← Mondays with Matt
Mondays with Matt
#8: How Two Brothers Built Their Business from Scratch
00:52:43
Scared of beginning your business!? Brothers Matt and Chris Reynolds share their entrepreneurial journeys, from overcoming fear to building successful businesses. Learn how to balance your day job with your dream, assess real risk, and take the leap towards financial freedom on this episode of the Build Your Business Podcast.
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- [00:02]
A
You're listening to the Build you'd Business podcast, powered by Turnkey Coach, where we help business owners find freedom over fear. I'm Matt Reynolds and I'm his brother, Chris Reynolds.
- [00:12]
B
Join us as we help build your business and move from fear to freedom together. You're listening to the Build you'd Business podcast. I am your co host, Matt Reynolds, here with my brother Chr Reynolds. We've got 40 years, almost 40 years of business ownership experience between the two of us. We help you go from fear to freedom in business ownership. Man, it was really scary when we got started and didn't really have a lot of people to walk through it with us. And so that's what we're here to do to help coach you through some of these challenges and problems and scary things that cause anxiety in business owners and walk through that and so welcome to the show, man. How's it going?
- [00:57]
A
It's going well. It's been a crazy, crazy day, this day already. This is one of those days where everything that could possibly go wrong has already gone wrong. It's just insane. But it is what it is.
- [01:09]
B
It is what it is. Mine's going pretty well. Got just finished my workout, literally ran up from gym sauna cold plunge, took a two minute shower, threw my clothes on and turned it on. So I'm even more red and sweaty than normal. But here we go. Today we're going to dive in. We're going to talk a little bit about founder Risk and I talked some about this, actually. I'll give a quick shout out. So I don't think we've said this since the book has been released, but Undoing Urgency came out last week. It's done very well. It's hit top 10 and lots of the business categories, I think number six in time management, things like that was right behind in business Donald Trump's Art of the Deal for a couple days, which is an interesting thing to be right behind the guy that's about to be president again. And so book's gone great. So if you're interested in Undoing urgency and really that book is about exactly what the title is, Undoing Urgency, Deprioritizing pulling weeds so that you can get rid of the urgent things and focus on the stuff that's more important. The most important things are never urgent and the urgent things are almost never important. And I don't hold anything back. It's a super vulnerable book. We've talked about that some on the podcast. Lots of life's lessons. It's not a book that's just about, here's all my successes and here's how I got there. I think most of the lessons are actually in the failures and lessons that I've learned, as I think most books should be. I'm preaching to myself as much as I am anybody else wrote it, certainly for my family and my grandkids who I don't have yet, and future grandchildren and great grandchildren and generations to come. It's really my life's work. And the things I've learned, again, didn't hold anything back. And we're not going to hold anything back on this podcast. You and I both run service companies. That's how we make our money so content for us. It's not like there's, ooh, the extra secret sauce is behind the paywall. This is the extra secret sauce. We're going to give everything we got. So, want to talk today about founder risk and one of the things I talk about in the book, some of the major derailments, things that can derail founders or even just derail you in your life. The book is not specifically for business owners, but it's probably most applicable there. And one of the major things is fear of risk. Risk tolerance is really important for a founder, but also I think understanding that there's less risk than you think there is in owning, founding, starting a business is a very important thing to understand. And you don't know that until you've had somebody who's done it, who can come back and tell you, like, hey, it's not that risky. It's actually far more risky. I think at the point that you hit $50,100,000,000 valuations than it is starting the business from scratch. Because you're considering in the beginning I have a day job that's safe, that pays me a salary. And if I'm going to leave that and do this thing that I love and start this business that feels very risky to me. Because what if I can't pay the mortgage? What if I can't pay the electric bill? What if I can't buy groceries for my family or Christmas? And so often in starting a business or in worrying about starting, the major anxiety is, one, I don't know how, and two, it seems too risky. And the combination of both of those just seems like a giant hurdle, like a chasm or a mountain that I don't know how to climb and cross. And I think for, especially in the first season of this podcast, that's probably the number one goal for you. And I is to help convince and train and coach other up and coming business owners and those who haven't made the leap yet to just buy in and be confident in their ability to found and own and run a business.
- [04:35]
A
Yeah, absolutely. I mean, part of this is also just how bad humans are at risk assessment in general. Like, humans were not really like we are. It's so easy to get confused about where the higher risk is in, in almost any situation. I can't tell you how frequently I hear about people who are just freaking out, freaking out about some news headline or something that they're like, this is the new thing. And every, you know, everything's, you know, if it's been. I've heard a lot of this around AI People are talking about AI, we're all losing our jobs and everything's going.
- [05:10]
B
Away and Terminator's coming and then they're going to take us over and they're going to kill everyone.
- [05:13]
A
You got in the car this morning and took your kid to school. Like that was the riskiest thing you're going to do all day. You realize that, right? And so they don't, they don't realize that nobody thinks about those things. Comparative risk is its own study. Like just realizing the risk that you accept every single day that are horrible risks that you take and comparing those to the other risks, like, things don't look that risky. Sort of a famous speech that Steve Jobs gave at Stanford whenever he was giving them the commencement speech in. I'm thinking it's 2006 or something.
- [05:53]
B
You can pull this up. It's on YouTube. You can watch it.
- [05:56]
A
Yep. And this was the one where I think he said, you know, when you look at the risk, you can be absolutely sure that one day you're gonna die. That is absolutely gonna happen. All the rest of the rest seem so small. And it's true. I think about that all the time and I think it's a useful thing to think about. Now, obviously getting a little deep pretty early on this podcast, but that is part of what you need to think about as you start thinking about the risks of starting your own company. The first risk that you want to come up against, the very first one that you want to deal with and think through, is what is the regret risk of not doing it.
- [06:38]
B
That's right. That's huge.
- [06:39]
A
That's a really important one. Right. Because if you think to yourself, if I am laying on my deathbed at 92 or something and I look back, am I going to regret not doing this? That is its Own risk. And this is a risk that people miss.
- [06:55]
B
It's a quality of life risk. Right? So if you wake up every morning, the alarm goes off and you have your normal blue collar job or white collar job or whatever it is, and you're sort of like, I did this when I was a teacher, which is probably, I don't know, blue collar probably would be considered as a teacher. And yeah, I would wake up and I would just say all the curse words and I would be pissed off that I would have to go to work. So the quality of life. And again, I actually really enjoyed teaching itself. Like the process of. I still do, but it was all the other stuff that came with the teaching. And so I was living a life, working a job, making just enough money to pay the bills that I basically hated. And the thought process of, wait, I love lifting. I love strength and conditioning. I love the potential to open a gym and be a coach and do the thing if that can support my family the way teaching in government schools can. Like, option two is way better. I want to do the gym. And then the big piece of that is regardless of how quote, unquote, safe your job is. So I would think government jobs, teaching jobs, blue collar, especially if you're in a union organization that really protects you from being fired, that's the safest type of job you can have. It's still not safe.
- [08:17]
A
That's right.
- [08:18]
B
Teachers all the time. First off, I mean, without even going down too much of a cultural or political rabbit hole, I left teaching in 2012. So it's been 13 years. How much has the world changed in 13 years? Yeah, man, I would not want to have 30 kids in the classroom. And even back then, there's a massive risk of some kids saying that you did X, that you didn't do, or that they took way too far and you get fired. And the same thing can happen in a lot of those blue collar jobs. You can get hurt. You can end up on opiates for the rest of your life and sitting at home on workman's comp. And that's a terrible quality of life. And most people listening to this don't have a job that's that safe. They're working a regular job and a regular business, which means if the economy struggles, if the business decides to aggressively get lean, like we talked about last week, your job's on the line.
- [09:09]
A
That's right. I can't tell you how many times I've talked to people in the sort of, some of the larger corporations that Are like, hey, you know, my job's totally safe. I'm in this large corporation. I'm like, that's one of the most dangerous places you can be. And as you work your way up the chain, the danger grows.
- [09:26]
B
That's right.
- [09:27]
A
Because what happens is you get a big old target on your back because your pay is getting higher and your benefits package is getting higher. And when they need to get lean, and that's driven entirely by the economy or their specific, you know, that specific sector of the, of the economy, they cut, they cut. Those decisions come from the top and, and it doesn't matter who knows you, like, at the end of the day, your job can go. So one of the big aspects of this that I always, I always like to, to describe to people as you start thinking about, you know, creating your own company and assessing the risk of that is at least in your organization, you are the last to go.
- [10:06]
B
Right? Right. So long as you own 51% of a business.
- [10:10]
A
Yep.
- [10:11]
B
Then you have the safest job in the world.
- [10:14]
A
Yeah.
- [10:15]
B
51% of the business. The only thing that can go, the risk, the only thing that can go wrong is that you run out of money.
- [10:21]
A
That's right.
- [10:22]
B
That's the risk. But you're never gonna lose your job.
- [10:25]
A
Right?
- [10:25]
B
Right.
- [10:26]
A
And you're not gonna run out of money because you listen to our last podcast where we talk about how to not run out of money.
- [10:31]
B
That's right. Because you're gonna focus on zero based accounting and profit first mentality so that there's always profit and you're not taking a bunch of debt and having to raise money. And at the point that you potentially grow, there is like this bell curve where in the beginning there is some risk because you're trying to make enough money to survive in the early days.
- [10:52]
A
Right.
- [10:52]
B
Then if it goes well, as it should. And a lot of that is just consistency over time. We've all heard the stats that 90% of businesses fail in the first two years. Things you get to year three, year four, year five, you're probably in a spot where you can fully support yourself, you're making some money. That's the safest place there is. And then as you get to the point where if you decide to take the business to a point that it grows and grows and grows to a, you know, an eight figure business, you bring on investors, you have a board of directors, at some point, you no longer own 51% of the company, you own less than 50% of the company, then the risk goes back up now, the board can fire you, right, as a CEO or as the founder and the owner, but the sweet spot is in those, you know, after that initial scare of the first, say, six months of business ownership into the first maybe five years. And for a lot of people, if you turn into a cash cow forever because you never go the route of bringing on investors and board of directors and things like, you always own a majority, you're the majority shareholder of your business, then risk is very, very low.
- [11:53]
A
Yeah, that's exactly right. So let's talk about how do you make the transition? Because I think for a lot of people, that's really where they get stuck. It's. It feels so risky. I don't know how to make them move. So we're going to talk about that now and sort of lay out very practical steps for how to do this and also tell the story of how we did it.
- [12:11]
B
And by the way, we mentioned this a little bit in past. In past episodes about some of this process of, you don't have to rip the band aid off one day. Like, you don't have to go from, I'm an accountant, but I really want to be a strength coach or whatever. The thing is what. I follow my passion in this thing. And then just quit your accounting job and start your woodworking job. Yeah, you can't do that. So if it's not that, what is it?
- [12:38]
A
Okay, so I'll tell a little bit of my story around how I did this. And I was young at the time. I had a very good job, especially from where we were, where we lived.
- [12:52]
B
In the Ozarks, where I still live.
- [12:55]
A
I was working as a network administrator for a group of credit unions, which is essentially a group of banks, pretty stable, supporting five different credit unions simultaneously.
- [13:07]
B
The guy that had been the previous network administrator had been there for 30 years or something.
- [13:11]
A
And actually, I think they brought him in within the last. I think it was like 10 years or something. But it was, like, crazy stable, right? Just like.
- [13:19]
B
But he was behind in technology, and you were the young kid. You came on as kind of his understudy. And then pretty quick, I remember the. I'll say this, so you don't have to. The credit unions were like, oh, the kid knows way more than the older guy, because the older guy hadn't kept up with technology, and technology had changed dramatically. So now he ends up being sort of asked to retire, and he retires, and you take the full network administrator job, and you're like the young upstart kid who's really smart. I remember you came in and you didn't just do. You did like online bank statements, which for everybody gets those now. But that was very early in those days. Yeah, you did secure websites for all of those banks on the side. You did. And so you had a pretty stable and a growing level of income every single year as that network administrator for the credit unions.
- [14:08]
A
Yeah, and I could have grown that into a forever career for sure. No question. I mean, like, not only that, there was an easy and obvious path too because as I grew within that organization, I would have eventually hit a ceiling. However, there are credit unions of essentially every size across the United States of America. And I know I would have ended up on the speaking circuit at certain places and I could have moved myself into a CTO role at one of these large credit unions and built a whole career doing that. And I thought about that. That was what was going on in my head. Like these are very stable jobs. They've got great retirement plans and all that kind of stuff. And maybe that's the route I should go. But I also knew, and there was this moment I think that was very important. I think it was extremely impactful for me. And it was. I was working at that job about 30 hours a week while I was finishing my degree at Missouri State. And so when I finished, I was running. I was running for as long as I can remember, like as fast as I can through everything. As fast as I can through junior high and high school. I got to high school and literally once I finished my credits and I knew I had met all my credits for, for high school, I just stopped taking additional classes.
- [15:27]
B
Yeah, you went like two hours a day your senior year?
- [15:29]
A
My senior year I went two hours.
- [15:30]
B
A day, which I think now kids do some, they'll go to, you know, like a trade school or a technical school or something for the second half of the day. But you worked, you did two hours of credit and you essentially worked a nearly full time job as a 17, 18 year old kid.
- [15:45]
A
I was running as fast as I could towards. I knew I wanted to get married. I knew I was with the woman I wanted to be with for the rest of my life, which has worked out quite well. I just knew what I wanted and I was running at it as fast as I could. I got done with my degree and I finished my degree with one additional credit hour that I had to have that is as efficient as you can possibly be. I mean there's, it's almost impossible to do that.
- [16:13]
B
Sure.
- [16:13]
A
And I did that in exactly four years, while I was working essentially 30 hours a week to go through that process. And when I got done with that, I remember sitting, at this point, the idea of starting a new company had not yet emerged in my brain. I was deeply into all the technology and all the work that I was doing with the credit unions. The day after I graduated, I'm sitting in that office and I have this full time job and this is it. I remember looking at my, myself in the mirror and going, oh no, it's like, is this it? Like this is it. This is what I did all this for, right?
- [16:53]
B
To work for somebody else? Oh no, for 60 grand a year.
- [16:57]
A
It was like I knew that I would be bored out of my mind. Like, like it wasn't going to work. Whenever there was an opportunity they had mentioned and you know, they'd seen a lot of drive in me and they wanted to, they wanted, they wanted a lot of things that they couldn't get in any other way. So they said, we are totally okay with you moonlighting and, and working to do projects for us outside of the, you know, the regular 40 hour work week. And I said, great, let's do it. And so as I started to build up some contractor work with those credit unions, it started to become clear to me that there was an opportunity there, that there was, you know, this is the very beginning of the web application era. This is like there were no, like this was web 1.0 and we were making the transition to web 2.0 at this point. But nobody even knew what that was. I mean it was brand, brand, brand new. And so. Which was an ideal time by the way, to start a business.
- [17:51]
B
Yeah.
- [17:51]
A
And so I started thinking about, okay, how will I do this? And what I did was I worked a full time job during the day. I did seven, I think my job started at 7:30 in the morning to open all the credit union, to open the credit unions. And then I got out, I think at 4. I think it was something like that. I took like 30 minute lunch and then from 4 until sometimes as late as like 2 or 3 in the morning, I would work on all of the projects that we had to do. Now I couldn't do that myself, so I'm not a designer. I think we talked about this in one of the podcasts. So I used my cousin, who's my business partner to do the design work. He did the design work. We quickly became kind of, he was the front end developer, I was the backend developer and we would just, I would Every night I would go over to his house, we would work and we'd work until 2 in the morning. He's a late, late owl kind of guy and I'm an early morning kind of guy. So that's 2am Things were kind of tough, but I did that for a year.
- [18:48]
B
He was a music studio engineer at the time as well. So he's doing the same thing, working a full time job as a, as a studio engineer and then working at night. So you guys did. So really what I'm hearing you say is from high school you essentially had set the pattern or the habit of working two shifts. You went to school and then you worked and then in college you went to school and then you worked. And then when you graduated from college, you, you worked your day job as a network administrator and then you moonlighted in the evenings and again as a network administrator. Correct me if I'm wrong, but I think I remember this correctly. The things like you, you had pretty good hacking skills. And so you said I went in as if I were a hacker and I can hack into all these bank websites and you don't have secure websites and you need secure websites. But building secure websites is not in my job description as a network administrator. And so one of the first things you guys did was you built secure websites for all of these credit unions. Moonlighting on the side is not part of your full time job to bring in additional income that then expanded additional like network opportunities in the banking world.
- [19:58]
A
That's right. The pattern was set. It didn't really stress me out. I was newly married. I got married during that job. No kid jet, no kids. And you know, my wife was still in college, so I could go as hard as I could possibly go. And I can go pretty hard. And so I did that for a year. It was more than 16 hours a day. It was probably closer to 18 hours a day for a year. And I was tired sometimes, but like it was fine. Right. I had the weekends at that point. I don't think I had yet learned to do a lot of weekend work. That came a little bit later. But for the most part that was the way that the opportunity started to emerge. And it wasn't until one of Those credit union CEOs mentioned that, you know, they liked the work that we were doing. We were getting a good name, the value of the product that we produce. And this is another important thing, right? Like you gotta go out there and put out really high quality stuff. Sure. But if you do that, opportunity finds you. And so what happened was that CEO of the credit union was on the board of a small insurance company in Nixon, Missouri. That insurance company no longer exists today. That company needed something, they thought they needed a website. So we went to visit them and we learned at the time that what they needed was not a website. What they needed was actually a way for their agents, their insurance agents, to quote insurance policies, to get quotes for insurance policies for the policyholders. So like if you're a homeowner today and you need homeowner's insurance, you go to an agent, the agent gets quotes from maybe three or four different places. @ that point in time, it was actually very uncommon for that to be done over the Internet because there were no websites that allowed you to do quoting like that.
- [21:44]
B
Sure.
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A
We learned on the fly that this was a thing that they needed to do. And so we went head down, we built the system, this quoting system, and the quoting system started to take off also.
- [21:54]
B
I remember that one, you negotiated an upfront payment from them. You said, if we're going to do this, it's going to cost this much and we're going to need this much up front. Like we're. You were just kind of honest with him. We're fresh out of college, we're kind of, you know, early in our career, we're going to need this to build this. And then when we complete the work, you know, you finish the payment. But you guys were able to take in a significant amount of revenue to build out that software.
- [22:20]
A
That's right.
- [22:20]
B
It also allowed you to start hiring some of your early employees or early people that were beyond just you and our cousin to build up that business. And so you pivoted, you were able to pivot from banking software to insurance software because you were young and you were mobile, you could quickly turn the ship. And so what you think you're going to get into, which we've talked about in previous podcasts, almost never, what is actually the niche you find yourself in long term, the successful niche you find yourself in long term. And so now you're going from banking software and banking websites and estatements and all those things to really what was an all inclusive office management CRM type software specifically for insurance companies and specifically for smaller insurance companies. Although, you know, the Big seven or whatever, you know, the state farms and the Allstates and the Progressives and the Geicos, they all have an entire team to work on that. But these farmer's mutuals, these mutual type insurance companies, out of $2 million in premiums, a year to 10 mil to 10 million maybe. Nobody had cracked the code on how to write fully functioning, complete software for companies like this.
- [23:37]
A
That's right.
- [23:38]
B
And you guys were able to do that and so.
- [23:40]
A
Well, another really interesting point here is that first step was just quoting systems. It was only this one little component and that spread, that spread really quickly because it was extremely effective. We were able to get lots and lots and lots of new business for these small carriers and that they hadn't seen that before. So they were, they were very excited.
- [24:01]
B
And was the new business primarily one degree of separation? I remember you went to a lot of conferences, insurance conferences, and you would put up booths and you would speak and you would give demos of that sort of thing. Like, was it a combination of both?
- [24:15]
A
Where did most people all know each other in this space? Across the United States, 100% of these people know each other. So it was very easy once you did a really great job and you. And, you know, we were, we were crazy about this. Like, if the software wasn't working the way that we expected it to work, I mean, they had our cell phone numbers. It was call my cell phone and if you need to wake me up at three in the morning, I will get up and solve your problem. It was the service level. This was the beginning, I realize now of I had a standard already in my head about the service level that I wanted to see because I didn't see it in the market, and that that would later become what my current company is, a service level that people just don't see from tech at all.
- [25:04]
B
Right.
- [25:05]
A
I knew that needed to be done. And so we had made such a name for ourselves and this was a pretty sleepy industry. There was no, you know, it was, it was ripe for disruption. And so that took off and it got all the way to West Virginia. And we realized, I remember Phil and I having a conversation in the car that our pricing model was broken and that we were basically going to run out of money. So on that first one, it wasn't done by any means. We had pivoted once from banking where I realized that we couldn't really. It's very hard to push the products that we had built for banking to the next level. So we go to these insurance companies, we build quoting, but quoting. We were pricing this quoting. It was essentially custom software every time. And so we were able to use some of what we had done in the past, but it was still very, very custom. A lot of custom pieces all, all the way throughout. And we didn't really get a residual. We got very little residual from these contracts. So we'd get some support fees, but they wouldn't be enough to really, you know, make a company grow. And it wasn't enough of the business to make it. To make it work. And so we were starting to toy around with the idea of building a system that would run the entire insurance company and build it on the web, which was again, this had not been done at this point. So totally web native, runs an insurance company from beginning to end. Claims management, claims processing, policy processing, pay the bills, all everything, like payments, everything. We had toyed around with the idea, but we would need new customers to actually pull that off. So we get to West Virginia. Well, actually, the story is probably useful in and of itself. What actually happened at that point is that we had a customer, a potential customer reach out to us. I still have the email to this day where he said, hey, we heard some really great things about your quoting system and would like to talk to you. We have a conference in West Virginia, in the middle of West Virginia. Would you be willing to come out and meet with a group of us in West Virginia? And Phil and I had no money, right?
- [27:00]
B
Like, we were down to almost driving to west. The gas to West Virginia was too much.
- [27:06]
A
We had just enough for two cheap plane tickets to get there and to stay in same hotel room. And like, I mean, it was tight. So we go to this thing and that relationship becomes the one. That guy, his name is Art Meadows. Call out to Art, still a friend of mine today. I'm on a bunch of boards with him. But Art knew so many. He was a connector. He knew so many people in the industry that what happened was he put us in contact with five different companies that all wanted this big policy administration system. And they all agreed to put money in a pool without owning any of the equity. We would own all the equity. They put a money money in the pool, and we would produce the software for them. And that was the thing that became Brightcore. Bright Core took off and then I was good to go, right? But everywhere that I just described along the way, as we're thinking about this founder risk concept, everything that I described along the way, there were all these risks that occurred and a lot of pivots along the way. But even at the point in time that we were about to run out of money, remember that I had made like, I'd made like, I'd probably made 200 connections of places that would have given me a job immediately, immediately. Like I could have had a job that paid just as well as my previous job the second I sent the email or made the phone call.
- [28:33]
B
Yeah.
- [28:34]
A
So what was the real risk?
- [28:35]
B
Sure. Right.
- [28:36]
A
The risk wasn't actually what I thought it was. In fact, as you go through and expand and learn and meet new people and all those things, what really happens is your total risk. The total risk that you end up in a situation where you cannot pay the bills drops very close to zero.
- [28:53]
B
That's right. I'll give you a super fast overview of my story. It's similar but somewhat different. And we've talked about this. Chris has always been very ambitious and very fast and very efficient his entire life. He was a worker as a kid like he's at junior high, high school. I was the opposite and frustrating to my teachers because I was very smart. I was. I got the highest ACT score in my class of 202, 40 or whatever it was that graduated, which is not a huge class but had the highest ACT score. I was a super smart kid, but I was just kind of lazy. And I worked from the day I was 16. I went and got a job at Kmart and did the typical 16 year old jobs. And I was really into my senior year. I got really into lifting and we studied everything we could. And we were at a house at the time that the previous owners had turned the two car garage into a. Or they had built a three car detached garage. And the two car garage was on. Actually ended up being your bedroom. You had been stuck in the small bedrooms our whole life. And so we're like, Chris gets the big bedroom. It wasn't a master bedroom, didn't have a bathroom attached. But we ended up, you had your bedroom and then we built a gym in your bedroom. And we would train at night during college or even during high school. And then we got into college, we would train a lot at Missouri State, at the gym there. And so I just fell in love with strength training. But I ended up going into education not because I was passionate about it, but because my wife is a couple years older than me and she was going to be a teacher. And I thought, well, this is a good. Teaching is a good job for a husband and wife combo because you get the summers off together. Your Christmas break and Thanksgiving break are all off together. That seems like the right move to make. And so I started teaching in 2004. In 2008, I opened a gym. Open, strong gym. But the caveat to that is we already had 30 or 35 guys training out of my two car garage. I had built a really nice home gym in my garage when we bought our first house and we were just outgrowing the garage. We couldn't, you know, we couldn't fit everybody in there. So we rented the cheapest. It was like $450 a month. And it was like 10,000 square feet industrial space, no heat, no air conditioning. It had a bathroom. I'm sure you remember it. We could do all the lifts. There's plenty of room for equipment. We could do strongman stuff in there, flip the tires, all this stuff. I never thought that was going to be a successful business. I thought I'd be a teacher. And then I went to get my master's as a principal. And by the time I finished my master's, I was like, I don't think I'm going to stay in the government school systems. I think maybe I can do this. I graduated my master's in 2009, I believe. Started the gym in 2008. The gym grew really fast, accidentally. It was just ripe. It was, you know, it was 2008, the beginning of CrossFit. We weren't CrossFit. We trained powerlifting style, but we had really good service. And it was very clean and very organized. And even though the building sucked and it was an old, dank industrial building, it was totally clean and great customer service. And we trained business executives and soccer moms and powerlifters and everybody kind of the same way. Everybody lifted heavy and the gym started to grow and I started to learn everything I could about business. Like at the time, I don't even know that I'd filed for an LLC or had a business bank account or an ein number stuff that we'll talk about, I think in the next episode on how to actually do this and start a business. But the business started to grow and in the period between 2009 and 2012, that's when I was working my double shift. So I was working as a teacher. I was the head strength coach of a five, A high school, of a big high school. I was an assistant football coach. I was just busy at work. And then I would have to go to the gym, or I would go to the gym early in the morning for an hour or two and train clients, go to school, work all day at school, football, football practice, come back to the gym, train clients. It was just super long days. And then I got to the point where we were making enough money in the gym that I was like, I can do the math and I can make enough money at the gym to completely replace the money that I'm making as a teacher. And so without that gym, there would never be a barbell logic because it let me learn the ins and outs of business. I read every business book I could get my hands on. I read things like the E. Myth. I developed systems and standard operating procedures which were pretty crude at the time, but it was a small business and not a lot of employees. And the only money that we took, and I think this is the next most important point that we've talked about in previous podcasts, is that you don't spend the money on the moonlighting job.
- [33:21]
A
That's right.
- [33:22]
B
And so the only money that I took from the moonlighting job was if I personal trained a client. Any of the memberships for the gym or income to the gym just got invested back into the gym. I had another business partner, William McNeely, who actually said very nice things about the book yesterday and posted on social media. So thanks, Will. Still good friends with him. He was a great guy. He had come out of the Navy, has terrible Crohn's disease, was on full time disability from the Navy. So he was living off Navy disability payments and what little he made from personal training. And we just reinvested the money back into the gym. 2012, I was able to leave teaching after not spending any money at the gym, not paying myself at the gym at all, and very quickly was able to completely replace the income from teaching into the gym. And then at that point, I'm no longer working, especially on those days that I was teaching training clients, teaching, coaching and then training clients. I'm no longer working 16 hours a day where two thirds of that is in the school. I'm working 14 hours a day, but all of it's at the gym. And so much of it was not just the working in the business. I learned the concept of the E Myth of working on the business. And so I develop business plans. Not for a bank, not to go get a loan, a business plan for us. What's our philosophy of training? What's our core values? What are the things we stick to? What do we stand by? How do we not fall into fitness fads, all of those sorts of things. And it continued to take off. And so from 2012 to 2015, we grew to be the largest privately owned strength gym in the country. Again, that's in the Ozarks, which is hard to do, but I think there's some advantages here because of 500,000 people were all within 15 minutes of the gym we moved multiple times, ended up in a really bought a building, a freestanding 15,000 square foot building, made it super nice, and then was able to sell the gym to a third business partner that we had brought on at the end of 15 and start the online coaching business. But by that time it didn't feel risky because I had enough money in the bank account that I could live for a year. It wasn't that much. I didn't sell it for 500 grand or anything, but had enough money in the bank account to live for a year and put all my eggs in the basket of online coaching. And so number one is neither of us spent the money on the moonlighting job. We let the main job pay the bills as we built up the savings from the moonlighting job so that the transition over was far less risky. I think that's really important. And then the second piece of this, then I'll turn it over to you, let you give comments on this, is that there then is an immediate hunger that jumps in. You have total control of your business and your destiny, but also that's the only income that's paying the bills. And so there's a hunger here that you're like, I have to make it work. There isn't an opportunity to let it not work. And I think that is a. Actually I go back and you probably do too, with tremendous nostalgia of those years and think like I was working so many hours, I would wake up at sometimes one in the morning, two in the morning, which is not what time I was waking up at the time, but my mind would just be going crazy. I remember when we bought the building, I'd get out the architectural drawings and I'd change what walls we were going to move and do the. Because I couldn't help but be so excited because I had this real business that was really making money, that actually had employees that had this. And we had a ton of. We had a big grand opening in town. It was in the newspaper, it was in the business journals, all that sort of stuff. Nothing ever felt like a risk to me with the exception of the first few weeks of fully leaving teaching and fully going into the business. But very quickly that risk felt like it diminished.
- [37:24]
A
It's just such a huge paradigm shift. People are so used to. I go to a job where there's a boss, a check shows up in my account every two weeks or whatever. Like that's just like this feels like a lot of responsibility, I think, for a lot of people. And so I think it's the paradigm shift that causes, you know, what am I missing? Like, am I missing something here? Well, guess you're not. You're actually not missing anything. It's funny, like, it's not as complicated as people make it and we've got a future episode where we talk about like the details of it. But there's sort of two things here that I want to make sure to draw attention to. The first one is the exact numbers don't matter all that much. But when do you make the jump? I think a big part of that is when the revenue from the new gig can support about 70% of your living costs and you have the rest of it to fill in the gaps in savings from the new gig. Then you're good for six months to a year.
- [38:19]
B
Yeah, you've got enough money coming in to support say 70%, 75% of your basic income needs. You got the other whatever, 25 to 30% in the bank for the next six months to a year. You've got a six month to a year cushion. That should continue to build and you should very much be able to build up so that when that money would theoretically run out, you have continued to increase revenue, you've continued to follow the focused action items that we laid out last week and getting lean and bootstrapping, all of those things. You should, six months in, be making more money at the new gig than you were at the old gig. That's the key.
- [39:00]
A
And two other points there. One, just when you leave your main gig, do so in the kindest possible way that you can. Cause you may have to go back.
- [39:10]
B
That's right.
- [39:11]
A
But additionally, the point I made earlier is still valid. The customers you create during this timeframe are also clear job opportunities for you. So it's not like you couldn't go back to the 9 to 5. You could go back to the 9 to 5 if you had to go back to the 9 to 5. Correct. So just know that like that's part of the de risking is making sure that you're leaving your optionality as open as you can. However, the point that you made about once you're there, something happens. And it does. I mean, I can tell you point blank something happens. I actually can see it more clearly with you than I could with me. And I think part of the reason was no matter how far into the business thing that I was, I was excited about business books and all these things or whatever, you were excited about it for me at a distance. But it wasn't until you got into your own business that you started slurping down the business. Right.
- [40:09]
B
Drinking from the fire hose.
- [40:11]
A
And I think that drive to learn is also. You realize that the learning is survival. And so you have a very immediate reason to need that stuff. And there's a ton of it that you can consume. But this is my. I call this the burn the ships moment. Because if you haven't heard that phrase before, that's a Cortez. That's. That's a phrase that describes when Cortez makes it to Mexico in like 15, 19. The guys that were there were like, yeah, we could always go back. And he was like, nuh. Because we're going to go burn the streets.
- [40:43]
B
We're going to burn the streets, right?
- [40:44]
A
We're here now. We're going to conquer this thing or we're not. That's how it's going to go. Right? And so I think that moment happens with you when you get into this business that you own. It's the only way that you're going to support your family. It's the only way you're going to put groceries on the table. And I think what happens then is a complete and utter shift of mindset. The longer you're in it and the more successful you are in the process, the less likely you will ever be able to go back to the nine to five.
- [41:12]
B
That's right.
- [41:12]
A
So the thing that I want to make sure that I tell you is what you need to hear in the early days is that you could always go back to the 9 to 5, but if you're successful at it, you'll never be able to go back to the 9 to 5. And it won't be because you don't have opportunities. It would be because you can't imagine that world ever again in that first.
- [41:32]
B
Say, six months that we're talking about. In the time period before you fully found a business, in the first six months after you've left the old gig and are only doing the new gig, you theoretically have time to pivot and go like, oh, we can't find product market fit at all. It's a million times harder than I ever thought. My personality is not cut out for the risk. All those things are actually okay reasons to leave business ownership and go back to the safe job. You might just be like, my quality of life is actually worse. Owning a business and a safe job is actually what I desire. And again, I never want to look down on those things because the world runs on people who are working safe jobs. But for those of you Listening to this, like, I have to do this on my own for myself and on my deathbed. If I don't, I will regret it for eternity. Then you've got to make the jump, right? And then there is a time period pretty early. And for some of you, it may literally be day one of the new business. And some it may be I'm a little more risk averse. And so it's maybe take me three, four, five, six months to get there, but there is a day that will occur that you're like, I'm going to figure out how to make this work no matter what. And then so that when the really brutally hard times come, so that when the revenue drops, when you lose the big client that was one third of your revenue, when you get sued by your mentor like I did, when you like whatever those things are, quitting is never an option.
- [42:59]
A
Yep.
- [42:59]
B
So there is. Pivoting is an option. And we'll talk about that in a future episode, as well as being able to be nimble enough in the early years to pivot. But quitting is never an option. And so, you know, in the midst of the hardest thing I've ever done in business, which was this big federal lawsuit that I thought could theoretically cost us millions of dollars, I still never even considered what it might look like if we have to shut the business down. I was just like, we're going to make it work. And in those time periods. And I had enough staff at that point. That was in 2019. We had launched the big new online coaching business in early 2016 with a big expansion at the end of 16. By 19, I had a good level of employees and coaches, 1099 coaches, and rallied the troops and said, we're going to fight this and we're not going to give up and we're going to do everything we can to continue to make money and make payroll and steward our money wisely. And again, that comes back to that hunger that you have to make it work. By that time, my wife had quit her job and your wife did too, pretty quick. And so you're a one income family. We have children now. I mean, we had children then, we still do. They're just older now, older now, but we had young kids back then. And you're like, I have to make it work. And so there's also a thing I heard, by the way, our favorite podcast, the Founder's Podcast. David Senra, he was on a couple days ago with Chris Williamson on Modern Wisdom. I listened the first 45 minutes so far it's so good. Chris Williamson opens that podcast by saying, you are the podcaster's podcast.
- [44:37]
A
That's right.
- [44:37]
B
Everyone that has a successful podcast listens to David Senra.
- [44:40]
A
Oh, so good.
- [44:41]
B
And so there are so many lessons there to be learned. But the idea there is that anything that is uniquely valuable is uniquely hard. And most people can't do hard for sustained amounts of time. Now, I will also argue that if you are married and if you have children and if you have a network of community that are important to you, it's also not sustainable to work 16 to 18 hours a day for a long period of time. But you can do it for a year, you can do it for 18 months at some point. And everybody's different based on their personality. And that's exactly what I did. It's exactly what you did. And now we're at a point where we don't have to work 16 hours a day or eight. There are still those days that we do. But consistently I'm working. You know, I work, I work probably 10 hours a day. And a lot of that's just because I get up so early in the morning that by the time if I get up at 3, I'm really working by 3:30, and I shut down at 3:30 or 4, I get just 12 hours. Maybe I shut down at 2:30, like, you know, and I have a lunch in the middle or whatever. So I'm working 10 hours a day on average. Now there are days where I definitely still work 16, 18 hours. It's all day, every day for a few days. But those are few and far between now and the business is in a place where now I feel almost no risk in the business. Right. And so business is going fine. There's money in the bank. But you have to make that initial jump and decide it will be okay. It will be okay. Jeff Bezos said this. I heard an interview with him just a couple days ago where he literally talked about his experience is that almost every human overestimates the risk and underestimates the potential return.
- [46:22]
A
That's right.
- [46:23]
B
And so you have to look at it and go, if you view the world in an uber pessimistic way, our dad did this, our grandma did this. Where it was always thinking about the worst case scenario. This is probably not a job for you.
- [46:37]
A
No, not probably. It's just not a job for you.
- [46:41]
B
Good founders are ultimate optimists. And Synra says that belief becomes before ability, that we often, as founders believe. And you look at the Elon Musk. He believes he can change the world. Before, like, in the early days of SpaceX, I didn't know anything about rocketry. In the early days of Tesla, there hadn't been a successful American car manufacturer in 80 years. Like, the guy was able to come out. And then, of course, Solar City and all the. And then X and all the other stuff. He believes that he has the opportunity and the power, the wherewithal, the ability to withstand pain. All of those lessons that we hear from Synra and great founders of the past, those are things that have to be ingrained in your personality. Now the question is, will you just do it?
- [47:30]
A
The statement I always remember is, pessimists sound smart and optimists make money.
- [47:37]
B
And optimists make money. That's exactly right.
- [47:39]
A
Yeah. I mean, it's every time. And the thing is, maybe don't fool yourself. I don't think that's something you can change. I think you're probably an optimist or you're a pessimist. And if you're a pessimist, that's okay. We need you in the risk department of some company somebody else started, but we don't need you starting companies because at the end of the day, I think it's a very, very difficult thing to do. All of this sort of leans in this general direction, which is obviously, know yourself, know whether or not this is the right move for you, but if it is, don't overestimate the risk and make sure that the way that you execute is smart. Right. A lot of this has just been very practical. We're just saying, listen, when you do this, you've already got the cash pad to be okay for six months to a year, because things are gonna go in a way that you don't expect them to go. Make sure that you do it in a smart way. Don't quit your job in a way that is horrible. Make sure you can go back if you need to. Like, there's a lot of steps to this that de risk it for you, but at the end of the day, you are in the best possible position. There is nothing like the reward that you get from being a founder in working for someone else. You will never make as much money. You will never be as proud. Like, there's no way to get the same level of benefit. So if this is a thing that, when you think about it, you would regret on your deathbed if you didn't do, I think you have to do it. Yeah.
- [49:11]
B
You have the opportunity to control your own destiny and that means that it may succeed and you get to take a lot of the credit and it may fail and you have to be brutally honest about if it does. That's also on you. But there's a lot of business owners, founders, extreme super successful founders, billion dollar founders at this point, who their first several businesses failed. And so having a failed business also doesn't mean if you love business and love what you do, even a failure is not a death nail in the coffin. You can come back and do it over again and then you can do what you've done, which is have a successful business go a route that was eventually private equity and a lot of stress and and now your new business has decided profit first, hopefully never having to take on investors and private equity or if so that would be way, way, way down the line and just build a cash cow profitable business. You have an opportunity to do that as well. So as you learn the process of this, once you get through the steps of and what we're going to talk about next week, like how to actually start a business very practically, like how to get an LLC and a business bank account and ein and things like that and, and being people of action, once you've done that, it's actually a really easy process. Even those things in the early years for me, like how do I actually legally start a business was very difficult. And so man, if you love it, if you're going to regret it on your deathbed, if you don't, you got to do it. Take a year or so and work the double shift. Save the money and then make the transition and then push all your chips to the middle of the table and be all in and you'll be just fine.
- [50:54]
A
That's it. Absolutely.
- [50:55]
B
That's another episode of the Build you'd business podcast. Again, we always love a five star review on Apple Podcasts or Spotify. Pick up that book Undoing Urgency on Amazon if you can. It's available both in hardback and Kindle. The audiobook will be out in a couple months. A little bit behind, but that'll be fun as well. I'm excited to hear the audiobook as well and if you get it, I would always love a review. Reviews help tremendously with the book Undoing Urgency. That's still something you can get in time for Christmas. It'll ship it out right away. Hope you guys have a super merry Christmas. We'll see you next week. We're gonna start about, talk about how to start a business, which is a great time to do it. Because you'll be hearing that podcast going into the new year, and the new year is a great time to start a business. You don't wanna start a business. Just FYI at the last three days of December, because then you're gonna have to file some taxes and stuff at the end of the year, which we'll get into as well next week. So that's another episode of the build your business podcast again, brought to you by Turnkey Coach. You can go if you're a fitness professional and you want to see the greatest software in the world for online coaching, go to Turnkey Coach. And certain if you're looking for great developers at S U r t o n.com Correct.
- [52:09]
A
That's correct.
- [52:10]
B
For certain for Christmas company. And until next week, I hope you guys have a great weekend and a great Christmas.
- [52:33]
A
Sa.