EP 152 | Why Businesses Fail with Scott Clary

whatever the market conditions are. Even if you are a printer, and we know that there is less printing demand today than there was 20 years ago, there are still examples of somebody being successful in that space. And so the question has to become, what did that business owner and that team of people spend their time on that is different from where you are spending your time? They figured out something different. They figured out a better product market fit.

They figured out how to message their product and service better. They figured out what they needed to tweak, and they

really learned through the process of growing and scaling their business. Now, once you have achieved product market fit, my perception and in working with the business owners that I work with is that instead of focusing on the things that they like to do, they have to start focusing on the things that have to be done in order to scale their business, like creating systems and processes and truly putting

the foundation in place. But until they get product market fit, until they're able to figure out who they're selling to, how they're talking to that person, all the things that you know so much about, they don't need to focus on starting the work, which is the book title that I'm coming out with and how I'm really framing that, because the work that they have started is good work. It's important work, but they do reach what we call a breakpoint. This breakpoint happens around the $3 million in

revenue mark for the majority of businesses. And when that mark happens, when they figured the the way to message their their product and service to their clients, and they have continued to consistently shown that they can do that. The work is an entirely different set of challenges, and it is an entirely different way of thinking that they need to start prioritizing. And what I find is the majority of business owners just don't start prioritizing those things.

They continue to focus on if they like the sales aspect, they're going to continue to stay close to the customer and figure out how to be a better salesperson. At a $3 million business, you do not need to continue to focus on being a better salesperson. It is an entirely different set of things that you have to start doing and force you and your team to put in place in order to truly scale that business.

problems with exiting, scaling all of it. Right. So that break point at 3 million. You mentioned a couple things I want to unpack. So it's clear. So you mentioned product market fit. You mentioned break point at 3 million. You mentioned focus I think focusing on things that are fun to do but not necessarily scaling. So let's unpack maybe some of those concepts first just to provide some context and framework. So product market fit. How do you define product market fit for a business.

marketing agencies at 3 million in revenue. If you are not the person continuing to sell that product in your business, you have figured out how to have a product or a service. Whatever it is that you're selling, that you're able to grow. If you were to add an additional channel outside of that first channel, that's what we're looking for in the businesses that we're defining as product market fit for the SMB space. Okay.

talk with iOS. It's called it integrator. There's all these different versions. Right. So what happens at 3 million because 3 million I'm assuming because a solopreneur could scale to 1 million. I'm assuming in most cases 3 million. What's happening in most businesses in SMB space.

sales person. That's how you start your business. Most business owners might even be the sales person in order to duplicate themselves in the sales function, so that they can actually focus on operations, some HR things, maybe some marketing pieces. They have to hire a second sales person that is responsible for sales, of course.

like break down. And the machine doesn't scale because that one person they hired, more often than not, they'll be benchmarking against their own performance as a founder. And it's scary to continue to grow. So then they default back to doing the stuff themselves, which is not good, and they don't want to lose the relationship with these high value accounts and whatnot.

What do you do with that?

And so what we're looking at at the 3 million mark is how does the founder take the skill set that they have and truly duplicate through looking at measurements every single day? What are the metrics inside that business to let that founder know? Is this working or is this not working? When they have the measurements in place and they see what's not working, ideally you're not just looking at what's broken and you're trying to fix as

if you're a firefighter every single day, what's broken. You're looking at what has worked as a business owner, what worked for you when you were in the sales process, what was the documentation, and all of the recorded sales calls for you in that function? Same with your marketing.

If you're not looking at your leads every single day, and it's shocking when you work with business owners who are in smaller industries and who are more fragmented, they don't have access to things like CRM or they don't think that they do, but they don't perceive that that's a problem. They might not even be looking at their

financials on more than a quarterly basis. And so you're really putting this structure into place inside the business to let the founder know or the entrepreneur know what's broken today. Assembling a team to help solve that problem is their next set of challenges, because they now see what's broken. But then they're playing firefighter by then being the ones that's fixing it. So we find that you have to put this foundation in place. What are the financial review

processes looking like? Are they even looking at their financials on a consistent basis and expecting from their outsourced bookkeeper, because they probably can't afford to hire someone in-house to see when it's happening, to look at the correct numbers, to be able to then formulate a plan. If I'm off on my EBITDA, if I'm off on my revenue, then what do I actually have to do in order to fix that? But I don't even know if I have to fix that if I'm not looking at it.

And so that first breakpoint really is those foundational elements through your financial review, your metrics, and the training and duplication of the owner into additional team members to allow that business to start to go into what would be the next breakpoint, which would be from 3 million to $8 million in revenue, which then you're looking at looking at, um, hiring an additional leadership layer to actually put those correct systems and processes in place because they're focused on the

measurements that they've been tracking.

not profitably. And they're burning cash, raising the next rounds, raising next rounds. And these are like the the entrepreneurial influence that a lot of us succumbed to. You just mentioned HVAC. You mentioned, uh, service based medical, uh, dentist, uh, agency. So I think the issue really is that you have somebody who built a great HVAC company and they're like, damn,

I'm doing $1 million million five. And like, I can't hire a three, a three person inside sales rep and accountant and then another two account executives with a million bucks. And that's what's screwing people over because they're learning from the wrong. They're learning from the wrong people. There's no, I don't know, a single HVAC entrepreneur, thought leader on social. But I know Jason Calacanis. I know who I know all the guys from Y-combinator. I know all those people

that are super loud on Twitter and create podcasts. And then you follow like the people like Adam Neumann who? Wild story. Right? Those are the people that you look to and you're like, okay, how do I learn how to build a business like this? But first, I don't even believe that many people should build a business based on venture money. I believe building profitable businesses from the get go is like a superpower, because it sets you

up to be a successful entrepreneur. Yeah. So what's the playbook for somebody who is in a service based or even not service based? Uh, who should they be looking to? Who should they emulate? Who's done this? Like, very, very well. Repeatedly. Who's like a better entrepreneurial. I don't know, influence then all the stuff we see on social and YouTube and podcasts and all that stuff.

45 dental locations. And they are creating content, but they are not creating content where they are getting millions of views and have all of these subscribers to their YouTube videos. It's such a niche audience that they are really talking to. And so for every one of these verticals, we do find that there are influencers, but they are not at the level. And they are so specific to, you know, I think of like Tommy Mellow in the garage door space.

to sell garage doors. And so as people become more successful through the markets that, I'm sorry, the industries that are hot right now and getting a huge valuation, somebody like Ken Goodrich in the HVAC space selling Guettel over. He sold it now three times for over $250 million. They will start to come out and have more social presence, and they will be creating individual, industry specific playbooks on

how to do this. Whether you are a chiropractor or a dentist or whatever the vertical that you are in. But the principles remain the same, which is why I feel very confident in writing a book like Start the Work or writing a book like teamwork, where at the end of the day, if you're a business owner, taking

VC money is a little bit different. And we don't we're we're not pro VC money for the majority of businesses because you really shouldn't be accessing that capital unless you already know the basics of what it takes to run a business. And the majority of business owners are not trying to raise VC capital, but they think they

think that, oh, maybe that's interesting or exciting. They should really, like get their teeth knocked in first by creating a marketing agency, or hiring their first team, or figuring out some of these standard foundational skill sets. How do you

review a financial set of documents in a business? Do you have that core competency before you go ask somebody for money, much less your friends and your family for money, like you should have these very foundational business skills in place where you've demonstrated that you were the right person for somebody to place money with you and not on like a hope and a dream, but on a real live example of this is me demonstrating that I actually know what I'm talking about, that I'm able to market,

that I'm able to solve a real problem. And you don't get that through not having some sort of experience.

they can do it tomorrow. The X factor is people. The X factor is always people. And I've heard this time and time again, especially post-Covid, and even I don't know what the rest of the US is like or the rest of the world. But I have friends that run businesses, and I have not had to hire people in the US since Covid ended, so I've been able to hire all over the world. pre-COVID was a different story. We had people in Canada and the US. Um, but

post-Covid it's all been it's all been all over. But I have friends who have tried to hire, and they say that the talent landscape post-Covid is very difficult. It's very difficult to get great people. And these people are not bad business leaders. But it's like the wildest stories, like somebody will be hired W2 employee and they'll negotiate a salary. And then the first week they'll say, I want more money. Like things that didn't happen in my

life at least. So the X factor is always people, The first person like that founder led business, they're making money themselves. They try to hire a sales rep. Maybe they're not closing as much as the founder does. So those first few hires are super important. How do you navigate the talent climate? How do you find the right person? What is like? What is your framework? Because now you have thousands of employees. Um, so you figured it out. What is that strategy?

go out and recruit. It is a game that you have to play for a long period of time to help the market understand why you are the founder or the entrepreneur, or the business that great people want to work with. And so first it starts with, how are you promoting that you are a great place to work at? Are you talking about in our business card adventures? Are you talking about the fact that people are winning inside your company? Not just your clients, but your team members?

We have team members who came to work with us, who were making $60,000 a year and are now making $400,000 a year. We we've only been in business for five years. We promote those stories, but we're thinking about that when we make that initial hire of somebody who is saying, I'm making $60,000 a year, I'm applying for a job here at this compensation. But I have radical goals. So how do you find people who have radical goals but are at a starting point where the business can

afford to hire that person? Most businesses cannot afford to hire somebody at $400,000. They can't afford to hire somebody who is hungry. That's making $60,000, who has the vision for their life of wanting to make 400,000, but has has actually no idea how to get there, because if they knew how to get there, they would already be making $400,000. We live in a free market economy. If somebody could go down the street and make that amount of money, they would go and make that amount of money.

And so as a business owner, if you're playing this game of people you're really thinking about, I need to create a brand for our organization where great talent thinks of us as a place where people come to find success and to have their success be easier with me than they would be able to find success with somebody down the street. So how are we you promoting that?

How are you constantly recruiting for people and posting jobs, even if you're not hiring for those roles, to tell the market that you are recruiting and you're constantly looking for great talent, and then once they come in the door, how are you exemplifying that you are actually interested in their success? I think what's made us successful in this hiring market over the last five years, pre-COVID, post Covid, is you're getting an opportunity to work alongside real leaders

in a in a non-virtual work environment. We have an office here. We have an office in Scottsdale. They're seeing how I work every single day. They're seeing how Brandon works every single day. They are like rubbing shoulders with us constantly to solve the the largest problems inside our organization. And if you take that and you apply it to a small business, we had the exact same principles five

years ago as we do today. We create this environment that allows people who have this dream, have this hope for their lives because we're marketing to them as a candidate journey, not just a customer journey as a candidate journey, because we're playing this people game, and this candidate journey is telling them you can achieve your personal, professional and financial goals. Through working here alongside us. We've achieved our personal, professional and financial goals up to a point, so there

is some success that you can follow. But we have radical goals for this organization and we are committed to growth. So once they're in the environment, in order to keep them, they have to actually see that we're really doing the

actions that demonstrate that we're committed to those things. So if they saw us on vacation all the time, or if they saw us not really being interested in their success, if they saw us just like half assing the work that we do with our clients, it It would be a different story, but instead what they see is a

team of people and leaders. Back then, when we had zero employees all the way up to today, when we have hundreds of employees working on the weekends and being here before people and being here after people leave, and they really are understanding what it takes to be successful. So it's the entire package of we sold the dream. We're marketing A to a candidates that this dream is possible here because we have this target of where this business is going in the future, and we're really clear

about that target. And then once they come in, they are testing and watching and seeing how serious we are. And so we have to be serious every day. And I do find that a lot of business owners really struggle with that level of seriousness and that level of commitment,

because they create a business around a lifestyle. And if you want a lifestyle business, that's totally fine if that's your prerogative, but But you are going to lose a people game if somebody else is not actually fulfilling their side of the the they're.

And I mean, I have my own thoughts about. I do believe that if you hire people like, I'm super happy if they build their personal brand, start something on the side. I think it helps them upskill. This is my personal opinion and there's a lot that goes into that. But for yourself, I'm curious. You know, when you hire somebody like this, there's a very high likelihood that they are either looking for the next thing, how to make more money. When you start making 400 K, you're like

comfortably poor at that point. So now you realize that damn life is good. But I'm also in Miami, so how do I make $1 million a year? And maybe it's not with an organization, or maybe it is, but the person who makes that kind of money, I believe, is inherently very an entrepreneurial. I think they are somewhat entrepreneurial because they're really striving, and if they put that much energy into their own business, there's a chance that they could actually succeed as well. So how do you

manage that personality type? Because everybody wants that person. But then at the same time, maybe it's easier if somebody is okay. Again, nothing wrong with how much money you make. You make six, make 400 K. Make a million. Make 10 million. Doesn't matter. But if somebody's okay making 60 K and they're not looking for the next thing and they're happy with that, then maybe it's less of a liability to the company.

Because what I know about being a business owner is it sucks most of the time, and you could actually live a fantastic life working for somebody else, making more money than you would make by yourself. The stats with business do not lie. The majority of businesses do not make a lot of money. And even if you took a high performer inside a business, it does not mean that they are going to be a high performance business owner and come with all of those challenges and all

of that risk. And so when we're having these PPF conversations with the team member, if they're telling me that they want to own a business one day, I really have to get down to like, why do you want to own a business? Is it because you have to be the guy? There's that quality where some people are just like, I want to be the guy. I want to be the person. Like, okay, that's cool. Part of that is a little bit of ego because they have

no freaking clue what they're talking about. They're making $60,000 a year. They've never started a business before. They don't understand what those components are going to look like. And if they do think that they want to be the guy, we're probably not going to retain that person, to be honest with you, in five years, that hasn't happened for us. Our high performers have not left us, especially the ones that started early on, the ones that are making it

with people making 400, 500, 600. The highest paid person probably makes $1.2 million a year. And that's a lot.

we have. If if we have a set of problems for somebody who is a high performer making $400,000 a year, that is not a 9 to 5 job, and we don't expect that they are going to be able to solve those problems at that compensation level in a 9 to 5 environment, because there's just more complexity than you

clocking in and clocking out. That's not the mindset. So when we have that person, though, that doesn't see themselves being an employee forever, how do we create the opportunity, as Cardone ventures as any small business, to show them how they could be a future partner and build inside of what we want to create, which is $1 billion organization. They can be the president of one of our verticals.

They could be a president of our health vertical or our HVAC vertical, or our roofing vertical or a dental vertical, and see themselves growing inside our business because we don't want to lose those people. And then they would still get the flexibility, the autonomy that they're looking for while still getting to do it with really cool people. The hardest part of starting a business is actually having to do it by yourself. And it sucks and it's painful,

and most people don't make it through that. So why wouldn't you want to continue to work alongside people who are always going to be pushing you and expecting more of you once you get to that level and partnering with you? Because there's more of a cushion there than you just going out and starting your own business. And this has been successful for us because it's an easy story to tell people, and it's also getting them focused

on what the problems are today. Instead of I'm solving these problems in my day job, but now I'm also solving these side problems. And now my focus is split in two different areas. That person is going to be less good at both of those things than the person who just does go all in and focuses on the

one thing in their career. Yes, they're choosing to take a gamble on the organization, but if we continue to demonstrate that we're here, that we're pushing, that we're growing, then that confidence and that trust continues to build.

the wrong person. And I don't know if, for example, if somebody in Cardone ventures that they took over as president of an HVAC division, if they would be able to buy in and have equity in that, I'm assuming, yes, at some level, if they're if they've, you know, shown that they can they can exceed and grow it and build it. So I think that okay, so we talked about building SOPs, uh, finding the right people, but then scaling out the management team, scaling out the people that

are entrepreneurial but within your own organization. Maybe ownership is a key piece of that. So how do you take it from let's tie this back into the book and the framework and the the 3 million to the $8 million break point, $8 million break point. You have to start bringing in another level of management that could be people that are be a super entrepreneurial, but they're taking a risk on your business. They're committing their time to

your business. What is the playbook for finding the right person that you can give ownership to, that you can trust with that level of management and level of responsibility to get over that $8 million break point.

order to inside our business. He's totally badass. He literally moved from New York to join this like small little $125 million company to be a part of what we're building. But that same thing that we are doing today to attract talent from KKR is how we started the business five years ago. It's talking about the fact that we are going someplace and having a big vision. And to me, this is where most business owners just fail. They do not actually have clarity on what their ten year vision is.

You and I were talking about your ten year targets and your ten year goals, and committing to something for ten years. If you really had that mindset with your business, you should be sharing with every single person that you come in contact with, what that big vision is. And if you don't have that big vision and you're not

talking about those things, of course you're going to get disengaged. People, people who are not interested in even having a conversation about equity because they just looked at your position as a job and your mindset because you're not playing a people game is I'm just filling holes inside this organization instead of really strategically looking at this as, how do I find people who want to come on board to have a piece of this business to help grow this business.

So every single thing that you do when it comes to how you show up with your team every single day, how you interview the candidate, what you're asking them to, to demonstrate to you in the interview process, are you asking them what their goals are? That, to me is the lowest hanging fruit for a business owner. If you are not asking somebody what their goals are prior to them joining you, it's akin to somebody getting married, falling in love, deciding to get married in a very short notice.

And then once you're on your honeymoon, you're having this conversation. You guys are blissfully in love, but you're having this conversation about the significant other saying, oh, I can't wait for us to move into the country and for us to be able to have farmland and get out of the city. I hate the city, and we can have all of these kids. And you're like, wait a second, I love the city. I always want to be in the city. I didn't think we were going to have

kids together. I thought it was just going to be you and me till the end, and we were going to build this empire. There was no coordination on the goals for those groups of people. We do this to our team members all the time. Were secretly as business owners wanting to create these large organizations. We have these dreams.

We don't communicate them. We post a position assuming that we're going to get the best talent, the most engaged talent, somebody who's finally going to help me in my business. All of a sudden they come on board. We didn't ask them what their goals were. They're expecting to clock in and clock out or they have other priorities that we didn't even ask them about ahead of time. And yet we're expecting them to help take our business from

$3 million to $8 million. We didn't we didn't even contextually put that person into the role of what does it take to go from 3 million to 8 million?

Do you know what it's like to work an $8 million business when you joined your last company that I'm so impressed with as an entrepreneur that was doing $50 million in revenue, were were you there only when they were doing 50 million, or were you there when they actually grew from 25 to 50, so that you have context to be able to help us not just go to 8 million, but actually hit a $50 million target.

And so in this conversation with the candidate, you have to be framing what the goal is for the organization. And then once they're on board with you, your your crystal clear on what the expectation is. Are they hitting metrics? Are they clear on what their job description is? Do they know what success looks like in the first 30, 60, 90 days? And at that point, for us at least, that's when we start issuing equity, because I'm not going to give equity to somebody on a hope and a

dream and a promise. But a lot of higher level executives are wanting that promise when they start an organization. And because we've tried doing that a handful of times, I'm at the place today where it hasn't worked. We'll not do that because they come in with these big degrees or they come in with this, this 14 years at Ernst and Young, and they are about to be a partner. And then they come in and they expect

that our environment is a cushy one. And so it really depends on what the business owner is trying to create. But if you are really serious about your goals and you are really clear on where you're trying to go, you have to be communicating that with the person the entire time. You almost have to promote that more than you're promoting your client journey, more than you're promoting you bringing on new business. Because at some point, that is not the thing that's going to stop you from growing

your business. It's going to be this people piece. And if you're not focused on this people piece, when you start, you're just playing this whac-a-mole game and filling positions and filling roles, and you have this duct tape together team Once you've got all of this, all of these clients that are inside your business and the business isn't set up to actually scale.

he partnered with both of you. So Brandon and yourself to build a Cardone Ventures, this is kind of it's an example of exactly what you're telling businesses to do. So, I mean, not a lot of businesses can attract somebody who had $151 million exit to come and partner up with them for sure. So, you know, obviously, I think it's good just to get a little bit of your backstory and where you came from, but then tee it

up with how did this partnership happen? Because this is what at as a business owner, if I can attract somebody who had that level of exit nine figure exit, like, that's phenomenal. Like I could only dream like, right. That's what I mean. I'm trying to attract people from from Fang, from Facebook, from Apple, let alone like an exited entrepreneur.

anxiety flood through him. Because you have this thing that happens that you've always dreamed of. But if you don't have people around you telling you what's next or helping you prepare for what that experience is like, you feel like your purpose is gone. And this is exactly what happened. His purpose was gone. And for two years we went around hanging out with everybody who had done a similar thing. They had exits. What do people do when they sell

their business? They start investing in golf memberships. They start traveling more. They buy homes. They might buy some stupid stuff. My husband happened to have a car, uh, a car, a little addiction there for a while. I think he bought like six cars in a matter of two months. It was ridiculous. That's a lot. It was a lot of cars. He likes cars. He still likes cars. But there was no influence around us saying, this is what's next. And so at the time, I was 23 years old.

He was 48 years old. We have a little bit of an age difference. And I was like, this is not what I signed up for. I signed up for us to build a business. I signed up for us to have a purpose and a mission, and I'm not cool with us talking to your golf buddies every single day about the one shot that we missed every day was like the same conversation. The one shot us with golfers. The one shot that, like, took the whole game out. Like,

I can't do this. And so I started looking at all of these social media influencers because my husband is brilliant and he's engaging and dynamic and funny and he's sharp. And I was like, if these guys can do it, you can frickin do it. You've done more from a competency standpoint than most of them have and have this incredible story. So I start looking at all these social media people, and I showed Grant to him, and the first time he saw Grant, he was like, this has

to be a joke. Like my husband was a very like traditional businessperson. He was thinking that our next iteration was going to be going through private equity, and I was like, what if we went the social media route? So I found this list, showed him Grant. He was not interested. I instantly was like, this is the guy. I just could tell through the content. But more importantly, his relationship with his wife and his relationship with his kids.

Not only was he creating this financial success and have this big mission to help all 8 billion people on the planet with financial literacy, like the mission is insane. Grant, like when he talks about ten X, that push that he has is very real because he has this big mission.

But it's not just about the cars and the planes and the watches and all this success, which is what I was seeing so much of it, the golf course, it was for him, more about how do I create this life and this legacy for other people and also have an incredible relationship with my wife and also be a phenomenal dad. And so I was very interested and attracted to this life, this ten-x thing that they were

promoting online. And so I read every single book. I practically watched every single YouTube video and put this in front of Brandon when we were going on a four hour car ride. I put the ten x rule on after I had read it like two times at that point, and at first he's like, no, no, no, we're not listening to this. Luckily, he has no idea how to work Bluetooth. The age difference seems to be with this. So I forced him to. He couldn't. He couldn't turn it off. We were in the car for four hours

and it clicked for him too. So when we met Grant and Elena, it was really us validating. Are they who they say they are and is their audience somebody that we know that we could help? They at the time had Cardinal Capital, which is an investment firm for multifamily real estate, and they had Cardinal University, which is sales training. But what we know how to do is leadership development and hiring and operations and how to look at financials and all of these other components of growing

and scaling a business. So we met this audience at Growth Con in 2019, this big event, 35,000 people in it. We met this audience. We're like, yeah, we know we can help these people because they're only getting serviced through these two channels that Grant currently is offering. And we watched Grant and Alena like weird little stalkers. Like we

just like watched every little lube. And when we finally got the opportunity to meet them, we said, what would it take for us to have a conversation around being partners and creating $1 billion organization together, servicing business owners? And grant like kind of blew us off a little bit at first. But, you know, we know how to follow up and we continue to follow up. And when that conversation became real, it was so obvious that this is a need in their organization. And this is what

we are good at doing. And we had been able to create this track record. And so for the last five years, that's what we've been busy building. But for me, maybe you and I might have a little bit of a different philosophy on this, actually. And I would love

to like, debate this potentially. Like, I think it's really hard when you're, like, picking and choosing pieces of mentors, because I don't want to be watching somebody who has all this business success and is telling me what it takes to do to to be great in business, but is a shitty dad. Like, I don't want to be listening to that person, and I have a hard time bifurcating that. It's one person. Interesting because to me, they're they are one person, and I want to learn from

people who really do have it all. If there is somebody who has exactly what I'm looking for, I want to listen to that person. And I used to listen to all of these different podcasts and YouTube, like, I'm

a student of this, this content. I used to listen to couples who did business separately, and then all of a sudden I was like, picking fights with Brandon or having issues in our business because I was listening to content that even though maybe I was listening to them about marriage content, it infiltrated the fact that they weren't

working together. And that wasn't my path. My path was working alongside my husband in a business and having to figure out this this way forward, while also being a business owner, a wife, being supportive in all of these roles. And it was confusing to me what I was trying to just like, study one part of somebody. And so for us, Grant and Elena really were that like family, husband, wife, kids,

ridiculously successful from a financial standpoint and impact driven. And what I found them to be, I'm like, I'm going all in. And five years later I am more putting them on a pedestal today than I was back then. And that is so rare in today's world where you put somebody on a pedestal because you think that they're this great person from everything you've watched on social media, YouTube, Instagram, all of the fun stuff. You're like, oh, they're this person.

But then you meet them oftentimes and you have a lot of experience with this. You meet them and and.

decided to literally go all in. We moved from Washington, move between here in Scottsdale to build this business over five years because we found people that had the life that we wanted who were willing to mentor us, and we also brought a significant amount of credibility and influence and hard work and strategy to the table to make this partnership make sense.

are so easily influenced by social media. I think it's dangerous. I think it's less risky to look at a few different people than to go all in on one person, because if I say go all in on one person, there's a there's a high probability that person is not who they say they are. That's the concern. And I think that we talk about access all the time. And I'm going to give you an impossible question to answer,

because you asked me some impossible questions as well. But when you look at the exit and the access that you had, someone will be like, okay, so I didn't have $151 million exit. How can I have a sit down conversation with all the people that I look up to to make sure that they are who they say they are? Because I do want to go all in on one person. That's a very difficult thing to replicate. So what would be the advice for somebody who's looking for mentor advice? All the people online, if.

thing that their kids were putting out. I watched all of the behind the scenes of their teams content because do they have great people around them that are vouching for them if they don't have great people around them, but they're there promoting that they know how to do all of this stuff and that they are these great people, great people have other great people around them. That is

a fact. And so do they have a big enough business or a group of leaders around them that do vouch for them, that do show up and promote them and believe in them and still say the things I mean to me, like I am their greatest billboard, but it's because I mean it. And it's to my core that I believe that those two individuals are just the greatest people that I've ever met. But do they have a lot of successful people around them, and what do

their lives look like? Are the people around them winning and achieving things and succeeding, or the people around them actually doing worse, or do they not promote the people around them at all? So I would really be looking at not just the one person. You're not just looking at Kylie Jenner, or you're not just looking at, you know, whoever your influencer of choice is, what is the group around them like, and are they winning or are they losing?

And are they when they get in proximity to these people, are they doing worse off than they were beforehand? And that to me is such an easy tell of if the person truly is influential and actually able to create an environment where the people around them become more successful. My definition of leadership is making other people success easy.

So if you really are a leader, how can you demonstrate that you have made the people around you their success easy through the environment that they are in now because of you, through the example that you are creating inside their presence like you do, rub off on people. Grant did rub off on people. Elena did rub off on people. Are those people doing better? And to the extent that they are, that's what those are, the people you should be going all in on. If they aren't,

then I would second guess. Are they really the right person to be listening to? Because the people who are close to them know, like where the bodies are buried, if the bodies aren't buried and there aren't any bodies, hope like praying that there aren't actually any buried bodies

or figuratively. Yes, figuratively. Um, then, you know, I watch so many social media people and people that we've partnered with, and I wish that I would have taken my advice earlier on when it comes to investing in businesses, because what I see a lot of people who are in this game that we're in, which is investing in businesses, they don't they don't really critically look at their partners.

When you look at a business deal that you're about to do, what is the family and the friend and the coworker situation like, I get that you're looking at the founder or the entrepreneur, but it's hard to tell just through financials and through somebody doing an interview if they're the real deal, If I can get access to having dinner with the founder and the spouse, I'm interested. Like, what's the dynamic between the two of them? Can I actually meet with the team and understand how that founder

shows up with their team members? Because they're going to show me one thing, but they're going to be an entirely different person, and the people around them are going to demonstrate a totally different side of them. And if I can get access to that, when I get access to that, we do better deals. When I haven't done that, those nine times out of ten are the deals that

have failed for us. It's because we just thought this one person was great, but we didn't have the rest of the picture and they didn't have the same core values that we have. They didn't demonstrate these things that are really important to us, not just inside work and not just being a high performer when they show up, but the rest of their lives. And, you know, when somebody is a fraud and the rest of their lives, when other people in their lives aren't vouching for them. Mhm.

I don't I don't know if they do. They do that level of due diligence when they buy a business. I don't think so.

the people are who they say they are. They're authentic, they're genuine, they're high performing. Ideally, that repels the bad ones, but sometimes people just get so money hungry or they think that you're going to give up sooner than you really are. They have a short term time horizon, and you have a long term time horizon. Like my life is too short to have to deal with those people.

There are enough great business owners out there that are the type of people that I want to spend time with, that if we have $1 billion fund instead of a $100 billion fund, like I'm good because I don't want to have to deal with the headaches and the the sheer torment, to be honest. And I know you have experience like this. The torments of founders who are just complete assholes. You couldn't. You couldn't pay me enough. But it's so much more than what they're actually able to

bring to the table that it's. I'm not going to do that. And I do think that there's an alternative route.

some a talent. And it's like it's it's so much that what you know, I'm trying to figure out how do I create success for other people? Maybe I kind of know where their career aspirations and goals are, but it's a startup. Everyone's struggling, everyone's stressed out, everything's on fire every single day. And I'm doing my best. And I'm working from six in the morning till 11 at night. How am I really supposed to invest more into my people?

What is like a very easy way to invest into my people so that their success is easier because of me, because I don't even feel as a business owner, my own success is easy, and I think that's a reality for a lot of people, especially in the in the SMB space and the people you serve. Sub $10 million, nothing feels easy. Your own success as an entrepreneur doesn't feel easy. So how am I going to give my energy and my time to all the people that work for me so that Natalie comes in, she wants to

buy my business? They don't say that. Yeah, Scott's not a bad guy, but, I mean, I haven't upskilled I haven't learned anything new. I kind of just do my job sometimes, like, we get stressed out and things aren't working, which I think is pretty like this is like a standard definition of almost any business. Everybody. So what's the what's the strategy to make people's success easier when you're already stressed yourself?

making $60,000 a year. And her goals, when we sat down and talked to her having this conversation was in the next 18 months, she wanted to make $250,000. Like in the role that you're in right now. It was an operations function. There is no possibility of you making $250,000 a year if this is not real in the next 18 months. This is the business owner. This is me being a coach in this situation because you're telling

me you want to do something. And if I believe you that you want to do something, I have to tell you when. That doesn't make sense here. But ideally, you're able to create a different path to keep this really engaged person, somebody who wants to be able to create something great and share with them what success could look like. So this person had never sold anything. She actually was working on her doctor of chiropractic. So she

had just finished chiropractic school. And when she sat down and told me this, I said, the only way that I see you during this organization, she was our 12th employee, and being able to make $250,000 a year is through becoming a salesperson. And if you become a salesperson and you learn the most valuable lesson that a business like ours is struggling with, which is how to get customers in and convert them into our products and services, you

won't be paid that and then some. So she thought about it for a week and a half and she's like, sure, I'll become a salesperson. And so we transitioned her over two months because she's still fulfilling that operations function. So business owners, like they're still in the function that they're originally in. But she's pivoted over to sales. She cried every single day for the first 90 days. Like it was like a patch up job every single day being told no 250 times. Most of the time, people not

even answering the phone call. Fast forward one year later, she had made $250,000. Think she made like 280. Then she made 350. Then she made 400,000. But ultimately she never wanted to be a salesperson. She wanted to make $250,000 a year, to then be able to service people in the health care space. So as an organization, we bought this little company called Streamline Medical, rebranded it to Ten-x health, bolted on another company in order to grow

its revenue, and we needed a director of sales. This team member is now the director of sales at Ten-x Health, leading a 50 person team, all because when she was 24 years old, she was very honest by saying, I'm making $60,000 a year. My value and contribution today is 50,000 or $60,000 a year. But I have these goals and we shoved her to where the business needed help right then and there, and it eventually ended up leading her back to what her goals were originally, which was

to be part of a health and wellness company. That was tied to why she went to chiropractic school to begin with. And so when you really take it as like, it's not this overwhelming concept of tying your team members to the goals of the business. This is a hand to hand combat, 1 to 1 conversation. You hire somebody, they tell you that they are making 80,000, but they only want to make 90,000. Is that person really going to be the person that helps you create this next

level of growth in your business? Probably not. Early on. You only want to be hiring very growth oriented team members because you need them to want to grow. And then when you're talking to them and they tell you that they have these large growth goals, how do you craft? This doesn't take hours. It probably takes 30 minutes with

each individual person. You have 12 team members, okay. If Bob wants to go from 80,000 to 120,000, what would he actually have to do in our product team in order to drive a $400,000 of additional revenue for him to be able to make this additional 30 or $40,000

a year. And if the gap between what they want to make and where they're making is so large, but they think that they can do it, why not have them propose to you what value they could add, what skill set they could bring to the table, what they would need investment in for them to go learn to invest in education and courses and content to actually get those skills that you're specifically looking for from that person.

And so the less you think of it as like a general, how do I, as a business owner, overcome this? And you think about it individually and you're crafting these plans for your team members, the more success you're going to have with actually creating the success, because you need those team members to up level their skills to grow. You're just helping them make their success easy by saying, great, this is the marketing course. This is the funnels course,

this is the sales content and training and plan. And this is what this is going to have to look like. And you're demonstrating that success as a business owner, because if you're doing $8 million a year and you're trying to get to 50, you're listening to a podcast like this, you're up leveling your skills. You're sharing this stuff with your team. You're sending that example of what it takes.

You have a goal. You get really technical about what skills you need to learn right now in order to get to the next step, and then you're duplicating that across the other team members who are looking at you as the person who's the example for the success inside the organization.

wild story. Early on in my career, I was trying to move from small market to mid market sales, and there was a base and a compensation package. And, uh, my director at the time, he was arguing for a higher compensation they were offering at candidates who were coming from outside the organization, as opposed to what they could offer people that were internally promoted. And for some reason, it was like a $10,000 difference. So if you're internally promoted,

you get say like 65. If you came from the outside, you can make 75. And he's like, this is the dumbest thing I've ever. So what we actually ended up doing is I ended up resigning and then applying, and then he brought me in as an external candidate. Like, how stupid, how stupid is it for a business to do that like that? That's absolutely ridiculous. So this is obviously the complete 180 of that type of mindset. Um,

I know, I just think it's amazing. I think it's I think it's a very smart way to foster talent from within. Yeah. Just one more thought on what you just mentioned because I love this. Um, I think sales is such an important strategy. Obviously, Cardon is a very sales heavy organization. Yeah. This is how it all started out. Um, do you believe that? And I believe that at least entrepreneurs should be salespeople, and that's one of the most important skills to a point, like you mentioned. But do

you believe that anybody can become a salesperson? Absolutely.

your expansion, especially if you are a small business. If you're a small business, you have five people to help you hit your growth goals. If you do not equip those five people to help you. Whose job is it to hit your growth goals? It's yours. You are entirely like holding all of this responsibility yourself. Instead of saying, hey, wait, there's five people. All of us are joined together through this mission. All of us are tied financially to the

success of this organization. So I'm going to equip you guys with the right skills so that when you're having a conversation with somebody in an elevator, when you're having a conversation with somebody, some business owner, that would be the perfect fit for our organization at a coffee shop or a smoothie shop, or at a restaurant or at a at a networking event. You can confidently talk about what your products are and move them through a close.

And if you're not training your people on how to do that, you're just accepting the fact that it is your responsibility. But then you're also wondering why everybody in your organization is disengaged. Well, of course they're disengaged because they don't know how to make any more money. You've hired them, you've set a salary for them. You don't have incentive compensation created. You don't have a commission structure in place. You're not training them on how they can

make more money. So why would they stay engaged? The only reason that somebody is listening to a podcast like this is because they are interested in growing some skill set. If your value prop in your podcast was success stories, how to be the same in one year from now as you are today, no one would be listening to this.

figure out what incentive metrics are. We're not going to have a conversation about what your goals are, because heaven forbid you tell us something that is important to you and then you sue us because you said something like, we've just created all of these weird structures and all of these weird, weird rules where business owners actually are creating a game where people only can be disengaged. That's their only default, is to be disengaged, because why else

would I be engaged? They don't think of this people strategy as a game where they're playing something, and every single day they get to figure out this different way to engage great people, to get the best talent to them themselves. Be people in an organization worthy of having the best people. And so instead, they just bitched to their significant other all night long about how terrible Sally is, or Bob is or Susan is, and nobody wants to

help them in their business. Well, if you allowed people to sell on your business, you'd at least be giving them a game to figure out how they can make more money, which is actually the contract that you guys have. Even if you're in a family business, the contract between team members, if you are working inside an organization and you have employed somebody, the contract is a financial one. If you stopped paying them, they would not show up on Monday morning. And yet we don't continue to create

on the contract. We think that because they're nice or their family member, we don't want to upset them, that we're not going to hold them accountable. It's ridiculous. And then we also bitch and complain about why people aren't helping us grow our businesses. We've never created a structure for them to do that.

remove the stigma of sales? Because there is there's always a stigma around sales, and there's a certain kind of person that likes to do it, and there's a lot of people that don't like to be sales. Right. So how do you get somebody to buy into this concept? Because once they once the money comes in, it's easy.

But there's so much pressure and negativity around the concept of sales that for a lot of people, the gap between the first commission check and where they're at now in a product manager role is too big for them to understand. Okay, I'm going to start to go down this path and I'm going to start to be okay with rejection. I'm going to start to be okay with putting myself out there and calling people and emailing people, having conversations and evangelizing the company I'm working for. What's

the what's the way to to tie it together? I have such.

what's called the Cardone wheel and the Cardone wheel. Cardone stands for Cardinal University, has this like, Wheel of Fortune type thing on an iPad, and we spin the wheel, and every single person in the company's name is on this wheel. And so it spins and it lands on one person, and that one person shares with the whole company, whether we were 12 employees or now 350 employees. What they learned the day before from Carleton University, and then they role play in front of everybody.

that you want in life is a sale. So if you're saying to us you want to make more money, this is exactly what this looks like, and we're going to give you the tools to help you get better at this. We're not going to let you fail. The the purpose is not to make people look silly. But imagine you're showing up to to your first day of

work inside our organization. Like it is just part of the culture, and the team is supportive and the chat and they're giving pointers and they're sharing what the links are. Carnal ventures.com/people. That's for upcoming essentials workshop. And they're just like figuring out how to help the person who's working through the sales process. But you're doing your team members a disservice if you are not addressing that. The number one skill that they can learn in a business is

to sell. You are selling yourself. You are selling your team. You are selling the product. You are selling the opportunity. You are constantly selling in any successful role. And so why do we think that we shouldn't allow people to hone that skill set to develop that, to overcome that negative mindset? To me, it just demonstrates that a company isn't really willing to have harder conversations about what true value creation looks like in a business. True value is

being able to overcome things that you're uncomfortable with. In my head of product cannot figure out how to intelligently speak and talk to the value proposition of our organization to a potential client. They're not the right product officer inside our organization. They can go work. They can work for Facebook. They can work for some other place. They are not the right person for us because we want people. I want that product officer to be able to sell

to me why I should listen to their idea. If they can't do that with me and they can't do that with a customer, they're not the right person.

to any company. And I mean, there's not a hard and fast rule, but go have a conversation between a CRO and a CTO. And it's like they're speaking different

languages from different planets and there's no cohesion. And I think it actually really inhibits I mean, I've been on I've been on zoom calls where CTO refuses to even turn on a camera or does like work until four in the morning so they don't show up for morning meetings, like, like just completely different cultures, and you end up disrespecting each other and you end up making all of your jobs harder, too. It's worked well. I'm assuming.

make that the DNA of the company. I don't want to hear the conversation between the CRO and the CTO having their like, fiefdoms. And I'm going to be in my side and our team is going to be against you. We are one team. We are one team that has one expectation. And if you the further you get from why the business exists, which is to sell customers, to move the business forward and ideally offer a great product

and service, a solution to their problem. The further you get from that, you spend time and your executives spend time dealing with this bullshit of different opinions. How we're going to work in certain ways. So us ingraining this into our culture. Sure, we've had people that don't want to be a part of it that has not stopped us from growing. We will find people who are interested and are okay with this, and it's the way that

we want our culture to be created. And so maybe for the business owner or the the listener who's in an organization right now, you're like, this could never fly inside our business. You have to ask yourself, why? Why would this not work inside your organization? Who would you be pissing off? And when you think about those individuals, it's likely a handful of people. It's not a groups of people. It's a handful of people.

those skills? We're we're letting the person who sleeps in until 4:00 doesn't show up to team meetings. Setting the worst example. But they're supposed to be helping the people underneath them get to the next level of success. It's very unlikely that those people are actually going to be able to develop the right skills, because they don't have a leader who's focused on the right things. If you focus on the right things sales, the business growth through sales,

it doesn't grow through anything else. There's no magical thing that happens that doesn't allow the business to grow through sales. If we're not teaching that to people, we're actually doing them a disservice and not teaching them what the value is of their role, regardless of their in HR, accounting, tech, whatever.

And basically you're cannibalizing yourself or you're competing yourself or you're you're you have two similar products and tech is pushing one, and then marketing is pushing one. And it's just messy. It's very messy. If everybody feels like like a fiefdom, I love that, like everybody is sort of king of their own little part of the business. Um, it creates a ton of mess and it will only get worse, and it'll make everything more difficult to scale

as you grow. And I think that this is probably why now I'm unpacking why you've been able to grow so quickly. You focus on cohesion. You focus on everyone in the brand. Being an evangelist, you focus on being a people first business, but you're doing it and you found ways to build process around it. Even at $1 billion, assets under management, even with hundreds of millions of dollars in revenue. So I think a lot of people start out with the right intentions, but I think as they grow,

I think they lose sight. And then the corporate America example is what happens, not the Cardone Ventures, Cardone Capital Cardone example, which is really what you're trying to preserve. So you don't sacrifice that at the for the sake of scale and growth for sure.

that is not in alignment with who I am. If you can do that with your first 50 team members and have your leaders be the type of people that actually represent your brand and that you like working with, and that are an example of what you want. Future team members, your 200th team member, your 500 team member to be like, if that's not how you feel about your first 50 team members, then keep weeding out the

people that you are being reasonable with. So you keep this philosophy of I'm going to be unreasonable because then when you have those people, those first 50 people, they will help you scale and grow the departments the right way.

But if you start being reasonable with your fifth employee, and people become reasonable for all sorts of reasons, because they don't think they can find better people, they think that the problems that Bob has are better than the unknown problems that Joe is going to bring in the business. They don't think that there's enough talent. They hear these stories like what your friends were telling you about somebody in their second week, renegotiating their salary, like all of

these random things in a business happen. But you have to stay true to this is what I'm trying to build. These are the people I want to spend my time around. If you do not fit this, I am confident that I will find somebody who will. So no thank you, thank you, but no thank you. I'm going to replace you with somebody who is in alignment with what I

want this business to look like. And if you can stick to that early on as a small business owner, you'll be able to have the confidence to reset with a problematic CRO and CTO because it's just the same thing on a larger scale and with more team members, I love this. Um.

And they're like, in the thick of it. And if I could include anything which I still technically can because the resources can be added and changed, I would just give more tangible examples of what success looks like with metrics tracking, because it's not the same across every single business. And so I'm a big visual learner. I think a lot of times business owners get confused because something doesn't instantly apply to their business, and they can't contextualize how

it could apply to their business. And so they just don't do the thing. Like they don't understand what a PNL is. And so they kind of always push this thing off because they, they don't understand this one word. And all of a sudden they're now operating a business without financials. And so as I was teaching this content this weekend, we had different groups of people in the room.

And I was like, man, I would love to give the example of a quarterly team meeting for a business services organization versus an HVAC business, because there are nuances in building out a library of more tangible things that people can really see, like, aha, that's me, I'm going to pick this resource. I'm a super tactical person. The book is super tactical. I want to just give all of the solutions for people to be able to implement.

And when I look back on it, I'm like, oh, there's still so many more examples that I can give. So I probably am going to actually add more resources to the book.

quarterly meeting? What's the point of an annual meeting if you were going to look at all the different metrics and things that people should look at as a business owner, maybe just very briefly, because obviously they're going to go to the book to get a lot more nuance. What are the main things that are important? What are the things that maybe can be pushed off even until the $8 million break point? Mhm.

of your business. You don't have to look at them weekly if you're looking at them daily and when you're looking at them daily. I wrap this into a daily alt meeting because from my standpoint, if you're a 15 team HVAC business and you're doing 1 million or 1 million and a half dollars in revenue, you're going to know what's working so fast. If you're looking at the daily change, it's not it doesn't take a rocket science to figure out, oh, we got all of these leads yesterday.

What did we do right yesterday? Oh, we didn't get very many leads yesterday. What happened was something broken was something not connected. You're so much more in tune with looking at and understanding what's happening in your business when you're actually doing this daily. And it's a practice that if you wait until your financials come back to you a month later, you're not actually able to impact revenue,

you're not able to make a change. And I strongly encourage business owners to schedule their day around what's happening inside the business. How am I looking at these daily metrics? How do I have time for myself and the key people that I'm dependent upon to make a change that day based off of what's not working any longer? If something didn't work yesterday, how am I making time for my day today to fix or to look at what's not working any longer. Because how many days am I

going to go? How many weeks? How many months am I going to go before I realize that the leads aren't connected, or that my sales person is reading the wrong script and their conversions are going around or are going down? The smaller you are, the more easy it is to be able to see those things that are working and aren't working. Do less of the things that aren't working, do more of the things that are working and you're going to be able to make time for

making those tweaks quickly. If you're looking at those numbers every single day, it's not metrics for metrics sake, it's metrics so that I can actually reorganize my day, not to fight fires, not to deal with the BS that my team has created on some issue. It's to actually fix something that's not working.

doing more of that? And then there's obviously time to look into the future and to say, okay, how are we strategically planning and how are we fixing things and what are where are we going and how are we aligning the initiatives with that stuff? That stuff needs to happen.

But most business owners, in order to get from 1 million or 3 million and actually hit an 8 million or 10 million or $15 million target, they have to pay attention to what's actually happening in their business today, not future casting and shiny penning all of the different initiatives that could be happening right.

six years ago, eight years ago. I had no confidence because every time I would get into a room after I had this horrible, nightmarish public speaking event, this like thing would happen in my brain where I would hear 15 different voices all at the same time. And instead of being able to communicate what I wanted to communicate, 15 different people were talking to me. And like, I almost couldn't hear my own thoughts. And so I worked

with a speaking coach. I when you talk about reps, like I put in reps for every opportunity I could get to make a toast, to host a group meeting to record myself. I would do that so I could get over this thing that was happening to me. And the craziest thing happened ten or maybe even five minutes in where that took place. And I thought that I

was over that. And what I want to share with the audience through this podcast experience is even when you think you've gotten good at something, you might not be so good at that thing, and you're never over those pieces that you're worried about or might have had insecurity about years ago. And so this game of creating a business and being a public speaker and figuring out how to get confidence and figuring out how to host a podcast or launch a social media platform, whatever it is,

it is a continuous, evolving learning opportunity. And when you make mistakes or when you mess something up, it's so easy to just like internalize. And I think that this is one of my superpowers. Even with the book, there are tons of things that after you hit publish, you're like, I want to fix it and I want to do more. But that's the exact thing that I think plagues people and stops them is they get so caught up in,

I want to do more. I have to perfect it, or they're so hard on themselves that they don't just keep moving forward and they don't figure out how to overcome from a mindset standpoint, those those moments where they're embarrassed or frustrated or disappointed in themselves. And so we didn't talk too much about mindset things. But I know I'm going to rewatch this podcast. I'm going to listen to the podcast and be like, man, what happened there?

And how could I have done that differently? But at the same time, five years ago, I would have just beaten myself up for this like thing that I perceive I can't control. Of course I can control it, I know I can, but in the moment it feels like it's uncontrollable and that just urging the person that's listening to this right now, that if you're struggling through something where you're feeling like you have to take two steps back and you just continue to take two steps, two

steps back, it's okay that that happens to you. It's okay that there are moments where you're not perfect. You just have to keep going on with the thing, and you have to just keep remembering that the target is. In this case, it's the finished podcast, right? But in a bigger things in life, it's making sure that the perfection that you want isn't the thing that actually stops you from continuing to move forward.

But the thing is, when we get this panic attack, if we don't know that it's actually a natural response to being put on stage or being put on the spot, we we think there's something wrong with us. And then we'll be thinking about that thing as opposed to like, what we're actually trying to do. And it will actually we will create this, this mindset where we keep thinking it's happening to us even though it's not. Yep. And

we'll keep stumbling. We'll keep and and you can usually for me at least, I can tell when I'm stressed out about something because my mouth gets dry. That's like the one sign now by doing it 500 times or by speaking on stage, not 500 times, but enough, um, I can perform through it. But that's again, just because of doing the reps. It's 100% doing the reps.

the scrapbooking, which sounds ridiculous. But today you see people who have built $1 million or $10 million or $100 million scrapbooking business because they were just really passionate and into that thing. And so for so long, I really felt like I held myself back, especially at the age of 20, from going all in on the things that interested me, because I was fearful and insecure and really

worried about what other people think. And today, the interests and passions that I have, I'm like, I'm crazy and a freak and a fanatic about those things. And I slowed my growth by 8 to 10 years by not having that mentality a lot sooner. I love.