Why Most Businesses Never Scale (And It Has Nothing to Do With Marketing) | EP 73

Speaker A: Foreign. Actually work really hard and not make any progress. Right. You can work a hundred hours a week and actually not be successful. So just because you're working harder doesn't mean you're going to get there. It just means you're working harder. We've all been there, right? I mean, m. You talk about seven years, like. Yeah, I feel like seven years can go by just like that. Would you rather have a company that's doing a $100 million where you own less of it and you have a lot of people helping you, or would you rather struggle working 100 hours a week and you just can't scale up past $4 million because, you know, you just can't do it yourself? So, yeah, I think you definitely have to bring people in and, and, and be open to rethinking how the business works. Because maybe the way the business is set up is it doesn't work.

Speaker B: Most founders think they're building a business, but what if they're actually building a job? Today's guest has spent more than two decades scaling, operating and advising companies that have generated hundreds of millions in revenue. And he believes the biggest thing holding businesses back isn't marketing, it's the foundation underneath them. Welcome back to the Perpetual Growth podcast. The show where we explore the strategies, insights and stories that help you to grow your business, strengthen your relationships and elevate your life. Because growth isn't just about what you achieve, it's about who you become along the way. Now, before we dive in, if you're enjoying the show, make sure to subscribe, leave a review and share the episode with someone who would benefit from it. Today's guest is Michael Kleiman. Michael is a founder, operator, advisor, and one of those rare people who spent decades building companies from the inside out. Over the past 25 years, he scaled multiple seven and eight figure businesses, managed more than 800 million in direct to consumer revenue, served as CEO, COO, President, Board Advisor and fractional executive, and has been featured in the New York Times, the Wall Street Journal, and national media. Today, Michael helps DTC and uh, subscription brands build scalable operational foundations that support long term growth instead of short term hype. We're talking about building companies that last founder mistakes, scaling operations, subscription economics, leadership, decision making and why. Most businesses don't fail because of marketing, they fail because of what happens behind the scenes. Michael, welcome to the Perpetual Growth Podcast.

Speaker A: Thanks for having me.

Speaker B: Yes, absolutely. I'm super excited to dive in with you today. Michael, you've built, operated, advised and scaled businesses for over two decades. When you look at founders today, what's the biggest thing they're focusing on that matters far less than what they think? What's the distraction versus the thing where they need to shift their attention?

Speaker A: Sure. I mean, I think everyone gets distracted by marketing and social media and, and you should focus on that. But if the underlying foundation of the business is not solid, then it really doesn't matter what you do on top of that, it's just never going to work.

Speaker B: Yeah, yeah. And when you say the foundation, is that, uh, the core product? Is it the operational infrastructure? Is it who they're speaking to? Is the leadership team? What, you know, specific, uh, um, elements or the pieces that tend to be lacking? I mean, if there is even easy one easy piece to isolate.

Speaker A: Yeah, that's a really good question. I think it really depends on the business. Uh, you know, because if it's a startup and there's one person there, you know, it's a completely different answer than if it's an established business that's maybe been around for 15 years. But um, I think to me the foundation is really like everything, right? It's, you know, how are you shipping items? If it's a physical product, it's, you know, where, you know, who is, your staff, where are they, how does that all work? How do you plan projects, how do you handle finance, how do you do, you know, procurement? I mean, it's just, uh, every, it's everything, right? Because if you try to spend a lot of money scaling a business and there are, you know, operational challenges in multiple areas and things are not optimized, you, you're just not spending money efficiently and it may not even work at all. So.

Speaker B: Yeah, yeah, yeah, I always use the, uh, the, the metaphor. I mean, it's, it's like, it's like trying to build a house without a, without a foundation or if there's cracks in that foundation. I mean, you've got to get a solid foundation in place before we can scale and build anything of any kind of degree of integrity. You know, an important question because this is something that so many founders and owners, uh, they're not clear on this distinction. What's the difference in your mind between a business and an asset?

Speaker A: A business and an asset?

Speaker B: Mhm.

Speaker A: It's interesting because I deal with a lot of startups and I deal with a lot of established businesses. So totally different answer for each, each of those. Um, I don't even know how to answer that question.

Speaker B: Um, I think maybe toward the, the established business side of things if that helps give a little more foundation.

Speaker A: Yeah, yeah, I mean, I think, um, you know, I've worked with clients. I ah, I'm, there's one client in particular I'm thinking of that I worked with where you know, they had a business, you know, and the business had been around for more than a decade and, and there were a lot of different aspects to the business. It was, you know, very established in certain areas and there are certain parts of it that worked, you know, you know, relatively well. Um, but, and the asset was, you know, the um, uh, the trademarks and the patents and the, you know, and the, and the, and the product that they made. Right. Um, but the business was deeply flawed and um. I don't know if I'm answering your question directly, but they just kind of pop into my head. Um, it's really, it's really interesting because they, you know, there was a, it was a well established, well known business, uh, with a lot of different products and uh, and there were, and there were like fatal flaws and so many different things. Um, and no matter what this business did, it never got to the next level. And across any topic, you know, tried to scale advertising, it grew a little, but never kind of grew a lot or tried to create new product lines. Didn't work. You know, whatever it is, they tried, it didn't, it didn't really work the way it should have. Um, and back to the original thing that you said it really all came down to, the foundation was cracked and no matter what you did and how much money you spent, you never really got to that next level. So, um, I don't know if I answered your question the way you wanted it answered, but no, that's perfect.

Speaker B: I mean to me. So let's just use that business as a great use case example. Like what were the specific cracks in that foundation? Because I mean as consultants, I mean we've got to be those detectives, the problem solvers. And it's going through the value chain. We got to look at each aspects of the business from the leadership team to the operational infrastructure, sales, marketing, engines and vehicles. How many different uh, spokes in the overall wheel are actually driving revenue from different sectors? Who is the predominant focus? There's fulfillment aspects of things. I mean we could go on, uh, and on and on and on. In this particular case, you know, there sounds like they're throwing a whole bunch of stuff at the wall, see what sticks and nothing actually M Moved the needle forward. What was the, the integral missing piece that you had to resolve first?

Speaker A: So it turns out the integral missing piece was something that was not solvable because it was a founder run company and the founder really needed to hire a CEO, uh, to run the company. And no matter what you did, ultimately it just wasn't going to work long term. So even though we were wildly successful in the things that we got involved in, there was always this other thing which you couldn't resolve. So I think, you know, I just tried to work around it. If I needed something to be done, I would approve it. I would approve as much as I could before I ran into a roadblock and I needed the founder. Um, yeah, it was very, it was a very interesting situation.

Speaker B: Yeah, it sounds like it.

Speaker A: I had to operate. I had to operate and ignore the founder, but respect the founder's role, if that makes any sense.

Speaker B: Oh, completely. I can relate to this in, uh, many different contexts. What I mean, so talk a little bit more about that because this could be a really, really great insight for some founders that might be the roadblock and don't realize that they are, you know, what are some of the questions maybe that they could be asking themselves to help determine am I the bottleneck in the business? Because it can be hard to let go of your baby. And you know, in many instances, you know, there's, there's different levels of mastery required. I mean, the thing that'll got us, get us here is not the thing that's going to get us those next level. And we need different skill sets. How does a founder identify when they become the bottleneck? And are there any recommendations you may have for how to start letting go if we really want to see the business, uh, grow and Thrive?

Speaker A: I think 99% of founders are probably the bottleneck, right?

Speaker B: 100%.

Speaker A: Yeah, yeah. Um, and, and um, and you know, I was talking about this the other day. It really comes down to the psychology of the founder and kind of how they're programmed and like, what drives them and, and what their goals are and like why they're, why they're in that business to begin with. You know, are they in that business because they're trying to prove something to their dad, you know, or like, why are they in it? Um, and, and a lot of that drives founders. So when they make decisions, they're not business decisions, they're emotional decisions based on these other things. And you know, as a consultant, I probably should have gotten a psychology degree and I might even just have one from doing this for so long. But um, I think, um, as a consultant you become like the, you know, chief psychologist. And it doesn't really matter. At least the way I do consulting, you know, I don't come in if I'm gonna work with a client. It's not going to be like some clearly defined one off thing. We come in, we go out. That's not how I operate. I come in as a, like fractional C suite, like the whole C suite, you know, or a fractional founder. That's how I want them to think of me. Because if I, I need to get so embedded in the organization that I could literally do everything except sign a check. Otherwise it doesn't work, you know, Otherwise you don't need someone like me. You can spend a lot less money and hire someone for a specific thing, if you know what that specific thing is. When you bring me into a business, it's because you don't know what to do to fix the business. And you need someone to come in and start like, ripping it apart and kind of looking at everything from a completely different lens.

Speaker B: Yeah, I wholeheartedly agree. The number one chokehold in any business is the psychology of its leader. You know, this was something I, I started in the health and wellness industry and started studying behavioral psychology because I, I wanted to understand why people do the things that they do. You know, I would see these very high level, of course, it's not this black and white, but there's, there's two groups of individuals. I mean, there's the type of people that come in, they're like, I'm ready to make a change now. They go in full force, they transform their bodies, their health, and everything around them starts to grow and improve. And then through the process of years in business, I started to fall in love with business and then started to realize those same skill sets were applicable across context. And it's what led me to the same outcome of this conversation. I mean, the owner becomes the predominant chokehold in any business. And sometimes the skill set, in many cases, it's the, uh, also the mindset. I mean, what, uh, what are the, the warning signs that someone might need to say, okay, look, it's time for me to start, you know, relinquishing some of that power and control, which I think is oftentimes a tremendous driver, uh, especially depending on what era we were born in or how we were conditioned as kids, and go, hey, it's time for me to get help. I need to call Michael. You know, when, when should they say, look, uh, Michael, I could really use your support? And I'm also at a Place where I am willing to be coachable and also have somebody come in that is um, going to integrate themselves and I'm also going to, you know, allow them to start making some of these decisions.

Speaker A: Yeah, I mean, and I guess to clarify, I don't, we don't always go in and go like full operational, you know, it really depends on the size of the engagement. Um, and there are only so many clients that I could be fully operational in. Right. Because there's only so many hours in the day. But um, you know, for the right client we'll get super embedded depending on the situation. But when do they call? Um, and, and I. Every founder wants help. Like they want to improve things. They founders pretty much know what the issues are. They don't know what the, they may not know what the details are, but they know that, you know, they're not making any money. They know that they have to keep loaning the company money or they know, you know, they, they have certain like signals. Right. They don't necessarily know how to fix that.

Speaker B: Yes.

Speaker A: Um, so I think if a founder has been at it for a while and they've tried a lot of things, maybe they've gotten burned by a bunch of consultants, a bunch of agent marketing agencies, you know, but, but they've tried a lot of things and they just, they can't figure it out or they know what the issue is, but they just need someone who has the experience solving those kinds of things. That's where we get involved. We had a client who um, um, the same client actually, uh, that I was talking about. Um, they couldn't uh, figure out why their Amazon sales were stagnant and long story short, their product reviews were not good. How do you fix product reviews? You have to effectively re engineer the product or like, you know, there's no silver, silver bullet. Like you have to figure out what's wrong. So we wound up analyzing tens of thousands of product reviews, segmenting it a bunch of different ways based on that specific company. Ultimately we uh, this is, was an apparel client. Right. So they had sizes. We wound up getting 800 items from their inventory and hiring 25 models to try on product. 800 items for weeks with a huge staff of people measuring everything. Ultimately we had to resize almost every single product and in every single size in the entire lineup. And, and, and um, no one would have thought of that other than probably me. And, and, and no one wanted to execute it because it was such a big project. Even the founders want to do it. Right. Yeah, I can Imagine I, so I, I planned it, I executed it, I was even there for some of it. And um, and ultimately, you know, they're redesigning the whole line and you know, it takes six to 12 months, you know, to get samples and inventory and you might have multiple rounds of samples. So there's a lot of back and forth. But what will happen is over the Next, let's say 18 to 24 months, their Amazon reviews are going to increase very substantially because we've fixed all the issues that people were complaining about. Know that's a large scale, you know, multi year project. Right. The ROI is a few years. But you know, as everyone knows, if you can get your Amazon ratings to like a 4.8 from a 3.8, let's say you're talking millions of dollars a year in revenues. So depending on how competitive that category might be. So um, that's the kind of like weird stuff we get involved in, but sometimes it's on the tech side, not on the like physical product side. Just depends.

Speaker B: Tech being more operation. Actually I want to, I don't want to get too far off track the. Because I love what you just said. I mean this is, it's the forest of the trees aspect of things. As a business owner, it is very difficult to see the opportunity and it's oftentimes I found the exact thing that you are unwilling to face that is the exact thing that you need to lean into in order to achieve that next level of success. There's a big glaring problem. Nobody was willing to take the necessary steps to actually face it and come up with a, an appropriate resolution. You come in, you see it and then you actually take the necessary steps to resolve the issue. So the company has the long term ability to grow, scale and ultimately thrive. Very, very important. You know, I always joke, but I've said it from stage countless times. There's nothing dumber than running the wrong direction enthusiastically. And so many people are doing that in both life and, and business. But that's a really, really fantastic example. You know, one thing I'm curious about just to continue on that thread, because I think this is a great learning opportunity is so now we resolve the product issue. M. Now we've got a customer trust issue. You know, we have years of issues.

Speaker A: Customer trust. Yeah.

Speaker B: Right. So what are some of the next steps that you would be implementing to demonstrate that look, we understand. Is it, is it, is it just straight ownership? We start a marketing campaign that says look, we screwed up. We, we, we didn't have these products appropriately Sized. We went through. We brought in 25 models, went through 800 SKS. We resized everything. You can now expect that this is what you are going to say. Where do you start with that? Now you made that investment. We fixed the problem. Now how do we show the world that?

Speaker A: That's a really good question. I, uh, think what complicates it even more is that the company sells products in different countries and has a, you know, big business in different countries. And every country is sized slightly differently. So a small in one country is, you know, maybe a medium in another country. Um, so yeah, they're. I don't think they've quite figured out how to roll it out. They're currently kind of at the stage of finalizing the samples because, you know, when you fit samples, you could go through multiple rounds of samples until you finalize it. Right. So that's kind of where they are right now, I think. Um, you know, and I, I think the challenging thing is, you know, you're not going to fix everything at once. So you're going to kind of roll things out in phases. So maybe you have like, I don't know, some percentage of the products have a new version now, some percentage have a new version in a few months. So there's. And then you still have existing inventory. So I don't think they've quite figured out how to handle this because there are a lot of like, nuances to things. But um, yeah, the rollout strategy is definitely going to be challenging.

Speaker B: Yeah, it's interesting. You know, I, I always believe the problem is the opportunity. If, if we're in different countries, it could be simple as those labeling. You know, by the way, if you're located in this particular market, you might want to upsize. If you're in this particular market, you might want to go down a size. And I, it literally takes me back to. This is a long time ago, but I remember ordering from a site and the. Most of the products were produced somewhere and um, I think it was probably China or something. Right. But I, but I remember ordering them. I'm not the biggest guy, but I had to order. Uh, I typically wear, you know, if I want some more snug fit, like a medium, a little bit more loose fitting, large, typically more large. But I was having to order like triple xls to have anything that was. Had even a remote possibility of fitting me. So I completely relate to that.

Speaker A: Yeah.

Speaker B: You know, so let's go back to what you're talking about with, um, you know, some of the systems Technology aspect of things. I mean, many entrepreneurs love sales and marketing, right? Very few love operations. Why?

Speaker A: Um, well, can I go back to your sizing thing real quick?

Speaker B: Yeah, do it.

Speaker A: So in addition to my consulting company, I also happen to own a underwear company.

Speaker B: Right.

Speaker A: Just because I've been in the underwear business for so long. Um, and the company pretty much runs itself. But we built sizing technology because one brand's medium is another brand's small. And we have this curated underwear club and we have, you know, thousands of SKUs and like 100 plus different brands in there. And you have to, like, equalize the sizing. So we actually solve that problem for this underwear company. Because, yeah, you're right. Like a small in one brand is not a small in another brand. And how do you keep your returns low? Because for apparel companies, returns is a huge nightmare. Right. I've got. Our returns are less than a half a percent because I know how to run returns. Some apparel, uh, brands have returns rates that are 25%. Anyway, getting back to your other question.

Speaker B: Yeah, no, that's amazing.

Speaker A: So I think a lot, you know, um, with. With the amount of experience that I have, um, I, When I saw. When I look at a problem, I don't always kind of solve that thing because sometimes it's something else that you really have to solve. Right. And, you know, I think when you, like, peel back the layers of the onion, a lot of times it's the same situation just disguised in a different year. Right. Or a different decade. Um, most of what we get involved in, though, is on the technology side because I have very significant technology experience, from developing tens of millions of dollars in custom software to, you know, Shopify, very complex Shopify related things or subscription software things. So, um, that's kind of a natural fit for us to get involved and kind of, you know, unravel the spaghetti and fix the technology. Um, so, I mean, that's a. When we first bring in a client, I'm always asked, like, what. What is the first thing that you do? I don't know if that's on your list of questions, but what is the first thing that you do? Okay, I do two things in parallel. One is I have my team go through their financials to validate them, because I don't believe any numbers until I validate them. And the second thing, you know, because finance client financials are never correct. And then the second thing we do is we go through Shopify and we validate that it's even set up correctly. Because you, like, let's just start with the basics, right. And then from those things usually you generate like dozens of other projects and then that's how you kind of build a project plan for the client that makes sense.

Speaker B: So your predominant focus is on direct to consumer online retailers?

Speaker A: Yeah, it is. However, I've gotten pulled into other types of things um, that are kind of adjacent and interesting. So um, you know, I don't only, I won't only stay in that lane of the D2C stuff. I'll get involved in other things. There are some B2B things I've been involved in, uh, regarding department stores, um, uh, you know, um, some fulfillment related things involving department stores, um, some consulting on, you know, B2B related, you know, like traditional sales oriented things. Um, I would say 90 something percent is, is B2C.

Speaker B: Mhm. Okay. Okay. Yeah. You know, continuing on the operations thread, what is there a particular operational mistake or mistakes that repeatedly show up in growing companies? What do you run into most?

Speaker A: What you typically run into is, you know, when you start a company, uh, you have like all hands on deck, everyone wears a million hats and you, you know, you have people that are, can do like a little bit of everything, right? And then depending on the founder's like level of sophistication and what they're good at, they'll have people that handle the things that they don't know a lot about or that they don't want to do. And I think a lot of times those people are really good in the beginning and then at some point those are the people that are like the crutches of the business. So if you can't get past $2 million, it's because the staff that you have is not capable of getting past $2 million. They were great getting you to $2 million, but they're not going to get you past that. And I remember seeing this, um, I mean many, many years ago, my first D2C company, um, I remember experiencing this where when um, we hit $1 million, I just started thinking about what I needed in the future. And it was very overwhelming because I was like 25 years old and didn't know what to do. And then, and then when I hit $2 million shortly thereafter I, I was like, oh wow, like what happens when we hit 5 or 10? And then I, I quickly realized that it's not the same staff, it's not the same systems. Like the, in order to go from one to two or to go from two to five, it's a completely different thing. And then to go from 5 to 10. Like, I had to learn how to. I had, I had a business where I was doubling it every year, right. And in my first big D2C thing, the thing that I got, you know, fairly, uh, well known for. And over the 10 years that I was there, it grew so fast for so long and I was so young that I had to learn like fast. Like really fast. Like how do you scale your staff? And this is back when you had an office and everyone came to the office, right? Like, how do you do that? And uh, uh, yeah, it's very interesting.

Speaker B: Yeah, no, I mean, it's a really fascinating point. I mean, there's a, uh, there's a lot of complexities to navigate because particularly when people have been through those growth stages. I mean, I know this is a personal battle that I've had to overcome many times. Is, is you feel a certain degree of, um, what's the word? Like, I mean, there's gratitude for the people that help get you there, but unfortunately, like, to your point, they're not in many cases going to be the people that are you need in order to get to your next level. There starts becoming a point where we can't be the jack of all trades, wear multiple hats. We have to be the master of one. And we've got to put the people in that'll be most effective in their particular lanes, from sales to marketing to the operational infrastructure, the financials and, and so on. Um, you know, one thing I, I want to pause here before a moment because I think a lot of listeners are somewhere between six, seven, uh, probably the seven figure mark, you know, maybe like the three to ten million dollar window. They're working hard, revenues growing, but, uh, they're exhausted. You know, business feels heavier every year. For someone listening who feels trapped inside their own success, what would you tell them?

Speaker A: I mean, I think there's some really simple things. First is go on vacation and really think. Go. Seriously, like, go. Yeah, uh, these are all the things I did not do. Okay. This is why I can give great advice, go on vacation. But really what you have to think about is like, if you had to do it all over again, what would you do differently? Because sometimes you get stuck in the minutia for years and you're so close to it that you just think, can't think clearly, right? The best thing might be to shut the business down, right? Or the best thing might be to sell the business. Or the best thing might be to bring people in that know what they're doing. To figure out the things you've been struggling with. I don't think that you need to struggle forever. I think you need to bring people in that can help you with the things that you can't do. And you know, the world right now seems to be moving a lot faster than when I first started running, you know, D2C websites. And so I think right now, you know, whereas like maybe before you waited a few years for something to happen, now it might be a few weeks or a few months. Uh, so I think, you know, if you're struggling with certain things and the business is really not exploding the way you want it to, or if it, you know, grew really fast and then it kind of tapered off, um, you have to, you have to literally turn it inside out because AI is changing things faster than people can keep up with it. Right. The capabilities like are, are like severe and, and, and in a good way. Right. But at the same time, if you're still trying to like, figure out how to get your warehouse to work efficiently and you're not even focusing on these new capabilities that exist, then, you know, you're already behind and you're just going to get further and further behind. So I think if you have a business that you know, where you've proven the business and it's a legitimate business and it just needs like, it really needs like the right people, then that's where you bring experts in to help you with different things. You just have to be okay rethinking the whole business.

Speaker B: Mhm. Yeah. Yeah. I mean, it's the um, it's the difference between, to your point, let's stuck in the minutia. It's like we get stuck looking down the scope of the rifle instead of taking that step back and looking at the greater field of play. And while I know you said, you know, and we laughed, I mean, to take a vacation, but there's so much, much truth. I mean I, I went through a very difficult time in my very first business. And I won't go into the story, but I mean There was a seven year period of time where I was working 80, 100, 120 hours a week. I didn't take more than a three day vacation for seven years. I look back at that in hindsight and I go, it's back to what I said earlier. There's nothing dumber than running the wrong direction enthusiastically. I was working so hard at working so hard that I wasn't actually doing the things that were productive and taking the time to step back and going, what do I really need to resolve? Resolve in order to ensure that the company can grow and thrive and that space through intentionality is such a powerful tool. And then to your point, perception. Ask for help. You know, we are conditioned in American society today. And of course, it all depends on familial environment, who your mentors were. But, I mean, you know, my dad was a stereotypical mid-1940s male. Let's do as I say, because I told you to do it and work hard, and eventually you'll be the rewards of the fruits of your labor. But, you know, uh, and there's a certain degree of truth to some of those things, but in most cases, I realize it's who, not how. You know, most people get stuck in the tyranny of how. Trying to resolve the problems on their own when they don't have the skill set to ask the right questions so they can get better answers. So, you know, getting expert guidance, I think, is one of the wisest things that we can do. Somebody else that's been there, done that, and not only that, that's going to bring in an outside perspective because you've been stuck in the weeds so long.

Speaker A: Because I will, like, I will tell you if I, like, you know, I'm a New Yorker, I don't sugarcoat anything. Right. I don't want to waste my time or yours. Like, I will tell you exactly what the real deal is of the situation. Um, you know, the other thing is, you know, they don't tell you that, you know, you can actually work really hard and not make any progress. Right? You can work a hundred hours a week and actually not be successful. So just because you're working harder doesn't mean you're going to get there. It just means you're working harder. And we've all been there, right? I mean, you talk about seven years, like. Yeah, I feel like seven years can go by just like that. You can really get. Yeah. And you can really get, um, you know, um, you can really get sucked into things, um, and. And it's very hard to get out of them. But, uh, yeah, asking for help, um, is, uh, is a good quality, Right. It's not a. It's not. It's not something to be ashamed of. Right? Would you rather have a company that's doing $100 million where you own less of it and you have a lot of people helping you, or would you rather struggle working 100 hours a week and you just can't scale up past $4 million because, you know, you just can't do it yourself. So, yeah, I think definitely have to bring people in and, And. And be open to rethinking how the business works, because maybe the way the business is set up is not. It doesn't work.

Speaker B: Yeah. Yeah. Well, let's talk more about that. I mean, you've worn almost every executive hat, uh, imaginable. I mean, CEO. CEO. Yeah. President, adviser, board member. Right. I mean, how does. How does leadership evolve or maybe more appropriately need to evolve as companies grow?

Speaker A: Well, I, uh. Look, you need professional management at some point, right? People who have, you know, scaled businesses to a certain level and have certain types of experience. You know, if you're trying to. If you're trying to scale a certain type of business, and there's no one that has ever done that before that has, like, deep experience in certain things, you know, you're going to be making a lot of expensive mistakes, and maybe those mistakes are going to be so significant that you can't scale the business ever. So, uh, you know, depending on where you are, I think, uh. Uh, for me, uh, when I first, uh, like many years ago with my first business, I think when we hit $10 million, that's when I started to think about, okay, maybe I need someone a little older than me with some experience who could, like, figure it out. Because I was in my 20s, right? And, um, I knew that I did not know everything, but I was invincible at that point in time. So I tried m. And then I think when I hit, like, I don't know, I think maybe when I hit 20 or 25 million, I forget what the number was. I. I realized that, like, okay, if I could do $25 million, I could probably do 50 or $75 million. You know, what does it take to get to that point? Um, and someone that gave me advice at that time, you know, uh, wanted to bring in, like, very seasoned ex, you know, people. He kept saying, we need the gray hairs. We need the gray hairs. And, you know, so we started interviewing some of these people, and I just thought that this was a complete waste of my time. Um, and. And it turns out every single. Per. Every single gray hair that we hired at that time was just wrong because they didn't know anything about the kind of business that I was running. They were just, like. They just had experience, but it wasn't, you know, applicable to my business. Right. So I think the, the takeaway is, you know, everyone likes to give advice, and you might have people that you trust. Like, I trusted this advisor, know, like, with my life, you know. But um, you need the right advisor to give you advice because you can also get bad advice from someone who has a lot of experience. And maybe it's advice that was really applicable in a different decade, but it's not applicable now. Or it's based on another type of business where they had success doing something, but that's not exactly what you're doing right now. So I wouldn't be impressed by how successful people are and how much money they have and what, you know, what their net worth is and all these other things like that doesn't really impress me. It really comes down to like uh, you know, if the exact experience they have and have they been hands on, you know, I don't need someone who's been at uh, a, I don't need like a, a uh, C level executive at a company that's doing a few hundred million dollars advising a startup on how to do something because they've probably never done anything even remotely close to what you need to do. Yes, I think in terms of advice, um, you really have to make sure that you're making your own decisions like let consultants give you advice and then you have to decide if that's the right advice. Don't be, you can't just, you know, um, kind of get excited about these shiny objects, you know.

Speaker B: Mhm. Well, so that's a very important point. You know, one thing that I freak about, I think about frequently and I've experienced more times than I could possibly imagine. I would imagine you've seen these parallels too is the difference between the founder, that is an operator versus the founder is a visionary. And yes, 99 times out of 100, the founder is, is the visionary and what they lack is the operational skills to take the company to another level, to take and put structure around that particular vision. It's, you know, those founders are the ones that are coming in every day with a new idea, another shiny object, something else to take to chase. And without that right leadership team in place to pull back the reins when it's appropriate and ensure that we're staying focused on the most necessary functions for us to grow and evolve now that that visionary can in so many cases just create utter and complete chaos. I mean, uh, I think this is a really great distinction is in your mind what, what separates the operator from the visionary when we look at those leadership roles and it is even possible for founders to realistically excel at both.

Speaker A: I think the challenging part is when you are both or when you are 75% one and 25% the other. Because that's what I struggle with, right? Because I come up with the craziest ideas that no one else would have ever come up with, and at the same time, I can implement them. And those are always, like, competing with each other. So, um, which is why I like consulting. Because I think you're better off doing it for someone else than kind of trying to figure it out yourself. Um. Um, you know, most of our clients have been. I guess all the clients have really been the visionaries, and where they struggle was the ops. And, um, and there are books about this, you know, but, like, I mean, if you identify yourself as a visionary and all you need is an ops person, you need a president of your company or a CEO or someone who can actually, like, operate the company. That's actually very easy, right? You have to give up some control, but you don't have to give it all up day one. You just have to figure out what you're not good at and get someone who is good at that. So, uh, if you're not good at managing people, which, like most visionaries, probably hate that, they hate dealing with the people, they hate dealing with the accounting department. They hate dealing with problems. They probably never stepped foot in customer service, right? Like, there are things they just don't do. So you need an operator who knows the importance of all these other things and can make them work. Well, um, the. You know, uh, I tell all of my clients this that are like pure visionaries. Like, you do what you're good at, we'll do what we're good at. Um, you know, otherwise the company will just not go anywhere like this. This. I was talking about something yesterday on another podcast, actually, where I had a client that had seven websites. And three of those seven websites were the same brand in different countries because they didn't know how to use Shopify. But in total, they had five brands. And after kind of discussing this at length, if I had not raised this as an issue, this founder would have created more brands and more websites. Because every time they came up with a great idea, they'd create another Shopify website. And no one knew what they were doing, so they just kept making website after website after website. You know, some of these could have been, like, sub brands of existing brands or whatever. Um, this was a. This was a special situation. But, you know, ultimately we redo, we consolidate everything to one website and got rid of the brands that weren't doing well. Um, but you need an operator to have that kind of conversation with the visionary, because the visionary is just going to keep coming up with new ideas and executing them because the visionary doesn't really know what is profitable and what is working and what is not working. Right. They're just excited by the idea because they're creative. And then you need an operator to structure the business correctly so you even know what is working.

Speaker B: Mm, mhm, mhm. Yeah. No, 100%. It's interesting. I had that, that same conversation with a client just, just last a couple of weeks ago. I'm like, you've got to be willing to get out of your own way. I mean, most, most m operators are not operators. Most visionaries try to solve problems by creating more problems. And it's like the stuff that got you here to this current level of success is not going to be getting that next level. And the number one thing you need to do is start to trust and lean into the leadership team that you've put into place and allow them to do what you put them into place for. That doesn't mean you still don't make the decisions. But we've got to stop making decisions from previous paradigms. We have to take, right, leverage that opportunity to actually listen and go, okay, am I defaulting to a previous pattern, the same one that's kept me stuck, or am I willing to listen to the guidance of the people that I put into place and act upon those new initiatives? Because they're the things that we need to do to resolve simple issues. And that's a great example of seven different websites when, you know, instead of expansion, more consolidation can be the simplest fix.

Speaker A: Um, and also, just because you bring in an operator or a consultant to help you with your business does not mean they're always going to be 100% correct. Like they're going to make mistakes. They're human. I, I'm, I need to add a disclaimer to my contracts that say, remember, like, we're human, right? Nothing is going to be perfect. But like the idea of bringing in an expert is you make less mistakes than if you did it yourself, right? And um, and you make like calculated decisions, right? Like sometimes, you know, you need to break a few things in order to fix something.

Speaker B: Yeah, yeah, 100%. Uh, as we, as we wrap up today's episode, Michael, imagine, uh, it's decades from now, your family, your team, your clients, the founders you've advised, the businesses you've impacted, they're all talking about your legacy. What's the lesson you hope they remember?

Speaker A: Um, I think I, uh, think it's important that you remember to have fun along the way. Right? Like, you're, like, it. It's. It's about the journey, not the destination.

Speaker B: Yeah. Yeah. That is so true. And it's. It might sound trite, but it is so true. People tend to focus on the problems, and they wonder why they get more of them. What's wrong is always available, so is what's right. We got to put more focus into what's right. Um, now, Michael, for those of you, uh, for those of the audience that want to learn more about your work, your advisory services, uh, or connect with you directly, where can they. Where can they find you?

Speaker A: Yeah, so you can check us out on LinkedIn. Uh, just type in Michael Kleinman on LinkedIn. Or you can go to our website, MK Inc dot com.

Speaker B: Beautiful. Beautiful. And we'll make sure that for all our listeners, we have all the contact information in the show notes. And Michael, this was a fantastic conversation. Conversation.

Speaker A: Thank you.

Speaker B: Um, one of the many, uh, takeaways, and probably the biggest for me, is that great businesses aren't built on momentum alone. You know, they're built on systems. They're built on discipline. Uh, they're built on foundations strong enough to support the vision. Too many entrepreneurs chase growth before they're ready. But sustainable success comes from building something that can endure, and that's exactly what you spent your career helping founders do. So thank you for joining us on the Perpetual Growth podcast today. It's been an absolute pleasure, my friend.