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Welcome to the future and welcome to the Shadow Podcast with KP Ready .
So , scrolling through LinkedIn and I came across this post where you typed words matter . So I thought I would uh , I'd read part of this , or maybe I'll . It's not a long post . Maybe I'll read the whole post and then we could unpack it . And if you're new to the podcast , this is what we do . If you're not following KP Ready on LinkedIn , you should .
His posts are thought-provoking , they're pot-stirring . If you're in the built environment , the world of the built environment architecture , engineering , construction , real estate you should follow KP . And this is your opportunity to find out what's going on in KP's brain as he's conjuring up some of these posts . So here it goes . Words matter .
When I ask how big is your company ? No-transcript , rarely do I hear 100 million per year of revenue with 40% gross margin and 10 million in EBITDA . The above are just examples .
Ignore the numbers and you go on to say the vocabulary that we use to describe our businesses , except for the last one , are all the indicators of what we think success looks like for our business . The last one is all that matters .
So I hear examples like that all the time and I'm guessing that anybody that's listening to this right now goes yep , I've heard that , or yep , I've said that , something along those lines . So , as you were , you logged into LinkedIn . You're getting ready to post something . What inspired you to type this post that starts out . Words matter .
Well . So I think there's a couple things . One I I don't . I'm not suggesting we walk around with t-shirts that show our financial information . That's not the suggestion .
The suggestion is that if you walk around and talk about how many employees you have as a definition , like a mathematical definition of your business , over time that gets ensconced into the culture and therefore every decision you make becomes around hiring people , because that is the status oh , we're about to hit 500 people , like .
So someone's running out trying to hire someone to hit 500 people . Right , it's not , because that's what the business is . So it's this extrapolation of financial information where people are like I'm not going to share my financial information , but I have to have a way of communicating it .
But what I find interesting is um , engineering and architecture firms are a people business . Construction companies are a people business . Yet when , at when , you ask them how much , how big are you ? The design professionals will always say people and the contractors will always say dollars in construction revenue . So you ask yourself why ? Why do they do that ?
And I think it's because maybe the design professionals are very focused on how many people they have , because it's about timesheets , it's about converting and arbitraging what you pay people and what you charge them out with . That is the business model . So therefore , that's what you track A contractor .
You can do a billion dollars in construction as a contractor with maybe 100 people . That doesn't tell me enough . Another firm might do 10 million with 100 people . You know , it's just .
It's really hard to know and they view that as the when you know when people are high fiving each other , they're high fiving each other about that new project and how many hundreds of millions it added to their backlog . So I think those words drive over time .
What is important , what is success , and when you think about business transformation and how I want to think about transforming my business , if I get stuck in a rubric like number of people , you , you're gonna have a hard time getting out of it . I see this other one in the real estate world like billions of transactions , billion dollars in transactions .
Well , what they don't tell you is they made 10 bucks a transaction , right , it's like great . I had someone pitch me the other day oh , we did a billion in transactions , kp . I'm like then why are you raising money ? Well , you know we get a penny a transaction or something like some absurd little amount .
So that billion in transactions translate to $50,000 a year in revenue . That's like a big , so what ? Right ? But they love running around saying a billion . So it can be used one . It can be an anchor to how you set your culture . It can also be a way to embellish your success . You know it's I always say it's .
It's kind of like you know , going to the gym . I mean , I spend three hours a day in the gym every day .
Well , you spend your time looking at the mirror and listening to the podcast and talking to people he didn't actually work out , right , it's , it's not the metric , no , no , um , you know , um trainer is gauging the success of their client by how much time they spend in the gym , and so I think there's just this idea of like you build these ideas and these
words and then you propagate them over and over again , and that is what defines your culture , which is a huge part . It's a massive boat anchor to innovation yeah , yeah .
So play devil's advocate a little bit , maybe . You know , when you talk about architecture engineers , you're exactly right , that's , that's that's how they talk about their size . Part of that may be , you know , the contractor says , well , you know , $10 billion in construction .
The architect doesn't think about it that way because they get a very , you know , much smaller percentage of the revenue of that than the contractor does .
But when it comes down , you know , and this , this , I think , is super danger zone right , this is the way we've always done it , which , to your point , that's that hinders renovation or not renovation , innovation every day . When it comes down to the point , you you mentioned culture . It's culture of the profession .
Right , this is the way we talk about an engineering firm . This is the way we talk about an architecture firm . It's 360 architects or it's a thousand engineers ? Do we have to turn around ? Does ? Does the engineering firm have to turn around and buck that system ? Um , break , break . That culture of the profession is that .
Is that the point , or part of the point ? The entire ?
okay . So in a construct where I go give all these talks , right , and people ask me about ai and I'm like , yes , ai will transform the industry , and the first place they go to is , oh , you mean we're going to have less people , it doesn't go to . I mean , that's fantastic . We're going to be able to do even more intricate designs .
We're going to be able to do a lot more differentiated projects . Maybe we only do museums and the museum business is slow , but AI will help us get the skill sets to move into sports arenas . Right , there's no thinking about this . Technology is going to allow us expand our business . The immediate thinking is oh , how many jobs is going to get rid of ?
Yeah , I don't know that contractors are thinking that . Contractors aren't saying , oh , ai is going to get rid of a bunch of our people . Ai saying they're saying AI is going to get rid of a bunch of our people . No-transcript . It's going to help us attain more construction backlog .
We'll be able to bid on more projects , and if you correlate those two , they're rooted back into how do you define a business . If an architecture firm defines themselves by how many people they have , ai as a disruptor means we're going to have less people , whereas a contractor is not saying , oh , ai is going to have us do less business .
Oh , we can do twice the amount of work with the same people .
Yeah , it's driving a mindset 100% . Yeah 100% . Yeah , yeah . We see that a lot . I've seen that in past lives , consulting with firms like that oh , we can't compete for this project because we only have x number and you know the , the our competitors have twice that many , or something like that .
It , there's no thought about capability , there's no thought about creativity or anything , it's just the , it's the number and it is driving that mindset I think when I was younger , we had a um , not a software development firm and I was like notorious for taking the wind out of my salespeople's sales because they'd come in .
Hey , we just sold this project and let me tell you all about like they would tell me all about like how amazing the project was . I was like how much ? When do we get paid ? And they would just be like , dude , like I'm trying to tell you about like this amazing project I just went . I was like how much , and when's the wire coming in ?
yeah and it was like , like it's like you don't even care . I'm like , oh , I care , but the first set of questions is more important to me . Then , once you tell me that I do want to hear about the project , I do want to hear about the project . You know my son's doing midterms right now . I don't ask him like how do you feel my hand ? How'd that go ?
You get a pass . How'd it go ? I feel my hand , how'd that go ? You get a pass . Like how'd it go . I don't say like hey , was it hard , how did you feel about ? Like I'm asking him those questions . So I think , unfortunately , like I might now , if he's like oh , dad , I think I got a d . I'm like , oh well , that feels pretty terrible .
But the facts that matter to me are much more binary in nature , but I do think how that drives . I think it really tells you a lot about how people think , about what's important and what the incentives are yeah , yeah , I mean that's you start the post with .
words matter and I think that's that hits the nail on the head , right . That's driving the mindset . And you know , if someone doesn't agree that , that , that the 100 million year of revenue and 40% gross margin , 10 million if they don't agree that that's what matters , well , that's a that's a different conversation .
But the mindset that is set up by the words is driving you in a certain direction and that's really why I appreciate this post . It develops , it creates your focus . And is that a focus that ultimately matters in the livelihood of your business , the success of your business ? Well , that might be the conversation for another podcast , but this is a good one .
If you don't follow KP , it's K period , P period , ready R-E-D-D-Y on LinkedIn . A lot of great posts , a lot of very insightful business technology innovation posts . They're going to make you think . That's why KP and I come here to unpack KP , unpack the brain of KP and figure out what it is that's inspiring the posts that he's making .
And so this one , as it starts out , as I said , it starts out , words matter . When I ask how big is your company , some of the common answers are you should check it out . Thanks for listening to us . Kp Thanks for unpacking this for us and we'll be back for another Unpacking KP next week .
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