← Second in Command: The Chief Behind the Chief with Cameron Herold
Second in Command: The Chief Behind the Chief with Cameron Herold
Ep. 594 - Dark Side of Scaling
00:41:27
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- [00:00]
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The big lesson is, like, understand your financials. Get a fractional CFO in place to help you with your financials. Listen to your people. Don't be the person who thinks you've got it all put together, because at times you're going to be wrong. And the way you run a business when you're small is not a way you run a business when you're older.
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Welcome to the Second In Command podcast, produced by the COO alliance and brought to you by its founder, Cameron Herald. In the Second In Command podcast, we Talk to top COOs who share the insights, strategies and tactics that made them the chief behind the chief. And now, here's your host, Cameron Herald.
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I thought that if I brought a chair in, I could make it more like a Fireside Chat as well, and less of a presentation. If any of you do want to bring chairs up front, you're welcome to. I'm going to be working off some notes because as Eli said, this is not a normal presentation. I've been paid to speak now. It's actually, this is my 30th country that I've spoken in, so. And I did get to speak in Antarctica to a group of CEOs about four and a half years ago. My wife and I were down there on a. On a cruise and we got paid to speak there. This is not a paid presentation. This is not a canned presentation. I decided to present on something that I call the Hero's Journey or Lessons from the Edge. And I'm going to talk about when I've either almost gone bankrupt or almost. Almost lost the company at 100 million in revenue, or $9 million in embezzlement and fraud, or when I had a nervous breakdown and I'd kind of talk about some of those lessons. So I'm not going to talk about any of my successes. I'm going to talk about all of the real crisis that I've gone through in my 30 years, or 40 years now, I guess, of running companies, which is crazy. Fuck, it's been 40 years. Holy shit. Fuck, I got old somehow. First off is entrepreneurs never share this stuff on social media. The only time anyone ever goes on social media and says I'm going to be vulnerable, you know, within four seconds, that they're full of shit because they're going to pull you into their funnel. 60 seconds, right? And so I'm going to be all vulnerable at something. Fuck off. Or like the fake tears of doing something like, we know you're pulling us into something we never, in the moment talk about being embezzled or almost bankrupting the company or our CFO stealing from us because you're dealing with it in that day. And you can't talk about it because your employees, your leadership team, your customers, your board, you'll scare the shit out of them until a few years later that they know you've recovered from us. So we never actually talk about the real stuff in the moment. At best, we talk about it in an EO or YPO forum or when we're getting really vulnerable here. And yet we all show up and talk about how big our sales are and what our EBIT is or how big our success is, but we never talk about the real stuff. And the problem is we all struggle with the real stuff. And we go through the stress and depression at home and our spouse sees us and it freaks them out because they're strapped to our back as we're riding this roller coaster. So I'm going to talk about some of the real shit that I've gone through and hopefully make it easier for you to know that the shit that you're going through is actually real. Almost every one of you today is actually going through something really tough in your business or relationship that you're not going to be talking about on social media for three years. Just a quick show of hands of who would feel that. That's probably pretty accurate right now, right? That's like 90% of the room agrees that there's stuff you're going through that we're not talking about. So hopefully this inspires us to throw it all out there because this is the group that can help us through it. The first one is we give a fake perception of how easy entrepreneurship is. Here I am on my beach in Bora Bora with my fucking laptop right here and I do it like, here I am globetrotting around the world as a digital nomad. Dude, it gets really freaking hard. It's not that easy. When I was 20 years old, I had 12 full time employees. I was running my first business that is now 40 years ago, which is crazy. I had 12 full time employees. I was running a house painting company in Canada. And in the first two months into my business, five of my 12 employees were some of my best friends from university. They'd driven five and a half hours to a different city to live in Sudbury, to help me run my business, to work for me. And. And they all hated me by the end of the second month because they thought I was rich, they thought I was making too much money and I went and talked to my dad, who'd been an entrepreneur for 20 years. And I said, my friends all hate me. And he said, why? And I said, because they think I'm rich. They think I'm making so much money. And he said, you haven't made a profit yet. And I'm like, I know. And he goes, well, why do they think you're rich? And I said, well, every job that we do, they see how much I'm charging the customer. So they know I'm charging the customer a thousand bucks. And they know they each made 100 bucks and they think I'm putting the 800 in my pocket. He goes, well, why don't you show them the truth? I'm like, how am I going to do that? And he goes, take out your accounting, show them your general ledger, show them your books, and show them the truth. So I'm like, all right, I'll do that. So I brought them into my living room, ordered pizza, sat down with a case of beer, a case in Canada's 24 beer. We sat down and we literally had pizza and beer. And I showed them my accounting, I showed them workers comp, liability insurance, my royalties, my advertising, my gas, my soft supplies, my unemployment insurance. I showed them my paint bills. And within 30 minutes, all 12 of my employees went from being terrified or sorry, hating because I was rich to going terrified that we were going bankrupt. In 30 minutes. In 30 minutes, I swear to God, they were like, holy, we're not gonna have a job and we move five hours away to work for you. You like, what the. But it was a really important lesson for me that open book financials doesn't mean open book financials to brag about your profit. Openbook financials means to show everybody how tough it really is so that we're not the only one going through this war to get like on our own. So I learned from it. Who's here? Heard of 1-800-GOT junk. So almost all of you, if you're in North America, you've heard of the big blue trucks driving around. We were on Oprah. We landed all the press about us. But what you don't know is when we are approaching 100 million in system wide revenue. We had about 3,000 employees. System wide. We had 248 people at the head office. We almost bankrupted the company. And what happened was we had $5 million in cash in the bank and we paid $2 million for an office renovation. And a move we were moving into 60,000 square feet spread over three fours of a Class A building. We spent $800,000 on a glass stairway to open up the floors. We were the number two company in Canada to work for, so we wanted this incredible culture. We spent $800,000 on employee leadership, team profit sharing, spent $600,000 in taxes, and, and our $5 million in cash went to zero within about eight or nine weeks. We were really happy about the fact that we were able to pay all of that with cash. We're like, this is fucking great. Look, look how smart we are. But we're like, sure, we don't have enough money to meet payroll. So we, our head of finance went to meet with the bank to say, can we get a credit line? Because we didn't need a credit line. We were so smart building $100 million company. We had no loan, no credit line. And by the way, when you're running $100 million company, you can't get free credit cards and max out your line. Like that doesn't do all when literally, right? It doesn't do anything. Our payroll for two weeks for just the corporate office was 420,000 just for payroll. Brian had to go and borrow money from his mom to meet payroll because the bank wouldn't loan us any money, wouldn't give us a single credit line because we didn't know how to run a business. We're like, what do you mean? Look how good we are. Look at all the press we're getting. Look at how big we are. Look at our growth six years in a row of 100% revenue growth. We're incredible. And they're like, you don't understand how to leverage a balance sheet. You'd understand that cash is your oxygen. And when you're a small company, like one to 10 employees, if you can't pay your bills, you just max out a credit card. Or you don't pay yourself for a month or two, or, you know, you don't pay yourself back for your expenses or at the end of the year, you can't do that, right? Your cash is oxygen. And so we learned a really, really big lesson that we needed to understand our financials better. The biggest lesson I got though was if we hire employees, we need to listen to them. Because our head of finance for the entire year prior had been saying, are you sure we're not growing too quickly? I'm worried that we're opening up too many corporate locations. Why are we opening up Australia and the UK all at the same time? And myself and Brian, the CEO, just kept Saying, no, no, we got this. No, no, we got this. Because we were these dominant type A. You know, I was in 98I and disc. Like, we were going 100 miles an hour without being able to see two miles in front of us. But our head of finance was very quiet, very analytical, very amiable, kind of an introvert who didn't have the ability to get our attention and we didn't have the ability to listen. And so the big lesson that we got from almost losing the entire company was, if you're not willing to listen to your employees, hire people you're willing to listen to. But God gave us two ears and one mouth, and we should use them. In that ratio. We also had to learn how to understand a budget and cash flow. So our new CFO that had come in right around that time that showed us we were going bankrupt, started giving us daily cash flow projections. So every day at one point, we were getting it twice a day. We were learning what our cash in the bank was going to be for tomorrow twice a day. To project where we were going, we had to fire 30 of the 248 employees in a single day. I had to call all of our suppliers. Like, I'm talking, like, our Google Ads people, our social people, like, all the marketing, our printing companies guy making our boxes for the back of all the trucks, the big blue boxes. I had to call all of our suppliers and tell them we couldn't pay them for 90 days, but they had to keep producing. One of the CEOs of one of our marketing agencies started screaming at me over the phone, like, how are you? I'm like, ma', am, if you keep yelling at me, like, I'm not even going to put you into the lottery to see if we pay you 30% of what we owe you in 90 days. Well, that was what we told them. We said, we can't pay you for 90 days. We will pay you back in 90 days. We'll pay you 30% of what we owe you, and then we'll start paying you a little bit more, and we'll make you whole over six months. She was losing her mind. And I'm just sitting there trying to keep the company together. So the big lesson is, like, understand your financials. Get a fractional CFO in place to help you with your financials. Listen to your people. Don't be the person who thinks you've got it all put together, because at times you're going to be wrong. And the way you run a business when you're Small is not a way you run a business when you're older. Where's Eli? Eli, how old are you now? Okay, when you were three years old, you were Eli. When you were 13, you were Eli. Okay? And when you were 23, you were Eli. But you wouldn't have been able to run this business at 23 or at 13. You're the same person. But you had to evolve as a person. What we had to learn was how to evolve as a company and how to understand how to evolve our financial management as a company and how to listen to our people as a company. Because it gets really, really horrible when you have to sit down with 30 people in a single day, more like over about three hours, and tell them all they're getting fired. It was every three to four minutes. It was like walking one into a room, telling them they're letting go, someone escorting to the next room and me going to get the next person and coming in by person number 10. I'm in tears. And the person number 10 knows what's coming because the other nine aren't coming back to their desk. And we can't go on social media. Well, there wasn't any social media. Facebook hadn't started yet. You're not going to share this. Like, you're not going to go on social media and say, I'm doing this. I'm struggling. Can anybody help me? Right. It's a really terrifying place to be. I went on a ski trip last month with dan Martell and 48 entrepreneurs. We went to a place called Bald Face to go cat skiing, which makes the skiing here look like preschool. It's some of the most intense skiing in my life. But the most intense moment of this four days was a friend that I'd brought from Australia to the trip, a guy who I'd met 19 years ago. He runs a big mold remediation company in Australia. And he told us about how he almost lost his company last year with $9 million of fraud that he was going through. And he's allowed me to tell the story to you because it's a big lesson for all of us to be aware of. So he was. Here's how the fraud happened. He had 140 employees at his head office. And by the way, if you don't think it can happen to you, then it's happening now. Okay? For real. He had 140 employees. Really good company culture. Everybody loved everybody. Everybody got along. All the people were getting their friends to come work for the company. It was incred until he Found out that his COO and his executive assistant had conspired to commit fraud. And they started hiring a bunch of their friends from within the Polynesian community to come and work in the company. And they made sure that they had a couple of people working in every business area. So the COO and executive assistant got a couple people into finance and into sales and into operations and into it so they could literally rig the systems to commit fraud. So some of the frauds that they did in a construction related business, they took company credit cards to the Home Depot of Australia with a bunch of contractors every week or two and said, buy whatever you want, as long as it's under 25 grand. We'll get to the door, I'll show you the bill, you give me 50 cents on the dollar, I'll run it through the company, you can take all the equipment, you give me 50% in cash. They're doing that every two weeks for 18 months. They were taking company gas cards because he had a fleet of vehicles and people were taking all their girlfriends down to the gas station and they were all filling up their family vehicles with gas. 20 bucks to get a full tank of gas, putting the gas on the company credit cards, they're putting 20 bucks in their pocket. They set up fake companies that they were invoicing the finance department. So like if I sent an invoice to most of our companies for 3200 bucks and you had somebody inside your finance department paying the bill, you never know what's happening. But there were these 3,500, 8,000, 419,000, all these expenses being run because the person in accounts payable was in on the fraud. And so they were doing that. They were, they were taking cash jobs, taking jobs off the schedule, going to the client and saying, igor, I know we're supposed to fix your house. It's normally going to be $18,000 to do this mold remediation. We'll do it for nine grand if you pay us cash and we'll still give you a receipt. Igor's going to say, fuck yeah, let's do it. He doesn't know it's fraud. He just thinks the company's doing it for cash. The reality is it was going to be a $9,000 job anyway. They knew because the head salesperson was in on the fraud to kind of charge more to get a cash job. They were then taking the cash, running the labor through the company. So over the 16 or 18 months that this was happening, he wasn't making money and he'd go back to his finance team saying he'd get really pissed off. They would stop the fraud for two or three weeks, build up some cash into the business again, he'd get some breathing room, and they'd start it up again anyway. Hired a forensic auditor, found out what was happening, fired 40 out of 170 people. Thankfully, during that period, he also raised his prices by 35% to try to start making some money. And the market actually sustained his price increase. So now he's coining it like he's making so much money. But that's a pretty big scam. When we built the barter company, I built a private currency business. I was the second in command for a large private currency company that we sold for 64 million in October of 2000. We sold the company in January of 2000, three months before the NASDAQ started at 78% crash. So we lost a $64 million cash out. We ended up with about 3 million. Yeah, it was somebody who said, jesus, it was worse than that. I was sitting with the CEO. We were on the fourth floor of our office in Seattle, in Belltown, and Steve looked out the window and he said, it's too bad we're only on the fourth floor. And I said, why? He said, we're only going to break our legs. This was, you know, we'd been building this company for years. This had been Steve's entire life. But the lesson that I learned from this was, don't keep saying that you're putting all your money into your company. You're investing in your company because it's effectively like going to Vegas and doubling down every year. Every once in a while, you lose that bet. Every once in a while, you don't actually make the money. I'm lucky because the company I was running that had been acquired by Steve was the public company that we then lost. But he'd spent 16 years building this company to then go from his valuation down to effectively zero. So the doubling down idea of continually putting money, sometimes it's good to pull some money off the table. I was lucky that I sold 35% of my stock right when we did the transaction because we weren't allowed to sell anymore until we had exited. So I was at least able to pay my taxes. But I lost all of my equity in the company, which led me to October of 2000. I was standing in an elevator in Seattle. I just prepared to move back to Canada. And One of my VPs tapped me on the shoulder and he said, are you okay, I weighed 30 odd pounds heavier than I do today. I was smoking, I was drinking a lot, I wasn't eating very well, I certainly wasn't getting exercise, I'd never been to the gym. And I turned around to say, yeah, I'm totally fine. And I collapsed on the floor of the elevator and started sobbing. And I was shaking, I'm shaking now as I'm saying it, but I was having a full nervous breakdown. I was literally shaking. I was sobbing like a 13 year old crying. And no, I wasn't okay, I was a train wreck. And then as you would do back in those days, I just went for dinner that night and had my steaks and red wine and Grand Marnier in Manhattan's and that's how I got through the night. And then I woke up the next day and was back in the office at seven away grinding. A week later I went to the doctor's office and the doctor, I was getting insurance for a home that we were buying in Vancouver and I needed to get a physical to be approved for the, the house insurance or mortgage? I guess the mortgage. And the doctor said, how's it going? I'm like, it's pretty good. I have this weird kind of a metallic taste at the back of my neck. Has anybody ever like super stressed in, in their neck and shoulders and you have like a, a metallic taste or a chemical sensation? Has anybody ever had that feeling? 1, 2, 3. So maybe not describing it correctly, but often entrepreneurs have this weird kind of feeling or taste almost. I could only describe it like I was chewing on tin foil or aluminum foil. And so the doctor did a test and he gave me a series of questions and each question had some points attached to them. And if you get 150 points you have a 50% chance of a heart attack. If you have 90. 90, sorry. If you have 250 points you have a 90 chance of a heart attack. I had 435 points. I was clinically redlining, which is why I'd had the nervous breakdown the week before. But instead of me going, oh, there's something wrong, I should maybe go seek help, I did what most guys do, which is, oh, that was weird. Let's go have a drink and some smokes and have a couple good steaks and I'll be fine, right? You just tough your way through it. But my mom was dying. She'd been diagnosed with cancer. I got married and realized it wasn't someone I was in love with. She just told me that she was pregnant and I knew that if I could wait till my child graduated high school, that then I could leave home. My child wasn't even born yet. Where's Andreas? That's the son I was talking about today wasn't even born, and I was ready to leave the house. I was overweight, wasn't eating, wasn't doing well. We'd lost the entire company. Stock market had crashed by 78%. Like, I was moving from Seattle to Canada, and I thought I was fine. The lesson that I got was to listen to my body more, right? And the whole Latin phrase of mensana and corporate sano, the healthy mind and a healthy body is. I had to start getting my shit together. I was written up in the Wall Street Journal that October as one of four supernovas, people whose careers had gone very high very quickly and flamed out with stress. That article is still online a year or two later. I was then written up in the Globe and Mail as someone who's turned their career around and their life around by, you know, getting in shape and running and getting some shit happening. But it's pretty scary when at 35 years old, I was literally having a nervous breakdown. So that was 25 years ago, and I was literally clinically redlining in January of last year or December of last year. So a year, 14 months ago, I got an email request, and it was, hey, we'd like to have you on our podcast. Somebody asked me yesterday if I've been on any podcast. I've probably been on 200 podcasts. I've been interviewed by every major newspaper magazine, like, the actual physical print. So I'm. I'm very used to dealing with the media. And it was a very normal request to be on a podcast. Not one of these like, hey, we'll pay you to be on, which is totally scams. It was like a legit. Here's the show. Here's the email. Would you like to be on the show? I respond, cool. They book it for a month out. A week later, I got an email and it said, can you send us your bio in your headshot? I sent them my updated bio, not the wrong one that I sent Eli today. I sent them my updated bio, sent them my proper headshot. They go, great. That's amazing. We'll see you in three weeks. A week later, I got another email that said, here's some questions we're thinking about asking you on the podcast. How do these look? I'm like, yeah, those look all great. Perfect. See you in two weeks. A week before the episode, they send me an email. We need you to do an AV check. We're going to be streaming this across multiple platforms. It's going to be on YouTube and LinkedIn and Facebook and Instagram all at once. We need to make sure you're tech. I'm like, I've never done that. So, yeah, I'll do this tech setup. So we hop on Zoom and I'm over in Dubai at a speaking event. I hop on Zoom and I'm on video. And right away the person says, sorry, I'm on audio only. I'm driving my kid to school. I heard you're in Dubai this week speaking. And I said, yeah. And he goes, are you really at the Mindvalley event with Vishen? Yeah. Are you doing the main stage thing? Yeah. Like, I heard you were doing the opening keynote. Yeah. And he goes, sorry, I'm wasting your time. Let me help you get the tech set up. So then he goes, go here, go here on Facebook, Open up the business manager, whatever. Click on this. And that's not working. Click on this one. No, that's not working. He goes, hang on, I'll send you a link. Click on the link and that'll help it get set up. And I go, you know what? I'm fucking frustrated. I was getting frustrated and I was like, short on time. I said, let me have you do this with my marketing manager. She can set it all up for you. I'm going to go back into the. The speaking event that I'm at. So I shut my laptop, messaged Bianca, my head of marketing. I said, hey, can you do the call with this guy, make sure our tech is all set up properly? Yeah, no problem. She gets on a call with him the next day. I heard Cameron's over in Dubai. How's his speaking event? Is he really at Mind Valley? Oh, sorry, I'm wasting your time. By the way, I'm only on. On audio because I'm driving my kid to soccer instead of school or whatever, hops on, takes him in. No, that's not working. That's. She sends. Or he sends her a link, she clicks on the link, that doesn't work. He sends her a second link, she clicks on the link. After about five or six minutes, her spider senses are going, there's something's off here. She goes, hang on, my kid's crying. Let me call you back. She closes her laptop, calls my EA and goes, lock out our accounts. Close everything out. She realized that something was going wrong in that seven minutes. He'd taken Us all off the Facebook account, had put himself in the business manager and had started two new pages. Thankfully, we were able to lock him out because what he was going to do is run an offer to his pages using my credit card inside the business manager. And his cost per acquisition could have been upside down. He could spend $1,000 to make 50. Right? Because he's spending my money and he knows that it's going to get shut down by Facebook at some point, but not until he's at least run like he spends a hundred grand on my Amex Platinum. He could have. Could have. Anyway, what happened was because we then got it shut down. I then go back into Facebook, talk to Facebook. I'm in Dubai, my assistant is in Brazil. My marketing manager's in Brazil, My EA is in Oklahoma. Facebook got spooked that all this had happened because this guy was somewhere in like, you know, Karachi or something. So they shut down my account. And then I had. And I was a Facebook verified profile. Thirteen years ago, back when you were. You had to be like a legit figure. You couldn't buy it. My. Anyway, so all my stuff was like legit verified for a long, long period of time. I'd run pages for years. I never heard a single warning. I got locked out of the account. After about six months, we finally got back into the account, and then I had to upload my passport in a video to prove it was really me again. That flagged it and it shut me down. I was out of Facebook and out of my pages for about 10 months until I hired some guy out of Turkey who paid people inside of Facebook to actually get my stuff back set up and back verified again. So I'm back on. But that was a shitty situation to go through. We had an email scam about eight weeks ago where an email was sent to my assistant with me being on the sub. The thread. There were a bunch of like, emails on this thread. There's a company saying, hey, can you pay our bill? Me saying, sorry, I'll get it paid. Hey, it's still not paid. Sorry. I'll send it to Accounts Payable cc my assistant, and then them sending it to Meredith. All of those emails were faked. So the thread was all stuff they created. And in the thread, it's me with my email addresses in blue saying, do this. But none of that was from me. It was just faked emails. Meredith got the email from me to pay this $17,000 bill, but when she read I sent it to accounts payable and pay it, she's like, we've never had an apartment called. We're like a company of eight. Like, what do we have accounts payable? What the fuck are you talking about? So she called me. She's like, is this legit? I'm like, no, it's not legit. But those scams happen so often, right? And when you have controllers or directors of finance or whatever, they don't find this stuff. Oh, I had an employee theft that legally, I'm not even allowed to talk about where we were stolen, about $150,000, and it was fraud. And I'm not even allowed to talk about the situation. So that's all I can say other than inspect what you expect and trust but verify. So that's some shit on finance. Balance. Let me talk about balance. You know, people always talk about, like, career life balance. I don't think there's any such thing as career life balance. What I've found for me is it's like an elephant on a teeter totter that you're always kind of doing a little bit of this, that for four or five months or three months, you might be all about fitness and friends and finance, and then it might swing into, like, it's more about balancing all of the different obsessions in your business. So when Ben was talking about all the stuff he's done with his family, Ashley and I have written a vivid vision for our marriage where we discuss friends and finance and family and vacations and what we do for money and relationships and sex and use of psychedelics. And we've discussed all this stuff, and I'm like, I have to look. And I've written that for me. And I look at how can I work hard on a couple of things? I might let a couple of other things slide. And then I try to work hard on a couple of other things, because if I try to keep everything perfectly balanced, I feel insanely guilty all the time. And I realize there's no possible way. I think that's why so many women feel that it's impossible to be a mom and a lover and a friend and a business person, and it's fucking impossible to be all of that. It's kind of. You got to just do a little bit of this. So I got better at doing some of that. I learned through a lot of my years and in stages that I wasn't spending time with my friends, that I was just so working, always working. And work was my biggest dopamine rush. So because I felt better with working, it was easier to go and do that than it was to spend time with my friends. So I lost a lot of my friends over those years. And it's only been in probably the last seven or eight years that I've decided to spend more time actually really getting to know people. But it's because one of my employees in 2007 told me something at a cocktail party, and it scarred me and Jillian, whose husband was on our board, and we were friends. Jillian worked with me, came up to me at this cocktail party, and she said, cameron, can I tell you something? And I said, sure. What? Said, you're boring. She said, all you talk about is 1-800-got-JUNK. And I realized that she wasn't telling me what else to talk about because I didn't have anything else in my life. I wasn't going to festivals. I wasn't getting tattoos. I wasn't traveling the world. I wasn't, you know, engaged. I wasn't listening to music. I wasn't reading books. I wasn't traveling. I wasn't engaged in buckets, Bucket list. I wasn't wanting to learn about sexuality or spirituality or my childhood traumas. I was literally all I could talk about was work. And I realized that that was not who I wanted to be. And then later, I was sitting at an event. You guys know the name Dean Graciosi? Dean and I were sitting at. We were at an event like this together in the room as sharing information. We were in a breakout group of two, and our exercise was, how do your kids describe you? And Dean said, my kids described me as a really good investor and a really good marketer and really good in real estate. And we lived, like, 10 blocks away from each other in Arcadia in Scottsdale. And he said, how about you? And I started to cry. And then he started to cry because we realized that's not how we want our kids to describe us. And now if you said, my kids, what's your dad do? They would say, he hikes and he travels and he likes going to Burning man and he's, like, madly in love and he's doing all this crazy shit and likes cooking and, oh, what does he do to make money? Yeah, he does these other things. But if you'd asked them that 15 years ago, they would have said, my daddy is a coach or my daddy does this. And that's not who I wanted to be. And it's not how I want them to describe me. So that, for me, had to be a big change, is, who's the man that I'm looking At in the mirror, right? What's. And if it's just work, then that's really boring. And the reason it's boring, by the way, and I had to learn this was if you've ever heard. I'm not going to ask you who you are because I know there's at least a handful of us in the room that have said, business is my hobby. If you've ever said, business is your hobby. No one in this room wants to hear about your hobby. Imagine if a lawyer said, but law is my hobby. Or a doctor said, medicine is my hobby. Or an accountant said, accounting is my hobby. Or an insurance salesman said, insurance sales is my hobby. We don't want to hear about anybody. Why is every other profession never talked about at cocktail parties? Teachers don't come in and talk about life is how exciting it is as a teacher. They have fucking hobbies. And I realized I didn't have any hobbies. Now I have a lot of hobbies. I'm. I'm at a point now where people ask me about business and I try to not answer the question enough times that then they start laughing going, you're not going to tell me. I'm. No. I'm even bored of what I do. Well, how are you going to be excited about it? I learned that working the 12 hour days, 14 hour days to catch up was a lie. There was one year in, this is 30 years ago when I was opening up college Pro Painters in Washington in Oregon. And I hired 220 people in 12 months from 0 to 220. And I'd worked 17 hours. One week. No, one day. I worked 17 hours. One day. Whatever it was, I ended up going, oh my God, if I keep. Yeah, it was 17 hours in a day. And I was like, if I do this. Because it was from like 7am till midnight, it was 17 hour day. And I'm like, if I do this again tomorrow, that's gonna be like 34 hour work week in two days. Like I am crushing it. So I did it and I would go across the street to this little market and get cherry cokes and these chocolate covered espresso beans which are so good. It's like before you get into cocaine, that's where you start. They're really good. They're so good. And then on the third day, I did it again, I did another 17 hour day. So I did three 17 hour days in a row. And then I did the math and I'm like, if I do this for seven days, that's why I was doing the math in my head. It's 120 hour work week. I will have effectively done three 40 hour weeks in one week. So I fucking did it. I went for it. I'm like, I'm a competitor. Like, I was competing with no one other than me, but I'm like, I want to see if I can do a hundred. And I did it for what purpose other than like, who was I trying to impress? No, not even. No, no. It was like so dumb. But I didn't learn. Like, that was before the nervous breakdown stuff. But those habits are built when we're really young. The habits of working long hours and catching up and working. None of us will ever catch up. Your to do list will never get done. My to do list never got done because I kept setting bigger goals or buying another company or starting another business or being on another podcast or growing or come doing a mastermind. You have more ideas of more stuff to do. You never catch up. So the lie that you're telling yourself of working nights and working weekends is because you're avoiding your relationship or you're avoiding your kids, or you don't like the person you see in the mirror or you're afraid to go to the gym. So all you do is whatever gives you the dopamine, which is your hobby. So I learned that. I also learned that I didn't delegate fast enough. In the early days, college pro painters taught me a very, very bad habit because it was the, the radical self reliance. We only had four months to build the company and, and scale it. And I, I didn't learn how to delegate fast enough. I learned how to really quickly get stuff done to minimum viable everything. But I had to unlearn that skill. So now the way I look at stuff is my to do list does not have my name on, just says to do list. And my job is to look at every item on my to do list and say, who can I delegate it to? And if there's no one I can delegate it to, I still pick somebody and I delegate it to them. And then I try to coach them to give them the skills and the confidence and the connections so they can do it. But that's still something that I haven't worked, that I have to keep working on because I can kind of get back into that grind mode instead of delegating more. And then kind of tied to that is focusing on growing their skills, right? If I can focus on growing the leadership skills of people, growing their skills around situational leadership and coaching and delegation and running meetings and giving them the executive functioning skills that I take for granted. Then they're able to do more profit sharing. We ran a really good profit sharing model for a couple of years at 1, 800 got junk where we distributed 10% of the company's profits as long as we made at least 10% EBITDA and we shared money. And every year people were getting really good bonuses. The problem was our management team got lazy. And in recruiting we'd say to people, I know we'll pay you 80 grand a year, but everybody's getting about 14% bonus from profit sharing. So you can probably count on another 96,000. Like we literally started telling people to expect it. So it became an expectation. The year after I left 1, 800 got junk. What happened in the 0809 financial crisis? Because I left in 07. All of a sudden in 08 and 09, there were no profit sharing bonuses and no 10, there was no profit sharing bonus. All these people that expected profit sharing didn't get anything. So I learned that it's also not aligned with what we really want. 95% of us as entrepreneurs are not trying to drive profit. We're trying to drive the economic value of our whole company, which is revenue and customer engagement and profitability. Right. And scale and ip. So if you're going to give people bonuses, align it with what you're trying to build overall. But also never use it as an expectation. Because we know that profit is something that we earn. We don't expect it and if we don't get it, it sucks. But we just dig in harder. That profit system can go completely sideways. It did for us. The last one is there's two more. One is this happened a couple weeks ago. So 20 years ago, I was standing at our daily huddle. We had an all company stand up meeting every day. It's on my YouTube channel. We run it. They've run it for 25 years. Every employee in the company comes for a seven minute. All companies stand up at 10:55 in the morning until 11:02. And on one of the daily huddles one day I said something about 60% of everything we remove in these trucks gets recycled. And one of my employees put their hand up and said, that's not true. I'm like, yeah, it's 60% of what we haul away. And they go, no, it's 57.6. I'm like, it's the same thing. And they go, no, it's not. And I'm like, Whatever. Fucking idiot. All of us as entrepreneurs know that 60 and 57.6 is the same thing. They pulled me aside afterwards and said if 60 Minutes, the TV show, or if that guy. What's the guy that's doing the. Like, he found out about all the preschools that weren't open. What's his name? Nick Shirley. Yeah. If Nick Shirley came and investigated your company, is everything that you're saying in your marketing and on your website and to your customers and on social, and is it all Nick Shirley proof? Because if it's not, it will unravel. And if it's not, your employees won't trust you. So this employee said to me, the reason that it's not the same is we know you're just rounding up and it's about the same and it doesn't really matter. And it truly doesn't really matter. But we need to know that what you say is what you mean and what you mean is what you say. And we need to know that everything you say is Nick shirley Proof or 60 Minutes proof. So two weeks ago, I saw a friend of mine do a video online and he said something about, I've. I'm a CEO and I've grown a 75 million dollar business. And I was like, that's weird. Like, I've. I know his business and I know, like, it doesn't. I've been around businesses long enough, I know it's not 75 million. I just know. And so I called him out on it privately, but I also called him on it privately because two people that I'd met with that week, somehow they'd known that I'd seen this guy that week, mentioned it to me as well, and they were like, it's kind of weird that he's doing it. They all like him, everybody liked the guy, but they're like, we don't understand why he would say something that isn't real. So I called him out on, I said, you're running, not running a $75 million business. He said, no, what I'm saying is that over 10 years I built a company from 0 to 75 million. Like, well, that's not true. That's like me saying, I went to the gym today and I did. I lifted a million pounds in the gym. Or I did like 10,000 sets or reps or whatever the. I'm like, no, you didn't. I'm like, yeah, I did. Like, I started tracking it 12 years ago and I just did my 10,000. Like, you don't talk that way there's not a single public company in on the planet that posts their revenue of what they've done in revenue in the last 10 years. So my sister came to me after she saw my video and she goes, I just built 161 million dollar company. Because she's been running her company for 25 years and that's her cumulative revenue. There's no reason to exaggerate. The guy's business is amazing. I'm a huge raving fan of it. But there's no reason to exaggerate something because then the employees know that you're exaggerating that. So they wonder what else is being exaggerated. So make sure it's 60 minutes proof or nick Shirley proof. It's really important. And then the so the journey at 1-800-got-JUNK was I joined the company and Brian was my best man at my wedding three months before I joined him. So we were best friends. We scaled it from literally nothing with ripped carpeting to the company that everyone wanted to work for in Canada and a brand that everybody knew. It's now 950 million in system wide sales. We went from 2 million to 106 million in system wide sales. And then one morning, Thursday morning, we were meeting with our leadership team and Brian and I would always meet 30 minutes before the leadership team would come in so we could sync up before we would then have the team meeting. And we sat, we were at the Vancouver Club for breakfast and I ordered my traditional eggs Benedict. I mean it's awesome. And Brian ordered grapefruit. I'm like, what the you ordering grape? You've never had grapefruit in your life. Like you always order eggs Benedict with hash browns, like grapefruit. And then he looks at me and you can see him kind of getting choked up. I was like, fuck. He goes, I'm sorry, it's over. And I started to cry. And then he started to cry and he said, you were the right guy to take us from 2 million to 106 million, but you're the wrong guy to take us from 100 million to a billion. He said, I need a very different COO now. I need a more detail oriented, polished, strategic, corporate second in command. Then I got past the crying part and I was like 13 year old primal fucking sobbing, complete, total mess. It was really bad. And he was crying and he made me take a taxi home and he drove my car home because I wasn't capable of driving. I clearly didn't stay for the leadership team meeting either, but I didn't talk about that on social media for about 10 years. Took a long time. A week after Brian fired me, he called me and said, I'm not gonna be able to go to the event in Vegas next year, the 20th anniversary of EO. Would you mind doing the speaking event that I'm supposed to do on my behalf? So here's like my best friend firing me and then asking me to go on stage to do the speaking event. About 1-800-got junk the week after he's fired me. So of course I do it. I go and for real, like it was up and then I did. Then I did Dallas and Houston and Austin. EO chapters three days apart. The week after I got fired as well. I don't know why I'm telling this story other than it's not something you stand up on social media about, but it's something that I needed help on. I didn't know where to go other than I had a really good network of friends that were entrepreneurs that were the only ones who were there for me. There you go. That's some shit I went through. Still hard.
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