← Second in Command: The Chief Behind the Chief with Cameron Herold
Second in Command: The Chief Behind the Chief with Cameron Herold
Ep. 592 - Your Employees Can’t Read Your Mind: The Vision Gap
01:11:02
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I want your Vivid Vision document to be like a magnet. It has to attract people into your business. But if a magnet attracts, what else does it do? It repels. You have to be okay with pushing some people away as well because if you water it down and try to attract everybody, then no one cares.
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Welcome to the Second in Command podcast produced by the COO alliance and brought to you by its founder, Cameron Herold. In the Second in Command podcast, we Talk to top COOs who share the insights, strategies and tactics that made him the chief behind the chief. And now here's your host, Cameron Herold.
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This talk, we're going to cover four different parts in this talk and then we're going to have some Q and A. Somehow these slides did not convert. I don't know what they did with my slide, but you can't see them. The first part we're going to cover is what's called the Vivid Vision. Has anyone read the book Vivid Vision? Awesome. That's pretty good start. And this is not to make money, like I'll make like seven bucks off the book, but I highly recommend you all get the book Vivid Vision or the book Double Double in chapter one of Double Double covers. The Vivid Vision concept. It is the starting point of what really helped Brian and I. Scale 1, 800 got junk. Brian and I learned the concept two years before I joined him. 120 entrepreneurs in Vancouver were invited to a lunch with a high performance sports psychologist. About 20 of us went part of the entrepreneurs organization or EO and we learned this concept together. I was building an auto body chain which is now called Boyd Auto Body. It's called Gerber in the United States. I was a partner in Boyd. It's now the largest collision repair chain on the planet. So you can kind of see the theme here. These systems help scale large, well known brands. The starting point is like a jigsaw puzzle. Put your hand up if you've ever done a jigsaw puzzle. Okay, all of us. Imagine if your mom handed you the jigsaw puzzle when you're 12 years old and all of the pieces of the puzzle were red. Like a 5,000 piece puzzle with red pieces. You'd have no idea where to start. That's like running a company today. Your employees need to have a vision for what you're building. And the vision is not a one sentence statement, it's not a mission statement. I'm going to talk to you about the most important concept you need inside of your company and it's called the Vivid Vision it is the jigsaw puzzle approach. I've been paid to speak all over the world on this. Mindvalley has this concept on their course, but the concept is like looking into a crystal ball. And I know that sounds a little bit woo woo, but just play with me on this one. Every single high performance athlete, every Olympian, uses visualization in the sport. Whether it's the high jumper standing off to the back of the track with their eyes closed, kind of picturing themselves going up over the bar. Or the gymnast who walks around the floor and pauses at each spot on the floor and pictures herself doing part of her routine. Or the downhill skier learned the concept of vision. We had to come up with one industry that used visualization every day. And the one that we came up with was home builders. The reason that home builders use visualization. Who is the CEO of a new home being built? The homeowner. Right? The homeowner is the CEO. Now, if the homeowner is the CEO of getting their home built, how many of those CEOs have any skill at building the home? Fucking none. Like, not a single homeowner knows how to build the home, right? So you have an incompetent CEO hiring a second in command. Who is the general contractor. Now, the key is for the general contractor to understand the vision of what they want built and for the CEO to say, I have confidence that you can now make my vision come true. You could hand 2 million bucks to the contractor and say, build me my dream home and leave for a year and come back and you go, what did you build me? Because it doesn't look like what I wanted. So the contractor has to get inside of the mind of the owner. This is where the concept really made sense to us. I built a home in Dunbar Point Grey, and I didn't do any of the building. I can't do electrical, I can't do plumbing. I really am bad at construction. I can barely hammer a nail, but I could visualize what I wanted my home to look like. I understood the budget that I wanted to spend. I knew what I wanted to feel like when I walked in the door. I knew the quality of the materials I wanted to see, but I had no idea how to put it all together. So I found a really good contractor who could do it. And we spent a lot of time for that contractor to be able to read my mind. They then created blueprints and plans and elevation drawings. And I remember about six months into the project, I walked in up the front steps and walked into the Living room. And I froze as I looked at the fireplace on the other side of the room. And it looked exactly as I described to the contractor. And one of the employees who I'd never met, the one who had been designing the fireplace, looked at me and he said, is it what you wanted? And I went, yeah, it's incredible. And then he said, look at this. And it was a little photo that I had given the general contractor on the first day that we'd met. And he had the photo taped to the wall beside the fireplace to go along with the elevation drawings and the blueprints because he could actually make my dream happen without ever having to talk to me. The problem that we have with entrepreneurs, with all of us in the room or outside, is that our employees can't read our mind. You have an idea of what you want your meetings to be like. You have an idea of what you want your customer service experience to be like. You have an idea of what you want the job sites to be like. You have an idea of what you want your dashboards to look like and your culture and the. You know, but they can't read your freaking mind. So how do we get them to understand what we're building? The vivid vision becomes a four or five page description of what your company looks like, acts like, and feels like three years in the future so that your employees can reverse engineer that five page document and figure out a way to make every sentence come true. That's what you're going to start with in scaling your company. When I joined Brian In October of 2000, he handed me what he called his painted picture, which was his vivid vision. I read it and I said, oh, I totally know how to do this. He goes, good, because I have no idea. But I'd already built Boyd Auto Body. I'd already built College Pro Painters. I knew how to scale a franchise company. I just needed to know his vision so that I could put the plans and the systems in place to make his vision come true. But if you don't know where you're going, any road will take you there. I was speaking with one of your members, Brad Gordon, this morning, and I was asking him what's the vision of where he wants to take his company. If I know what his vision is, I could help him get there. But if I don't know where his vision is, I could take him in a completely different direction. Does this make sense? The same as you could have the smartest employees in the room, but if they don't know where you Want to go? They could all be going in the wrong direction, which is why they're driving you crazy. But it's your fault. So far, who here has seen the movie the Sound of Music? Put your hand up. Who's never seen the movie the Sound of Music? Who has no idea what the movie the Sound of Music is about? Brad, you have no idea. For real? Awesome. Okay. Can I make fun of you? Okay, good. Okay, so don't say anything to Brad. Brad, we gotta make you stand up for a sec so everybody knows who the guy in the room is. Brad, there's a very famous scene in the movie the Sound of Music. I want you to recreate that scene for bta, okay? So we need you to recreate the scene so we can all show up in that scene at the next event. It's the picnic. It's the picnic scene in the Sound of Music. Should the picnic be at a beach? Should it be at a park? Or should be in the mountains? At a park. Okay, good. So the picnic in the Sound of Music is going to be at a park. Okay, don't say anything. Don't say anything. We should probably bring some food to the picnic. Should we get it at a little hut at the park? Should we buy it at a grocery store? Or should we bring it in a picnic basket? Okay, picnic basket at a park. Good. And then let's bring our kids to the picnic, too. It'd be fun to have our kids there. Should our kids be playing croquet, playing baseball, dancing? What should our kids be doing at the picnic? Right? Yeah. Okay. Playing croquet. So we're gonna have a picnic with food in a basket. We're gonna have our kids playing croquet. And that's exactly like the scene in this. Like, what the. Dude, were you not paying attention? The Sound of Music was a clue, right? It's held in the Austrian Alps with the song with Julianne. The hills are alive with the kids are singing and dancing. Who here knows that scene? Right? All of us. But why did we have a great, strong, solid employee recreate that scene and completely screw it up? Because he'd never seen the movie. Your employees are doing the best they can with the vision that you've given them. And the reason they drive you crazy every day and have picnics with kids playing croquet is they don't know the movie that you see in your mind. Okay, you can sit. Thank you. I needed you to do that. By the way, I had somebody one time say, the picnic should be in the Alps and the kids should be dancing. And I'm like, really? I have nowhere to go with this presentation. So if you're going to write a vivid vision for your company, you got to get out of the box. You can't sit in your office and do this where you're in planning mode, you can't sit at your home office in planning mode, you can't sit with a laptop where you're actually solving problems and in budgeting and planning all the time. You need to get out of the box. You need to go somewhere where you're inspired, Somewhere around nature, go to a park, go to the mountains, go to your cabin, rent an Airbnb somewhere, go to a high end hotel and sit in their lobby. But go somewhere with just an actual notepad and a pen, like this yellow pad that Johnny's holding. That's what you're going to start crafting your vivid vision with. Not a laptop, not an iPad, because you always get sucked back into the real world there. I want you to pretend that you're hopping into the DeLorean time machine and you're going to travel out to December 31, 2028. And you get out of the time machine and you walk around and you're looking at your company. You don't know how it happened, but you can describe what it looked like. You can describe your meeting rhythms, you can describe the pulse, you can describe the energy, you can describe the interactions of your employees, you can describe what the media is writing about you. You can describe your customers, you can describe what your employees are putting on Glass Door. I want you to come up with a whole bunch of ideas and mind map it out. Just put a bunch of your ideas into some organized areas. You're not going to be writing the actual full document. Your job is to just get a bunch of bullet points together, pull all of those bullet points together, and then, yeah, you can throw it into Grok or Claude or ChatGPT and have you write the first draft. You can hand it to a writer or a copywriter and have them polish it, or give it to somebody on your marketing team or a freelance marketer and have them run it through AI a bunch of times to get it really polished so that it actually vibrates and is exciting and polarizing. And then you can add some design elements to it so that it looks and feels like your brand. These are a couple of clients of mine from years ago, a company called Gong Show Gear that sold clothing for guys that loved hockey. And this feels like kind of a Hockey brand. So they incorporated some of their design elements. Another client of mine, Billie Jean, who runs a big marketing agency, it feels like his brand. Now, I want your Vivid vision document to be like a magnet. It has to attract people into your business. But if a magnet attracts, what else does it do? It repels. You have to be okay with pushing some people away as well because if you water it down and try to attract everybody, then no one cares. Right? As an example, the only clients that work with me are young, fun, entrepreneurial, high viral, high growth, pre public. I don't work with government agencies, I don't work with nonprofits, I don't work with boring manufacturing. Like, and I don't mean young like a 24 year old, but like young at heart, vibrating, fun. If I talk to somebody and they're kind of like old, boring, whatever, I don't want to work with you. Like, God forbid you show up wearing a suit and tie. Like you just. We're just not the right tribe, right? I'm wearing purple high Converse. Now what I mean by polarizing. Remember when Steve Jobs launched the iPhone, which is crazy that it was now 19 years ago, it was 2007. What was missing on the first iPhone? What did we all think was missing? The keyboard, right? And then we heard somebody clicking on it for the first time, like, oh my God, can I try it? And as soon as we tried it, we were hooked. He was willing to push 99% of the people away to have the zealots come in and say, I just want that. And if he attracted those people, then the rest of us would follow. What happens when you roll out the vivid vision is you get complete alignment. And I'm talking about sharing your vivid vision with your customers, your suppliers, your employees, potential employees, your partners. Everybody in our organization reads my vivid vision for our company. Every month I wrote a vivid vision for my life as Cameron Herald. It explains me fitness, fun, finance, what I do for travel, sexuality, use of substances, vacation time. It's all there. It's a five page description of me. My wife and I went off site together or off site together. That sounds a little weird. We went off site. She did her mind map and her bullet points of our marriage. I did mine. And then we wrote a merged version of us as a couple. So I have a vivid vision for me, we have a vivid vision for us as a couple. And I have a vivid vision for my company, the COO alliance, which is kind of like Breakthrough Academy, but only for the second in command. So the next thing I want to talk about is what I visualize every company. I call it the jigsaw puzzle for growth. I visualize the jigsaw puzzle as having these core components. The first component is really the picture on the front of the box, right? Your vivid vision. And then for me, the four corners of your jigsaw puzzle are your core values, your core purpose, your bhag, which is your big, hairy, audacious goal that Jim Collins talks about, and then your one year plan. Now, Igor mentioned a couple things when he came up here that core values are really important for bta. Do you know that I left College pro painters in 1994? Elon Musk's younger brother worked for me that summer. I hired Kimbal Musk and then also his cousin Peter Reeve, who built Solar City. They were both franchisees for me in 1993. So I leave College Pro in October of 94. 31, 32 years ago. The core values for College Pro Painters. Deliver what you promised. Respect the individual pride in all you do and find a better way. Now, if I can recite the four core values for a company that I worked for 32 years ago, I guarantee you, if I walked up to a whole bunch of you who have core values in your company that 95% of you couldn't recite them, and you don't want to test me on that, because I know I'm right. I could bet every single one of you a hundred bucks in the room, and I would walk out with thousands of dollars that most of you say you have core values, but you don't even know them, which means your employees don't know them, and you certainly don't live them, because you have people coming to work every day who break your core values, which means they're not core values, they're merely aspirational core values. At college propainters, we were willing to fire people who broke the core values. I remember in 1993, I was sitting at the head office of College Pro Painters because I worked in Toronto, and one of the vice presidents made a very disrespectful remark to one of the women in our office in these days. It would have been like a hashtag MeToo. Big bad moment for this person's career. And I called him on it, and I was like, kevin, respect the individual. And he went, don't call me on the core values in front of the team. And he walked out of the room. I'm like, oh, fuck, I'm totally getting fired. And then about 10 minutes later, he Called me into his office and the rest of the team was like, dude, you are totally getting fired. And I walked into his office and he said, don't call me on the core values in front of the employees. And I don't know where it came from, but my instant response was, don't break them. And he thought about it for a minute and he was like, fuck. And Kevin and I, 30 odd years later, are still very good friends probably because of that moment, because I knew that he didn't mean it. But for him to see me care about the core values so much meant that I would go through brick walls for the company. He had to go through brick walls for me. If your core values are important to you, at least know them, at least enforce them, and at least fire people who break them. And by the way, the government and post office are always hiring. They'll take care of your bad people, they'll hire them. But core values are critical. The first side of the jigsaw puzzle are the people systems, right? So you have your four corners of your jigsaw puzzle and then you go to your side. I can't go into all this content. It's hours and hours of content. So you can bring me back for year two and we can go into kind of the corners and sides, but the people side of your business is critical. And when I talk about people, I talk about the recruiting, interviewing, hiring, onboarding, the talent, leadership development of people, and the off boarding of the wrong people. It's the full lifecycle of people are the people systems you need to have inside of your company. Who's here has heard of the saying in the book good to great, get the right people on the bus, the wrong people off the bus, and everybody in the right seats. This is the bus. In the book Good to Great, he talks about the bus. It's called Further, that was driven around the United States in the early 60s by the Merry Pranksters and Ken Kesey and some of the people from the Grateful Dead. And they were all tripping on acid. The reason their mantra was so important was you're either part of the scene or you're not. You either get it or you don't. You're either on the bus or. Or off the bus. And they knew that if they had the wrong people on the bus, it would ruin the trip. Literally, if you're in a party and you have some negative, toxic person come into the party, it fucks up the trip. That's where the mantra came from. But I have never found a company. Yet in all the companies I've worked with in 29 countries around the world where I've coached companies, I've never found a single company that puts enough time and systems in place to get rid of the toxic underperformers fast enough. We talk about recruiting, we talk about onboarding, we talk about culture, but we don't talk about getting rid of the toxic underperforming C players inside of your organization. So I want you to think about that as well. I learned a little bit about recruiting from one of my grandfathers. He owned a hunting resort up in Northern Ontario on the French river. And he had about 60 employees back in the 60s and 70s. So whenever we would go duck hunting together, the conversation somehow always turned to running businesses. It's all I ever knew growing up was my dad ran a company, both grandfathers were entrepreneurs. My whole world was entrepreneurship. Well, one of the things I learned from duck hunting was you put a bunch of decoys out these wooden or plastic ducks to attract ducks into your blind. It's a weird concept, but it works. And then they have these little weird calls that they do and they call in the ducks into your duck blind. What are the decoys from your company? What are you using to attract people into your business vision? Wages, your brand purpose, people, culture. Okay, let me core values, let me talk about this stuff. If the outside world doesn't know these things, they're not decoys. You need to put your decoys out into the market so your website is a decoy. If your website looks like something the government built, you're not attracting anybody. Your website needs to be something that is more like Apple or more like Virgin that Richard Branson would have. You need to model the dot coms, the Internet based companies. Your website needs to look and feel fresh and modern and clean. If you have a leadership team page and your leadership team photos have people in ties, you're pushing people away. You're not pulling them towards you. Right. If the bios from your leadership teams are freaking boring, you're pushing people away. You're not attracting your leadership team bios need to read more like a Tinder profile than a business bio. I was on a government or an Internet company's leadership team page one day and all the photos were amazing. One of them was this woman surrounded by shoes, all of her shoes, like 50 pairs of shoes, all different types of shoes. And it starts off and it's like she's like the vice president of engineering from $100 million company, by the way. And she's like, hi, my name's Elaine. I love shoes. My shoes take me all over the world. I have shoes for tango, I have shoes for rock climbing, I have shoes for kayaking, I have shoes for whatever, right? I have Jimmy Choos. I've got like. And I'm reading through her bio, kind of like reading through like a Facebook or Tinder profile. I'm like, this is incredible. And then at the end it says, oh, by the way, I have my undergraduate degree from Stanford and I have my PhD from MIT, but you don't really care about that. If you want to know where my shoes are taking me next, here's my profile or here's my email. You know what I did after I read Elaine's bio? I read Tom's and then I read Bob's and then I read Kevin's and then I was like, 16 profiles in going, fuck, I don't even need to know this stuff. But they sucked me into their business. When you walk into your company's office, who here knows the name of Tommy Mello or a one garage door? So I coach Tommy. I coach his coo, Luke. I've been coaching them for a year. His CEO, Luke Martin, is a member of our COO alliance. They've got about a dozen of their managers going through my invest in your leaders course. I was down at their head office in Scottsdale, Arizona about three months ago. I walked in the front door and I paused. It felt just like 1-800-got junk. It was branded. It was vibrating. Every time an employee walked past me, they're like, hey, have you been helped yet? Can I get you a water? Like I'm talking everybody. It was culty by design. They taught that, they indoctrinated that, they lived that. Those are the decoys that you have to put out there to bring people into your company. And then if you're hunting ducks, you use a shotgun. But when you're looking for best employees, you need more of a rifle based approach. If you're putting job ads up on LinkedIn or Craigslist or wherever the hell you advertise for people, no. A players are ever on those sites looking for a job. A players are working for one of your strongest competitors. A players are working for other companies that are even outside of your industry but doing the job you need them to do for you. A players are already working for really good companies and you have to entice them in, which means your website has to look amazing. You've got to have press coverage about your business. That shows you as the best company to work for. You've got to be winning awards in your, your city or state or province or country is the best place to work. You've got to have like that kind of culty feel. You've got to have a really good social media profile. These are recruiting tools as well as customer tools. But no great employee is going to come to work for an average company. I remember in 2007 I was in Calgary, Alberta speaking at a conference, a group of 120 entrepreneurs and somebody in the room put their hand up and they said, it's really hard to find good people in Calgary. And I said, no, it's really hard to find good people to work for an average company in Calgary. And he paused and he was like, shit, you're right, it's a bell curve. And most of us are horribly in the middle of that bell curve. If you want to really get great people and grow great companies, you've got to be on the kind of top 5 to 10%, which is actually much easier than you think. But the key is to obsess about that and then get a recruiting agency. I've got five different recruiting firms that I use for very, very different. I actually talked to two partners of our CEO alliance this morning. One that only does C level searches and one that does fractional and full time hires, all based in Latin America for a third of what we pay them in North. I was talking to both those CEOs this morning. I use and have all of our clients using search firms because they go out and poach people and bring them into our organizations. The first interview that I do with people is a group interview and I bring six to eight candidates together in person or over zoom. And I interview the six to eight people to find out who vibrates like we vibrate, who lives the core values like we do, who are the people I'd want to hang out with. And then after they go through the group interview, then I find out if they have the skills to do the job. But the group interview process is important. And then I show them the vivid vision of our company even before the group interview. And I ask them after reading our vivid vision if this sounds like the kind of company that you want to help fly to the moon. Reply now with a three minute video of how you will help us make our vivid vision come true and why you want to work here. I don't even read the resumes of people until I get the videos back. If I like their videos then I'll look at the resume and then I put them through the group interview. So they're already pre sold and they're selling me on why to hire them before I've even told them about the company. Other than that Vivid Vision document. So as Steve Jobs used to say, if I don't see the twinkle in their eyes, I don't care if they have the skills. People coming into Apple had to wanna build insanely great products that challenge the status quo and will change the human race. That was their kind of core purpose. And if you didn't think and want to do that kind of stuff, he didn't care if you had the skills to do it. That was what was different about Apple. Then I used something about job descriptions and scorecards. Again, this slide came up wrong when they converted it for me. So I apologize. But it was supposed to show you just the actual job description first and the scorecard second. But let me explain the difference. A job description shows all of the things that you're hiring for, right? Let's say I was hiring a swimmer. I want somebody who's fast and someone who's strong and somebody who knows all the four strokes and somebody who's competitive. That's a job description like most of us have, but the scorecard is more measurable. Someone who broke a world record, someone who won a gold medal, someone who competed at all four strokes. Again, I'll tease Brad for a second, but, Brad, do you know how to win an Olympic gold medal? No. You do you know how to win? Just be faster or better than everybody else. Okay, so we all know how to do it, right? Every single one of us knows how to win a gold medal. We all know how to break a world record. How many of us in the room have done it? Not many. I was hiring a guy one time, and we only hired athletes. We looked for triathletes, we looked for marathoners. We looked for team players, people that had competed in college and high school or above. And I'm interviewing this guy and I said, what do you do for fun? He looked like a runner. He goes, I run. I'm like, are you middle distance? He goes, yeah. I said, you see run 10k? And he goes, yeah. I go, what's your PB in the 10k? PB is personal best or personal record. He goes, dude, I'm fast. I'm like, no, what is it? He goes, dude, I'm really fucking fast. Any runners in the room? His personal record in the 10K was 28 minutes and 48 seconds. And I go, dude, you're lying. He goes, no, I was sixth in the US Olympic Trials. I'm like, you're fucking hired. When someone is sixth on the US Olympic Trials, they're goal oriented, they're tenacious, they don't give up. They examine their own contribution to the problem first. They will do anything to get through those brick walls. And he loved our vivid vision and he had the skills. You're hired. I hired another guy one time. Has anyone ever done the Vancouver sun run? There's 54,000 people do the Vancouver Sun Run. You know that when you do the Vancouver Sun Run, you don't have to know the course because you just follow the 20,000 people in front of you. Not Jeff. Jeff came eighth. How the fuck do you come eighth in a race of 54,000 people when you're eighth? You have to memorize the course because there's nobody in front of you. Like maybe seven guys. But like, anyway, what we do is we raise the bar every time someone comes into our organization. They have to be better than 50% of the people that work with us in that business area. If I have four people in marketing, the next one has to be better than at least two. I'm always raising the bar. When you raise the bar and when you have your employees hiring people they're excited and inspired to work with, that's building a real culture. And by the way, stop saying that you have a family culture. Half of the world population doesn't like their family. For real. Sorry I came up in the family I love, but I'm amazed there's people that didn't have, like, they had really dysfunctional bad families. So don't say you have a family culture. You're turning away half the world. And don't say that you're actually a team environment either. Think of it more like Cirque du Soleil, that you want to be absolutely the best in the world and you can trust the other people because their lives are at stake. When they're flying through the air and you're going to catch them, try to raise the bar. So what would Jack do? Jack Welch, in his day, was the CEO and chairman of General Electric. I asked his second in command, Jeff Imelt, for a system that Jack used to use at GE that they still use today. And every six months, every executive draws this on a piece of paper. It's a four box, a simple matrix with results on the up and down Y axis. Low results at the bottom, high results at the top and across the Bottom is your core values or your culture fit with low core values to the left and high core values to the right. What do you do if someone's in the bottom left hand corner? And you can think of it as a scale of 1 through 10, right? 1 through 10 on results, 1 through 10 on core values. If someone's in the bottom left hand Corner, they're below 5 on results. They're below 5 on core values. What do you do with them? Right. You fire them. That's easy. Now, what do you do if somebody's in the top right hand corner? I'm saying like a 9 or a 10 in results, a 9 or a 10 on core values. What do you do with them? Maybe promote them, maybe hire them. You actually handcuff them to your company. You find a way to keep that person inside of your organization for at least five years. And there's no such thing as a golden handcuff program because every individual is completely different. If these two tables were, my God forbid they ever quit, A players out of the room of all my employees, I would make sure that every one of you has something different. For some, they want to be promoted. Some, they want more responsibility. Some want less responsibility. Some, they want more access to the board of directors. Some want to do their executive MBA while they're here. Some want more vacation time, more flex time, more responsibility. Some want you to buy a company and let them run them. Some want you to spin off a company, let them run that. Some want more executive development. Some want more vacation time. Some want more right. You have to find the things that intrinsically satisfy that person and make sure that your company is the ladder to their roof. And then when they're up on the roof, pull away the ladder. It's true. When you get your A players so handcuffed to your company and there's no way out they're not leaving and then just take care of them. And by the way, stop spending time with your underperformers. Fire your underperformers and spend your time with your A players. Why am I not spending time with my A players and I'm spending time with the C's. Now my A players feel like the ugly stepchild. Like, why are you spending time with the jerk? Because the jerk's not doing well. Yeah, but I'm doing well. I want your time. I want your visibility. I just want to hang with you. I would get more results here than back there. What do you do if somebody's in the bottom right hand corner? Really, really high Core values in culture fit, but they're not getting the results. Yeah, everybody says train them. Wrong answer. The first thing you do is make sure they're in the right seat. If you know they're in the right seat, then train them and coach them. We had a guy working for us who was coaching franchisees, but he was so massively dyslexic that he couldn't read the operations manual. We had a 330 page operations manual and Christopher Bennett had never read it. But he was such a good speaker and so good at getting people to rally around his ideas that they just did whatever he said. So all of our franchisees were doing it differently and we didn't know until we found out that he'd never read the thing. So I can't coach him or train him. What we did was put him into a different seat. We put him in pr and PR for us is phoning journalists all day long and telling them about our company. Christopher landed all of the big press for our organization. He went on to become the head of PR for Best Buy Canada, then the head of PR for Guitar center in the United States, and then the head of PR and communications for Sprint Worldwide. You put someone in the right seat, they don't need any coaching whatsoever. If they're in the right seat, then coach and develop them. What about if somebody's on the top left hand corner? Really, really high results. But they're the cultural core value cancers which, what do you do with them? You have to fire them. You have to get these people out of your organization. They get one chance. You have to come to Jesus meeting. They have to know where they have to change. If you're gonna keep them and put them on a personal development plan for a month or two, then your job is to coach them until they get successful. If you're not willing to spend the time to coach them, then fire them right away. But you have to either get them to change right away or get them out of the organization. That's where the real growth comes for or comes from in your organization is the right people in the right seats. And, and you spending your time with the right people and you making sure that your A players are handcuffed to your company. And if you don't have your A players handcuffed to your company, guys like me come and poach them. And I do it for fun. I'm not kidding. Who here has heard of Whistler and Blackcomb? Whistler and Blackcomb used to be owned by interest in 2006 interest was acquired by Fortress, which is a Fortress, which is a hedge fund in New York City. Now a ski resort company being acquired by a hedge fund company. I'm like, huh? I think your culture is going to kind of change. But I wanted the mid to senior level people at Intrawest to come and work for us at 1-800-got junk, right? We're approaching 100 million in revenue. We were a cult. They were a cult. I'm like, we got to get some of these people. So I knew three people that knew people at Interest. I asked for introductions. Six weeks later, six of the top 10 talent people inside of Interest had signed agreements to work at 1-800-GOT junk. Great people can be poached and brought into great cultures, but they're not going to sit with an average company. And if you don't have them handcuffed again, guys like me will poach them, or my search firms that I work with will poach them. And the wrong person inside of your company costs you 15 times their annual salary. The data from a group called Top Grading says that if you're paying someone 100 grand a year and they're the wrong person, it's costing you 1.5 million because of the opportunity cost, because of the time you're spending with them, because of the people they're pissing off, because of the mistakes they're causing, because of fraud, because of the rest. Like, there's so much cost and waste in having the wrong people. It's just better to get rid of them completely. So I was speaking to a group of about 2,000 people in Dubai in January last year, a group called Mindvalley. I came off the stage and I was speaking with a guy who's 6 7, I'm 6 4. And I was asking him, what do you do for fun? He said, I play volleyball. I'm like, like, how much? He goes, I play pro. I'm like, oh, shit. So you play two on two pro beach volleyball? He goes, yeah. I said, well, I played on my high school team and I played in college, recreational in college. I said, if. If we had like six of my buddies and I didn't even have a chance to ask the rest of the question. He goes, dude, we'd beat you every game. I'm like, so you and your partner could beat me and five of my friends, like two on six? He goes, we'd beat you every game. So I thought about it. I've been kind of obsessed about this for the last 12 months. And again, I've been growing companies for 30 years. This concept hit me so hard that A players are free. If I had two A players paying them 200 grand a year each against six C players paying them 100 grand a year each, the two A's would destroy the six C's and I've got 600,000 in payroll against 400,000 in payroll. The 400,000 in payroll would destroy us. If you're the CEO of a company and you want to see how your salary or compensation stacks up against hundreds of others, go to cooalliance.comdownloads. we have a salary survey with a couple of hundred coos with their compensation, what their base pay is, their bonuses, the size of the company, whether they're male or female, what their exact title is. Go check out how your car stacks up. It'll be great data for you to actually sit and talk with your CEO. Again, go to coalliance.comdownloads for a salary survey. The reason that most of your companies are not really embracing AI across every single function in every single business area is you have very average people that aren't strong enough in AI. If you brought in really strong people that are already obsessed with AI, they would change the profitability and trajectory of your company overnight. It's very, very hard. When you pay peanuts, you get monkeys. So the rest of the jigsaw puzzle kind of looks like this. The people systems, the strategic thinking systems. And by the way, there's no such thing as strategic planning. There's strategy and planning. They're very different. They're as different as sales and marketing. Strategy is thinking about the what ifs. Strategy is doing SWOT analysis. Strategy is looking at what your competitors are doing. Strategy is looking at what others in other industries are doing. By the way, it's amazing that you're all in BTA. You should all be in BTA for the next 10 years or longer. How many of you are also in a second mastermind community of entrepreneurs? Pretty good. About a fifth of you. All of you should be in a second mastermind community as well. It's ideas, having sex. You need to take good ideas from outside of your industry and good ideas from inside of your industry. What's nice about here is you're also different industries, right? But you're also still very home services kind of construction ish, Right? But imagine if you spent more time with tech companies or global like I go to masterminds in Dubai, in Croatia, all different places in Europe, in Asia. I'm like trying to get more of a global perspective on what's happening in the business world. So that's strategy. Your meeting rhythms is everything related to your annual meetings, your quarterly meetings. And by the way, it's amazing. You're all doing planning, but you're two and a half months late. What the fuck are you doing a planning meeting for in January? Your plan should be rolled out and executed by now. Your plan for the year has to be done by the end of October. Your budget has to be done locked and loaded by the end of November. Your hiring plan, your staffing plan, your project plan has to be signed off on by your leadership team. Everyone in your company has to know what it is. So January 1st, you've already started executing and it's January 8th. You are eight days like a week into a year. You're 2% of your year is over and you haven't rolled out your plan yet. So annual planning meetings, quarterly planning meetings, financial review meetings, one on one coaching meetings, daily huddles. There's stuff around meeting rhythms and then your financial systems, budgets, cash flow, understanding how to leverage your balance sheet. We almost bankrupted 1, 800, got junk at 100 million in revenue because we didn't understand how to leverage our balance sheet. We had been very profitable, but we had no credit lines, no loans anyway. You need to understand these different parts of your jigsaw puzzle and then culture emerges from there. So the next thing that I've always obsessed around is leadership skills. And with leadership skills, it's so critical when you're in what I call the death zone. So the death zone is where often companies start building complexity. The death zone is when we have a mid level team of people that are trying their, but they've never really done it before. The death zone is because we don't understand how to go out and hire the right people who have done it before. The death zone is because we're pissing away money that we didn't necessarily need to be throwing away. So I see every company going through different iterations at what I call the ones and the threes. When you have 100,000 in revenue to 300,000 in revenue to a million in revenue. At a million, you're starting to hire some people. At 3 million in revenue, you've got a couple managers managing some of your people for you. At 10 million in revenue, you have a management team. But they probably never really run companies before. They're working hard, they're trying their best, they're doing a good job. Awesome. At 30 million, you've got a solid first leadership team at 100 million, you've got people that have built companies, sold companies, They've done it before. You don't even need to tell them what to do anymore. They've done it before. By the way, the difference between a C level and a VP level and a director level. A director, you have to tell them what to do and they can execute a vp, there's a bit of a meeting in the minds and the C level comes in and tells you what to do. And they come in with a level of autonomy, strategic insight, P and L responsibility. They typically bring employees with them and companies and suppliers with them. And you get to sit back and breathe. That's the true difference between a C level, a VP and a director. But the ones and the threes are these different trajection points that you need to get through. And if you don't get through the death zone, you either waste a lot of time, you waste a lot of money, you drive yourself crazy, your spouse hates you because all you're doing is spending time on the business. The key way to get through this is to grow your people, to really spend time growing the skills and the confidence and the connections of your employees. Now what's amazing is you're all here growing yourself. Who here has their second in command or any of their management people in a mastermind community? Stand up. Yeah, about 12, 15 of you. Okay. Awesome. All of you need to get your key people into a mastermind and into some coaching. Here's why. Pretend that you're a duck. And as the CEO, you're working on strengthening your right wing, but your leadership team is your left wing. If you don't strengthen their skills, you're going to start flying in a circle at 1-800-got junk. When I was the COO, I was in a mastermind. Brian was in a mastermind. I had a coach, Brian had a coach. And all seven of us on the leadership team each had an individual mentor. I was being mentored by the incoming COO at Starbucks, Greg Johnson. Greg did a one hour call with me every month for two years and did a full day meeting with me every quarter. One quarter I would go down to Seattle, next quarter, he would come up to Vancouver. We did that for two years and every single person on our leadership team had that. And I'm going to walk you through it. We built a skill development program where I worked on the leadership skills for all of the people in our company that managed people. That's where our growth came from. So you need to Think about that. So I've heard people say, well, what if I spend time growing people in my company? What if they quit? What if they stay and you haven't grown their skills? That's the bigger problem. We've heard of roi, right? The return on investment. So what's the return on investing in your people? It's huge. It's 1-800-got junk. It's Tommy Mellow, A1 garage. It's Boyd Auto Body. It's College Pro. The return on investing in your people is huge. But the cost of inaction, the COI is way, way, way higher. What it's costing you to not invest in your people is way more than the cost if you invest in them and they quit. And by the way, there's two things that Gen Y and Gen Z want from a company more than ever before. Number one is purpose. They want to work with a company that has purpose, direction and lives. The core values. Number two is they want skill development because they're terrified that the world is going to put them out of a job. If you help them get more skills, more AI skills, more leadership skills, more management skills, more skills at doing, not skills at doing the functional stuff. Like if they're in marketing, yeah, they need marketing skills, but they also need skills to manage projects and time and priorities and conflict and people. Right? If you give them those things, they're gonna stick. So the problem right now is that most of us don't know the leadership skills that our people need. Number two, as we just touched on, most of us are growing ourselves, the CEOs, but we're not growing our leadership team and our managers. It's interesting. I was coaching a company in Florida called Bluegrace Logistics. They actually raised $140 million from a group called Warburg Pincus. He went to become one of the largest logistics and freight companies in North America. I coached him from 40 people up to 700 when he was about 400 people. I was coaching him on one of these leadership skills and Bobby said, wow, this is going to change our company. I'm like, no, it's going to change you. What's going to change your company is teaching this skill to everyone in your organization that manages people. The ripple effects of growing your people is greater than the skill sets of a strong CEO. Number three, the problem is that most small medium sized companies don't have training departments. So you don't have a team of people to do this stuff. You don't even know where to start. You don't know how to train them so we just don't do it. And then lastly is we don't really know the skills or so. So the solution is knowing the skills that they need. So I'm going to tell you right now in this next screen, you should take a picture of. These are the core 12 skills that every single person in your company that manages people needs to be good at. These are the skills you need to be good at. These are the skills your COO needs to be good at. Your management team, your leadership team. Igor, do you recognize some of these skills? Right, these 12 skills, with the exception of vivid vision and email management, 10 of these 12 skills were taught to Igor and I at college propainters. I was certified in these skills in 1989, meaning I was trained in it. I went through classroom training. I lived, listened to speakers about it. I had Paul Woolner teaching me, I had Greg Clark teaching me. Then I had to actually show and demonstrate these skills in the field, and I got certified in performance of these skills. Here's the core skills from those 12 that I really think that the leadership team needs to be bulletproof in your leadership team, and you and your COO needs to be good in these skills more than any other skill in the company. This will be an interesting one. If you have ever done a job interview and interviewed to hire someone, I'd like you to stand up, okay? Stay standing. So all of us have done job interviews, right? Stay standing. I was. Stay standing. I was talking to a CEO one day and I said, you know, have you ever had any training on interviewing? He goes, no, But I've interviewed 100 people. I said, maybe you've done it wrong every time. I want you to sit down only if you've had at least an hour's training. And this is not reading a book. How many of you been through some classroom training or solid training on how to do proper job interviews? Sit down. If you've had at least an hour's training. Stay standing. If you've not had an hour training. The rest of you, this is the problem in your company is all of you are hiring people without a fucking clue how to do it. But that's normal. I want everyone to stand up. If you've ever run a meeting before, stand up. If you've ever run meetings before now. If you've never had at least an hour's training on how to run meetings, how to get collaboration, how to get the youngest and earliest people in the room to how to deal with moderators and parking lots and and timekeepers. If you've never had at least an hour's training on running meetings, and I'm not talking reading the book Death by Meeting. If you've never had at least an hour's training on running meetings, I want you to sit down, or sit down if you had it. Okay, again, most of you run meetings and have no idea how to run meetings. Okay, you can all sit down for a second. See, the problem is that most of us are trying our best, but we're all like a fly trying to bang our head on the window, and we're going to work really hard until we get out the other end of the window and we all up dead on the windowsill. We would never send our little kid off to play Little League baseball without teaching them the basic skills of how to hold the bat and catch the ball and toss the ball. Right? Remember when our kids were going off to play sports, we always, they were incompetent as hell, but we at least practiced with them. Because if you don't practice with your kid, they come home from Little League and they say, daddy, baseball sucks. It's like, no, Johnny, you suck at baseball. Who here believes that business is difficult? You're the fucking reason. Maybe I shouldn't have sworn, but maybe you shouldn't be running a business without the skills. You have all lost the right to say business is difficult. When you're working and running a business without the basic skills to run a business, most of your managers are coming to you saying, I need to hire someone. No, you need to know how to manage priorities better. You need to know how to make decisions better. You need to align your priorities. Like, no, we don't need to keep hiring. We've built all this complexity into our business because we're like kids going off to Little League without having a clue how to do the basics. This is why Igor and I got trained on this stuff at College Pro Painters was because we only had four months to hire and train 800 franchisees, and then we had again six weeks to hire 8,000 painters. I was a reference for Elon Musk and Kimbal Musk in their very first round of funding in January of 1995 for Zip2. So I've known Elon for 31 years. His brother is brother Kimball worked for me in 1993 at college pro Painters. I had to be a reference for Zip2. And the reason College Pro Painters is mentioned in the autobiography on Elon Musk, the one by Walter Isaacson, College Pro is talked about, is because the initial funding they got was Kimbal Musk's operational and leadership skills that I trained him in that he got from college Pro. They weren't going to bet on Elon because he'd never done anything. He was this crazy, autistic, way out of the box thinker. But Elon had the skills to manage people, projects, time, interdependencies, conflicts. So they put. Kimball called me that night. He goes, what did you tell them? I'm like, did I fuck up? He goes, no. We asked for 600,000 in funding again. January of 95, they gave us 3 million bucks. They sold zip two, two and a half years later for $317 million cash to Compaq, the largest cash all acquisition in history at the time, because of the skill sets that they had coming into the company. So I packaged these skills up in a course. It's called invest in your leaders. Take a screenshot of this. Go look at it to put yourself through it, it's 350 bucks. To put any of your employees through it, it's 350 bucks. They get lifetime access. And guess what the skills are that are in this course. Those 12. So you can recreate an entire training program for your company, or you can take the training program that I put into 1-800-got junk and put it into your company for 350 bucks a person. That's pretty simple. When I was 16, my dad pulled me aside and he goes, cam, you need to learn something in business. You're never going to be smart enough to figure this out on your own. He said, your R and D has to stand for rip off and duplicate. You have to take the best systems that the best companies have done and put those in place inside of your organization. If you've got five people on your management team and you put them through this for $1,500 total, that will change the directory of your company forever and again. I'm not doing this to make money. I've already hit an economic free zone. I don't need to make any more money. I'm based out of Dubai. My company's based in Dubai. I don't pay taxes. I've already hit my retirement number. I'm trying to give you these things, these systems to scale your company. This is the stuff that I did for Brian 25 years ago. Next thing I want to talk about is how to unleash the power of a CEO or a second in command. Who here has a second in command? Stand up. If I can see who has, like, A general manager, VP Ops, Director of Ops. Okay, good. All of you should take a look at putting that person into the COO alliance. It's like bta, but only for them. You're not allowed to come to the meetings, but they can join. It's only six grand a year for them to be a member. Who here wants to have a coo? Yeah. Good. So I'm going to talk to you about how to leverage the power of a second in command. My last book that just came out is called the Second in Command and it talks about how to unleash the power of the coo. I've run an organization that's global. We have members of COOs and second commands from 17 countries called the CO Alliance. Our next event coming up in Vancouver. You need 5 million of revenue to send your second in command to this one. But to be a member you only need 2 million. But to come to the next in person, they need to do 5 million. Remember? And then again, I was the COO. Elk 1, 800, got junk. So let me talk about what a COO is. Where do I start? Harvard wrote an article about 20 years ago called the misunderstood role of the COO. And it's because it's a very complicated role. If you're the head of marketing for a construction company, you can probably be the head of marketing for any construction company. In fact, if you've been the head of marketing for a home services company, you can probably be the head of marketing for any home services company. If you've been the head of finance, the same. The head of IT the same. The head of customer engagement. The same. The head of sales, probably. Right. The second in command is so different because we have to be really good at whatever the CEO sucks at. The COO has to be really good at whatever the CEO doesn't like to do. And we have to be the right size organization COO. The current COO of 1-800-GA-JUNK has a guy named Eric Church. Eric's been there for 14 years. Eric and I started a fraternity in Ottawa, Canada in October of 1987. I was president year one, he was president year two. Weird, right? And now I was COO, and then he's COO. I was COO in the entrepreneurial zone. The 2 million to 106 million. I wasn't the right guy to take them to the billion. Two years later, they'd gone from 106 million to 70. During the global financial crisis. During two other COOs, Brian fired one and had an interim one and then they hired Eric, and Eric came in at 70 million, and he's taken the company to 900 million today. Eric would have been a horrible COO for the first six years. He'd never built a franchise company. He wasn't entrepreneurial. He wasn't what brought, and he didn't know how to build it, but he knew how to scale what was already complicated. He walked in and went, what a cute little company. And I was like, fuck pulling my hair out, right? So the weird thing about the COO is you have to be good at whatever the CEO is not good at. You have to be good at whatever the CEO doesn't like to do. You have to be the right kind of size and scale kind of coo. So it's a complicated role. But I talk about that in my book, the second in command. The second in command also has to be the leash to the entrepreneur's dragon. Most entrepreneurs, me included, are very kind of add distracted by the way you scare all of your employees that you're at this event right now because they know you're coming back on Monday with 12 new ideas and 34 others, right? They know. And they know that you're gonna give them about 25 seconds per idea and expect them to execute. Like, this session alone will scare the shit out of your employees. So your second in command needs to be the leash to your dragon. They need to be the brakes to your gas, but not the parking brake, and they can't choke you with the leash. My job was to slow Brian down and keep him in control, as I then made his vision come true. I was about six months into 1-800-got- junk, and Brian said that he wanted to start a second brand. And I said, I remember this so clearly. I'm like, if you ever mention a second brand to me while I'm still here, I will walk out the door that day. A person can only sit on one toilet at a time. You try to shit on more than one toilet, it gets kind of messy. My job was to keep Brian focused until we got to the size and scale that he could then open the second brand. He didn't open the second brand until they were about $150 million in revenue, by the way. It took Brian 10 years to go from 0 to 2 million, and it took us six and a half years to go from 2 to 106 because he brought the right COO in who'd done it before, who knew what to do, and Brian could step away and focus on what he was good at. So you can hire a second in command that's the executor, someone who can help get stuff done. Someone who's the change agent. Someone like me, who is more of the mentor because I was able to show Brian what needed to get done, or I was the other half or the partner because I could actually help divide and conquer. Brian was really good at it, and he was really good at finance. I'm horribly weak at both of those. I don't even like them. I also have a form of dyslexia called dyscalculia, where I flip all of my numbers around. So it's really, really hard for me to run that side of the. He loved that side of the business. He loved details. He loved really getting granular. For me, I was more of an outward facing coo. I was pr, I was sales, I was marketing, franchising, corporate operations, Development, execution of vision. Who here has an executive assistant? Okay, this one should scare you. If you don't have an executive assistant, you are one. If any of you. If I was. If I was on your board of advisors or if I was a shareholder in your company and I found out that you were making $200,000 a year or a million dollars a year running your business and you were doing $15 an hour work, I would fire your ass. Why am I paying you 200 grand a year or $500,000 a year to do minimum wage work? I've had an EA for 25 years. My current EA has been with me for 10. We don't live in the same city. When I was originally hiring Meredith, I said, I really want an EA who's local. And she said, why? I said, I want someone to do some local tasks for me. She said, no, you need some local tasks done. I'm like, okay, Yoda, teach me. She said, what's some. I said, I need somebody to, like, take my dry cleaning in once in a while, get my tires changed. She goes, great, I'll find someone on TaskRabbit.
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I'm like, oh, I need someone to file this stuff. Cool. I can bring someone in. Okay. Next. Like, she was able to think, like, someone to pick up groceries. Gotta go to grocery delivery service. Like, anything that I thought I needed a human for, she could find a service for. Here's another ADD moment for you. I was sitting in a sauna at a speaking event I was doing in Hilton Head three months ago. A group called Baby Bathwater brought me in to speak. And I was talking to one of the entrepreneurs in the room. I said, I need to hire someone to do cold calling. He said, no, you don't. I'm like, no, I need a cold caller. I've got a really good closer. I need a cold caller. I need a setter. He goes, no, you don't. I'm like, all right, Yoda, teach me. He goes, you need an AI agent to do cold calling. I'm like, no, no, I need someone to pick up the phone and call people. He goes, no, you need an AI agent to pick. I'm like, can it do that? And he goes, I have two. So he demoed his outbound calling that does phone calls with prospects with South African accents better than I could ever set up. And they literally booked people onto calendars automatically so that my human can then talk to people. That's fucking cool. But if you've got C players that aren't thinking about putting agents in place, then, yeah, we need to hire more people. And like, he literally put in a second, like an AI agent with a South African accent doing outbound call. That's brilliant. And it's a computer anyway. If you have a second in command, you got to have date night. You have to spend time with your key executives out of the office. You have to spend time with your second in command. Building a relationship, building trust. Brian and I had a bit of an unfair advantage. I was the best man, so he was best man at my wedding in 2000. Before I started working with him three months later, he'd watched me build two other companies. He watched me build the private currency business that we took public. He watched me build Boyd Auto Body for four and a half years. We were in a mastermind in the entrepreneurs organization together. So we already had that unfair advantage. But when we started working together, we made a promise that our relationship as friends was more important than the business. So we kept spending time every week doing stuff as friends, which allowed us to fight and argue like you're supposed to, right? Spouses, husbands and wives have to fight and argue, but not in front of the kids. And then you have to be able to spend time together and away from the kids so that you actually can build that trust together and like each other, make sure that you do that. I also knew that one of my roles inside of 1-800-GOT junk was to make Brian iconic. I had to make Brian the shining star of the organization, which means I was the one who rolled out the tough decisions. I was the one that said no to franchisees. I was the one that cut budgets. I was the one that led firing initiatives. And I let Brian roll out the good news and I regrow the bad news. But internally, Brian shined the spotlight on me. So internally, he made sure all the employees knew that I had to be the tough guy. It was kind of like when I was a kid and I got in trouble and my mom would send me to my room and my dad would show up four hours later and spank me. And then my mom would come in after and say, your daddy has to do that, but he still loves you. Like, there was good cop, bad cop. But like, I know that was kind of a weird way to grow up back then, but it's kind of how we all grew up back then. But I did know that my dad loved me, but he had to be the bad guy. Brian made sure that all the employees knew that I had to be the bad guy. And that's a critical thing to think about inside of your organization. Most entrepreneurs are horrible at handling conflict. We avoid it. Most entrepreneurs are horrible at firing people. And by the way, if you ever say, oh, I'm so glad somebody quit, that's actually hurt your company that they quit. You are better to act from a position of strength than a position of weakness. It's better to fire someone than have them quit because you want to have this scud missile approach where you control the way that they actually leave the organization. But if they quit, they start getting everybody a little bit nervous. And if you're firing somebody, cut deep cut once, fire 12 people, not one at a time for 12 weeks. I can go into a bunch of stuff on that. Imagine what your life would look like if you actually had a second in command and a leadership team with the skills to run your organization for you. And you had that vivid vision that they were executing on like, business gets extraordinarily simple. It's really not that difficult. You're like the fly banging your head on the window. And I'm trying to show you there's a door that's open right here. Just go out the door. Take that path of least resistance. Cash is your oxygen. The reason we almost bankrupted 1-800-got junk at 100 million was we didn't know how to leverage our balance sheet. We didn't understand that businesses cash needs were different as we scaled. Remember when you were like 4 years old and your mom or dad threw a penny in a swimming pool and you drove down to get the penny and you came up and you're gasping for air. It's like, relax, you're not going to fucking die. You were four feet down, right? It's like, you're not going to die, man. You're fine. But then you go scuba diving for the first time and you get down to 80ft and you run out of air. You're not going to die, but you're probably going to get really sick. But if you go scuba dive down to 140ft and you run out of air, you will die. So business is the same when you're a small company. You're starting out million dollars, couple million bucks. If you're tight, you just don't pay yourself for a month or two. You don't submit expenses for a couple months. Yeah, you max out a couple credit cards, you borrow money from your wife, whatever. You just like, it's easy, right? You got money in your left pocket, you pay for the expenses. Simple. When you're like a little bit bigger, you go to the bank, you get a credit line, you max out your credit cards, you get your executive team to not pay for a little bit. You get through it, but as you get bigger, you can't do that anymore. We were approaching 100 million in revenue. We had ranked as the number two company in Canada to work for, twice ranked number one in British Columbia to work for. We've been on Oprah. We were like, we were crushing it. 330 franchisees operating in four countries. We'd opened the UK and Australia. We were crushing it. We had $5 million in cash in the bank and we moved the offices from Granville island down to the Guinness Towers. And so we'd moved into 60,000 square feet, three floors, 20,000 square feet per floor. Let's design this office to be a cultural iconic office in Vancouver. So we paid cash for the office renovation, a couple million bucks. We actually built a glass stairway between floors six, seven and eight. That was about $600,000 to build this glass stairway to connect all three floors because we'd be really cool and more open office environment, right? So we paid cash for the glass stairway and we paid about $800,000 in bonuses and profit sharing, gross margin sharing to all of our team. We had another $400,000 bonus we paid to the call center. And we paid about $600,000 in bonuses out to, or, sorry, taxes out to the government kind of bonuses to them too, because they're idiots anyway. But the $5 million, we drained it out of our bank in about six weeks because we didn't know how to leverage our balance sheet. And we held all the cash, we thought we just spend it. But they were like, shit, we need some money. So we went to the bank to get a credit line. We were 100 million in business with no credit line, no loans. We'd never even increased our credit card balances every year because we didn't need it. Because we were making so much money every year. We thought we were king of the world. And we went into the bank to borrow money and they said, we can't loan to you. We're like, why not? Number two, in Canada, we've been on Oprah. Everybody knows us. We're a cult. There's only us, Lululemon and Vancouver Olympics that people want to work for. Why wouldn't you loan to us? They're like, you don't know how to run a business. We go, yeah, we do. Number two, no, you don't know how to manage and leverage your balance sheet. We had no idea how to actually truly scale a company at that size so they wouldn't loan to us. Brian had to borrow $420,000 from his mom to meet payroll that week. I had to personally fire 28 members of our team. The call center had to fire about 20 people. And then I had to phone all of our suppliers and tell them they weren't getting paid for up to three months. Those were not pleasant phone calls. There was one phone call where the CEO started swearing at me and screaming at me. I'm like, here's the deal. You're not getting paid for up to three months. And if you keep yelling at me, I'm not even putting your name into the fucking lottery to see if you get paid part of what we owe you in three months. We need you to be there for us. I'm sorry we fucked this up. We really screwed up. I know it's not your fault, but we don't have any money anyway. We turned the company around. But if you don't have the proper financial acumen, you can hire that. You can get a fractional cfo. We've got two companies that are partners of our CO alliance. I can introduce you. You can have a fractional CFO that your P and L that can manage your cash flow, that can coach your director of operation or your director of finance, they can coach your controller. You need financial acumen as you scale up the organization, but they don't have to be a full time person. Let me give you the last part of this. I call this the secret formula to success. You can write this down or take a picture of it. This is what we figured out was our most successful kind of way to measure our business on a monthly or quarterly basis. And it's F times F times E equals success. So the F is focus. How focused are you? How focused is your company? How focused are your leadership team? How focused are you on your budget, your goals, your marketing? How focused are you on your plan and what you do? Is you give yourself a percentage rating around focus, somewhere between 1 to 100% focused. So let's say that you're examining yourself for the last month, right? How focused were you in December? Let's say that you're 50% focused, right? Let's say you're 80% focused. Actually, let's be kind of optimistic. The second half is faith. How much faith do you have in your skills? How much faith do you have in your plan and your budget? In the market, in the economy? How much faith do you have in your people? How much faith do you have in these unskilled, untrained managers to run your business? Let's say you still give yourself an 80% score on faith. And then the E is effort. How much effort are you putting in? Like, are you really working hard or are you hardly working? And effort does not mean 16 hours a day. It means when you're working, you're really, really working, right? Are you fluffing it? Right? Are you at this conference just out drinking and partying? Or are you actually showing up trying to suck as much as you can from the group? And are you trying to give as much to the group so that you build more connections with everybody in the art? Like, how much effort are you putting in and how much effort are your employees putting in? Let's say you give yourself again a score of 80% on effort. Well, you multiply 0.8 by 0.8 point point eight, it comes out to 51.2% chance of success. Those are pretty shitty odds. That's literally like going to Vegas and throwing it all on red or black. Like, you literally have a 50, 50 shot at going bankrupt. If you're operating at 80% focus, 80% faith, 80% effort. Even if you get to 90% focus times 90% faith times 90% effort, that only gives you a 72.8% chance of success. 0.9 times 0.9 times 0.9 is 72.8%. Where we pushed 1-800-got junk was 98% focus, 98% faith, 98% effort. We were monomaniacal around making sure the organization was dialed in. Around those three things. And 98 times 98 times 98 gives you a 94% chance of success. Those were odds I'm willing to bet on. Those are the clients that we work within our CEO alliance. That's what you have to do to be successful. It is not a hard market out there right now. It's really not. There are people in your industry that are absolutely crushing it. I was coaching a client years ago and he said that he was preparing for a tough year because the industry was forecasting only 3% growth for the industry. Who's heard this kind of things before, right? The focus for the industry. I said, so on the bell curve, as humans, where is your fitness level? He goes, well, I run triathletes, I'm in the gym every morning. I eat healthy, I don't drink, I don't smoke. I'm like, I'm in the top 2% of humans. I'm like, okay, if you're in the top 2% of humans, where's your business amongst all the business in your industry? He goes, oh, we're top 5% in our industry. So then why are you planning to be average when you've never been average at anything in your life? I said, what would the top 5% be? He goes, well, we'd have to grow by 35%. I said, Then let's put the plan in place and the people in place and the focus and systems in place to grow that 35%. He goes, okay, let's do that. Guess where they came in. 42% growth. The opportunity for you is to dial this stuff in. I gave you a lot of content. I really want you to take a look at this. Invest in your leaders training again. It's not there for me to make money. It's there to really help you scale this stuff up. Put your second in command into the CEO Alliance. You're not getting that for them here and it doesn't take away from here. And it's a rounding error in terms of cost, but they'll get value from it. This is my main website. If you want any of my books, my speaking, all my free content, my YouTube channels, my second in command podcast, it's all up there. So you can kind of grab all
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that information you've been listening to. Second in Command brought to you by COO alliance founder Cameron Herold. If you enjoyed this episode, please be sure to like, share and subscribe to us on Apple Podcasts, Spotify and our other podcast streaming platforms for more best practices from industry leading COOs. Visit cooalliance.com
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SAM.