Scott Becker (0:00)

This is Scott Becker with the Becker Private Equity and Business podcast. Today's discussion is a longer discussion that comes out of businesses. And we're going to call this building businesses winners and losers or winning and losing, whatever you want to call it. But, but here's the background on this. I, I've had the good fortune of building two successful businesses. One, the fabulous healthcare media company which became a really successful healthcare media. The second, building this great health care legal practice. And these two things ended up being somewhat related in their own way. But ultimately, you know, two really nice successes. The legal practice became one of the largest legal practices at a billion dollar firm over a very long period of time. Now I've really ceded that baton to some of the junior people that are no longer junior people. They're fantastic partners that lead a lot of that practice. Similarly, the media company became a really successful health care media company and great, great success. Now the thing that's fascinating about it is anybody who's built businesses, it's almost like talking about stocks. There are stocks that you have that are winners. Paleontaire Technologies is one of my winners. But you don't often hear about some of the stocks that you have that are losers. And one of my losers is something called Astera Labs. So when you build businesses new invest stocks, whatever you do, going to have what I think of as winners and losers. In addition to sort of building his businesses, also started a couple of other businesses, invested with venture capital funds like Andreessen Horowitz and invested several individual startup companies. Vaso served on supports of directors. And this is not so much telling you this because of credibility, for credibility or to brag, but telling you it because it goes to the backdrop to my goodness, if you do this long enough, you get plenty of wins, plenty of losses. And I think both are very instructive because so many of the lessons that I've seen over the years come from the fact that I've learned from the investments that have turned to zero or the companies I've been involved with that have ended up fizzling out versus continuing to be really successful or struggle. And there are lessons in all of those things and I'll sort of try and go through common lessons in business that we have sort of come towards and lived through. I start with this concept that so much is about building great teams and I'm a huge fan of the Jim Collins perspective that you literally could do almost anything you want if you build a great team. What I've seen in businesses is when I've Built great teams and really invested the time to build great teams. Whether at the law firm or Beckers Healthcare. I've had great, great success. And the people that run those teams today that were part of the teams that I was building now are the leaders of those places. And if you take the time to really build teams and it's a lot of work, you gotta sort out a lot of people that you could build the foundation for a great business. If you don't ultimately make the time and effort to build teams, you're never really gonna get there. And I' this in a couple different spots. I've been in the spot where I've started a couple other things, but have been very weary of really trying to invest time and energy and money into building serious teams. And those other businesses have ultimately relatively fizzled out or they've been almost like one hit wonders. They've been successful period of time and then falling apart. Similarly, I've served on a couple different boards of directors. I remember this vividly early in my career. One of the boards built a magnificent deep leadership team. It went on to have tremendous success. The other board, this was an early board, was incredibly successful period of time. But it was really driven by the insane energy and personal skills of one person. And when that person didn't build a strong enough team around them, they never really got to that next step of greatness that you want to have as a company or sustainable greatness. So I view that as fundamental everything. Jim Collins talks about this extensively in his book Good to Great, but that teams are really sort of everything. The second thing I often look at is niches and defined niches and defined ideal customer profile. Again where we have been able to build things that have been successful or been able to see things that are successful. There's been a very clear target on what you're trying to do, what who you're trying to serve. Originally building the legal business back in the day, it was originally individual surgery centers, physicians in surgery centers, the leaders of surgery centers. And we had a very clear target. We built a newsletter, built a, you know, a conference around that, you know, and similarly in the media company, health care media company, very clear about serving health systems, health it, orthopedic and spine and more so, but very, very specific. I love a current niche business that I'm watching them involved in called shoulder360. You know, exactly. The audience are trying to attract. Exactly. The vendors are trying to attract. Everything's around the shoulder. They've got very great clarity about their niche and around their product fit. In contrast, where I've tried to build things on a more broad scale for general business audience, I found it very, very hard to do so when not really attacking a specific niche. So the similar concept is I don't spend much time in the B2C area, but where I've seen people in the business to consumer area, they almost have to find a niche and have distribution channels very, very hard to do it essentially by themselves. So that's sort of a couple starting points on niches and teams. The third starting point I'll talk about is what I call product to market fit and commercialization early and really trying to see if your customers want what you're selling. And this I found particularly apropos in the sort of software business where I've seen different engineers build great things that they thought were going to be fantastic, but they spent so little time actually commercializing that they never hit the yin and yang. They might have been building something great, but they weren't building it for something that somebody wanted. I remember one of our lawyers 100 years ago being upset that you didn't get thanked enough. And I would have to explain, well, no, they're really thanking you by paying us because they love what you're doing for them. But if I find a fault in companies, it's sometimes when they don't early on really focus on customer fit, product market fit. They've not really made that effort. So that's sort of another lesson in business. You've got to commercialize early and find out if your customers are really there or not early. The fourth thing I talk about in building businesses is, and this is true for me, it may not be true for everybody. Some people are very intellectual, very smart. They do it in a different way. I have found that whenever I'm building a business and it's been successful, I've been almost compelled and obsessive and driven and excited by it. That it takes tremendous drive, tremendous energy, almost obsession to want to build that business. The contrast I've seen is situations where others are half in or half out, where the spouse of a husband or wife who's really successful starts a hobby store and that hobby store ends up being not successful because they weren't really driven towards it. They put their foot in the water, they've got something they can call their own, but they don't really want to do it. I remember a fantastic wrestling coach when I was younger who said, do you want to wrestle or do you want to be on the wrestling team. And the concept was, did you really want to compete, Were you really obsessed with competing, or did you just want to be a part of the team? And the two very, very different things. So that's a fifth concept we talk about often, is the obsession it takes to really be successful. The fifth thing we discuss for whatever you're doing is business plans. And I basically break this down into three different types of business plan. There's essentially the no business plan. There's the two to ten page business plan that has some clarity about what you're trying to do, who you're trying to serve, who you're trying to hire, what your costs are going to be, and so forth. And then there's the extensive 50 to 100 page business plan that you could hire somebody to do with you or that you could find online. And I'll tell you, when I look at these three things, all of my personal success and the companies I've worked with success has been built more or less around those business plans that are closer to the two to ten page business plan. Now, that doesn't mean that you don't need the more extensive one at times for capital, for other reasons, for partners, or if you're doing a huge business out of something you're putting in billions of dollars, yes, you're going to need a more extensive business plan. But in my experience, most businesses are well served by the 3 to 10 business plan page business plan and great clarity about what they're trying to do. I've also seen people do this, including myself, without a business plan. And at times, early on in my life, I could succeed that way with just sheer energy. But I think it's a huge mistake. I think some business plan is needed. The sixth thing we talk about, and we see it on, you know, online all the time, is this concept of do you burn the boat? And burning the boats means that you're sort of giving up everything to put all your energy into the business. And this sounds like a great romantic idea, but from my perspective, it's largely a stupid idea. You got to be able to pay your bills. You probably have to be able to fund your business. In my own perspective, this concept, this romanticized concept that comes out of a Julius Caesar quote of burn the boat is really a stupid, stupid concept. And we don't encourage it. We encourage you, you know, keep the day job, keep the right businesses going, know what you're doing, and then when you're successful enough, you could end up stop straddling and really get really fully Focused on what you're trying to do. The seventh concept we'll talk about today is we find the best, best businesses really know their own business really well. They know who their best customers are. They know where their best people are. They know where the revenues and their profits are coming from. They really know their, their best, their own business really well. And that's really the starting point for almost everything. The eighth thing we talk about often is the 80, 20 rule. You're going to put most of your time into your best people, your best customers. It's not a democracy. It's best people, best customers, and you're constantly down your best product lines, your best service lines, your most profit lines, and so forth and so on. The ninth concept we talk about is this concept of businesses are systems and people. It's technology and people. You need to have great people. I've seen people build businesses, huge business without great people. I'm not a believer in it. I think everything is much easier if you're hiring great, smart, driven, motivated people. There's also a tack on thought around this about. There's always this comment of culture beat strategy for lunch. Again, I think this is one of the great myths of our time. From my perspective, it's culture plus strategy plus talent. It's not one or the other. You got to have both. It's really easy to say burn the bolt. It's really easy to say it's all about culture and there's some truth to all that stuff. But you also need talented people and driven people and motivated people and customers and all that kind of stuff. Tenth, ideas. We always say about businesses, there's five funnels in a business. There's an idea and then there's actually developing a profit. Then there's developing revenues, then there's developing actual profits, and then there's actually scaling it. But ideas themselves are not the thing. It's the execution and the development that's the thing. But even with ideas, I'm a huge believer that it's much easier to find ideas for businesses when you are deeply involved in things than when you're in contrast, you know, really just sort of abstracting whiteboarding. I find it's very hard to abstract whiteboard, much easier to really find ideas, come up with ideas for business when you're deeply involved. So that's the concept on, on. On ideas and, and businesses, you know, and so forth. The 11th thing I'll talk about really quickly is this concept of the solopreneur. The solopreneur is this social media construct of the person that could do it all themselves. And I am no doubt there are people that are creators on the Internet and so forth that maybe could do it all themselves. But even there they probably need to to find help resourcing, selling, doing other kinds of things to find sponsors and all those kinds of things. In general, I'm not a believer in the solopreneur. I'm in the believer in the bill building teams. They don't have to be huge teams that could be lean teams, but I'm much more focused on that than I am this concept of the solopreneur. I often talk about the myth of the solopreneur because it's really hard to do anything by your finally, the 12th concept that we talk about all the time is, and we've talked about it a little bit earlier today, is ultimately, you're going to constantly double down on what works as you develop businesses, as you know what's working, what's not working. A lot of it is very simple. You double down on what's working, what's bringing in money, who your great people are, and so forth and so on. So those again, building businesses, winners and losers. I've had a lot of both. Thank you for listening to the Becker Private Equity and Business podcast. Thank you very much.