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[00:00:05] We run this show every week and we’ve done it now for a boat. I don’t know, seven months now. And we have dozens of episodes that have been recorded, really phenomenal episodes that you can check out. And I’m just going to pin a link at the top of the room.

[00:00:25] Www.startup.club, if you haven’t already done so you can actually join the mailing list, but you can check out if you go there and you click on recordings and you click on the serial entrepreneur hour, you can see the 20 or so or 30 recordings that we’ve done. We’ve covered topics, everything from exiting your business to scaling your business.

[00:00:48] We’ve had speakers like Fern, Harnish, and Patrick Theon, and we’ve had serial entrepreneurs come on and speak and talk to us because this show is all about what does it take for an entrepreneur to start scale, exit, and repeat that process over and over and over again. What is that secret formula? You know, is it dumb luck?

[00:01:17] Is it skilled or is there some formula that exists out there that we can learn that help increase our chances of starting scaling and exiting a business? Well, that’s what the show is all about. Uh, today’s episode, we are doing an open mic today. So if you’re in the audience, say guy got to get you on stage.

[00:01:38] He’s our co-host today, guys. Thank you for coming in. Sorry about the. Um, we’re talking about today. Why entrepreneurs fail to scale? There are 28 million small businesses in the United States. 99% of small businesses are small and do not scale to become larger businesses. Now, why is that? Why is it that only 1% breakthrough?

[00:02:04] And, uh, we have guy Cooper here today as well, who is a consultant, a sales consultant. And we’ve, he’s joined us on a number of, uh, episodes over the last few weeks. And he’s helped us out. He was the one who came up with the idea of this topic about three or four weeks ago. If you’re a serial entrepreneur, you’re in the audience, time to raise your hand, time to come up here and tell us your theory as to why you think.

[00:02:29] Small businesses fail to scale. They failed to become big businesses. And let me tell you this I’ve run about a dozen businesses in my lifetime and the small ones are just as much work as the larger ones. In fact, I would argue they’re arguably more work involved for the entrepreneur because you don’t have the leadership team around you to help, um, help lift some of the work that you need to do, uh, in, in these companies.

[00:02:54] So small business can be very, very. All right today, our lead moderator is Michelle van Tilburg. I’m calling C Campbell and we have Jeffrey sass. Take it away, Michelle. Thank you so much, you know, I’m particularly excited about this topic. It can be a real challenge that actually will, could just bankrupt you if you’re unable to scale.

[00:03:19] So I I’m challenging, um, those in the. To think of scaling on many different, in many different facets. It could be failure, for example, to be able to raise more funding or initial funding, pasture, initial prototype. So it could be you failed to scale because you cannot raise capital. Cannot bring in and convince new investors.

[00:03:48] Failing to scale may be that you’re unable to acquire more customers in a cost effective manner. So in other words, your lifetime value of your customers, um, does not, it’s not less, I’m sorry. It’s not more than your acquisition costs. That could be another area. That could prevent you from scaling. Um, additionally, it could be employees you’re unable to attract and hire the right customers.

[00:04:20] It could be your executive staff, maybe your CEO or your, you know, your C-level team, whatever you might not even go that fancy with titles as you’re scaling, but maybe you don’t have the right talent to move you to the next level or. It could be, you can’t get, you know, and these times we’re having a lot of these, um, um, issues.

[00:04:43] It could be that you can’t, you can’t get inventory or it’s too expensive, the inventory, and you can’t sell it at an, at a means that people will convert and buy. So there’s a lot of different facets to scale. It’s not just, oh, I, you know, don’t have enough money and I can’t grow enough. You have to really look at all the components, human and non-human to really be able to scale and get that formula.

[00:05:12] Right. But before we start and before, um, folks in the audience speak are more people here on the stage. Uh, please remember that we are recording the session. So when you do come to the stage, you are consenting to speak. All right. You know, Jeff, I know that you’ve run lots of new businesses it’s successful and you know, maybe otherwise, right.

[00:05:37] It happens to all of us. Um, I’d love to hear a story that you have first. Yeah. Uh, thanks. Uh, thanks, Michelle. And just as a, as a reminder, we are recording this show. So if you do participate, you are, um, you are giving us permission to record you and I give you permission to record me. Um, yeah. You know, scaling, you mentioned, you know, all the different ways you can fail to scale.

[00:06:03] And I think, you know, one of the key things and, and, you know, Uh, Colin talks about it a lot is, is also to scale a business. You have to understand processes and for a startup, you know, getting to that stage where you start to. Develop processes, um, is sometimes difficult because, you know, in the early days you were a handful of people, sometimes it’s just you and your founder, as it was with, um, a couple of the companies that I started you, um, everyone’s doing everything and you kind of just more reactive than proactive.

[00:06:35] And when it gets time to really scale your business, it’s time to kind of step back, look at what you’re doing and what’s working how you are acquiring customers. How are you growing your revenue and how can you. Back into a process for that, so that it can be scaled so that you can add staff to it and they can repeat what you know, already works so that you can scale it.

[00:06:57] So I think, you know, stepping back from the craziness of getting launched and figuring out what aspects of the business you can turn into, uh, processes. Is really important. And, and, um, and it’s hard, you know, sometimes on the sales side too, you know, it’s really interesting depending on your business or product.

[00:07:16] I remember once going to talking to a company many years ago, um, that we were interested in, in partnering with and the CEO of that company had broken down his sales process. To such a granular level. It was really, really impressive. Like he knew exactly. He said, if we want to grow our revenue by X, here’s all I need to do.

[00:07:38] I hire three more salespeople because I know if they make this number of calls a day, talk to this many people, they’re going to get this much revenue. And he had it exactly broken down to a science. And I was always very impressed and quite frankly, never able to replicate. Uh, a sales process as accurately and as detailed as he had.

[00:07:57] So thinking about your processes is really important, um, when it comes to scaling your business, I’m Jeffrey and I’m done. Yes. Interesting. I think we should, uh, I know like last week we kicked it off with like the personality of the entrepreneur dive, remember that, but this time Jeff sort sorta kicked it off with processes and systems.

[00:08:15] So what are the types of processes and systems that startups can use to scale their business? That they often don’t use. Um, maybe guy, you could come up with something there. I will say that when, uh, I was at, um, Hostopia, uh, we began to implement goal setting. I brought in a CEO coach and before that the wheels were coming off the bus, we had, you know, everyone was going in different directions.

[00:08:44] And then we, we began to implement, um, two days of strategic planning, 90 days of execution. And, uh, goal setting three to five measurable goals per person, per executive. Um, and then three to five measurable goals for the, for the company for that quarter. And what that did is it really brought everyone into alignment.

[00:09:05] And I thought that like that for us was probably a game changer because I think as entrepreneurs, when we start our businesses, we really, you know, we have a lot of energy. We have a lot of, we have, you know, what it takes to get that business to a certain. But then you start to get to a point and things just start to break.

[00:09:26] We had 600 employees and the wheels were falling off the bus. And until I brought in a CEO coach and implemented a number of systems, um, we weren’t able to move forward. And, uh, so it’s very critical to do that. And I think goal setting. So maybe we could just, just go around and, and, um, Michelle or a guy or George, if you have a thought about, you know, what kind of systems you can implement to help scale your business.

[00:09:52] Collin, I love that as far as the goal setting and just hearing the, uh, the numbers on how that really enhanced their company and have to process. So for me, I was in a very, I had an auto service. And so I was in a very antagonistic, um, type of company where it’s not like you’re going to get baked goods or going to get a nice new pair of shoes.

[00:10:15] Nobody really wants to come and get their vehicle repaired. So when they came in my door, um, they came in, um, I was the bad guy at some level because it’s like, you know, you’re going to try to rip me off. Is this surface? Not that it’d be. Expected or are you going to meet my needs or not? So what am I saying?

[00:10:40] Um, uh, I’m sorry, my phone rang and I lost my train of thought. Give me a second. Yeah, we did lose it for a second. So just repeat that. Yep. Yep. Um, so for me in that, the initial process was how do I, how do I intake client? And, and so two things, one, you know, I set up an intake process for my clients. And that’s part of why I’m doing what I do now, where I was able to license that process, uh, and AAA and other companies or whatever, but that was successful.

[00:11:14] But what I didn’t do well, and what you just stayed at Collin is I didn’t set up good processes with my people. You know, I onboarded my clients, but I didn’t own board people or know how to retain people. Well, and I want to just talk about that. It’s worked as far as the intake for the client. So, um, because people came in the door.

[00:11:39] Necessarily partnered in the process. They didn’t know whether we were a good guy or bad guy, so to speak. Um, I had a form that you would fill out, like being a doctor. So I had an intake form where you had to fill out, you know, what’s, what’s the concern that you put your vehicle in. And then how long have you lived with that concern?

[00:11:56] And I asked a number of questions from there. And in that intake process, what would happen is we immediately became a partner with our client where they wrote out and, and we, we had the pastor and I taught my people. We had the pasta. You don’t have to understand. You don’t have to know what’s wrong. All we want you to do is to say, you know, what type of concern that you have and when you do that, you know, we’re going to move to understand it.

[00:12:20] So now we’re, we’re sad, sad, last side-by-side side. We can to really move to understand our client. Our clients love that process. And, you know, as I said, in other, uh, yesterday on the show with, with us sharing. One bottom feeders came in. What’s a bottom feeder, a bottom theater, some the cook point criminal ICAN artists that that wants to get over.

[00:12:44] They want something for nothing. So this, this process weeded out the bottom feeders. And let me just share that little nugget. So in the first question, You know, why’d you bring your car in? The second question is how long have you lived with these concerns? Well, if what you said is I bought my client for a check engine light, and then you said, I had this problem for a year then automatically my team would know that you’re probably coming in and our state in Maryland for a missions.

[00:13:12] Right. Um, so, you know, so why did you come in now? Because if you, if you’ve had this for a year and you’re bringing it now, You know, why is that we’re going to really dive in and dig there. So we make sure we’re on the same page in that process. So this process really weeded out what I would call the bottom feeders really onboarded our clients.

[00:13:32] But, but with that, I didn’t do that so well. And taking care of my people. I had a plan on how my people were, my team was going to take care of my client and this, but not how I took care of my people. And I ended. Up in that process because I didn’t have solid processes in the beginning to include myself much burnout in that process.

[00:13:54] So I’ve gotten, I’ve done speeding. It’s almost like, I don’t know if you’ve ever read the E-Myth and anyone here in the audience. I mean, it was thinking about systems and scaling. Um, they almost put processes and systems over people and I don’t think you’d ever put anything over people. I think, you know, people are your keys.

[00:14:13] Yeah, the core team around you, but more often than not, when somebody leaves your organization, if you don’t have the right processes and handoff to the new person who takes on that role, the whole organization can just suffer. And when you start, you know, it’s one thing when you have 10 employees, it’s another thing when you get to a hundred, it’s another thing we get taught that.

[00:14:36] And so the E-Myth really talks a lot about building systems and putting them in place so that you don’t rely on those people as much. Don’t get me wrong. People are definitely your number one asset in any organization. Any thoughts on that? Um, Lee, Joe, we asked you to come on stage to, I saw you in the audience.

[00:14:55] It was very interesting. I don’t know if you want to add any thoughts to that, or if you have any, any other reasons why you think entrepreneurs failed?

[00:15:06] If I’m pronouncing your name, right? I’m sorry. you’re on mute or Linda.

[00:15:16] Yeah, I I’m just gonna, you know, dive into what we’re saying a little bit more here. In terms of processes and people, um, you know, I’m not sure if anyone in the audience has studied is called the capability maturity model. I think it’s out of Carnegie Mellon, but they do an amazing job of breaking it down because the processes and the people that you need, oftentimes in the initial stages, Is much different than it is in stage 2, 3, 4 0 5.

[00:15:52] So I think one of the key things here is processes take a while to develop some sometimes. Obviously, you don’t want it to get shoved to the back. It should be in the forefront, but I think it’s important to realize where you are and, you know, see people so to speak at the right position at the table as you grow that comanage those more complex processes.

[00:16:20] Um, one thing that I’ve experienced and even I tried to push when I was younger at companies is to kind of go from like zero to five. And skipping all those in between steps. Like I would have these great ideas about these very sophisticated systems and processes, but I quickly realized, like that was the wrong thing for the organization.

[00:16:43] You know, we didn’t know that we were going down the wrong path and B we didn’t, you know, we didn’t have, you know, the skillset to develop nor the money to develop those kinds of more, um, you know, heavy automation kind of backend systems or processes. So I think as important as a startup. And I know this happens to people like myself and probably people that are, you know, technical and analytical.

[00:17:15] Like you kind of want to skip a bunch of steps, but sometimes you do call and I would have to say, have to throw a little bit of manpower in there and do it yourself a bit and really learn what it is you need and make sure that you’re putting your resources. Right. That’s another thing, are you managing your resources correctly?

[00:17:34] Because you can build the best darn processes ever. But if it’s not really moving the company forward, then you’ve just wasted a lot of valuable resources, money, time, and people, I don’t know college. Yeah. And, um, yeah, the other one that I was thinking about the other key one is, is leading indicators or leading KPIs, key performance indicators.

[00:17:58] You know, a lot of us don’t have those actually set up in our company and, and it takes probably about a 15. You know, sit down 15 minutes with your team, figure out what are those leading indicators guy? I think you talked about Jeff, you talked about that sales process and how, you know, X number of phone calls per day.

[00:18:18] So is that a leading indicator? We know that we have to hit a hundred phone calls per day or 10 meetings per day, or, um, we know we have to hit an average user, uh, average cost of acquisition. You know, especially if you get into a recurring revenue businesses, understanding your cost of acquisition, that’s a popular leading indicator because then you know exactly what it costs to acquire that customer.

[00:18:43] And then how much, uh, money you invest will get you to X. So these KPIs, they can also, there’s like without KPIs, you’re flying blind. You’re a plane in the, in the fog with no radar. And, uh, as a company. If you have great KPIs, you can actually begin to sense the problems or understand where issues are going to occur before they occur.

[00:19:08] So I think that’s part of the systems as well, probably even in the startup phase. KPIs are important. Any other thoughts from a team here? Anyone on stage Linda? Yes. Hi. Um, to both your point, Colin and Michelle. Um, in my experience in a startup I worked out with before was that we’re acquiring customers.

[00:19:29] Too quickly. And then we didn’t have the, um, the technical team to implement and develop the projects on time, which then meant there was an issue with billing. So, um, then scaling became a problem because yes, you’ve got these customers, but because you can’t deliver what they need in time, they, they, they then can’t pay you on time.

[00:19:56] At the same time the company wanted to open international offices. Now it means that you’ve got, you know, staff in different places at a project for not being, um, coordinated effectively. So that is my experience with the issue of, uh,

[00:20:16] Yeah, that’s a great point, Linda, because sometimes if you scale one aspect of your business too soon, it can actually prevent you from scaling the overall business. So too many customers too soon, when you don’t have the resources or the infrastructure to support them can actually prevent you from scaling your business.

[00:20:36] So, so, um, really. Important to understand how all of the pieces and all the levers fit together so that, you know, if you’re going to move one lever up, is it going to cause problems in another area of your business? And you have to manage scaling across the whole enterprise and make sure that you can scale, um, not only your, your customers and your revenue, but the infrastructure you need to support them.

[00:21:04] Sorry. I spoke over Cornyn. Yeah. That caused a problem for me because I was in charge of business development. So I thought I was doing a fantastic job, getting all these new clients, but then everyone is now upset because we can’t provide what we were supposed to provide, um, is a good position to be in.

[00:21:20] But, um, not for a long time, because then they complaints are mute now. So Colin can continue with what he was about to say. I was going to say that, um, I’m in, I’m involved in a company. Gigs for less and they have one 800 programmers and it’s an outsourcing company and we’ve been doing it now for almost 20 years.

[00:21:42] The CEO and my business partner, um, insists on not hiring Linda and BD. You know, he really does not want to hire salespeople. He really wants a controlled growth and he’s done very well. Um, and he’s done it through relationships and delivering quality services versus what I’ve done in other companies where I’m not saying we don’t do those things as well, but I, but I have hired salespeople at Hostopia.

[00:22:11] It was all, you get a sales team of about 10 people. And, uh, so I, it really is interesting that you bring that up. Like, can you grow too fast? And can that actually hurt that cannot actually hurt your ability to ultimately scale and build sustainable. Yeah, I would say you can, you can actually grow yourself to failure, right?

[00:22:34] Because if you’re a demand, for example, also outpaces your, um, supply. You could be in a world. And get a horrible reputation before you even get off the ground or you build this fantastic product, but you didn’t take time, you know, to see if he could actually produce it or any legal issues. There’s a lot of way Sprite to like grow yourself to failure.

[00:23:00] But Linda, it makes me feel like, you know, you’re bringing up a good point here, like communication. Within those departments. And gosh, I remember at the beginning of my career, working for big companies, you know, fortune 500 companies, like we always were trying to address this problem of silos, but it’s such a dangerous thing as, as you described so correctly, Linda, when the, you know, business development.

[00:23:31] Was not fully in the loop with whatever your dev team or your R and D team like that’s wow. That kids that could just like bring a company down to its knees. So we always like to say, you know, when you’re having these important meetings and it doesn’t even have to be a super important meeting, but ongoing meetings, like who needs to be setting up the table.

[00:23:54] And when I say, who needs to be sitting at the table, I’m not talking about the people. Who is representing each of those functional areas and them understanding that they’re there for, you know, obviously their input, but they’re there to also go back and prepare and communicate to the team if they don’t do that, you know, you’re just could possibly be looking at an epic failure.

[00:24:23] Yeah, I agree. And I think for me that was a learning experience because I wasn’t not yet. And then also then the experience helped me because it then taught me to ask the right questions. So in my subsequent role, heading up business development, I was able to ask the manufacturing team, the R and D department, if we had a sufficient amount of product so that if we want to contract, we had sufficient material, but also the relevant team to, um, to do the project, uh, integration.

[00:24:54] So once I, once I was able to ask those questions, then the problem went away because ultimately customers do want, I mean, companies do want customers because they want to grow, but it’s just a case of making sure that, um, everything, everyone is singing from the same hymn sheet. So R and D manufacturing, sales, and finance.

[00:25:14] So once you can do that, then, um, yeah, things a bit.

[00:25:24] Well, I know someone had mentioned earlier about, I think we, they feel like we covered systems really well. Um, but if you fail to hire the right people or for that matter, if you fail to fire the people who aren’t capable of handling that position anymore, that can also block you. I mean, the reality is you’re a small business.

[00:25:46] These are people you’ve known from the beginning, and they’ve helped to get you to where you are today, but they may not be able to help get you to where you need to be. I know Jack Walch, I love his one of his lines. When he says hire people with runway and runway doesn’t mean you go and hire someone working at a fortune 1000 company and bring them into a company with, you know, 10, a million dollars of revenue.

[00:26:12] In fact, I find that’s actually a formula for disaster. Uh, I believe that you really do have to think in terms of scaling and zeros or expanding a 10 X and hiring people who, for instance, if you’re at a million dollar company and you want to be a $10 million company hire people, who’ve run $10 million companies.

[00:26:32] You know, don’t hire people who are running billion dollar companies, because there’s a really different set of experiences and talents needed to achieve success. At each of the different levels, it’s really is much more of a do it yourself environment, these small businesses, even the ones like we have tremendous talent within our organization here at dock, when we did.club, we had Michelle was running it.

[00:26:57] And Jeff was CMO when I was coming to join the parties here and there. But no I’m teasing, but th but the reality is it was a lot of do it yourself. And so when you hire the right people, You have to think about the size of the company and the experiences they’ve had. And it’s very hard to terminate people who just aren’t cutting it anymore, you know?

[00:27:20] And anyone else have experience in firing having to fire someone to scale your company, your smell? I don’t know if you’ve had an experience like that or a guy you want to chip in here. Linda.

[00:27:36] So one of the things that I, uh, Learned how to do the hard way. I mean, the really hard way is the not really hire people to necessarily do a job, but to hire them, to manage a set of tasks and to, to lay out, you know, what are the measures of performance on those tasks as it comes to, you know, having people under the employ and hiring and firing you’re managing these tasks and.

[00:28:00] Even when you’re hired the day that you can’t manage these tasks, it’s not personal. Um, I have to have somebody to manage these tasks. And so, you know, from that, I got that principle from the military, the military moves into something. They call the leaders in intent where they actually, uh, it’s a three-step process where they’ll tell their, they stay deployed, uh, share with their team, why they’re doing something they’re sharing.

[00:28:25] Well, first off they have the tasks that they’re doing, why they’re doing it and what the end state should look like in that process. Um, and that’s kind of baked in, you know, the job descriptions. That’s big in the policies and procedures. ’cause that’s back then people know the tasks that they’re managing.

[00:28:42] So everybody’s managing some level of something and then you can’t do it that we have to find somebody to, uh, to actually get that done. So that really helped me to be able to terminate people, uh, or have them terminate themselves for not being at a man as though that set of tasks. But it also really helped where teams could actually go in and they could completely exceed your expectations in that process.

[00:29:05] And with that. Because they were aligned with the process that we were moving in front of beginning and throughout the organization. Um, we could, you know, we knew what we stood and they agreed with where we stood. Right. And we had clarity in that. And anytime we didn’t, we could come back to the table and talk about that clarity.

[00:29:24] So we got, we got a chance to get everything we could out of all we had in that process, giving your best friend from college, your, your wife or your spouse. Who’s helped you at all along the way, doing the bookkeeping. And now you need a CPA. Is that, how far are you that ruthless guy? Collins. You broke up.

[00:29:45] I didn’t hear it. I didn’t hear the beginning of what you said. I’m sorry. All you heard is, are you, were that ruthless guy? No, I said you’re your best call? You’re talking about, you know, your best friend from college or your spouse, who’s doing your bookkeeping and now you need a CPA because you want to do, you know, raise money or whatever, you know, are you that ruthless?

[00:30:05] Would you actually take, uh, the people around you that you’re that close to in order to scale your business? No, you know, um, but what I learned and again, the very, very hard way, because in the beginning it was some level of guys where the highway, um, what I learned. That, you know, what’s, what’s, what’s in the way, what is the friction point?

[00:30:29] And, you know, as a leader, leading my people, I had to learn to listen. I had to learn to be able to listen, but you have to set up the rules of engagement for that listening. Right. So, you know, what’s. In the way, what is the friction, but before we get there, you know, this is not a complaining session. We’re not going to complain.

[00:30:46] We’re going to take action. So what’s working and what’s not working and not working as well as you like. And I let my people kind of share some of that. So we could get to where, you know, what’s in our way. And if I found that. Any of the leadership team and even with my clients, um, you know, if the leadership team is in the way or whatever’s in the way at the end of the day, what, what, when did they get to the bottom of, is what is that?

[00:31:11] Because then we go to, how do we get in shape so that we can go forward? Because you talked about KPIs earlier, Colin and love KPIs, but usually KPIs, you know, the top four KPIs are profitablity. Revenue growth, uh, client retention of some store or satisfaction, but they’re all tied to lag measures. It’s all time after the fact, the lead measures in that process as is dialing in and finding out, you know, are there any encumbrances with your people?

[00:31:39] Are there any friction points with your people and with your leadership? Um, and if there is. The bottom of that, because if we can and move to get a shape, now we can go forward, get on the same page and flow. So I would say, no, I’m not, I’m not that ruthless. Uh, but you know, once we dial that in, we’re going to hold people to a standard.

[00:32:01] Um, and yeah, we’re going to have, we’re going to give them an opportunity to, to really, uh, uh, show that they can’t hand manage those tasks.

[00:32:14] Anyone else want his smell? I’m not sort of like pronouncing your name, right? Ishmael is not. Can you help us with your pronunciation? And, uh, do you have, um, you know, a thought about how or why entrepreneurs fail to scale?

[00:32:34] Uh, Eastland? Yes, sir. You right coding and whoa.

[00:32:41] Uh, for a ruin in blue house, interesting room. And I got my two right away with these home. Uh, can you speak a little louder to your phone? We’re having a hard time hearing you. Okay.

[00:33:09] Um, no, we’re not hearing you

[00:33:15] now. It’s very broken up. Yeah. We’ll have to get you just to see if you can’t get into a better, a better location. Um, yeah, so I, I also remember reading Jim Collins book. I love Jim Collins. He did. So many cool things in that book. Good to great. And he talked about getting the right people on the bus, in the right positions.

[00:33:39] And you know, when you begin to grow, you have, everyone’s got core skills and talents that if they applied those core in the area, that that they’re the best at, you could get the most out of your team. But more often than not, we don’t have the right people in the right spots. And I think just sort of identifying, standing back and identifying, you know, what are the positions we need to have today?

[00:34:08] Where, what are those positions going to be? Um, 10 times our size and how do we fill those positions with the people that we have today and the talents we have today, and then who do we have to bring in from the outside? And I just thought that Jim Collins did a great job of summarizing getting the right people on the bus.

[00:34:28] Any other thoughts from the team? Well, a colony, what he talks about too is not just getting the right people on the bus, but getting the right people on the right seat on the bus. So you might have the right people, but you may need to move them around into different roles to really maximize their opportunity to scale the business.

[00:34:46] But it’s interesting. One thing that I was thinking about w w when everyone was talking, isn’t. You know, we talked earlier with Linda about how you can hurt scaling the business by getting too many customers too soon. But another way that companies often fail to sale is fail to scale. Excuse me, especially if you’re in the software or software as a service or any kind of a service businesses by taking.

[00:35:11] Too big a client too soon. And then shifting all the focus of your energy into satisfying that client. If you take on a very big client too soon, who’s paying you a lot of money and is responsible for a big chunk of your revenue. The inclination is to S to change. Product and change your vision to satisfy that company.

[00:35:33] So all of a sudden your, your client who’s, who’s paying you. Lots of money is saying, well, you know, we’d like it better. If the software did this and could you add this feature for us? And you could you do this for us? And all of a sudden. You lose sight of your original vision for your product and you start modifying it, changing it for the needs of this large customer, which may be in fact particular to that customer and not something that you need for your product for everyone else.

[00:36:02] And that can actually hurt your ability to scale the company. Not only from lack of focus, but from. Basically ruining your product because you’ve made it more or less custom for a particular use case of a particular large client, but that not may not serve the larger and broader customer base that you need to really scale your business.

[00:36:23] So there are a lot of complexities in making sure not only the hire the right people, but that you bring on the right customers at the early stages of your business.

[00:36:36] Yeah, I just wanted to make a quick point to your, to your point about the bad people on the bus. So you asked earlier about firing people. I haven’t fired anyone, but I’ve had to effect the fire myself from a startup and leave because we had many talented people, but the one in the right seat. So I knew that we weren’t going to be able to be functional or flourish as a business.

[00:37:01] So. I left the business. I find myself in that scenario. That’s fascinating. You know, so go ahead, Michelle. Yeah, I, I commend you Linda. Like, that’s hard to do you, you, you know, you really checked your ego, so I commend you for that. That, that took a lot of guts. Yeah. Because you know, I like to get things done.

[00:37:25] I like completion. So. There is no point me being in this space, if we can’t, uh, work as a collective, because then you end up going one in stock holes, it becomes toxic and a blame game. I don’t like toxic environments. I like things happy and carefree. So, um, it was better for me to leave with my dignity intact.

[00:37:47] Did you find the company did better after you left or worse? I’m just curious. No, they lost it. Um, maybe like less than a year. And then they just, um, yeah. Stop trading.

[00:38:03] The idea of firing, firing yourself is interesting too, because in some respects, that’s what delegation is all about. Right. Um, you know, one of the big challenges a startup founder has early on is, is learning to let go and to delegate. And you can’t scale scale your business. If you’re not willing to let go and delegate, cause you can’t do everything yourself and you have to be self-aware and fire yourself from the things that you really aren’t the right person to be doing or the best person to be doing and delegate those tasks to someone else and learning how to delegate delegate well is really a super power for an entrepreneur.

[00:38:42] Because if you want to really scale your business, You need to be able to let go of things and, and assign those things, those responsibilities to others, and then trust them, uh, and guide them to do their job so that you can grow the company. So you got to fire yourself, if not completely from you, have, you have to fire yourself from the things that you really shouldn’t be doing.

[00:39:05] That’s interesting. But then if you fire yourself and they screw up, You know, then you’ve made a, I guess that’s the challenge. That’s the real challenge. We talked a lot about that last week. It’s it’s recorded by the way, where if you begin to delegate responsibilities and your team members, um, don’t always do what you want them to do, whether it’s right.

[00:39:31] Or even if it’s wrong. Giving them enough rope giving them enough room to be able to manage that position, manage that responsibility allows you to step up a level so that you’re not always getting into it because one week, cause that is what happens when we start a business. We, the entrepreneur is the dominant individual who is dictating almost every aspect of that business from day one, controlling.

[00:40:01] And the more that entrepreneurs learn to let go, the more their ability to scale the company increases. And I just think that the most challenging part of that is when you, um, you hire a person to run a division or an area of your business, and they’re doing something you don’t agree with is to step back and let them continue to do that.

[00:40:23] And sometimes even fail at that and understand that now, obviously they can not. Make a mistake that would take the company down. So there’s a balance between that, that, that in that equation, any thought, any thoughts from the team here around that? Well, I think, um, you know, a gentleman that I hired to be CEO of a company that I co-founded when, when the board said, you know, the founders had to step aside and we needed to bring in a real senior manager here, he always had a saying, which I think is relevant, Collin, to what you’re talking about.

[00:40:57] Inspect what you expect. So, you know, even though you might delegate responsibilities to someone else, if you’re the CEO or the founder of the company or the principal shareholder. Oh, the chairman of the board, you know, the buck is going to start. With you. So just because you’ve handed off responsibilities to someone doesn’t mean you, you brush your hands completely of it.

[00:41:17] You want to inspect what they’re doing from time to time. You want to guide them and be a coach and a mentor and a leader to ensure them and help them have the success. So, so you can’t just hand things off when you delegate and go lock yourself in a closet and not pay attention to it. You still need to always inspect what you expect from the people that you delegate.

[00:41:41] Jeffrey. I love that inspect what you expect. Patrick Lensioni has written a book, the five dysfunctions of a CEO he’s written many, all of them are pretty dynamic, but in the five dysfunctions of a CEO, if we just kind of reverse engineer what he did there, he kind of gave us the secret on what, what happens if you have an inattention to results.

[00:42:00] Then you probably have some avoidance and accountability somewhere. And if you have that avoidance and accountability, then you probably have a lack of commitment somewhere. And if that’s the case, there’s a fear of conflict. I’ve been able to deal with and get to the root concerns and why something is taking place.

[00:42:17] And if that’s the case, then there’s possibly an absence of trust and trust. It’s basically character and competence. Are you competent enough to do what you say you’re going to do? And you do have the character to do that. And I’ve seen that just all over. Where we’re, there’s an inattention of assaults.

[00:42:31] Usually. Um, the accountability is either not established well enough or maybe there’s not enough accountability there. Um, but I, and I, and I, I think that goes hand in hand with Jim Collins’ book. Good to great, you know, what the right people on the bus and the people in the right seats on the bus as well.

[00:42:46] Um, is those five dysfunctions there? Yeah, that’s another great book. Thanks for reminding us of that one too guy. Um, at this time we have about 15 minutes left of this session. We’d like to reset the room just to reminder, this show is being recorded. So if you have spoken or you come on stage or giving consent, On other news, we have a newly redesigned website@wwstartup.club.

[00:43:21] Um, we’ve, we’re been working really hard back here at headquarters to get all of this amazing content posted to the site. We post the recording. Um, we do blog posts and we’re in the process of also posting the transcripts. So, um, please take advantage of that. Um, there’s lots of great shows, lots of great, um, information.

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[00:44:15] Thanks so much. And, um, back to you, let’s go back to Jeff. Okay. Pack to Jeff. Um, no, I think we’ve covered a lot of stuff both last week. And this week, you know, in terms of the many, many reasons why, uh, entrepreneurs fail to scale, their companies failed to scale. Um, you know, we talked about processes, we talked about people.

[00:44:42] Um, we talked about customers, which is really interesting, cause I think a lot of times people do. I think in those terms and really, um, the business model is another important thing to think about, which we really haven’t talked about is really understanding and finding the right business model is, is going to be an issue.

[00:45:01] Part of whether you succeed or fail in trying to scale, because sometimes, you know, the business model could be the thing that’s, that’s holding you back from scaling and there’ve been many companies, you know, a great example is the, a company comm.com. So you probably have heard their commercials. You probably familiar with the app.

[00:45:19] It’s a meditation app. Um, when they first launched, they. The model was they had a freemium, a free version of the app, and then they upgraded you to an annual fee. So it was something like 10 or $15 for the year. So you would pay one time, 10 or 15 bucks, and then you could use the app for a whole year. Um, and they were having a hard time scaling their revenue, which, which prevented them from scaling the business on that basis because not enough people, um, were.

[00:45:51] Paying the 10, $10 a year or $15 a year. And even if it was a lot of people, it wasn’t enough money to let them grow the business the way they wanted to. And then they had the idea to change their business model and they shifted to a monthly subscription instead of an annual subscription. And literally went from $10 a year.

[00:46:10] To $10 a month. Now, when you’re sitting in the boardroom discussing that kind of a shift in the business model, it might sound scary. It’s like, oh my gosh, we’re going to multiply the cost of our app by 12. Um, aren’t we going to lose all of our current subscribers and everyone else, but what they found out actually was the opposite happened as soon as they switched to a monthly fee of $10 a month.

[00:46:34] Not only did the revenue grow, but the number of subscribers in downloads grew dramatically because it turns out consumer behavior. There’s more trucks. In paying a monthly fee for something because you have this sense that, okay, I can cancel if I don’t like it. So I’ll start paying the monthly fee. And if I don’t like it, I can cancel versus paying one time upfront, even though it’s less money psychologically consumers think, well, I don’t want to buy that if I don’t know if I like it first, so I’m not going to buy it.

[00:47:05] So people would rather pay more. On a month to month basis knowing they could cancel them, pay less upfront for something. They’re not sure if they’re going to like, so they had a dramatic success story by changing their business model. And now they’re a unicorn and they’ve done extremely well. And if they hadn’t changed their business model, I probably wouldn’t be talking to talking about them right now.

[00:47:29] So the business model is another thing that can have significant impact in whether you succeed or failing and scaling your business. You know, I’ve, I’ve known you for so long and I’ve never heard that story. That’s so cool. So I love it. I love it. Just the way they redesigned that they pivoted a little bit to help them scale their business by going monthly versus annual.

[00:47:50] Now I do often hear, um, that the number one complaint of a lot of entrepreneurs who fail to scale is that they, they, they just can’t raise the money. They need money to scale. And that is something we haven’t really, you know, beat around here. Maybe, you know, I don’t know if, um, guy or, or doctor a, B Seca, and another name is tough to pronounce him.

[00:48:15] Maybe if you have something else as well, doctor, um, maybe you have another thought as to why you think entrepreneurs fail to scale, but, uh, you know, raising money can sometimes be what blocks, great concepts from. Yeah. Hi. Um, I wish you again, uh, I’ve been, um, eh, startup company founder in, uh, about, uh, Biotronics, uh um, completely, um, it’s a policy-making in India, so that’s for me, what I experienced is a lot of challenge comes.

[00:48:55] Uh, we do, uh, Phew, phew, um, per page or, or for example, MBBS, but somehow the policies to take over, um, those things to, to scaling it up and developing. And there’s lack of support from the administrator. You propose a administrative site. So that’s how we. The plants never convert properly. So this is one, one thing, major hurdle from my startup.

[00:49:27] I being, uh, being, uh, uh, involved in, in a lot of, uh, gadget, um, innovation apart from that, um, what, what also, where we see, um, a couple of innovations, we also retracted from our sites because of our, um, uh, uh, because of our. Thinking like we, we didn’t, um, consider many of the factors, which probably any of it or, or not possible to scale it up.

[00:49:58] So in board ways, I see, um, I see some challenges to, to scale some products. Um, but I think, um, the major, which for me it affects is the policies, uh, which cannot, um, allow the, the ideas to, to, to, to, to, to become more, um, you know, feasible for going to the, to the, to the, scaling it up or to convert it to a real product in the market.

[00:50:29] Thanks. And I think that’s a great point is we don’t even, we never even thought about that. You know, is the environment that you’re in the country or in the regulations that you face. Like these are things that we, you know, we haven’t even be considered, could be an issue. And how do you get around that?

[00:50:46] You know, how do you get around in India? Do you, do you, do you, um, try to launch these products in another country or is, or, or any techniques you’ve used Dr. Ivy to try to get around. To be very precise. Um, we’ve been converted, uh, um, this, this hustle of, uh, of coronavirus tasting by creating a hand held device, which can perform the, the RT lamb, probably, um, some of who are here or listening, they may know about it.

[00:51:19] The, the problem we found what to scale it off is, um, the, the state from, from the governing bodies to carry forward to the next level where the needle, big amount of, uh, you know, the major amount of scaling strategy. And that is not been so much smoother for a startup company, which is like from my company, like is pretty young and it is a pandemic born, right.

[00:51:49] W we are like, literally I am also working remotely. I am insecurity in Germany. So I think, um, that should be more smooth to giving them an opportunity to go. And the second innovation, what we are also facing challenge that is air purifier, which is pretty much medicated and it has been nanoparticle infused in the filters.

[00:52:14] That’s like, I, we, we very recently discovered that there is no such facility where you can test devices. They are building it. So these are the two major things. I found it from the administrator sites. So I’d mentioned a say that these are the things we’d probably, uh, you know, could have been established Reiki, long bag, or there should have been proper channels.

[00:52:41] A young startup can easily pass to one, deliver the product, which is pretty much needed for the society. Appreciate that. Appreciate that doctor. Um, I know we’re running low on time, uh, and I just want to talk a little bit about money. Um, I brought that up earlier. I do believe it’s never been a better time in history to raise money for your startup to scale it.

[00:53:07] Uh, we have so many different methods from venture capital. Uh, in the United States here, and you talk to a regulation environment, doctor in the United States here, we have, um, a pretty favorable legislation around regulation, crowdfunding regulate regulation. CF, you can Google that and you can raise up to $5 million.

[00:53:28] Um, there’s a private placement memorandum, reg D, where you get sophisticated investors. That’s my favorite form of financing. Uh, because you don’t have what’s called liquidation preference. Um, everybody takes the same risk when they make that investments. Um, there’s a new, uh, uh, model called reggae plus as well, which we’re looking at for two of our companies in our portfolio here, we’re looking at, um, using that particular, using those where you can raise up to $75 million.

[00:53:57] They also call those mini mini IPOs, you know, You know, back in the day when I was, I ran two public companies, they were smaller public companies and we were able to raise $30 million on one of them. Uh, you could never, you know, never do that today in the U S with all of the regulation, Sarbanes, Oxley, and all the, you know, all the challenges associated with that.

[00:54:18] Uh, there’s Kickstarter campaigns. There are there’s government funding and, and that’s something not to underestimate when it comes to money. Is government funding. Um, especially in the S the SBA loans in the United States, um, that, that can, that can really help your business. There’s just, I’ve never seen so much money being available for entrepreneurs and startups.

[00:54:42] I, I do believe that if you are struggling to raise money for your startup to scale, That you really need to get a board of advisors, a group of people around you to help you do that. And I know Michelle, we only have two minutes left. I can tee up next week’s topic, but is there anything else, you know, Linda Guy or Jeff or Michelle you want to talk about here?

[00:55:05] Well, I think we covered quite a bit and this is quite a bit more we can talk about. It’s a pretty rich topic. When you think of all the different ways you can fail to scale or succeed in scaling your business. So. I enjoyed the discussion and thank everyone for participating and Linda, I know you’re going to say something.

[00:55:23] Yeah, just quickly. I won’t take too long cause you’re about to close, but I was going to say that that you’ve a lot of money around, but there is slight challenges where, for example, in energy projects where there’s a component of fossil fuels in it or natural gas, for example, because the whole, um, renewable energy concept is being widely.

[00:55:47] So under a slightly apprehensive to put their money in projects that are not deemed, um, green F what I am seeing right now, especially for projects in emerging economies. Um, so yeah, that is the challenge. Although I guess here in the UK to us, the, that these countries were industrialized on fossil fuels, you know, gas and all of these different.

[00:56:15] But now that’s a challenge for emerging markets because we’re being told that gas is not so good for the environment. And we need to look at solar and everything else, which is we know sustainable, but that’s a topic for another day. Yeah. And I hadn’t even thought about that. I mean, I’ve, I know from a, you know, launching new technology businesses that, you know, when I was launching these businesses, Startups like the banks would run, the investors would run.

[00:56:42] They, they were, they were afraid of what I was doing. Something called the, this thing called the internet. It’s really going to be big guys. Trust me. No, no, no, no. We, we want to invest in oil and gas. I’m coming from a Canadian perspective here now. It’s like, okay, we’ll and gas no more. We want to invest in solar and all the new technologies.

[00:56:59] It’s very interesting how that has changed. And the mindset has changed around that. Um, but we are out of time. And if you haven’t already done. So please check out that link on the top of the screen startup.club, and I’m telling you we’ve got about 30 or 40 episodes of this show, serial entrepreneur hour.

[00:57:19] And they are incredible. If you listen to them, you will get an MBA in entrepreneurship and it will be will help start your company because we are sharing serial entrepreneurs are sharing. Their secrets of how they do it over and over again, starting scaling, exiting, and repeating that process to next week’s topic is something very similar.

[00:57:45] It was brought up last week by check it’s called the X factor. So those companies that fail to scale more often than not, don’t have an X factor, the ones that do have an X factor. They make it look easy. Domino’s 30 minutes or free national car rental. Just walk in the aisle, take the car and go. These are companies that redesign the re-engineered their organizations to give them an edge to win in the marketplace against their competitors.

[00:58:15] What’s your X factor. If you don’t have one already, let’s help you find one next Friday, two o’clock Eastern. Thank you for joining us on the serial entrepreneur.