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Guy Pinsent: Banker, Diplomat, Entrepreneur & CEO, Founder of Poland/Czech Republic's Largest Self-Storage Business
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- [00:02]
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- [01:15]
Guy Pinsent
Welcome to the New Books Network.
- [01:20]
Richard
Good morning, good evening, good night, entrepreneurship and Leadership Channel listeners on the New Books Network. I'm here today with Guy Pinzant, who I've known for many years and I could probably introduce him quite well. But as the regular listeners will know, what I prefer to do is to ask our guest to introduce themselves the way they would to someone who'd absolutely never heard of them and asked that great opening question. So what do you do?
- [01:44]
Guy Pinsent
Good morning, Rich. Well, thank you very much for having me on your on your podcast. My name is Guy Pinsent and I'm a British entrepreneur who's lived in Poland now for 20 years, having previously been here a couple of years as a diplomat. I was in the British Foreign Service for six and a half years and that took me to Poland 2003, 2005, and I left the Foreign Office and got back into business and having. Because prior to the Foreign Office, I was in banking for a bit and I kind of fell into the self storage industry because no one, no one really chooses self storage. It sort of comes to you and, but it is an amazing business and I set up a company called less mess storage 14 years ago. Sorry, 12 years ago. And we originally bought a little self storage business in Warsaw and in Prague, we Say to our investors, investing in less mess is the best excuse for a trip to Prague. And we've used that original five store small portfolio as a sort of springboard to grow into self storage, grow a business in Poland and the Czech Republic where it's near virgin territory. And today we have about a 70% market share. We are the leader in Poland and Czechia and we are now the 17th biggest self storage store in Europe as measured by total net lettable area.
- [03:10]
Richard
Well, yes, and when, when we last had a chat you, you told me a few of the, the numbers and I don't, obviously I'm not going to ask you to share anything you can't share, but can you give any kind of indication of the scale of the business? Because I remember being, you know, I, I, I was a customer of your business for a while when I moved away from Poland and my stuff stayed in your premises for a while. So I knew, I knew you were active on the outskirts of Krakow, but what sort of revenue? Yeah, so total number of people. What, what can you share?
- [03:42]
Guy Pinsent
Absolutely. Well, we, we, we have 18 large stores, well technically 20 projects at 18 locations. So apart from Warsaw and Prague, we also have opened in four other major cities in Poland, but that being Krakow where we first met of course all those years ago. Wrocaw, Poznan towards the west of Poland and the Tri City area, essentially Gdanskadynia and Sofot in the middle to make Tri City on the Baltic coast in the north of Poland. And the total footprint we have open today is about 100,000 square meters net lettable area. And we've got in what I call advanced pipeline that is under construction or fully funded and under a binding preliminary sale purchase agreement for the site. We have in that situation about just under 40,000 square meters additional coming down the rails over the next two, three years. And of course we're always growing because the market is still very much undersupplied when you compare supply levels of self storage in the United States, Canada, even Britain today.
- [04:55]
Richard
And in money terms, is there anything you can share, like how big the
- [04:58]
Guy Pinsent
business is that we cannot share? We do though, let's say in terms of the overall enterprise value of the business, we think we're valued at somewhere over 300 million euros. And we have total bank facilities, which is public information in euro terms, total bank, senior bank credit lines of today 121 million euros or thereabouts.
- [05:25]
Richard
So that gives us. Yes, so for people listening, we know we often chat to people who started their own business and in technology Quite often businesses have high valuations but are quite small. I want to, we'll come back to the business and the way from my perspective you leveraged your understanding of banking prior to being in the Foreign Office but to structure it and we don't want to spend too much on the finance. But what you did was to go into business by setting up a financial structure and buying someone else's business. We've had a few entrepreneurs through acquisition people in the past but it's a very good thing for people to know about this as a way to do things. But I'd like to spin back a bit to pre British Diplomatic Service Foreign Office. We try not to use jargon terms that are familiar to the Brits but not to our international leaders. Pre university would your family have been surprised to think of you owning a network of self storage places specifically or being a businessman at all? Did you come from a sort of a world in which people went into business and did their own thing or would that be a bit of a surprise to them?
- [06:41]
Guy Pinsent
My father was a serial entrepreneur and someone who I looked up to and still look up to with great affection and, and you know, and made a very good impression on me. He, he was in businesses ranging from tea plantations in Africa to a pottery business in, in Britain which was in the 1970s exporting you know, very high end pottery to the likes of Tiffany in New York. And then at the beginning of the 80s he founded and grew from nothing what was an amazing business called Anglo American Agriculture which bought, there were special tax breaks apparently for Brits investing in agricultural land in California at the beginning of the 80s. And he bought a, I think a Thompson's Table Grape vineyards, lovely white, crunchy, seedless grapes which were a novelty of Bristol at the beginning of the 80s. So he started importing really high quality fruit to Britain and that grew into wine grapes, citrus date gardens, jojoba beans, a funny thing which are used to make very high end shampoos and interestingly Formula one motor oil because it has a very long chain in the oil, very resistant at high temperatures and pressures. It grew to macadamia nuts in Hawaii and then a huge deal where he bought the biggest cotton farm in Australia in about 1986 called Collie Cotton. And this, this has been the subject of various rankings, corporate rankings of Collie Cotton over the years have been the subject of Harvard Business School case study, you know, the entrepreneurship through my father and you know prior to that he had a sort of city background as well, fund management. So in a Sense. I've had a similar path to my father and I've learned a lot from him. My mother, I guess if you're drawing from the gene pool. My mother has had a life in horses and that demands very high discipline. So she's always been very disciplined, riding, looking after horses, teaching, breeding, schooling and so on.
- [08:56]
Richard
So I think I've drawn, so the role models were obviously there and sort of understanding that it's a bit of a different world. And what about you? I mean you said you looked up to your father, but it's not you. You did, were you, did you have in mind that at some stage in your life you'd have your own, your own business? Because the stuff of your career didn't look like that, did it?
- [09:22]
Guy Pinsent
No, absolutely. I think there was always an ambition to have my own business. But I think that, you know, the career choices I took to start with, um, obviously with hindsight everything looks like it makes sense, but that's sort of selection bias of course. And so it's really hard to disentangle what, what, how, how these paths make sense. But I, you know, I chose banking to start with probably for lack of imagination. It, you know, it was, it was a natural progression from sort of Pembroke, Cambridge Economics to go to the City. Obviously the City is well paid jobs and it can be a very satisfying career path and it's also a very good foundation for business because you're looking at different businesses, you learn how to pull balance sheets and accounts to pieces and put them back together again so you can really analyze what's going on through the numbers and try and understand different business models. And for me at Citibank, I liken it to a bit like the Karate Kid where I actually found the job pretty boring, but it was a bit like the wax on, wax off scene from Karate Kid where although I felt like I wasn't learning anything, actually when I look back on it years later, it taught me the language of credit and banking. So I'm absolutely fluent in it. And that served me extremely well when I came to raise money Senior Finance for Less mess because I just know exactly how to talk to bankers because I've been on the other side of the table, I know exactly what, what they need to look at to understand, you know, credit capacity and cash flow volatility and all the other risk factors a credit team in a bank are looking at.
- [11:03]
Richard
So, so, so yeah, so I, I, I understand that. And so we actually met at Cambridge, sorry, we didn't meet at Cambridge University, but we we had a, a common history and before we go into our sort of origin of our friendship story, I'd like to ask you about social status and standing. Reason being is that your jobs? You know, obviously going to Cambridge University, I'm biased but definitely one of the best universities in the world. Certainly the best college at Cambridge. Then after that a prestigious job in the city, then a prestigious employee, the Foreign Office doing things that looked good. In the, the world of business there are sort of cool startups with sort of game changing disruptive Internet technologies and then there's a certain sort of. Even as there are YouTubers who make channels about what you might call boring businesses. And you know, for a lot of people who care about social status they might think run running self storage isn't the, the coolest, most impression impressive thing. Just, just. And obviously I don't share that but I'm curious the extent to which the opinion of others about how impressive or not impressive was important to you prior to going off and doing this and then at the time whether you had any doubts. So in a sense what did you want to achieve out of the business and was that kind of potential? A friend of ours, John lynch in Krakow makes T shirts. He's got one of the largest, yeah promotional clothing businesses in Europe acquired by the biggest in the world, I think biggest American one. And they're like someone from the American embassy made a speech where he just called John the T shirt guy. And obviously this was a reception the Sheraton John had done very well. But there is that issue that some people when they imagine being a successful businessman or woman, they imagine themselves on the TV doing something cool. And did that ever matter? It's a long question but I think you know what's behind it. Could you just share your reflections on how, how it, how how what you were doing looked to other people and how you felt about it.
- [13:17]
Guy Pinsent
The perceived social status of where I worked has never ever and is still not a consideration at all in what I do. I, it just absolutely, it just does not cross my mind. I was you know, just looking at doing an interesting job to build a life like everybody else. And, and that's manifest the obvious in my, in my choices because you're indicating and it understandably self storage from the outside. It's not, you don't go oh that's a really sexy business like doing, doing fashion or some luxury hotel or rockets to Mars for example or rocket science or high end surgery or something. It's just not that. And I never thought of social status at all with Citibank or indeed with the Foreign Office. For the Foreign Office, it was about the job. It was an amazing opportunity for some amazing public service in my 20s. And frankly speaking, the social status perceived with people in the Foreign Office today, I have to say is pretty poor given the quality of a lot of people I see as obviously I was
- [14:30]
Richard
just wondering, wondering about sharing this with some diplomats I met at the reception at the beginning of the week in Lisbon. I was thinking maybe, maybe not. Maybe not.
- [14:39]
Guy Pinsent
Well, you know, just look, I believe in looking at the evidence, not caring about what we feel. An idea that pops into your head. It's look at the data. Four words always drilled into me very strongly by doctor, now Professor Donald Robertson, my first teacher at Pembroke. Look at the data to try and inform a view.
- [15:01]
Richard
And just on this topic for people, a lot of people who listen to this are definitely either in business or interested in going into business. That in the world of being well known in business, people can be spectacularly successful in their business and no one's heard of them. Literally no one's heard of them. And we just had, I run this chem entrepreneurs group, Cambridge University, and we just had an event in San Francisco and David Clevely, who co founded Abcam, which exited for $5.7 billion was our guest of honor and he's well known in the Cambridge entrepreneurship circle. But you know, my mum hasn't heard of David Cleveland, even though by most people's business standards he's absolutely spectacular success story and he's done a lot of public service, he's got a cbe. But still it's not, it's not the chances you're going to be famous and respected by the man on the street, very low. And if you are famous, you may be disrespected by the man on the street rather than respect. So anyway, social status wasn't, wasn't a thing for you at all.
- [16:12]
Guy Pinsent
What does drive me was self storage. You know, as we, as everyone would agree, you know, no one goes, no one hears the word storage and gets filled with excitement. Okay. It's about providing a business which is a. Often it's a reluctant purchase which people use because they've got no other option when they're moving house, someone died or there's been a ghastly flood at home or they got divorced and all the rest of it. And so people are often using our business in stressful times. And so it's just not a business. You can sort of go out there and it's a need to have purchase and a reluctant purchase when you need it. And then people discover that they like the extra space and stick with it. But for me, what's exciting about business again is there's nothing about people's perception from the outside is it is a fantastic business model. When you look under the hood and look at the numbers, it, for me personally, it's the best asset backed business you could possibly think of. And so it's obviously not.
- [17:15]
Richard
Can you explain, can you explain why that is? I mean, I certainly, in my case, I was a customer for longer than I expected. And I think often people imagine they'll put stuff in for a little bit and then, you know, spaces at a premium in most people's houses. And if you've got a choice between an extra room for guests or your spare room being filled with boxes of books that you can't bear to give away or whatever it is. But can you explain why? What is it about the business that makes it so attractive?
- [17:45]
Guy Pinsent
Well, Richard, you just hit one of the key things right there, which is, you know, in economists, business speak, customer inertia. So whether it's bank accounts, magazine subscriptions, mobile phone subscriptions, or self storage, once you have signed up, so to speak, it's painful and expensive and not fun to move out or to change your bank account or to, you know, to get rid of this magazine subscription you want. So once people moved in, they always stay longer, typically than they anticipate. And often what we get in a customer journey is people only use self storage in the first instance when they absolutely have to, such as a house move. And they've got no uncle or aunt who's able to keep their stuff stored during the whole house move changeover. So they use self storage reluctantly. They think they're going to be in and out within three months. The house move and the whole changeover typically means they stay for at least eight months. But then what you'll often find is once they settled into their new house, unless it's a huge house, they'll typically want to keep the storage room because it's just helpful to have that extra space. And they've learned about the offer, they've realized that the expense is not nearly as bad as they thought. And they become what we say in sort of American speak, they become lifestyle stories. And they stay forever with that extra space. And we also, of course have lots of business users. About half our revenue comes from business, some half from domestic users. And again, they will stay on and on forever. So that's one great attribute is customer inertia. Another is, but we have very low at the operating level, we have very low break even occupancies. So for, for sort of average size, big less mass stores be about five and a half thousand square meters net lettable. Our EBITDA break even is about 15% occupancy. And the nearest comparable business model would be two three star hotels. They need to have, you know, I think many occupancy around 65% break even and they have to sell the room almost every day. And it's a much more complex operating model in the sense that our stored furniture doesn't call reception, complain there's no hot water.
- [20:01]
Richard
Yeah, what a great example. Yes. I mean and having, and as, as I said I was your, your customer and you know, you sort of, you note that the things, the processes behind the business are really simple. You know, you have to sell people padlocks, you have to provide them with trollers, you have to show them how to use the lift if they've forgotten, forgotten how to use the lift or whatever. But it really is, you know, you're getting is pretty, pretty low operating cost per building. As you say. There's no. And coming back to something that we've mentioned again and again in this podcast, the lifetime value of the client against the cost of gaining a client or the cost of acquisition sounds spectacularly good. And obviously moving into what you might call relatively virgin territory countries where there weren't that many self storage places. What was your. How did you get the word out to the potential market? Did you have a. Yeah, how much did it, how much did it cost you to get a customer in the early days?
- [21:08]
Guy Pinsent
Yeah, it's a good, great question. And we obviously operate in a market with very low supply, so low competition is obviously good. We like that.
- [21:18]
Richard
Good for the vendors. Good for the vendors.
- [21:20]
Guy Pinsent
Yes. However, however the other side of that coin is very, very, very low awareness of the offer. And it's a big long road for us to build awareness of what the self storage product is. The largest European market for self storage is the UK. It started there in 1979. And because it's the most advanced market and the most advanced self storage association, they do sort of proper statistically significant sample surveys to ask hunters in Britain about awareness. And they'll ask essentially what do you. Have you heard of the word self storage? And that has a certain percentage of. Yes, I think it's around 40%. But if you scratch below the surface and ask a question Saying could you name one feature of the self storage offer? Then of course that percentage drops to about half of that level to around 20%. So even in Britain today only one in five people or thereabouts understand what self storage actually is and so it will be an order of magnitude less. Less in, in Poland, across the whole country. I would argue that in more, so much better awareness but we don't have proper data to understand that. So it's a long, long game. And also the additional challenge with marketing self storage, two additional challenges. One of course, as we've already discussed, it's not a sexy product so harder to get people excited about it through marketing. And secondly, and this is a really tough one, is that because self storage tends to be needs based rather than nice to have because the market's immature and the first use is often under a stressful circumstances such as a house move or a flood at home or a divorce because of that marketing you do today might have a result tomorrow, next week or sometime in five years time, you know, so it's a constant effort of building the envelope.
- [23:15]
Richard
Do you talk to gate holders like the divorce lawyers and funeral directors and people who, who they do so give referral fees to someone. I'll bury you, you know. Well, is there an empty house now that needs to be.
- [23:27]
Guy Pinsent
It's a great question and exactly that point came up when we've been brainstorming with marketing sessions. So for example, my brother is the marketing guru whole life in major global advertising agencies like db, DDB London, Ogilvy publicist. So extremely experienced on the strategy and he's also pretty, pretty handy on the creative as well. He's technically a strategy marketing guy and he, we've engaged with him on several occasions on this question and one idea that came up is should we have an in house lawyer to help people with, you know, divorce and a sort of cross seller storage and, and, and the fact is we then thought about it some more and just thought that just won't fly. It's just, yeah, it's just people in that situation and I think we can both speak from personal experience. You don't, you just don't. You're not going to mix your storage in your divorce lawyering.
- [24:24]
Richard
I remember my father telling me that the donkey sanctuary used to advertise in some legal gazette in the uk. Reason being that lawyers deal with, deal with people who die and every now and again you get someone who's died without a will. Lawyers don't necessarily know. I saw an advert for that Happy looking donkey or that sad looking donkey. Maybe I'll just give this to the donkey saying and but anyway, but I
- [24:49]
Guy Pinsent
mean so targeting parties for example, we are, where we are trying to go is a sort of holy grail. You have to be careful. It's not too much in potential customers faces is through the use of you know, cookies and other similar gimmicks. When people are surfing on the Internet. If you have a punter who's been to our website, so we've got a sort of footprint from their surfing and then we know that they're going off surfing looking at notaries offices and they're looking at estate agencies and then notary for doing the paperwork for a house transaction. Well perhaps they're moving house, you know, then we can have a certain algorithm telling that and then we can do a targeted. When they come back to our website they get a sort of targeted pop up window saying are you moving house? Can we help? That's a fine line background.
- [25:35]
Richard
And also Poland's been a country not so much these days but historically large numbers of Poles would go to work abroad. So you would imagine that quite often it might be foreigners living in Poland who are aware of self storage before they moved, like me or Poles who lived in America for a while and you know, came across it because every town you go to is surrounded by sort of low cost self storage places
- [25:57]
Guy Pinsent
or America is living in Poland. I mean the very, very first customer of our brand new shiny store. So we bought five little stores 12 years ago and then started growing and the first one we opened, the first new one we opened, so store number six. But the first one we built ourselves was our Waters or Benavo store on the west side of the city. And you know, doors open at 10am, opening party. First guy that walks in was a burly American with a big parcel on his shoulder. He slapped it on the floor and said I'd like some storage please. Just the kind of cusp you need. And like, because they know exactly what it is. Big American self storage is bigger than Fast Street. It's just utterly enormous business there. There's one of the statistics, there must be, there must be about 3 billion square feet of self storage in America.
- [26:42]
Richard
Yes. And were you profitable from day one because the company you acquired was actually making money when you bought it? Or did you? Because like, and this is one of the huge advantages of entrepreneurship through acquisition is that you, on day one you're buying something that works in this it's something that's failed. But there's potential in it. So what was the state of the business when you took it over? Because you would imagine that the reasons why it was attractive for you to buy would also potentially make it unattractive for the people you were buying from to sell as well. Like what was going on that made
- [27:20]
Guy Pinsent
that deal a valid that's the tension in every single transaction of which there are billions happening around the world every day. The price tension between buyer and seller. Who is it that quipped why would I want to sell anything to you? Which you would want to buy? Yes.
- [27:38]
Richard
Yeah, we both did. Economics. So the magic of the market.
- [27:43]
Guy Pinsent
But the answer is yes, that's really throwing off good cash flow. And you're quite right, you've hit the nail on the head that made the whole thing easier to get going than startup. I was looking at startup capital and failing and then I was looking at this acquisition and failing. I was on this acquisition for about six years before finally getting it over the line. It was on and off for six years, partly because raising capital in the wake of the Great Crash and recessions of 2008 onwards, starting after the credit crunch from America in August 2007, meant that capital was scarce or priced too aggressively.
- [28:25]
Richard
Sorry to interrupt, but note for listeners, just so I don't forget, it's highly likely we're going to have a very troubled year or two now due to a big energy price shock that's already started. Sometimes during a crisis you get opportunities that won't occur later because when people are gloomy and can't figure out how to make ends meet, they might be ready to do a deal that they won't do later. So just a note to listeners that it's not a bad if you know people with capital who are worried about how to protect it, point out to them that there might be some opportunities coming down the line in the next
- [28:56]
Guy Pinsent
six to well, coming back to your earlier question about positive attributes of this business, and you've just sort of reminded me of two more very good ones about self storage, which is it's a fantastic inflation defense. We can put up our prices for new customers moving in at a moment's notice. Of course we can raise existing customers with a month's notice. As a policy, we only put up existing customers prices no more than every 12 months. But we can shorten that if inflation got out of control and we needed to one of the biggest companies in America extra space. I think they have a policy of raising existing customers prices every nine or 10 months. So a Bit more aggressive. So again, very positive attitude attribute there. And also this business has wonderful countercyclical demand properties. For example, if there's a really heavy recession and people are forced to downsize their homes, that creates additional demand for self storage. We were very lucky to not we beat our budget when we had a proper black swan, a genuine black swan event. People are banging around the word black swan too often now. A black swan by definition is something you cannot predict. And so the COVID pandemic, pandemic which started exactly six years ago, was a huge black swan which obviously sent many businesses to the wall because they were just literally shut down. We were lucky. The rules in Poland and, and the Czech Republic were such that with a few basic hygiene precautions we was, we were open for business and, and actually forced a simple change or forced us to adapt and use something we always had but actually make it happen properly, which was getting customers to sign their contracts remotely and then giving them instructions on how to move in remotely. So we beat our budget during COVID and so good counter stick for properties.
- [31:00]
Richard
I don't think I want to go too much into the financial engineering of how you did this. We can put a link in the show notes so someone who wants to read about it can and maybe I'll ask you to check that. So we don't put out anything that's inaccurate, but thanks to large language models you can find out a lot if you want. And I don't think it's. But I want to.
- [31:18]
Guy Pinsent
It's public information because we started as a public company.
- [31:21]
Richard
Yes, but what I want to ask was how did you protect your own personal position in the cap table because largely you were using other people's money, if I understand correctly, rather than your own. And when you weren't fabulously wealthy, when you kick this thing off and in those circumstances, if, if you're relatively under. If you're. The amount of money you've got is low compared to the other people doing it. How did you make sure that you had a significant chunk of the business? What you know, is there anything you could share with people who are listening? Because this can happen to anyone, even if you've got millions. If you want to do a business, 50 needs 50 million of capital, potentially you can have quite a small position unless you know what you're doing.
- [32:03]
Guy Pinsent
Yeah, absolutely. So again, the long road to getting funded was, with hindsight, a good one in the sense that I finally came to get a deal done with a very close friend who was also at Cambridge with Me, he was, he's six years older, so he was a postgraduate doing a one year course at Cambridge and we became very close friends because we were in the boxing team together in the 96, 97 season in the year he was at Cambridge. And he's a Canadian lawyer by training and background. Very, very, very bright lawyer. But he had given up practicing law a few years after leaving Cambridge and his focus was on creating, forming publicly listed shell companies. So he'd raise 1 to 2 million dollars in France. Tick all the boxes, you need to have to have a listing which is a certain minimum number of shareholders, minimum amount of capital capital and a project. You typically have a mining concession, product project or an exploration concession in Canada or around the world. So he was essentially a resource specialist doing various projects. And he had always been visiting me in Poland over the years so he could see the evolution, the massive growth of Poland. Just looking at Warsaw, how the city's mushroom in terms of its skyline. And then Fast forward to 2013 when I was still trying to get the deal together. The deal had come back to me and he was looking for a deal to use his latest shell company. And because China had slowed its growth, official reported growth from 10 to 8%, the global resource market had fallen out of bed. So there were no resource deals to be able to do or no capital to get his shell funded on a resource deal. So we saw stars aligned in the back end of 2013, we teamed up. His name's Pete Smith. Was quite a lot of Pete Smith out there, but he's a top chap. And he had a shell company called DGM Minerals which we retooled to make it the acquisition platform and within the deal structure, when you do and you deal with the shell, under the Canadian rules, you can issue a certain chunk of equity known as promotional equity or promo stock. And so a piece of that equity was allocated to me. So to put real skin in the game, everyone who was close to the deal, me and Pete and one or two others, we all put in hard cash as well to buy equity in the new issue. But me and Pete and again some other people who helped also received promo equity. So, and again and again, this is a public company deal that is all public information out there for anyone to look up.
- [34:52]
Richard
And this is so important for people to realize that sometimes when you're, you know, getting started, you're a bit younger. You, you just can't imagine how can, how can I find someone who'll trust me with half a million or a million Euros, a hands, whatever. And yet there are people out there with larger pools of capital and they don't have, and they know they don't have the entrepreneurial setup to turn that into a business that's going to grow and develop. So they can be in a situation where, you know, actually meeting some credible people. And of course then the credibility of your team that your, your, your close friend Pete had lots of track record. I obviously one assumes that some of the things he did worked. Otherwise, you know, there's a little. The S is the limit.
- [35:35]
Guy Pinsent
He just doesn't accept failure as an option. He's one of those guys just.
- [35:40]
Richard
But, but then, you know, someone might say to, and did you know anything about that? You, you'd had a spell in the property market with a. Was it Colliers before you? Before?
- [35:51]
Guy Pinsent
Absolutely. So my son, my, my, my sort of. My career was, was Citibank for a couple of years and then six and a half years the foreign office. Then my step back to Poland was stepping into, into a new career in property. So my first job was with Colliers Poland, a property advisory group where I was focused in the transaction advisory team. So essentially advising buyers or sellers of massive commercial properties, be it a shopping center or big industrial logistics park. So that was a sort of property education. Was able to deepen my network in the property world. And then shortly after coming back to Poland, while I was at Colliers, I was introduced to a British self storage company. And this is in the back end of 2006, during those go go days when everything was just going up and up in the markets, including property. And so they were looking to expand around the world and I was introduced to someone who could help them possibly in Poland. So that was my first sort of interaction with looking at the self storage business model and understanding what they wanted. So I put all the pieces together for them as a client of Colliers to pull a trigger in Poland in 2007 if they wanted. And, and based on that, what happened? They said, well, we really like what we see and would you come and be the right hand man to the CEO? So that was my sort of transition into self storage. And that company got into trouble though very soon after I joined in 2008, partly triggered by a slowdown in the housing market because of the cold winds blowing from the credit crunch in from America in August 2007, partly because that business was structured as an operational company, it didn't own its real estate. And it turns out that if you are renting buildings which are empty, paying Rent full rent on a building was empty which you're trying to fill up is obviously means you're operating leverages through the roof and not a great model. So I I'm like big yellow to quote one of the non executive directors I had a meeting with a few years ago. I am religiously freehold in the approach. So higher capital, higher capital hurdles get going in terms of owning your property. But then you can use conservative bank leverage to turbocharge your equity rather than having a lower capital hurdle and operating leverage through the roof if you're renting your properties.
- [38:13]
Richard
Anyone who's seen there's a great film, I'll put a link in the show Notes about the history of McDonald's Ray Kroc's story the founder and he bumps into someone in a bank lobby who hears him struggling and basically McDonald's becomes a property company and banks are so hard to borrow from. Unless it's for property. If it's for property, it's something they understand and of course so anyway that's a separate so so and but just again take away that if you're thinking of getting into something in the long term, working for someone else who while you learn how to do it, obviously there might be ethical issues so you don't want to just pile into competing with the person who gave you a job. But nonetheless, if you're thinking of being setting up a chain of veterinary surgeons, go work for one. Just see what it's like because you'll understand it so that A you'll draw a salary while you're learning about it and B you'll, you will get to know people. And of course for the investors who come along later, the fact that you had that track record must have been critical in them trusting you as being the right and obviously you've got your this is an audio podcast. Guy's quite good looking so he's got his nice nice face but nonetheless just a nice face and the right accent is nice to have. But what people really want is proven track record and the thing you're claiming you're going to do for them.
- [39:36]
Guy Pinsent
Yes, and that in itself though is a big problem. First of all, I'd just like to say the company I joined in Bristol was not in my mind just to sort of let me do what the Americans call a big brain suck. Let me get paid to learn and then walk off and do my own thing. Absolutely not. I love those guys and the company and the opportunity. When I joined that company I was only 31 and I was the right hand to the CEO. So it was just. And it was. And it was a small growing company in a small business in Britain.
- [40:08]
Richard
Another timestamp, the guy said he's only 31. Like sometimes people feel that life's a race and you've got to achieve things by a certain stage and a founder has to be written down for it to count. And this is just not true. People who are a bit younger listening to this, remember you're likely to live and be functional into your 80s with medical science or even longer. So. So you've got plenty of time to do things, learn about the things you want to do and like you said, whether it's a brain, because maybe you work in a company, you think, jesus, if these guys can make money doing it this badly, there's an opportunity. You can learn what not to do as well as what to do. Are there examples of real world experience? There's something you learned that you would have not learned any other way from that, that, that being in the, being in the industry. Because sometimes an excite outside of you can be good as well, can't it?
- [41:05]
Guy Pinsent
Yeah, absolutely. Well, let me just come back to the point about age again. Can I ask the founder again? Ray Kroc was such an inspiration. He only got going with McDonald's in his 50s.
- [41:14]
Richard
Exactly.
- [41:14]
Guy Pinsent
And being in your 50s in 1950 was very old compared to today. So inspiration for everybody. You know, with medical science you could start your big entrepreneurial path age 60 today, why not?
- [41:28]
Richard
And actually if you study the story the way the film shows it, which I think is there are some questions about how accurate it was in some areas, but he'd had multiple failed ventures prior and he was struggling away and working hard and just keeping going and not giving up and not settling for was part of it. But yes, as you say. And Ray Kroc, you know, he, he was the person who met the McDonald's brothers and made McDonald's from being a single, a single, well, very well run outlet and he saw the potential to make it bigger. So.
- [42:04]
Guy Pinsent
Yeah, but coming back to the question, Absolutely learned a lot of what not to do. That is obviously as important as learning what to do. And I think two of the biggest lessons I learned what not to do from that brief 10 months or so in this UK self storage company was one go for even that's as I've already mentioned, go for freehold model and own your property rather than renting from a third party for the reasons already mentioned. And secondly, in terms of just control and structure. There was an almighty mighty row between the share. There were two shareholders of the opco and because things got very difficult with the Propco landlords, let's say that triggered a sort of a bit of a fallout between these two shareholders and they were 50, 50 owners of the business without deadlock provisions or deadlock provisions which, you know, required them to sort of waste money and time by fighting each other in the High Court in London. And so utter nightmare for them when you had a situation where it's not going to plan and they're loggerheads. And so the lesson there, control of the business or very, very clearly laid out provisions in case things don't go quite to plan.
- [43:18]
Richard
Very good learning point here. And when I was discussing doing the podcast with Guy, I said we try to pull lessons out for people to learn that you have to ask your co founders if you're going to business with them, what happens if things start to go wrong? What happens when we don't agree? What happens if one of us is happy making X a month and just wants to put their feet up and the others want to carry on great growing it like, because these are real, these are real situations in a 5050 setup. And I remember someone I knew back in my Polish days in Krakow who was like, she and some friends wanted to start a business, but they didn't want to deal with what they called the boring legal stuff. And they said, do I know someone who could like do the CEO stuff? And I said, you realize the CEO can hire and fire everyone in the organization. And they said what? You know. And like, yet the point is the person who's responsible, the person who's responsible has to have the power to do things like hiring and firing. And same early days entrepreneurship stories from my side was like finding illegal pornography on a company computer, someone's husband not coming home from work because he'd had a car crash and lots of stuff. You're not thinking about the glamour of business when you go into business. But if you're the CEO, anything bad that happens done by that organization is highly likely to land on your desk. And it should do. It should do. People wouldn't be, they wouldn't be doing what they're doing if it wasn't for you. So not put people off. But I don't. But on the other hand, draw attention to the rough that comes with the snooze of being in charge.
- [44:50]
Guy Pinsent
Well, Elon Musk articulated this point very clearly, which is if you are doing your job as a CEO, it's actually a horrible job because a good CEO to grow the business is fixing problems. If you're passing yourself and you're high fiving with your team for everything that goes well all the time, then you will probably stall and decline and go extinct eventually. Because to grow the company, make things work better, you need to focus on what's not going well and fix it. And that's where a good CEO doing his job and that. And I think every wannabe entrepreneur needs to really understand this point because it will, it takes some of the shine off the glamour of oh, I'm the CEO. It's not like some movie where I've got a nice oak paneled office and a nice cabinet of whiskey and crystal glasses and a cigar box and I've got a nice big leather armchair with my feet up on the desk saying you do that, you do that, you do that is a sort of obviously a nonsense caricature. The real work.
- [45:52]
Richard
A lot, a lot of people believe it. And can you give me a vivid example of a tough experience you had as a result of being a CEO that kind of blindsided you when it erupted. You think, you thought wow, do you find someone chopping up dead bodies like in a movie and one of your storage things or you know, something, something really horrible or you, I mean obviously choose your story as you wish.
- [46:13]
Guy Pinsent
But well, I mean I, I, I, I'll pick two examples of things which are just not fun and one pretty simple example actually was we, we signed a binding delivery set l purchase agreement to buy a site with sub. The, the, the conditionality for closing is we get a, a validated building permit and we have to obviously spend a lot of time and money to get a building permitted. So it's a big enterprise getting a building permit with architects and, and my development team and, and so we explained to the sellers that we're doing this and then we pay you once we've got it and then you get your money and we all say great and we've got the land and we, then we stop construction. But that's not the seller's problem. And we had a situation about four or five years ago where the sellers of the site, we signed a brilliant primary sale purchase agreement about six months into the planting process. It takes about a year now to get a permit. It can be shorter, but let's say up to a year. About six months into that process they came to us and said we want a higher price please. And we said well no, we have a black and white contract and of course what they were doing was dishonestly knowing that we have to spend money on getting a building favored one and two, knowing that for us to sue them will delay us hugely because the courts move slowly in permission that they thought they would have us over a barrel and squeeze me to give them more money for their side. And they, they picked on the wrong, wrong guy. I mean I'm, I'm an old school Brit, you know, my word is my bond. And in this case, black and white contract. And that contract has to be honored. And that's what we told them. And we called them to the notaries later that year when we got the building permit and they refused to show up. And so I had to throw them into court and they finally backed off about a year, year and a half into the court process. So that's a pretty simple example. I mean that was a bit of an intellectual challenge, but that was just a sort of annoying oddball where you, you're thrown off course because of people behaving, rather misbehaving.
- [48:18]
Richard
Yeah.
- [48:20]
Guy Pinsent
In a bad way.
- [48:21]
Richard
You just discover your character as well because, you know, it's a reflection of your personality. I, some quite often you, you know, the rational thing to do is not to fight, you just move on. But sometimes you, because of the length of the legal process and you know, the costs and benefits, but ultimately it's your call. There's no, you can't, there's no handbook to look up. You know, what's the.
- [48:42]
Guy Pinsent
Absolutely. And the one which was much more of a sort of with hindsight, fun challenge, but at the time, you know, is type 2 fun. Type 1 fun is fun at the time and then fun recording it. Type 2 fun. It's horrible at the time, but quite fun to reminisce. So, so type two fun situation. And the first thing that sort of gave me slightly shorter nights, let's say, not me got me concerned, was a situation. It ar, it arose in the summer of 2014. So within six months of buying the business in where we closed in April 2014, my sort of head manager in Warsaw, tiny business, I mean, had two stores in Warsaw and one and then the three stores in Prague said, oh, we've got this demand for the equivalent of about €20,000 from one of our customers who we disposed of their stored furniture and other belongings. And it transpired that there was a deal which didn't come up in due diligence because it was a small deal. But the manager in Warsaw had a company to remove bad debtors goods from their rooms to clear the room so we could then sell it to a new customer today. And this customer, there was a bad debt that had disappeared. But six months after the contract was terminated and her room had been cleared out, she came out of the woodwork and said, I want my stuff and it's worth this and give me the money. And we politely declined. And, and then for some reason she suddenly started exaggerating the amounts claimed. And within two, three weeks she was suddenly claiming that there was extremely expensive furniture and fine art which we had disposed to a total sum of a million euros. And we were so small at the time that that would have killed the company. We just didn't have that sort of cash lying around. And you know, it was a huge claim. And under the Polish law you can claim to the company or to the insurer. And she wisely assumed that the insurer had deep pockets. So she went to the insurer as well. And we had a discussion with our insurer and they wanted to pay her up because they had under the insurance policy for such events a fine art exclusion. And they put a battalion, you know, huge in global insurance with their office in Warsaw. They got battalions of lawyers and they crawled all over it and, and they've worked out that the non art maximum liability they would have been liable for would be about €15,000. And so it became a massive sort of intellectual psychological persuasion challenge for me with my insurance broker to sit down with the lawyers and the senior people at the insurer to persuade them that they could not pay out this bad debtor a penny. And I always remember going to the first meeting, I was in a huge boardroom at this, this insurer's office and me and a couple of gentlemen were sitting around the table waiting for the, for the main director to come in, who was a very elegant looking silver haired lady. And I think what made the difference was when she walked in, I was the only one who stood up, which prompted everyone else to sort of smartly stand up and says it was suddenly, you know, just good manners and smiling. The psychological thing meant you got a really good audience and then you sort of make your case moral and psychological for them not to pay out. And they, they, they find they agreed to what I wanted, which is a huge win because, you know, and then of course, so the insurer said no to her. She then tried, she tried to sue Les Mess for the money. Unfortunately got nowhere because she, she was broke and didn't have enough money for a court deposit. Just, just, you know, so the courts demand certain percentage of the amount being sued for to stop, you know, vexationless challenges.
- [52:28]
Richard
I know you, we wanted to share a little of how we first met and got together, but just before. But I think rather than do that and then jump onto the next step in your company journey, what have you got in the pipeline now? What do you see as your options? Because you're already, you know, the CEO of a significant company, like a market leader in the region, in the countries you're active in. And will you. Could you imagine doing this for another 5, 10, 15, 20 years or would you be thinking to hand over to someone else? What do you see your options are and how do you think about it?
- [53:07]
Guy Pinsent
Well, that's a great question and I'm very lucky. My cup overflows. It's a job I love and the business still has another lifetime or two to go in terms of growth prominently there. I hope I'm not eating those works one day. So I absolutely could go again. Do this for another five years if or so. And we've been, we. We did a public to private transaction 19 months after the original deal in April 2014. So Christmas 2015 we went private with a main investor who came in to inject capital to grow. Grow the business as well. It's called Metric Capital Partners and we have been together for over 10 years now since, since 2015. So that's going very well. But they like all private equity funds, they will eventually look to crystallize their returns, I. E. Exit, sell the business. And so when that comes at some stage in the next year or two or maybe longer, because there's no pressure for them to sell and they like the business, they're not going to sell unless the price is satisfactory. Then there will be a sort of decision to be made if I'm not doing this. One thing I, like a lot of people like us, Richard, have their eye on is the situation politically in Britain. I'm not happy with what's going on in our country in terms of the relative decline and lack of growth in GDP per capita has gone effectively nowhere for the best part of 20 years. Productivity is getting worse and worse because the state's expanding and the productivity in the public sector has gone absolutely nowhere. So that's dragging down the average. And so this is all completely counter to free market Austrian school of individual liberty, personal responsibility in a small state with taxes only there to the government to do what they have to do, not what they'd like to do and sort of become an all embracing socialist utopia or rather dystopia. So politics is something I am looking at as well. And you know, in full disclosure, I become a donor to the Conservative Party over the last year and a half. So that's something I'm sort of being involved in. And as a result of that I've been invited to this center right think tank called the center of Policy Studies where they have some very interesting conversations and speakers. So I could maybe get involved in that one way or another in case my time at Les Mess draws to a close.
- [55:45]
Richard
So I mean I might mention that my, my brother was a candidate for the Liberal Democrats and is at the, what you might call the, the, the conservative side of the, that political party and he does a lot of cross party things to do with well, various topics and last time a few months ago he said oh, if the guy wants to have a chat, if you go down that path, I think there are people with their heart in the right place in all political parties and cross party cooperation is really important on what you might call the basics of freedom and democracy and standard bad dangerous neighbors. Yeah. So I mean as we see with
- [56:26]
Guy Pinsent
raising it sucked into tribalism. But I think you have to start from the point that politicians are there to make people's lives better. The central point of economics, political economy. And so there's often a lot more in common than the tribalism of British politics makes people see.
- [56:43]
Richard
And sometimes the best way to make people's lives better is to get out of the way and you provide them with a safety net to fall back on. But if you have too much hand holding then people depend on the hand that they're holding rather than look after themselves which isn't good for them or the country they're from. So but just could there's some. And obviously maybe at the end I'll ask if I. I haven't asked anything that you'd like to have been asked but why don't you tell our listeners how we came across each other and what we have in common and where we're different.
- [57:13]
Guy Pinsent
Yeah, absolutely. So our first meeting was an absolute joy for me Richard because apart from meeting a lovely chap, I would just arrived in Krakow. This was in around I think early October 2002. So I was approximately halfway through my pre posting Polish language training. So I was full time student of Polish in London. There was a. It's being closed and outsourced now but they used to be in the wonderful Horse Guards building, a foreign office language school and that was my place of work for the best part of a year where I'd have a post teacher one to one every day. And then as part of the training I had one month so called immersion in Krakow where I was staying with a family living right in the center of Krakow. And I had two teachers who I'd have certain days a week, two hours each, so four hours a day, seven days a week and otherwise traveling around with them on various excursions. So it was pretty intense. But even sort of six months, five months into post language training, I could still barely string a sentence together. So it was with great joy that my family to feed me on the first evening rather than cook at home. They took me to the British Polish Chamber of Commerce event where there was a buffet there to feed me. And obviously being a British Polish Chamber of Commerce event, it was wonderful for me not to have the pressure of trying to garble away in Polish. So I was delighted to meet a fellow Brit at this event and I was delighted to discover within a couple of seconds of introducing each other that we were both at Pembroke Cambridge studying economics and had the same main teacher. Michael Kuchinski very sadly passed away last year at the Reich old age of 84.
- [59:01]
Richard
I'll see whether I can, just for the sake of a screenshot, let me see whether I can actually display the. I was at his memorial service in Cambridge a few, A few, couple of weeks ago. Yeah.
- [59:15]
Guy Pinsent
Three weeks ago.
- [59:16]
Richard
Yeah. And what you may not know remarkably is that my mother's younger sister was his brother's girlfriend when they were both at Oxford in the 1950s. Pedro Pablo Kuchinski called himself Peter Kuchinski and he went on to be president of Peru. So but it's, we, we can reflect on maybe the benefits of having a wonderful, a wonderful teacher.
- [59:45]
Guy Pinsent
Absolutely. I mean he, he really was. I mean the word legend is sort of bandied around too frequently these days, but he was a genuine legend. He was the life and soul of Pembroke, a wonderful dry wit. I mean talks with him were always interesting. There was always something fun would come up. And he had an ability to distill very complex economics ideas into undigestible bites for us to all enjoy and understand. And he was also the sort of the classical film set movie Don, Cambridge Don. You'd imagine his, his, his office was just as is art, everywhere and piles of books and papers and half drunk cups of coffee and sherry. I mean it was, it was the absolute, you know, a movie director wanting to do a sort of archetypal Cambridge. Don needed to look no further than Michael Kicinski's office.
- [60:44]
Richard
This is familiar territory for you and me, but maybe you could share. For listeners who don't understand what's unusual to your mind about the. The, the Cambridge, or for that matter, Oxford education, what do you get if you go there that you don't normally get at another university?
- [61:02]
Guy Pinsent
Well, the point, I think, and they make this point in Brian's Head Revisited, I think, is that the learning has to come from you, not from someone just talking at you. And I think the point of the Cambridge school across university was that you should be, or particularly from economics, is to learn to really start to think critically and challenge everything that you're told, not just so takers wrote, what's handed down to you. So we are actively encouraged to, you know, to be controversial, to challenge ideas, to look at data and to form a view based on thinking about the subject rather than just, oh, it's in a book, therefore it's like tablets coming down from the mountain.
- [61:48]
Richard
Instead, I think I'll try and edit that out as a clip and put it onto the university resources that I'm connected to. But the other thing I was going to add, which is extremely unusual and quite remarkable, is two things. One is the amount of individual time where it's just you, maybe one other student with your tutor once a week defending an essay that you've written for good questions. And the other is, and this isn't unique to the elite universities of the uk, is the fact that it's extremely difficult to get in means, and that you live with people who study other things than the thing you study means that you're surrounded by people who are very good at something that you don't know much about, who are going to. So you just. Someone who doesn't look very glamorous, doesn't seem very impressive, ask you a really difficult question and they're curious about what you're doing in the same way you're curious about what they're doing. So.
- [62:46]
Guy Pinsent
Well, the other thing I found, which is very intense and I was able to compare to other universities, other good universities, you know, economics course at Cambridge, three years, so nine terms. Yeah. And the terms are short, only eight weeks. And the summer term is essentially just preparing for exams. So essentially you have two very intense terms a week, a year, plus also an exam term, so very intense. And in those eight weeks, we had to churn out an average of two to three essays a week and each essay would be a proper 10 pager, you know, and that was Pretty intense, but became what we understood was the norm. And I compare and contrast that. So when I visited my brother for a weekend once when he was a student at Edinburgh and they seemed to have to write only about two or three essays a term, and because they, of course, would procrastinate and leave that until the last week, it was still, in their view, a crisis and really hard work because they spent seven weeks, eight weeks, you know, going to the pub and having fun and then doing all the work in the last week. So that for me was extraordinary that a great university like Edinburgh seem to have a far more relaxed regime in terms of the work output compared to what we had to do at Cambridge.
- [64:08]
Richard
Yes, and. Well. Well, thank you. So is the. Yes, and we've stayed in touch and we've got mutual, mutual friends like Kamil Turek and we. So there's a certain group of foreigners who live in any country which you might call the expat or immigrant community. But, you know, for different reasons, we. Our paths cross. But not everyone does the sort of thing that you and I did of going into, Going into business on your own account. And I think that also is. Is certainly is a bond of experience that, you know, it's, you know, in some ways we had advantages, in other ways we disadvantaged. What would you say that the, you know, if someone listening for this imagines going into, going into business in a country that they're not from, what are the. What, what are the. The main pros and cons or one pro and one con for doing that?
- [65:03]
Guy Pinsent
Oh, gosh. Well, I mean, I think it's fairly standard thing. I mean, living in another country is exciting. You know, you're a guest in that country. A country like Poland is particularly exciting because it's dynamic. I find polls are very much aligned with the sort of American dream that if you work very hard, you, odds on you'll do well for yourself. And that's very aspirational society, which sadly, we've lost in old Western Europe, I think, where because, well, because of incentive structures, you know, living on welfare has started to become a sort of lifestyle of choice in Britain, which is very, very sad. Whereas there's none of that here. Here it's very much, you know, you, you pretty much get what you deserve in terms of you work hard, you should do well. If you don't work hard, sit on your backside, you probably won't do so well. So I think that's one of the big advances of home disadvantages. Well, everyone complains about the bureaucracy Here. But I wonder whether it's any worse here than anywhere else, really. There are some very annoying bureaucratic hoops you have to jump through. Just basic stuff, you know, driving license or, you know, you need a document if you're not an EU citizen. And, you know, Americans have to fill in quite a lot of paperwork if they're living here long term, every couple of years or so and queue in government offices for hours on end just to get the paperwork processed. So that I think that's a bit of a disadvantage. But everywhere there's bureaucracy to deal with, I think.
- [66:35]
Richard
Yes, I would just add to that sometimes if you come from a different country, the chance to look at the country sort of like at a slight distance and potentially bring things that are good from the place you're from, whether it's a business model or a habit, but also be challenged. And I noticed that a very simple thing that happened at Polish parties when I went in the 1990s, that it's absolutely standard for a new arrival at a party to go around the room, introduce themselves to everyone in the room very rapidly. Hi, I'm Richard. Hi, I'm Rich. And just work the room in a minute, just say hello. Whereas in Britain it seems like you just find your friend and go and talk to your friend and just like little, tiny little things actually make a lot of sense. What better way to start your. And probably that's in the culture somewhere that's normal. That's what people grew up with, thinking it's normal. And just tiny little things make a big difference as well as big things to do with patriotism or. Or being proud of where you're from. My children went to Polish schools and on the first day of primary school there's the equivalent of the American pledge. It's not every day, but at the beginning of primary school they have the national standard is brought out in the national anthem and the kids swear to be good citizens, to be good little poems. Benjamin Dobrum Marin Polakami and just this idea that it's okay to be in favor of the country or from and is expected for you to open up
- [68:08]
Guy Pinsent
a much bigger subject here about whether it's a good thing or not to have a nation state. I. I'm very much in favor of that. But we are led by donkeys in Britain today who are host nationalists. And this is why Keir Starmer, to quote David Betts and Professor David Betts, the professor of war, who I interviewed for a little documentary I did as a side project last year called Should Brits Come Home? Professor David Betts explains that Keir Starmer cannot act in the national interest because he's incapable of thinking in the national interest. He's a, he's a post nationalist. He thinks we should all be some part of some global world government.
- [68:43]
Richard
You know, Davos, man, you've raised another strand. Because I'd love the people who listen to this podcast to take a look at Guy and another mutual friend of ours, Paddy. Paddy Ney made a very interesting and provocative documentary about whether British people living aboard should come home. And both Paddy and Guy both lived in Poland or live in Poland. So that was their point of comparison and they interviewed a wide range of British people. But what was the genesis of the idea of that film? Because. And just try and try. If you can do the, the pitch in a minute or 90 seconds, that'd be great.
- [69:24]
Guy Pinsent
Absolutely. Well, very simply, me and me and Patty is Patrick Nay, who he's been living in Poland for at least 15, 16 years. Polish wife, kids here. He's a media. Guy had a similar background to me. He used to work for the government and we become friends over many years and we, you know, we're very interested in politics and shared political views in WhatsApp group groups where I were sharing memes, making fun with the dire state of direction that Britain's heading politically. And because we've been talking about it so much, Patrick came upon this idea of why don't we. Why don't we actually, we're running a sort of whinge about things and talk about it privately. Why don't we actually put some energy and effort into making a proper documentary to look at some of these questions. And so that was how it sort of evolved and Patrick put it all together. In the summer last year we went to Britain for a week at the end of August, visited a country agricultural show which I grew up competing in and visiting when I was little. And also we went, for the first time in my life, we went to the Notting Hill Carnival and we visited various other places of interest in Britain and lots of box pops in the street. So we took a quite light hearted approach to sort of make it more entertaining rather than being too academic. So you can criticize it for that, but that's how it came about and it's quite a good response.
- [70:49]
Richard
Yes. Well, I'll certainly put a link in the show notes and just before we wrap up, it's been a real pleasure to share some of your story. Is there anything, if someone listening to this is considering going into business no matter what age they are, on their own account. Is there anything from your journey or perspective that a belief or a view you have that maybe isn't typical, that you'd like to share just for any list or maybe someone who's already in business that from your take this is really important and not everyone tells you this type, type final closing thought if there isn't, no worries. But is there anything else that I should have asked you'd like to share that they might not hear from someone else?
- [71:30]
Guy Pinsent
Well, I was hard for you to pick on anything which is particularly original. I would say, you know, worth looking at the 6, 7 minute Arnold Schwarzenegger pep talk which is there easy to find on YouTube where he talks about the sort of five or six points which made him what he is. And for me two points really stick out. And I think if you're going to be an entrepreneur, you're going to have to take these ones on board very seriously and really see it through because so many businesses fail because you give up just before the sort of light at the end of the tunnel comes through. And you know, the two points he makes, which always stuck with me is one, ignore the naysayers because when you're trying to raise capital for something, particularly if it's something tech and new is not known, people haven't got, can't see your vision by definition and therefore it's very easy for them to sort of naysay and. And either to your face if they're honest or certainly behind your back. I had both. And for me, because of the failure to raise money for five years before I finally got going, you know that, that becomes pretty intense and so you've got to have be pretty resilient at the same time you've got to be questioning yourself because maybe they're right. You've got this, you've got a monkey on each shoulder. One is telling you ignore the naysayers, be strong, you've got. It's a good business model, keep going. The other monkey is quite rightly you need a bit of self doubt always to course correct and everything challenge what you're thinking. Are you, have you got the. Are you just blinded by your own idea? And actually everyone else who's naysaying has a point so that's very difficult. You've got to be able to clearly deal with that. And then the other one, if I
- [73:08]
Richard
could just put an objection because I might share this with a couple of friends. So as it were, the silla of Naysayers and doubters against the Charybda. The Charybda of the possibility. The naysayers are right across the Straits of Messina, perhaps.
- [73:27]
Guy Pinsent
Exactly, quite right too. And then the next point, which Arnold Schwarzenegger says, but I won't swear, I'll change the words to be slightly more polite, is work your tail off. Just work. There are so many people who constantly talking about their success or their future success. You know, the Del Boy next year Rodney will be miglit, as they're on their fourth pint in the bar on a Wednesday evening. Actually stop drinking those pints, sit down and do the work.
- [73:55]
Richard
Obviously there's an American entrepreneur who comes from the Soviet Union, Belarus, and Gary Vaynerchuk has a very high social media presence. But he says, I will outwork you. It's the only variable that you really control everything else, the weather, the environment, the market that's external, but you have endless agency on how hard you work. And he said, I will outwork you. And it's, you know that. And of course, still that little. The Charybdis of the voice of self doubt. You know, if you're working on a business that's going to fail you, sometimes a trusted friend needs to tell you, needs to tell you, this isn't working. And a tip I've given to listeners before on this podcast, it's a great idea. If you've got an idea or a business project, ask a trusted friend, please help me by telling me what you think is wrong with my idea. Don't look for people who validate you, look for people who challenge you. Because, I mean, it's just so. It's so easy for people to think they're being friendly by saying, great idea, guy, go for it.
- [74:58]
Guy Pinsent
Yes.
- [74:59]
Richard
You know, but if their mum goes home and they say, what's the point of that? Why would anyone buy it? And you say, people like my mum don't understand this either it's a great idea, you fail to communicate or, or there's something wrong if a, you know, a middle aged, elderly or older British lady cannot understand the point of this. It's worth thinking about. Okay, good, that's fine.
- [75:21]
Guy Pinsent
One final point though, which is not binding around so much. And I say this to people who I've been flattered to have a couple of people ask me to be their mentor and otherwise just conversations with people saying, I want to be an entrepreneur, I want to do this. And this is my idea. And I do a very simple exercise. I get a little sheet of paper and along the X axis, I have time. On the Y axis, we start at zero and we have some measure, just call it success, whether that's sales, profit, number of customers, whatever. And after X amount of time, there's a dot up there and I say how do you go from 0 to 0? What's the path from 00 to your, to your goal, say 5 year goal of X numbers, Y number of cells. And of course typically we want the shortest, most efficient route. So people just draw a straight line to that goal. And unfortunately that just very rarely in fact just does not happen in nature and in business. It's a geometric curve and it's worse than that. It's a geometric curve with bumps, bumps along the way. And so I think anyone who wants to start up a business or grow a small business, like less mess from a very small base to grow, understand, understand compounding, understand the geometric curve. And understand that when you're on the geometric curve you're grinding away and it always feels like you're getting nowhere.
- [76:33]
Richard
And I feel this conversation. I did warn you we might overrun. If it's interesting, and this is a very interesting point, the one thing I say to people is, and you alluded to this when you said you didn't really care about the social status of what you're doing. Success is personal. You need to know your own definition of success, what you call success. And it could be someone just wants to have one very successful restaurant, they might want to have hundreds, but for the one who wants hundreds, hundreds is a success. For the one who wants one, one is a. But on the one hand it's personal. On the other hand the market doesn't lie and you have to be able to pay your bills. And so you can't have a definition of success that is only going to work if other people are constantly lending you money or injecting more capital. There is a point at which you have to achieve the sustainability and depending and you know a very interesting startup I'm involved in at the moment, run by a good friend called AliExpress, you know, in the investor updates, they've got months of cash left every month. They're measuring it. Yeah, and you were still cash negative, but it's a discussed figure. There's no illusion and the sales are growing very nicely. It's looking very promising, but just being objective, being honest and remembering that the highs in business, the highs are higher, but boy are the lows lower. You know, it's like when because you've got, you can only look in the mirror when things are going wrong. You can't, you can't.
- [77:52]
Guy Pinsent
Yes.
- [77:53]
Richard
Look anywhere else.
- [77:54]
Guy Pinsent
Yeah. And also, you know, work from the likes of Daniel Kahman will say, people, the average human is far more averse to $100 loss. That's more there's double the pain for a hundred dollar loss than the pleasure of $100 profit. You know, so you've got to understand that and be ready to go to that geometric curve where it's seemingly going nowhere. And that seemingly going nowhere could be years. And, you know, look no further than Bezos. He, his original business plan for Amazon actually predicted not a dollar of profit for at least seven years.
- [78:30]
Richard
And on that slightly somber note, Guy, Guy Pinsent, it's been a pleasure to have you on the podcast. And if you're happy, I'll put a link to you in the way you choose in the show notes. So if someone listening to this wants to get in touch with you, they can. I'm not going to commit you to any particular response, but Guy is an interesting chap and I think anyone listening to this who wants to have a dialogue with him can reach out directly and he'll either say no or yes.
- [78:58]
Guy Pinsent
Thank you so much, Richard. It's been real, real pleasure to talk to you, as always.