's like, it's, you know, um, there was a quote, I'm trying to think what it was, but, um, you only learn bad lessons running downhill. Right. And it's like, you know, that's the, it's when you're running downhill, when you. Things are going really well, that you make some of those big mistakes that probably come back to haunt you later on.

Speaker B: Yeah, absolutely. And you know, this whole idea of, you know, making mistakes and reflecting. Right. And you know, something that I, uh, regularly think about this in my own journey. So I have either directly spent or been responsible for managing more than half a billion dollars in advertising. And I still don't think I know a lot about it.

Speaker A: Well, in the grand scheme of things, it's not a lot of money when you think about some of the budgets that are out there.

Speaker B: Exactly right. And I look at that and I'm like, I have a really thorough grasp of some of the fundamentals. And recently I sat down with someone who does a lot of this. Yeah. And has been doing it for a long time as part of their career. And I sat there, I'm like, oh, this is just epic. I'm learning so much from having this conversation. And I sat there and reflected on it afterwards. I'm like, I don't think that many people that have spent 5 million on advertising would be happy to acknowledge new information and then take it away. And this is, in my opinion, one of the, you know, one of the core differentiating characteristics between people and founders, specifically, that go a little way versus go a long way is the ones that are more focused on learning and getting better than how good they are.

Speaker A: Mhm.

Speaker B: So they're spending a lot of time being like, oh, okay, yeah, well, what's next? What? What's next? What's next? What next? That's more valuable than. I've learned that. I've learned that. I've learned that. I've learned that. You know, the former is something that people can use, anyone can use to get further in life. The latter is an incredibly limiting mindset and something I commonly refer to as a very unsafe way of living your life. Because if anything changes in reality, you'll be none the wiser because you spend all your time thinking that you already know.

Speaker A: Right.

Speaker B: And so you can't teach a man something if he already believes he knows it.

Speaker A: Right.

Speaker B: And as far as business is concerned, there's a direct relationship between that and your capacity to make more money.

Speaker A: So I'm interested to hear about your personal, uh, anecdotes, experiences around managing those dashboards. Like, more from a tactical perspective. Like, is it something that you went out there and you kind of built these things yourself? Are you using your basic zeros and your accounting platforms and softwares? Like, how do you actually go about tracking and managing some of these benchmarks that we're talking about? Like, obviously P and L, that's pretty obvious, but outside of that, like, yeah.

Speaker B: Uh, so I think importantly, I think the first thing actually is that I think you as the founder need to be the one to design it. And what I mean by that is that if you rely on an accountant to build your P and L and a marketing person to build this and a salesperson to build, build that for the first time. Right. Then you're none the wiser. Is this a good or a bad idea? Where does the data come from? Does it have integrity? Is my definition of that metric the same as their definition? There's so much variability. So I actually always encourage people, especially people that are very early on in their journey. I'm like, we'll go figure it out, right? List of your own metrics. Where are you going to get the data from? How are you defining it?

Speaker A: It's also one of the, like, just going through your P and L and actually going through your line items, like actually. And then dissecting them. Not to be all the time, but like, I found that personally, one of the most helpful things, when you're picking up the cost that shouldn't be in there. But two, it's like you can start to understand, like, if you're getting your, your bookkeeping done or something like that. Like, for me, I was like, I figured we went through P and L the other day and I was like, oh, um, you know, can you tell me about this? This just seems to be a bit weird, a bit off. Um, and I was like, oh. Anyway, he, you know, turns out that it was being, you know, it was. There was an allocation that was going completely wrong.

Speaker B: Yep.

Speaker A: And now, you know, completely, um, you know, shifted our margins. Right. In terms of making that adjustment happen, but wouldn't pick up on it otherwise.

Speaker B: You know, and this is part of the thing, Right. Like, I believe, and a lot of people disagree with this, but I believe that you need to be in as much detail as possible, both early on, in my opinion, for a decent amount of time in your journey as a founder and a manager or leader, even if it's not your business. And a lot of people will say, being to be a good leader, you can't be in the detail. I completely disagree with that. To be a good leader, you absolutely need to be in and understand the detail. Because the fundamental truth is you are in that position because you've gone further, worked harder, learned more, and achieved better results, presumably, than the majority of the people that report to you. So that means you understand things about those details that they don't. So if you're not in the detail, who the hell is?

Speaker A: I would assume it comes back to what you were saying before around the business, right? Like that word, the business. It's like all these little things that are happening in the company are inputs.

Speaker B: Yeah.

Speaker A: And like, you know, if you're like, oh well, you know, gross margin, we want to see an uplift of 5%. How.

Speaker B: But this is the point, right? So yeah, going back to your question, how do you kind of go about managing them? So the first thing is I think that the founders, or at least the founder and management team should collaboratively go design those dashboards. The second thing is that you have to have routine. Sorry. The uh, second thing is you have to all agree what those words mean because if there's any variability in what you think it is, and I think it is, then they're redundant conversations. Right. So once you've designed and defined. Right. Then the most important thing after that is a uh, really structured recurring set of forums for you to investigate these metrics.

Speaker A: Right.

Speaker B: And then the way I normally tell people to think about this is set the frequency of these different types of meetings based on your ability to impact different metrics. Right. So it's quite hard to, you know, impact margin on a daily basis. So you're probably not going to kind of try to do that. But things like your advertising, roas, cac, traffic, you know, this, that, the other, these are things you can kind of meaningfully move day to day. Then month to month you might be able to make larger P and L decisions, this, that and the other. So your report that you do daily or weekly is presumably going to be much smaller than the one that you do monthly. Now once you've set those forums and the list of your metrics that you'll review at those different points in times and those conversations need to be structured for one thing and one thing only, and that is the improvement of results against budget. Now the statement at the end of that, against budget therefore suggests the idea that you kind of have to have a budget. Right now a budget isn't mandatory for every company, and especially ones that are really early on because so much is going to change and it's very unpredictable. But once you've gotten to some degree of stability over time, it's very worthwhile having one. And it's not just worthwhile having one for the obvious reasons of managing spend and setting goals and whatever, but it's also because a, uh, well run financial planning cycle is, in my opinion the best way to develop your team members, align their understanding and actually drive performance against reality. And, and what I'm kind of emphasizing there is people will set goals that are just completely unreasonable and ridiculous. So they'll have dashboards and then everything's red because they're like, oh, we're going to grow 200% this year. But that comes back to the initial conversation around investments, right? Those assumptions were fraudulent. Right? They were never going to be real. They didn't stand up to any form of basic analysis. And so if you have these nicely designed dashboards that kind of link to your budget and you have these meetings on kind of weekly, fortnightly, monthly basis, whatever they may be, now you've got a management team and or yourself, they're kind of locked into this cadence of like well we're going to review what's happening against what we agreed was the reality of our business, which is this dashboard or scorecard if you will. And the thing that we're scoring ourselves on is the variance to what we predicted was going to happen. So then every time you update your predictions kind of quarterly is normally the frequency. Well you get less ridiculously aspirational because you don't want to be the person that says oh, I thought we were going to hit a CAC of 20 bucks, but it's actually 40. You don't want to be in that position. And that has big flow on effects to the business. So some of these, um. Designing this operating process forces an adoption of the idea of what's the whole business impact, not just my metric of customer acquisition cost or whatever it may be. The only other layer that I try to get other organizations to um, adopt is that if you were to go through your whole P and L and this list of metrics, I try to assign a leader or a manager M to each of those things. So even if you're not currently sophisticated enough to have like functional P&L's reviewed monthly, this, that, the other, that's okay, but you can at least say, well look like traffic and conversion, uh, rate, aov, these sorts of things. These are kind of owned by our E Comm Marketing advertising team. Things like kind of margin this, that and the other. They're going to presumably be largely owned by the product team. And so you can start to kind of allocate some of these metrics to these people because in the performance conversations become really easy. Well, I employ you to get this result. You told me that that result was reasonable to achieve. We are or are not achieving that result, which is again you're managing them to variance of their own expectations, right?

Speaker A: Mhm. I like that a lot. How is there a certain level that you have to be at to be able to do that? Like you know, and, and, or is it more In, I would assume the bigger the team, um, the more the budgets and these kind of things play

Speaker B: a significant role, I think in business. One of these things, one, uh, of the ideas in business is really important to understand is like, right tool for the right problem at the right time. And so most businesses of any size have some form of reporting, but that's a very, very open to interpretation word. So if you're a small team of like two or three people, it's like you could probably get away doing nothing other than just a basic weekly report. And there's probably not value in doing a lot more because by the time you create a bigger report, half your week is going to be gone.

Speaker A: Yeah, right. That's the, that's the tricky thing is a small business.

Speaker B: Yeah, yeah. So you got to, you have to. I try to come back to this simple idea, like just, just do what makes sense. Just be practical. And not that. That's a. Just to be clear, being practical is a far cry from doing what's easy. M. Uh, they're not, they're not the same thing. Right. And I think a lot of the time in business, people think that what they're doing is the obvious, logical, practical, reasonable thing, but what they're really doing is just defaulting to the easy out because it's a uncomfortable topic or something they're not familiar with or it's emotionally confronting. You know, and this is a, uh, there's so much productivity leakage in business that comes from fear and avoidance as opposed to honesty and courage.

Speaker A: Yeah, I feel that in my bones too. I feel like it's one of the things you have to get good at, you know, like, okay, why am I like, as a founder? It's like, why am I avoiding this? Why am I avoiding this?

Speaker B: That constantly question of, well, it comes back like that. So the, the root answer to a lot of these conversations with a lot of founders is they go, I'm just, I'm worried about X, Y or Z happening or I'm afraid.

Speaker A: Right.

Speaker B: And that's fair enough.

Speaker A: Yeah.

Speaker B: Not an unreasonable position to arrive at. Uh, it might not be a right position or a wrong position or the most useful position, but we can generally understand how people arrive there. They're working with this founder for a little while and he has struggled with some, uh, you know, fear problems and anxiety problems in his business. He kind of would avoid things because he's afraid of kind of upsetting the status quo or that he might fail or whatever it may be. And yeah, as we explored that Team. I said, I'm like, well, what things do you do in your life that regularly require courage? And you could see him sitting there thinking on that, and, you know, momentarily, he goes, well, you know, kind of other than just, like, showing up to business and to work in general these days, I don't really think anything. Okay, so because you're not regularly engaging in something that requires you to be courageous, deliberately, like, you know, of your own volition, you know, uh, I. E. Engaging in things that are hard, right? Even easy things seem hard because you have no relative calibration of what actually is difficult. Now, um, this particular situation, uh, you know, played out in a really interesting way because he was like, oh, what could I do or should I do? And I was like, well, I did jiu jitsu. That was one of the reasons I started. And he's like, cool, I'm gonna do that then. And I was like, okay. I'm like, well, you come with me. We'll train you. Commit to three days a week for three months. And let's just. Your thing is just. Just arrive. Worry about nothing else. Just arrive. And the first night, he comes in, and I deliberately give him a little bit of a punish. And at the end of the class, I'm like. I said, what are your reflections? And he's like, well, he's like, I was freaking out before even getting here. This is really hard. And honestly, I thought I was gonna die the whole time. I'm like, cool, that's great. Well, let's go away, and then we'll see you tomorrow. Comes back the second day, goes through the class, and he's like, oh, man. He's like, oh, that was really hard tonight. I'm like, okay, we'll just keep reflecting on that third night. He comes back, he's like, oh, dude, this is awesome. I was like, well, were you freaking out that you were going to die tonight? He's like, no, no, not at all. And I'm like, was there ever any point in freaking out now that you know what, you know, three days later? And he's like, no. I'm like, was there any ever point at any ever point in freaking out in your business? He's like, no. Was there ever any point in avoiding all that stuff? No. And so having these experiences where you approach things that are, like, meaningfully uncomfortable to you, that generally you instill fear and anxiety and. Or, uh, worry in you, right? But then, like, persevering through them, you normally get out the other side and have the realization, well, none of those things are actually ever that bad. You know, most of what occurs in your life that is bad occurs in your mind before it happens. And a lot of the time it never even happens. Right. And so from a business perspective, if you could adopt that mindset of courage, you'll realize that not only doing a lot of those things never actually ever happen. If they do, they normally happen because you weren't courageous to begin with and they could have been avoided anyway.

Speaker A: That makes total sense, I think. Um, how important do you think it is like you, that concept of having something outside of the business to challenge yourself?

Speaker B: At the end of the day, everyone is different. So everyone has a different mindset, different beliefs, you know, et cetera, et cetera. And so whether it needs to be outside the business or not is kind of dependent on them. But I do believe in a general sense, a safer way to live your life is to constantly do things that make you feel unsafe.

Speaker A: Mhm.

Speaker B: Because then you get far better at dealing with the idea of not feeling so good all the time. A lot of people will make these complaints like, I just want to live a happy life, I just want to be happy, et cetera, et cetera. I'm like, but by virtue of you making that statement, I'm running on the assumption that you're currently not happy. Are you unhappy? Right. Right now? And a lot of the time they'll go, oh, well, no, but I just want. And I'm like, so you're convincing yourself that you're unhappy so that you can strive for happiness, which is, uh, is a, I think, a fraudulent idea, you know, in and of itself.

Speaker A: I agree.

Speaker B: Um, so yeah, I think for a lot of people, the reason they feel so sad and unhappy is because they don't actually have anything to struggle, strive against. They have no battle to fight. And if you are, uh, if you're an individual who proactively finds these battles to fight and challenges to face up against and overcome, you realize that the rest of life is actually pretty great. There's a lot of awesomeness there. But you can also accept that it won't always be great. And so you don't necessarily feel like you're always striving for happiness because you have a purpose to exist.

Speaker A: And what about if I said, like, the statement of like, some people are made for it and some people aren't?

Speaker B: Yeah. I completely disagree with the idea that everyone could, would, and should be an entrepreneur. I think it's a very unsafe statement. And I don't say that from a position of disrespect. That's not what it's about. You know, um, it's sort of like saying every single person could be LeBron James. Well, they can't. I'm ah, never going to be that tall or athletic. It is statistically unlikely. Right. And so the, the statement of everybody can be this or that, people can be anything that they want in general is a very unsafe idea for society to adopt in the sense that one, it's very obviously and fundamentally untrue. Um, and two, it actually also leads people to a lot of sadness and frustration. Right. It doesn't mean that you can't try to be one. But not everyone's meant to be an entrepreneur in the same way that they're not all meant to be famous, super successful basketball players or athletes. That's not the way that the world works. Everyone is born with different fundamental traits, characteristics and attributes and, or develop them throughout their life and they should find an area to apply that to that brings them joy and solves their other kind of life problems or desires. But that doesn't necessarily always need to be owning and running an organization. I know a lot of people that have tried really hard to do that who have actually just worked themselves into sadness.

Speaker A: That's the, uh, look, that would be the, that would be the, the, the toughest thing I think, for a lot of entrepreneurs to, to come to a decision. Because it's a time thing. Right. It's like, all right, I've got uh, 20 years.

Speaker B: Yeah.

Speaker A: Fundamentally I got 20 years. I got from the age of 20, you'd say to 40, whatever.

Speaker B: Yeah, sure.

Speaker A: To kind of be as productive as I can.

Speaker B: Yep.

Speaker A: And you could waste 15 of those and never get there.

Speaker B: Sure. But this kind of comes back to like, what actually are your core drivers? Yeah. Because uh, uh, one, not everyone's cool drivers are the same. We all value different things differently.

Speaker A: Mhm.

Speaker B: Right. Uh, number two, most people don't even really know what they value. That's why they get caught up doing things that they don't actually enjoy or like, because they're kind of chasing someone else's dream or idea. Right. You know, one of the best examples of this is people who go to university to get a degree. It's like, why are you here? It's like, oh, my parents said that, you know, uh, you just got to get this because it's safe and it's good and you know, you can get a good income and a good job, etc. Etc. It's like, but you Hate that. And you're not even driven by the outcome that that could potentially provide you. So why are you doing it? Right? And so I think regardless of whether everyone isn't, is not an entrepreneur, which I don't believe is true at all. You know, the first protocol here is figuring out, well, what do you actually care about in your life? What are the things like how do you want to live your life?

Speaker A: Mhm.

Speaker B: Right. Because a lot of people get into these things, you know, play a sport or run a business and they never have any consideration for what's actually required to get to the other side.

Speaker A: Right.

Speaker B: Like I often say to people, I'm like, right now, is your current level of effort and sacrifice representative of the things that you say you desire? Because everyone in business at least goes, oh, I want to grow the business, I want a 10x, I want to make all this money. It's like, well, how much effort are you putting in and what have you been sacrificing recently to achieve that? Because the answer is a mediocre effort and load of mediocre sacrifices when you should expect load of mediocre results. Yeah, right. Don't expect extraordinary outcomes unless you are, uh, capable and willing to do extraordinary things. Otherwise it's just an unreasonable dream that's only going to make you unhappy.

Speaker A: The next topic I want to talk about, you mentioned earlier, which is risk. You said, uh, I, this is something I fundamentally agree with and you said it just there, is that if you don't have much to risk, then you should, you know, you should be going as hard as you possibly can.

Speaker B: Yeah.

Speaker A: Can you talk to that a little bit? Because, and, and then I think it kind of ties in with what you just said as well. But this idea that, you know, how do you think about risk? What's your advice for, uh, entrepreneurs in the early days with risk?

Speaker B: Yeah.

Speaker A: Um, because a lot of people seem to be scared of things that, yeah. Losing things that, that aren't necessarily there.

Speaker B: Yeah. I think for a lot of people. And I was having a conversation with actually one of my co founders recently for an organization I own about this. Uh, you know, he's sitting there saying to me, well, yeah, I really back myself.

Speaker A: Yeah.

Speaker B: But yeah, but if I, if I invest this money, then I lose it. Well, we have to, that, that's, that's a bad thing. And I'm like, well, yeah, I mean like financially that wouldn't necessarily be a great thing, but I'm like, what have you actually lost? Because you've, uh, already made all this money, you'd lose a portion of it. Do you believe that you can do that again? And then he's like, yeah, absolutely. I'm like, well then you lose nothing. Because doing nothing is a much bigger risk to you than losing half a million dollars or whatever the amount of money is. I think the idea of risk here, and specifically for people like earlier in their journey in business, if you don't currently own any material assets and uh, you don't have any other kind of material ongoing obligations financially, I. E. Children or a mortgage or whatever it may be, what do you have to lose? Because right now you're losing time and opportunity by doing nothing. M and that's much, much, much more expensive than money. So if you're someone who saved up 50 or $100,000, that may have taken you a large amount of time. But the reality is if you quantify the risk of doing nothing, it is substantially larger that 50 or $100,000 you might lose. But the skills that you develop losing that might make you 50 million. And so you have to be, at some point in your journey, open to risking a huge amount proportionately of what you've got, typically earlier on to kind of get where you want to go. Now, if you're at the opposite end of the spectrum and maybe you've made a decent amount of money and you have some obligations, et cetera, et cetera, et cetera, it's just a value equation for you. You know, are, ah, you worried about going from a nice house, a nice car and a nice lifestyle to a bad one? And do you have low or high belief in your capacity to get there? If you have full belief, you risk it all. Because to you that's a two way door, right? You can go through that, lose it all, and you can come back and make it all over again. If you don't have the belief and you're not willing to sacrifice those things, which would also be very reasonable. Right. Well then, uh, it's a one way door. You can't come back through that door if that doesn't play out the way that you want it to. And so for me now in my career, I think about things from a proportionality basis. I'm like, I'm going to invest all of my money, so I'm going to risk all of it, but I'm going to try to find a way to allocate it to make sure that the likelihood that it all dies or is permanently destroyed is low. So they are in many regards two way doors. From a macro perspective. Right. But you're early on, like right at the beginning of my journey, I think I had $60,000 in the bank. I spent 20 or $30,000 of that to try to build the first version of the E book and website.

Speaker A: Right.

Speaker B: Uh, and made a lot of money subsequently off the back of that.

Speaker A: Right.

Speaker B: But even prior to that, when I was running a bootcamp business, you, I would spend sort of 30, 40, 50% of my money on marketing material. And in retrospect, it probably did nothing for me and generated me. No, no business.

Speaker A: Yeah.

Speaker B: Um, but I would do that kind of on a semi regular basis. I was like, well, I've got to do something to try to make this work. But if you live in a fear mindset where you're not willing to risk anything forever, regardless of your context and you're not going to get very far.

Speaker A: It's been something that's playing on my mind a lot lately, which is this idea that fundamentally risk is the biggest thing that you have to wrap your head around. Right. Like this idea that the more risk you take, the more, you know, obviously there's. I was gonna say the more risky take, the fundamentally the bigger the reward can be.

Speaker B: But that sometimes.

Speaker A: Sometimes. Right. Like it has to pay off. Right. But I think you fundamentally have to be okay with taking risk. M. And those risks as you get deeper and deeper. Like you said, like, you know, if you have a massive exit, the risk is, is high because you've got the money and you can lose it. But your framework for kind of does answer that. But you know, it is something that I'm recognizing even in myself now is like, okay, you get to these kind of critical points where. Right. Where you've got these critical decisions and there is risk associated with all of those decisions.

Speaker B: Mhm.

Speaker A: And then it's like, okay, I now have to make this decision and it's either progress or stagnate.

Speaker B: And the thing with this, for people in business too, the level of risk that you engage with and or kind of tolerate is not always the same in all situations for all people. Right. So, uh, for you, you've built a successful business, uh, making like, you know, production studios and production teams to deliver a large amount of high quality content for a variety of different businesses. Right. If you were going to go and open 10 more of these studios, that's far lower risk for you than it is for me right now. If those studios cost. And uh, I just for argument's sake, say $2 million. Right. The kind of objective Quantified risk is effectively identical. $2 million to you is $2 million to me. Right, but you've done this multiple times already and are doing it still right now successfully. I've never done it at all. So on a subjective basis, your risk is substantially lower than mine. Mine is drastically higher as a result of a, uh, capability deficit that I have on a relative basis to you.

Speaker A: Right.

Speaker B: And so when you look at people like the Warren Buffetts of the world, right? You know, Guy goes invest $100 billion in some huge thing, a lot of people go, oh, that's so much money. Oh my God, what if it goes wrong? It's like, yeah, but you're misinterpreting it. There are things that are available to him intellectually that most people don't even know exist. I probably don't even, never even heard of them. Right. Because he is such an expert, he sees the world and investing in businesses in a very different way to you or I. You m know, one of the examples I give with this is if a musician plays a, a song on the piano and a self, uh, taught, 15 year old kid who's been playing for two years plays the same piece of music.

Speaker A: I don't know.

Speaker B: A Thousand Miles by Vanessa Carlton. Right. One of my favorites. To the ordinary person on the street, they sound the same. It's the same song. There is no differentiation between the two. To a musician, they can clearly see a difference. This person's hitting all the right notes all the time, the timing is correct and more consistent. You know, their interpretation and articulation and inflection, you know, or enunciation of the music is far more crisp and sophisticated than the person who's self taught for a couple of years. Right. But to the rest of the world, that's not visible. So in business, the same idea plays out. A lot of people will look at things in business and go, we all see business the same way. We absolutely do not. You see this business with far greater detail and clarity than I do. Right. I see other businesses with far greater detail and clarity than other people do. Right. Uh, and in those imperceptible differences between people who are kind of experts, or at least very good at what they do, versus people who have kind of no idea. That's where the value creation happens. Right. But the people who have no idea don't have any idea that they have no idea. To them it's just all one and the same. They don't have a great way of calibrating risk.

Speaker A: Do you think it can also go the other way, though, where maybe people that do have a great idea. Absolutely have the opposite effect. Right. Where they're not confident or maybe they lack that confidence.

Speaker B: Absolutely.

Speaker A: Stops them from taking the risk.

Speaker B: Yeah, absolutely. Sometimes, uh, naivety can be a massive advantage over knowledge.

Speaker A: Right.

Speaker B: And in business, one of the overarching things here is that not many things are, uh, rules. They're principles and guidelines. Right. So you're like the whole more knowledge and more money always wins. Like, that's not at all true. There is hundreds of very well documented examples of that not being true at all.

Speaker A: M. Right.

Speaker B: Yeah. Uh, if it was true, then no one else would ever start a new company, and all the huge companies in the world would make all the money forever. Now, they do a great job and whatever, but there's lots of people who are starting businesses making nice amounts of money alongside that. So it's not always just knowledge and money. There's other things, you know, motivation, agency, desire.

Speaker A: Right.

Speaker B: There's lots of other, you know, uh, contextual relevance, proximity. There's so many other things that need to kind of go together for each different type of business to work. But in a general sense, knowing more is very helpful.

Speaker A: Yeah, no, no, it's just interesting because I feel like. Like I went through an experience, um, previously where I was in discussion with someone who's, you know, very successful in business and doing great things. Um, and had. He had an opinion that really rocked me about. About the business. My. My business. And I was like. I was like, oh, like, you know, maybe he's right. You know, I'm thinking, maybe he's right. Maybe he's right. And. And in my head, I'm kind of working through that. And it was a good two months to work through this. Playing on my mind, you know?

Speaker B: Yeah.

Speaker A: Because when you. When you're in front of people and. And I think that's, like, something that you have to get used to is, like, actually dissecting what someone's saying and. And then understanding, uh, the context, which comes back to what you just said, which was like, there's a lot of detail I have that that person doesn't have.

Speaker B: Absolutely.

Speaker A: And, um, anyway, I fundamentally got to this, um, two months later, I just said no, like, I actually think he's wrong. Right. And I'm gonna. I'm gonna do that. And then, anyway, it turns out, had another conversation and. And, you know, that. That, um, perception changed. But if I hadn't have kind of gone through that process myself, I probably would have just accepted that that was the case. And yeah, maybe it was a lack of confidence. Maybe. I. I don't know. Maybe there's. There's, uh, you know, the idea that you put people up on a pedestal. Right. And that can help you a little bit. But it made me think just then with what you just said, this idea that it can probably go both ways. Right. You can lack confidence and not take the risk, and you can have too much confidence and. Absolutely, you know, an uncalculated risk and they can both be detrimental.

Speaker B: Yeah, yeah, definitely. And I think sometimes with these things too, you know, there's a. A nuanced difference between knowledge and understanding, you know, So I can kind of know that these things exist, but I don't necessarily fully understand how they work, why, when, where, how all these sorts of things. And in business specifically, that's a very dangerous differentiation to not understand in the sense that if you go, oh, yeah, I know finance, I know pnl, uh, I've kind of seen those. Great, yeah. But do you understand why are they designed that way? And what are the rules that govern the structure of a P and L? That's very different to being like, oh, I can read, you know, revenue, cogs, gross margin, cost of sales, contribution margin, opex, ebitda. Uh, maybe there's some other stuff. Oh, I can kind of understand you kind of cash flow and balance sheet. Knowing those things exist versus really understanding how they work.

Speaker A: Like, that's something that. That's like, in my opinion, like, when you go to that, you're right. Like there's that basic stuff, but then there's that second layer. There's details with like, what you just said, the balance sheet and, and that's just like, you know, you've said it multiple times. There's levels to it.

Speaker B: And I feel like, absolutely, yeah. I, um, I saw, uh, ah, I stumbled across a guy online a couple of years ago. His name's Jason Andrew. He owns, um, a company with a few other people called sbo. They're like an accounting firm, support a lot of businesses, specifically quite a lot of E. Comm businesses. Um, and I really rate his intelligence and knowledge. He's been working alongside the accounting firm to build an investment business, uh, that has a very somewhat unique investment philosophy. Right. Anyway, he writes these blogs and articles and I read a few of his things and I was like, damn, this guy knows a lot of stuff. Not only that I don't know about, but I don't understand at all. So I reached out to him, I was like, dude, let's go for breakfast. I want to learn from you. Anyway, we've been kind of chatting on and off for the last couple of years, and I think that that idea there, that seems all really fun and basic and obvious. Right. But not many people will do that. Uh, I consider my finance knowledge to be pretty good. I'd say it's above average. Right. This guy's so far ahead of me. I literally reached out to him a few weeks ago. I'm like, oh, you just wrote a post about this metric. I actually didn't come across that before. Like, you know, what do I read? And he sends me a links, like, read this book. This talks about it. Uh, I'm like, beauty. Right. But that's because I'm super happy to acknowledge I don't know a lot about these specific things. And when you can get to that point of saying, I'm aware or maybe even not aware of this, but even if I am, I just don't really understand that. And I think there's value there, then you can kind of hunt out, you know, that knowledge. But a lot of people don't want to do that. You know the example before about the founder who doesn't want to, you know, uh, be courageous in front of other people and say, I don't know. Yeah. I don't want to let down my management team or look like the fool who doesn't know or understand. I'm like, it's the other way around. There's so much value in that. Because the reality is most people in the management team don't know either. Right.

Speaker A: Yeah. It's 100 and. But it's so interesting what you're saying. Like, I, I, um, I seen there's someone that you must speak to, recommended a book on Instagram. It was a financial literacy literacy book,

Speaker B: Financial Intelligence for Entrepreneurs. Yeah.

Speaker A: I've started reading that. Um, but not just reading it. I went to the publisher part. Like, so going deep on balance sheets, I felt like that was probably a bit of a weakness of mine.

Speaker B: Sure.

Speaker A: And, um, it's just funny, like, there's so much that you don't know that. Just one little decision.

Speaker B: Yeah.

Speaker A: Split decision. To reach out to. To. To hunt for that little bit of knowledge.

Speaker B: Y.

Speaker A: And, you know, it's, it's, um, it's probably completely shifted just how I'm. We're going to be operating, you know,

Speaker B: um, but this is the thing. Right? And all tremendously. Yeah, all tremendously. Good business people can do this. They don't just. Not only are they open to learning. They will hunt out learning. And not only do they hunt out learning, once they have learned something, they will try to immediately implement it in a context in their organization that adds value because there's no value to be gained from the aggregation of knowledge. Knowing a lot of things doesn't necessarily mean you get value from them. Using the knowledge and applying it through skill in your organization in a relevant context is actually where the value becomes. Or is the value is developed rather. And again, like, it sounds so obvious, but not a lot of people are willing to do that. You know, it comes back to this simple idea. You want to be healthy, eat better food, do a bit of exercise. The majority of the people on the planet don't do that. This is not even a. Just a straight out knowledge problem. Right. It's an emotional problem.

Speaker A: Yeah, yeah, yeah.

Speaker B: The emotions are at the root of all. Almost all of these challenges.

Speaker A: It comes back to what we were saying before. Okay, so there's two myths, m. Or two things I want to finish on the first one. The kids debate. Yeah, right. A lot of. I feel like, you know, I mean, I just turned, uh, 31, but the idea that once you start getting to like, 27 and above, that's a, that's a stereotype. But, like, a lot of people start having these conversations, oh, like, should I have a kid? Is it, you know, should I grow the business a bit more? Should I do this, should I do that? I'd love to get your opinion on it. Is it a superpower having a kid? Um, is it, is it detrimental? Is it not, you know, to the business? Like, what is that? What is that conversation?

Speaker B: Yeah, I think, um, let's start from the position that, uh, from my experience anyway, a lot of people complain about kids on the other side of having had them, that they've taken away their life or this out the other. Right. Um, and not a rule, but in a general sense, like, that was their decision.

Speaker A: Right.

Speaker B: And so the problem actually is their lack of accountability.

Speaker A: Yeah.

Speaker B: It's not actually the children. Right. I think, um, you know, a lot of people will say, like, oh, yeah, I'm going to lose all my time, you know, this, that the other. I won't be able to work on my business to win. Blah, blah, blah. Whatever it may be, I'll say to them, well, if that's going to be your justification for not wanting to have children, you sure as hell want to make sure that you don't waste a minute of your time at the moment.

Speaker A: That's so True, isn't it?

Speaker B: Right. And most people waste a lot of time. Right. So then that argument kind of goes out the window. Now, to be clear, if you don't want to have kids, cool. That's your preference. That's also totally fine. Right. But I think a lot of people will use that as a justification or an excuse to not do things. Yeah. Which is sort of like saying, I'm not going to go for a run because it's cold. It's like, that's not a real answer. Like, unless you're in a very, very unique part of the world. You know, generally cold is not really a good answer. Yeah, you're. I'm tired isn't really a good answer. Um, you know, and just to be clear, this is coming from a person. You know, I was very selfish, very focused, very driven. Still am. Have been for a very long time in my life. I was not, uh, you know, initially, early on in my 20s, I was not really at all paternal. I was so focused on winning. And then when that, you know, opportunity, uh, came up and, you know, had my daughter, it's, uh, completely changed my life for the better. And one of the big things is that I realized I wasted a lot of time. Right. A huge amount of time. Now, I don't necessarily think I work meaningfully less than what I did without having a child, but I waste meaningfully less time.

Speaker A: It's just focus, isn't it? Like I say the same thing. Like for me, it just removed all the clutter and shift out of my life, you know, that I. The stuff that I was spending time on that I probably didn't need to, it wasn't really adding anything to my life.

Speaker B: Yep.

Speaker A: So, yeah, I, I totally agree with that. I think it does make you more focused and um, does teach you a lot about how self you like. You know, I kind of said the first time I realized I was really selfish was when I got a dog.

Speaker B: Yeah.

Speaker A: And then the kid is like a hundred times.

Speaker B: Many, many, many, many layers beyond. Yeah.

Speaker A: And they just teach you so much too about yourself. So I, um, I love that answer. The second one is loneliness in business.

Speaker B: Yeah.

Speaker A: So I would love to kind of get a gauge of. I've heard you talk about it before, but I think it is obviously just a stark reality.

Speaker B: Yeah.

Speaker A: Um, in business, like, how do you think about that? And then more importantly, like, how did you deal with it and manage it?

Speaker B: Yeah. So, I mean, I have, I've said many times before that. Yeah. Especially in business, loneliness isn't the absence of people, it's the absence of connection or capacity to relate, right? And so if, uh, for the founder's role, you know, purely by default of the fact that you've decided to start a business, you already can't relate to the vast majority of people in your life, right? They can't understand the existential threat that you experience in some regards, probably on a daily basis, right? That's not going to happen. So by virtue of them not being able to relate or connect with that aspect of your life in some regards, that's a kind of unconscious sacrifice on your behalf, right? When you choose to engage on this thing, you're choosing to let go of a part of that, right? And a lot of people will say, like, I'm really happy to uh, sacrifice for success, um, because I want to get to success. But they misunderstand. The value that you get from success isn't the destination, it's who you become on the journey, on the way there, right? And part of the thing that changes for a huge amount of people in business is that they become more self sufficient. Because entering, uh, the idea of founding an organization for yourself, it's one of the very few things that will stare right back at you in the mirror every day and hold you fully accountable for every single thing that you do. There's not many things in your life that will do that. You can be employed and be mediocre and kind of get through. You can be in your relationship and be moderately present and scathe through. You can hang out with your family and friends and be kind of moderately engaged and scathed through. That's all totally fine, right? You can't moderately engage with an organization that you want to try and build. It is in some regards all consuming. And as a result of that, you have to sacrifice a lot of connectivity with other people. Lots of people will say, you know, you kind of become a product of the five people that you surround yourself with. So kind of try to surround yourself with the best possible people. But I don't think that's necessarily fully untrue. Like, I think there's certainly some value in that. But you also need to remember that you still can't rely on those people to solve your problems. Your problems are still your problems. And coming back to some of the themes that we've spoken about today, those five people might be able to give you a huge amount of knowledge. You might be able to connect with them and feel less lonely on the journey. But when push comes to shove and you Got to fix your shit. It's still all on you. That's still a you thing. And people will commonly misinterpret the experience of, uh, loneliness in business by saying, I just want to hang out with people that get it. But that's not when you're feeling lonely, you're feeling lonely and isolated. When you got to go into that conversation and fire that person, you're feeling lonely and isolated. When you're sitting there looking at the balance sheet and going, shit, well, we don't have any money, you know, we're going to go broke in six weeks. You know you're feeling lonely. When everyone in your team is looking at you and going, well, we're in this position, that's bad. What do we do? That's lonely. Right. And no matter how well you connect with other founders, friends, family, partner or whatever it may be, a lot of them are not going to be able to relate to that. And even if they can, they're not going to do that for you. And so in entrepreneurship and on the journey to building your business, yes, loneliness is omnipresent and it's really bloody hard surrounding yourself with people that can relate to that is definitely a bit of a tool or a cheat code to making it more, I guess, tolerable on the way in. But a lot of this loneliness comes from, from a lack of courage and a lack of self belief because in a simple sense, when you're lonely and you're feeling isolated, you want to be able to, uh, rely on other people to help make you feel better. You want to be able to rely on other people to understand what you're going through. And you want to be able to rely on people, hopefully to fix them your problems. That doesn't really exist in business because even if someone gives you the answer, you still got to do it. So yes, combat that by finding people you can connect with, if that's feasible. But if you can have a proactive approach to trying to remember that this is still all about you and it's all on you, how courageous you can be is going to have a massive impact on the, your ability to kind of withstand or survive the loneliness that's going to be there for a long time.

Speaker A: Yeah, yeah. I mean, and so it's a lot of it's about being able to actually manage that and deal with it and kind of just exist, exist with it. Well, and then eventually you're saying it, it that turns.

Speaker B: Yes. Think about this, right? The person who wants to be happy says, all I want to do is live a happy life and be happy. It's like the founder that says, oh, I just don't want to be lonely. You know, I just want people to understand me. Well, why would you start a business? Right. That's a saying. Like I just want to be like really comfortable and not sweat or feel pain. Why'd you go to the gym? You're like a lot of these things in society. People want to kind of invert the reality and then hope it's true when you accept them. Um, yeah, yeah, you have to accept that, you know, unhappiness is a part of life. You have to accept that loneliness is not only a part of life, but a very prevalent experience in business.

Speaker A: Mhm.

Speaker B: Right.

Speaker A: It's like a job.

Speaker B: Yeah. And you can't expect to get to the destination of success and winning and joy or pleasure or whatever it may be that you think is on the other side without some form of pain. Like what, you thought this was going to be easy? Give up now? Because it's not going to be easy. It's going to be really bloody hard. And if it was easy, then everyone will be hyper successful.

Speaker A: That's a beautiful answer. Uh, I feel, I just feel like it's, it's, it's the truth. Like there's no two ways about it in terms of you just have to accept it. That's part of it.

Speaker B: Yeah.

Speaker A: And then, and then, and then once you accept it, your, your whole demeanor changes, your whole attitude towards yourself and yeah, that kind of, you know, it all just starts to shift.

Speaker B: Well, if we go back to the story before about the guy who came to Jiu Jitsu to try train for a couple of days, he was still going and I'll probably train with him tonight.

Speaker A: Right.

Speaker B: You know, the primary thing that changed between day one and day three is his expectation.

Speaker A: Right.

Speaker B: Uh, on day one he showed up expecting it to maybe not be that bad and rah, uh, rah, rah, uh, but being really afraid. Right. On day three, he expected it to be shit and uncomfortable and challenging. So any experience by default is better than that. M. If you show up to work every day expecting it to be pleasurable and enjoyable and winning and, you know, flying cash everywhere, you're gonna be real sad for a very long time. If you expect to have a relationship with your lover, uh, and it to be cuddles and kisses and romance all the time, you're gonna be really upset. For a lot of times you expect to have kids and uh, for it to not be Occasionally kind of draining or exhausting or frustrating. It's like. Or you're in for a. You're in for a rough time. Yeah. So I think with a lot of these things, the negative emotion that we experience with a lot of these things in life comes from the fact that there is an incongruence between what we hope is going to happen and what actually happens in reality. And no matter how long you hope for, no matter how hard you hope that it's going to be easy or fun or enjoyable, a lot of these things in life, business being one of them, a lot of the experience is bloody hard. A lot of the experience is bloody lonely. And the quicker that you can get to a point where you accept and expect that, the more tolerable and more joyful your experience will be on the journey.

Speaker A: That's a really good place to finish, I think. Um, Tobe, a massive thanks for coming on the show again, thanks for hosting me. I could chat to you all day. I could literally sit here and just absorb a lot of that knowledge because it's like, you know, every time I talk to you, I just feel like I'm getting smacked between the eyes.

Speaker B: Honesty is the best policy, mate.

Speaker A: Yeah, just like, yeah, you doing that. But again, a massive appreciation. I'm very appreciative of your time and I hope. I actually haven't shot a pod in a while, so this would have been first in a while. So we're back. Um, and I hope you guys enjoyed the episode.

Speaker B: Thanks, Eve's man.