Tobi Pearce - Co-Founder of Sweat | The Founder Who Sold for $400M Says Most Business Advice Is Worthless

You say that most business advice is crap. More often than not, it's marketing material and highlight reel. Stuff. The majority of the conversation online is often about the story and what happened. It's not necessarily about why and how. That isn't valued. And people think that's advice, but they often think that the story is the advice. The best possible advice you can get in the world is actually free, and it is feedback that you get from doing. What if the biggest opportunities come from seeing what everyone else ignores? Toby Pierce built one of the fastest growing fitness brands in the world, transforming a simple idea into a global movement. In my second year, we made like 15 mil bottom line, and that was all cash. I thought that anything I touched will work here. I found out very quickly that wasn't actually true in reality. At that point, you're pretty good. You're in the top 1% of founders. That's actually a really dangerous point to be psychologically. When you lose, it becomes abundantly clear why you've lost. When you win, it's very hard to know why you win. Why do executives get paid a share load more money than you? Because they can think better than you can. He's scaled businesses and mastered the art of digital growth. From entrepreneurship to personal discipline, he's learned that growth only happens when you're willing to evolve faster than everyone around you. At what point on this journey, did you figure out that the medical cognition, thinking about how you think is more important than the actual tactics? So Toby, you see that most business advice is crap. Why? Firstly, most advice that people get in general actually comes from the internet, from interviews like this. And more often than not, it's marketing material and highlight real stuff. Firstly, and secondly, also, I think that the majority of the conversation online is often about the story and what happened. It's not necessarily about why and how. And so what I mean by that is that your most stories start like, oh, we sold a business for this much money. We built this company and have this money customers or whatever it may be. But that isn't value. And people think that's advice. But they often think that the story is the advice. But the advice actually isn't that. The advice is, well, this is what happened. But this is why we chose to do it that way. And we were presented with these options. And out of the options, we used this reasoning and decision-making to make that choice to then. You do this thing. That's actually the advice. So the first issue with most advice is that it's not actually advice. Right. So that's the foundation. The second thing is that I think a lot of the time when people, so really early on in someone's business journey, they're not famous. Their story isn't cool or interesting then. So they're not giving advice at that point. Normally, it's towards the end or even after the end of the business journey that they give advice. And one of the fundamental issues with that is that they're then telling the story and giving advice about, especially about how they got started 10, 15 years in the future. And from my perspective, I've always tried to be really, I guess, brutally honest about the fact that I'm like, honestly, I don't actually really remember everything that happened early on. I can tell you the cliff notes, right? But I can't actually do like, hey, while I was feeling this at this point in time, and this is how it worked, etc., etc. So therefore, even some of the advice about early on is you're basing it on memory from 10, 15 years ago. So it's not super reliable. So to me, the advice that matters, actually, is well, when presented with these sort of situations, this actually is the way to think about it and make these decisions. That's advice, a story, and one that's 10 to 15 years later isn't actually advice. Where do you suggest founders? Because I think that's very wise. So the people that founders usually look up to, they're so far removed. From the boots on the ground, bullshit, that they had to go through when they started a company, that memory is definitely foggy, for sure. Now that begs the question, okay, so then if not the people that have exited for tens or hundreds of millions that are now writing a book after they've retired, where do they find the best advice? Because then you have to weed and sift through all the garbage on the internet. And you advise founders for a living, I'm sure you get a lot of questions. Where do you send people? The best possible advice you can get in the world is actually free and it is feedback that you get from doing. Right, so, and that sounds a little, like, antithetical or counter-insuitive, but the best feedback and door directing you can get from, is actually doing things and failing. That's the best advice, right? Which you can get yourself. You can start doing whatever you want. In terms of actually trying to identify like an individual though, your impact is kind of been there and done that. I think there's several filters that I think you need to put whoever it is that you're looking at through. I think the first filter is that, you know, ideally, they've actually done the thing that you want to do. And I think specificity matters here. So it's not like you build a business and made money. That's very broad in general. It's like, oh, well, maybe I'm in, you know, direct to consumer, you know, consumable products or food products or supplements. Okay, well, out of that industry, you know, over the last 20 years, who are the best 10 people out this? So that's big filter, you know, number one. And just to be clear, I think even with that, you could go a layer deeper again. It's like all out of the companies or the people who have done that, maybe you've got a specific skill that you're trying to figure out wholesale or performance marketing or sales or whatever it is. Like you got to get really specific. Yeah, about finding the person you want to advice from. That's the first, you know, part. I think the second part is that even if you do find those people, you kind of need to put them through the screening process before, do you actually want to be giving advice? Because a lot of people don't really want to be doing it, but they still kind of do it. You know, so if they don't really get energized by like teaching or coaching, then you're probably not going to get the maximum value. Had something to do that. I would say that most people think they want advice, but then sometimes they hear good advice and they don't actually use it. I was going to say that that's the last part. Yeah, the last part. Cause like, even if you do get to someone who maybe is, they're a good educator, they want to be doing it. They've got relevant experience. But if you at the student are not ready, then it's redundant anyway. And as goes the saying, it's like, you know, the teacher appears and the student is ready, right? But I think like most of these things, you know, and kind of reinforcing that point, it's like, if you're a good entrepreneur and yeah, that's a loaded, you know, a term, I guess, but if you're a good entrepreneur, like, you'll figure this shit out. You figure out what skill of this you need to learn. You'll figure out who's got that skill. You'll figure out whether or not you're ready and comfortable receiving advice that maybe you don't agree with or understand, which I think is a critical point too. You know, a lot of the advice you get from people who have really experienced is very simple. And then people are like, oh, well, but it's so simple. Like that can't be any good. And I'm like, well, it being simple is the point, right? But a lot of people want to overcomplicate or they'll let their ego, you know, get in the way of actually learning. Cause you know, and just to be clear, this is a fundamental floor, I think psychologically a lot of founders experience. Once you get past the real Grammy and dirty phase of like, call it product market fitter, whatever. And maybe you're getting sort of 10 to 50 mil, you know, revenue at that point, you're pretty good. You're in the top 1% of founders now. You've done some pretty good stuff. You've clearly got high agency. You're clearly intrinsically motivated. You've clearly got a good work ethic, et cetera, et cetera. That's actually a really dangerous point to be psychologically for a lot of people, not all founders, but a lot of them get to that point thinking they're really good going to get advice, but they're not agreeing with the advice I'm not using it anyway. So we build an ego simultaneously that their own success, yeah. 100% and you I've worked with quite a few people over the last few years like this. One guy, you're in particular who always comes to mind. You know, I was only in great business at the time. You're about 35 mil, you know, really like profitable service based business. And spent a lot of money, not just on me, but on other people for advice. And I'm not sure any of the advice was ever taken, you know, and then you fast forward two, three, four years later, business gets a bit bigger, gets a bit more complicated, didn't do the things a couple of years ago that maybe they should have. And now that business is effectively, it's nearly double the size, but actually not making any money. Interesting. You know, and some like, have you actually made any progress over the last two or three years on a gig for that person? No, they've gone materially backwards. It's so interesting because you focus, even after speaking to you for now, two minutes, three minutes, you focus a lot on how to think. Oh, I think like, it sounds like a silly thing to say, but I notice it more than others who would dive right into the tactics. You mentioned, you know, what makes a podcast boring is just sort of riffing through the origin story and then thinking that's the advice. But then the layer two, like the taking it a layer deeper or a level deeper is usually going into the tactics, like the actual case. So what's, you know, how do you have a positive role as on a Facebook ads, whatever the thing is? But then I actually really appreciate where you're taking this because this is how this podcast has shifted. When I first started this show, it was very tactical. And it's moved almost entirely, not exclusively, but almost entirely towards like the mental models. Oh, man, medical ignition, I think is a really, really big deal. And for those that are not familiar with it, you know, medical ignition is effectively just thinking about the way that you think, you know, and trying to improve the way that you think to improve your outputs or outcomes in your entrepreneurial endeavor. And yeah, it's an interesting thing, you know, that you call out because I think even, yeah, like a huge portion, arguably the biggest portion of people want the story because it's motivating and inspiring. Then there's some, you know, we'll call it, you know, almost like utilitarian people, like, oh, like just tell me what to do. You know, I'll go and do the thing, which is, you know, that there's some value into the tactics and sometimes you just need the answer, right? But I'd argue that the best of the best people, the ones who actually have like a really alternate and or a find way of thinking. So it's not really about the story or the tactics. It's actually, well, I don't need the tactics or the answers. So I was figuring them out because I know how to think about these sorts of problems. Yeah, and I think I actually think as well, like again, like, you know, looking at a broad spectrum of different founders, it's very easy to figure out the ones who have built the skill, not just the knowledge. And so when I frame that, it's like your knowledge or what I can take a tactic from you, that's a piece of knowledge, right? And I can go and, yeah, just copy paste that. But that's not necessarily a skill. I can't figure out that tactic by myself. And may or may not be able to contextualize why, why is that a good tactic and all worth doing? And I often frame this to people who are employees, not, not, not found around entrepreneurs. In the exact same way, I'm like, well, why do executives get paid a share load more money than you? And they're like, I don't know how to think. Well, yeah, because they can think better than you can. They have the capacity to make better judgments than you do and that is reflected in their decisions. Yes, there's potentially other variables and skills and whatnot, but ultimately, it's really about judgment, right? Yeah, and there's a reason why the executives at these gigantic organizations also get paid a lot more than any other employee because their responsibility is larger, but they are trusted with larger responsibility because of the decision making skills. And they're all is effectively built on the foundation of the way that they actually think and problem-solve. You've had several companies. I think there was like 16 or 17. Yeah, a lot. Many have not worked out. Heaps, heaps. Learn more from that as well, but I'm gonna say in a minute. At what point on this journey, did you figure out that the metacognition thinking about how you think is more important than the actual tactics? I don't think it was out of the gate, I'm sure. No, no, I'd like, honestly, I actually think I was almost down the opposite end of the spectrum. I was very unconscious, you know, because I was pricelessly naive, you know, in some regards. So naive, I was like, I'll just do this stuff. Yeah, and I was very fortunate early on. So I actually didn't really have the hard getting started story. As in I'd had a reasonably challenging kind of life up until that point, but I actually got into business. The first three things I did all worked and made money first go. You know, so I didn't really have any of that, like, oh, we grind it and had to raise money and miss out the other, you know, like in, where soon as I got online, which was my, some of my third business, as soon as I actually got online, yeah, in my second year, we made like 15 mil bottom line. You know, and that was all cash because there was no CapEx or inventory. It was an info product. And so I didn't have any of that. It wasn't until later, you know, when things got bigger, more complicated and I tried to do lots of different businesses at the same time, because I thought that, you know, I was like, oh, I've got the might as touch, you know, anything I touch will work here. I found out very quickly that wasn't actually true, in reality, but yeah, I'd argue that from the mistakes and whatever you learn materially more than winning, if anything, I think, you know, it's actually a paraphrasing something, Bane actually says in Batman, which is that he's like, oh, you know, victory has made you weak, right? And I think that's a really good insight, you know, that I think the more that you succeed unknowingly, especially early on in the journey, the more futile and fragile your success and skill set actually is, it's not until you've had some like very meaningful when I'd argue, I think public failure is also really good. And that's what it sounds like a very strange statement, but I think public failure and significant failure is really important, both for the psychological components, so, you know, build resilience and all this and stuff. But I also actually think, you know, when you lose, it becomes abundantly clear why you've lost. When you win, it's very hard to know why you've win and to make all these assumptions and assertions about why I wanted to do how good you are. Totally, and you see it with all these founders, they're like, oh, you know, yeah, and our product is different, our community is unique, you know, blah, blah, blah, I'm like, no, you just got channel arbitrage on TikTok show. And in five years time, all those founders will be probably realizing that looking back at right now. One of my favorite, funniest ideas is that Zuckerberg has really only been successful at creating Facebook. Everything else has been purchased. Or copied, or failed. Yeah, yes. One of the three. He really has not created a second good product, which is, I mean, it goes to show, obviously, in Greta Bismar guy, you don't actually need repeat successes if you ever really need to build inertia. But even at that level, it's not like everything he touches turns to gold. In fact, he just shut down the metaverse, the metaverse. Yeah, and all the ocular stuff for whatever's been bleeding billions, tens of billions. But this is the point too, you know, again, to the success piece is like success makes a lot of people really blind. And it also, it makes people very psychologically fragile, you know, because like I've seen this quite a lot, like part of the reason, I believe, I theorize that a lot of really successful founders that have exits, the reason they don't want to go and start more businesses afterwards is because they've got to get all the way back down in the detail. And that's the most fragile, vulnerable place to be, especially if you were unknowing and if you're going to a new space. So like I, you went from service businesses, you know, to kind of info products online, then drove to consumer mobile content subscription, right? I don't know anything about any of those. And then once I sold that company, then I went into marketplaces, professional services, you know, all this different stuff. But it hadn't occurred to me that that was quite different to a lot of people, whereas when you look at a lot of founders, they'll build and sell one company and they go back straight into the same industry because it's a safe, you know, yeah, easy founders that sell, wait for the non-gabit to expire and then build the same company. I found straight back in it. Like a exact same company, not even same industry sometimes, it's because it's just a very safe. Yeah, and whatever, if that's what you want to do, right? And for me, that was the complete opposite. You know, of what I wanted to do, I was like, I don't know, I want to feel, you know, small and vulnerable and going to a spot that's complex and learn because to me, that's more stimulating for me. If anything, I actually found, you know, this is like I've worked on with my coach, you know, quite a lot, but I got probably two or three years, you know, into building sweat and I kind of go, oh, oh, it's very obvious how this goes. Now I can see the next three to five years of this. Oh, that's actually not really that interesting. I mean, like sure, we'll make lots of money and that's great, you know, but I was like, oh, like I'm not really actually learning anything anymore. And so I tried very hard. You know, from a humility standpoint, I was like, oh, I'll focus more on, you know, kind of financial management, you know, ops, you know, leadership, I will try to lend those skills more, but like the actual business itself and the business model industry, I was like, oh, I can see exactly where this is going. And that was a real problem for me because I got very disengaged, you know, by the idea, and at this point, the business is still, you know, rocketing along doing this, but it just wasn't, there was no intellectual excitement for me. You know, one of my, one of my really good friends, he sold the company for, you know, in the hundreds of millions and he said, before he exited, he could like go home at lunch and take a nap. Like there was nothing for him to do anymore, like at that point, you have so many smart people that are behind and if you're good at hiring, we can chat about even that. But he said there was nothing to do before he exited. But this is also like part of the point, right? Once you've built inertia and you have a repeatable model if you're a systems thinker, because not everyone is a systems thinker, but businesses are just big systems, right? They should be. We can talk about most important mental models and I'm sure that's definitely one of them, but 100%. And so, yeah, it's a similar thing for me. You know, towards the end of my time, you know, it's where I was really running almost the whole company in about five meetings a month. Like, you know, yes, there's other bits and bobs outside of that and very, very, you know, it's a small part, like 90 plus percent of the influence and decisions that I would either wield or make, pretty much were concentrated into, you know, five, like primary meetings. And I'd argue too that in a general sense, that should probably be the goal for most people in management anyway. And when I say that, I don't mean necessarily going home at lunchtime, you know, but like in a general sense, like you want to build redundancy, like so for redundancy in some regards, like you want things to mostly be able to happen without you, whether that's through policy or process or systems, whatever it may be. And I'd argue culture is the biggest amplifier, you know, for good decisions, but like realistically, that should be the goal. The goal shouldn't be that things are dependent on you, even if you're the CEO of founder, I'd argue that the best leverage is leveraging yourself out of the business. And that makes the asset most sellable too. I agree. I was earlier on my career as part of a company where the founder was an incredibly strong entrepreneur, but there was always a ceiling. And he was closing him, so it was the company's doing 11 million. And he was, he was personally closing six million of that 11 million himself. It was the right limiter. It was a big belly run, my favorite right limiter. And I was part of the early on in my career, I joined the company, they hired me on and I saw him go through the process of hiring all these incredible executives, prepping for the exit, finally sold the private equity. But even after the sale, I looked at that company a couple of weeks ago and they're completely one bankrupt. It was a traditional case of... Pump them. Yeah, basically. And it was like, it was a significant multiplier on that exit. I think they sold for just over 90. And, you know, fast forward whatever, 10 plus years and there's nothing left of that. And there's, you know, all these creditors are trying to get the money back. It's like most of the COVID businesses in general, it's well right, you know. But the point is he did a, he did a sort of a quick job of trying to remove himself from the business. But it wasn't obviously a successful job longterm, but it was candidly enough for somebody to buy it. I was going to say it depends on what the objective is. You know, like if you're trying to build something that is enduring, you know, and sustainable, whether you're selling it or not, you know, but if you're trying to build something enduring and sustainable, then, yeah, building a culture that is non-reliant and found or agnostic or even CEO and executives who make agnostic is hard. Like that's hard, but I'd argue that would probably be the right thing. But, you know, if your goal is really like, oh, I've got a timeline here. One or two years, this industry markets about to peak. Like, you know, let's liquidate. If that's your goal, then it's not as relevant. But for the people that acquired it was. Yeah. Not the bad. The different problem for them. And, you know, it's interesting, right? Because like, you can make heaps of money doing that. If you understand the cycle and all the psychology of like, you know, VC, private equity, et cetera, et cetera. Like, is that that's all a game and respectfully a bit of a Fagazi? It's a game of musical chess, really. And even what's going on now in the AI space, you know, we'll look back on this in 10, 20 years time and go, oh, okay, cool. There was like 150 players, these two survived. Everyone that was died. But that's also just the nature of the beast. You know, that that's part of the game and it's also part of capitalism, right? Yeah, there's enough money to go around to get a whole bunch of people to have a crack at solving a particular problem. And obviously, there'll be a few winners. And even for them, I'm sure they bet on 10 different companies. And yeah, like, you're not spending that kind of money and just human bet. No, no, no, not at all. And if anything, especially the VC game, it's all pretty much like probabilistic. It's a very different game to, you know, private equity, like private equity and VC. You were private equity. Sorry. You're the people that quite, you know, you're the people I was strategic. Yeah, we're strategic. Which again, you know, that is a great competitive for the PEs and you know, what in that space anyway, but the actual investing game for private equity and VC is like fundamentally different. But again, like, these are things that as well, I really just didn't understand the first time going through this. I was a complete rookie. You know, and you're kind of like, it's sort of like you're in the middle of like a storm in the ocean, you just kind of go on with the waves, right? But if you really know what's coming on and I absolutely had no idea, we just get a surfboard out and you know, to what you go. But for most people, much more like me, you know, the first time they go through that style process, it can be a quite violent experience and a very like emotionally exhausting and crushed soul-crushing one. Was yours? Oh, massively. Yeah, we, so the long and short of it was, I, you know, had, you got infatuated with your idea. You know, like selling businesses after spending a lot of time, you know, in the States. Being in Australia, and that's a very different, you know, quite eye-opening experience. And so you went through that process. And as I said, first time around, we tried to sell, got rejected by 120 plus, you know, different, different firms and funds, you know, in a couple of weeks. Um, had one person who ended up, you know, wanting to buy the company, literally got paperwork signed, everything executed all the way right to the end, was sort of 36 hours out from like literally getting the first 50 mil US cash payment at the bank account and they pulled out, right? And so, and it's just to be clear, this is because I was much younger and hopefully less wise. The name now, but, you know, I'd told the entire company that we'd sold, you know, we'd, we'd recruit it into this because part of this was also a primary, like capital injection to grow the company, as well as a love secondary coming off. So we'd opened the new office into state, it recruits to 30 or 40 people, they pulled out of the deal, obviously didn't get any of the money, spent sort of nearly $11 million getting the company prepped, you know, for the deal. And then a few weeks later, COVID hit. So this all, this all happened, you know, like at the same time. So, from what I'm able to understand and what I've been able to like sort of deduce from what had gone down. So the guy who was running the deal, it was just been promoted to managing director and this was the first deal that he was going to be the guy like making the decision on, which the whole way throughout the process, there was some, you can see he was sort of struggling with some of that. And then we got literally right all the way to the end and then most of the kind of going through like the network and capital adjustments, they're certainly at the like, do the final pricing for the actual transaction to, you know, complete your illegal terms. Some of the numbers weren't adding up between like financials they'd been given by one of the big four, which was representing us. And then like other financials would provide to them. And as he thought that was like, there was something going on there. When every other day, it was just they were looking at different, you know, different factories. So that kind of like, at the very last minute, freaked him out and then whole deal was pulled out from underneath me, which again, because later going, we went back to market later and sold the company and whatever, which was positive. But again, I'd argued that experience taught me a lot more than actually. I was going to say like, what's the lesson there for founders? Because there's more there, so you sold for 400. And that was still like a great multiple. And I think there was a hundred million in revenue. Yeah, we're doing about a hundred and five years, maybe a hundred and twenty top line, you know, I think at the time, give or take. But transparently like realistically, and I say this with, you know, great humiliation reflection now, the business probably shouldn't have been bought in the way that it did in the structure that it did, you know, at the particular time. And again, I say that being able to very honestly reflect on what was going on in that kind of post-COVID environment, this particular industry and space, capital markets, all this sort of stuff, all these, you know, movements at the same time, I've had to be created what I would now refer to as a very frothy, you know, like investment space. And in Australia, I can't exactly what the status, but it's some crazy thing from the three years post-COVID out of every like hundred dollars that was publicly listed on the Australian stock exchange, 85 cents out of every dollar is gone. Because of the prices of all the companies that listed have gone down by 85% some of them are dead now. And I think specifically in the fitness space as well, because a lot of this stuff was like, oh, we're locked down, we've got to like stay indoors. Well, at home fitness became the most popular thing overnight. And so this was a lot of the success we were having, not that this makes me happy, but it wasn't real success, but that was an inflated success period of what was happening there. Absolutely. And so then obviously, there was a huge normalization effect in sort of 2022 and 2023, which I was already kind of long gone by this point, but nonetheless, you're not the best asset to buy that particular point in time. HubSpot is a success story partner. Now customers are using traditional search less and less to find the businesses they want to buy from. Now when a buyer or a customer asks AI for a solution like yours, does your business come up? 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That's netsuite.com slash Scott Clary. Okay, so let's go into lessons from both of those transactions. So people can understand. So the first one, it didn't work out. You learned more from that than you probably did from the successful one. What was the lesson to take away for somebody that is actually looking to sell their company, going through the process for the first time that you had to deal with? Yeah, so I think, yeah, no, but I think, I think you need to understand the game you're playing, right? And what I mean by that is that, yeah, when you're selling a business or raising money, or selling and raising, or publicly listing, publicly listing and raising, there's all these different variables of the experience that you can have. It's super important to understand like what it actually is that you're selling, right? And so if you're, if you're, you know, start up early on and you go into a venture capital firms try to raise money, you're selling yourself. I'm a great founder. I'm gonna make your heaps of money. There's a good chance of this wins. And this idea is a reasonable idea in this market. It's big and we can do some stuff, right? But if that's, you know, you're super early on, if you're at the opposite end of the spectrum and you're like, oh, I hate like where a business does, I'm gonna call it 10 mil, you know, a bazaar. I want to sort of private equity firm. Okay, cool. Well, you're selling the huge cash flow of the business, which means the proposition of you being there is probably actually less interesting. So you want to go to sort of the asset as if I'm not going to be here. It's not dependent on me, right? Because if it is dependent on you, you're going to be massively discounted. Whereas if you're doing venture raising, you want it to be dependent on you and you want the venture capital funds to be invested in you, right? And I'm not saying that there's one rule for, you know, all types of deals or whatever. It's like my way to think about it for sure. It's a really important thing to understand. And I often, so I actually refer to this whole thing as like end game theory, and I position as end game theory because I don't think that all of the ends of this game are actually exits. Like I actually think for a lot of founders, the end is just you not working there and it becomes an asset that you hold and you have an employee CEO or GMMD, whatever it is that you want to have. Because ultimately for all founders, oh, sorry, maybe I should condition this. For most founders, ultimately, you want to make money, right? But making money in deal exits is actually very different in reality to what, you know, the headlines, you know, state, you know, a friend of mine who sold his business for 600 million, you know, deal value got 300 million cash up front and got not zero but close to zero of the remaining part because of, you know, deal structures and whatever. You know, I have another friend, you know, who's sold their business for $25 million and ended up getting five. You know, and so like, if you come back to the first principle that, you know, the goal here is to make money. An exit is an option. It's not the option. And I think this is saying that, again, societally, you know, entrepreneurs, we like a fantasize and, you know, about what this looks like. But again, you know, like most things are in our mind, they're not necessarily as good as, you know, in reality is what they actually, you know, end up being. And so I think, but yeah, overarching to answer your question in short, they're overarching insight really is, I think you need to know what game you're playing and or what you're selling. If you actually intend on getting a good outcome, both psychologically and financially. Now, this may seem like a silly question because you ended up selling for $400 million, but are you happy you sold? Yeah, I think the conflating variables at a time, it was the right choice, you know, for me at that time, both personally and for the, for the business as an asset. I think, I think, like you're looking at other businesses, you know, I either started or ones I've invested in now, like this is another company that I actually found during my time that I was working at SWET, which is, it's so funny, I was referred to as like the boring business that's going to make me heaps of money, which is we basically broke our driving lessons, right? And so like in Australia, you know, just in Australia alone, you know, we'll do about 35 million, you know, of lessons this year. And it's really interesting because when I look at that company, I've got some other investors in that. I'm like, hmm, I'd probably consider buying you out and I might stay in because I look at that. I'm like, oh, like a lot of people go, oh, there's driverless cars coming blah, blah, blah. I won't go into the reasoning as long reason here, but I'm not really worried about any of that for this particular business. And so when I look at this company, I'm like, oh, wow, marketplace, hard to penetrate, hard to compete with incredibly resilient, boring industry with low competition, low technical sophistication, incredibly high margins, great cash flow. But like what, unless I was going to sell that for an eye-watering multiple, financially, it just doesn't make a lot of sense. There's no incentive for me to sell. But if you'd have asked me five years ago, I'd be like, oh, no, I'm building sale, I'm making money. And yeah, let's go. So. Do you think most founders could be better off holding the asset, like you mentioned before and unhiring somebody to take it over completely? Like walk me through the map because I've, I know stories like this where people have this great, great exit on, well, that exit and air quotes. I say I should put great in air quotes. They have an exit, it looks good. They can talk about the numbers with their friends and they can maybe they'll even get a, you know, a Forbes article written about them, but like how much money do they actually walk away with? Even if you look at, I don't know, Hermosi's exact numbers, but I'm pretty sure that most of his money he was taking distributions while he was still actually building his gym company versus what he actually got after he sold it. Yeah, yeah, yeah. No, yeah, it's super interesting. Like I definitely offended a few people going through this before unintentionally. But the way I, the way I look at this is, if you were to do almost like a pinnacle-esque version of your exit right to assess it, like a post-exit analysis, if you will, for most people, and again, countries, tax rates, you know, all this and stuff. If you sell a business for, let's call it 24, 25 million bucks, you're gonna wave goodbye to 30% of that straight up the top because you're gonna pay, say for example, Australia, subject to most of the rules, you pay about 25% capital gains tax, call it another 5% in fees, lawyers, accountants, you know, they set the other on whatever. And then let's assume that the business actually has like enough work and capital to run itself. So there's no work and capital adjustment either, which a lot of the time founders have actually like sucked all the work and capital out of the business. So then they end up having to, you know, put money in that comes out of the dual, I do a bit. Let's give it simple, right? 24 million bucks, you know, 30% gone. So you've gone from 24 to 16. Normally I then say, well, most people, at least in my experience, most people then go, oh, well, I'll spend 5 million of that, I'll buy a car, I'll give my parents some money, I'll buy myself a house for a couple million bucks. Yeah, well, whatever it looks like, but let's just call it, you spend 5 million bucks one way or the other. So you end up with, you know, call it 11 million dollars, which I have often said, I'm like, firstly, you're in the top like a 0.1% of founders if you achieve that. And that's an incredible achievement, right? But most people think that selling a 25 means that then you're like on private jets and you're like yachts off the coast of the med, you know, Italy, you know, for the summer each year. But when you look at like 11 million liquid, for me, and also pretty much everyone that I ever spoken to that has achieved like an exit with like a meaningful, you know, liquid liquid capital on the other side, almost all of them have the same experience. And then it's like, oh my god, yes, I've exited, holy shit, I do not want to lose that money, right? And so with 11 million bucks, you know, you're two or three bad choices away from nothing. So then most people, and that's if you are reasonably responsible and you're reasonably good investor, most people are going, well, I want to invest this, you know, call it $10 million, I want to invest this to fund my life. And you go, okay, well, firstly, the predominant like return investments people get from things like, you know, stocks and property and whatnot is actually in capital growth, which means if you want to get that to spend it, you have to then sell it. It's not cash. Then if you are investing, that's just called all in bonds and you're making a 5% you're in that yield, you're making half a million dollars a year, you know, on the 10 mil pre-tax, because that'll get income taxed. So if you lose half of that income tax, you end up with a quarter a mil, you're a year, not a lot of money. Which again, just to be clear, it is, but it isn't, that's the same time. I'm not plugging the stick at that. Yeah, for a lot of people, that would be life changing itself, ignore the 25 million, even getting a quarter million dollars a year on repeat, doing no work, would be life changing. But I think that the fantasy that that 25 million means you're on your own jets of yachts, or you've got like 10 cars and a massive like mansion, that's not necessarily real. And to be clear, that might not be the goal for some people. And if it's not, that's also great. If you're super happy living on 50 grand a year, that's amazing. But we're not talking about that. We're talking about people who want to sell the business, right? And so the reality is that, you know, from 25 mil you end up getting not actually a huge amount of your real financial freedom. I'm just to put this into perspective, especially in a major US city, New York, Miami, LA, SF. What is $250,000 is I don't even think considered. No, you'd be technically, you'd be in the top few percent. But that's not, again, it's the issue is that it's the top few percent of world statement is not represented in lifestyle by what people think the top few percent of lifestyle is. And just going back to that too, if you've sold a business to 25 million, let's just say you were doing like a boring service-based business, changing tires on cars, for example, you're going to sell that for maybe five times EBITDA are multiple. And if you're making $5 million a year EBITDA with a nice translation to free cash flow, I can't imagine any world where I'd be selling that for 25 mil pre-tax, pre blah, blah, blah, to then end up with a little bit of income. And again, maybe the industry is an interesting cycle, blah, blah, blah, maybe you want to get out, maybe you want to retire, sure. And there's other variables as the reasons why you may. But generally speaking to me, that math is not super inspiring relative to, well, I could just have the five million cash a year. I agree with that. That makes it something no investor is no partner. Yeah, yeah, sorry, yeah. Well, not only that, yeah, if you were selling it 25, but assumes you're only 100%, which a lot of the time is not true, firstly. And number two, it also assumes that you've got no debt, because debt is also normally like an exit adjustment, you have to value. Three, it also assumes that the deal is you sign, you get 25 million cash liquid, which I have not actually seen a deal of that side. Oh, yeah, there's no script for script role over, so into public equity, or some sort of like vendor financing or contingent income. So like a lot of the deals you see, not all, but a lot of the deals are like, oh, we'll pay you $100. I'll give you 30 bucks in cash today. Yeah, I'll give you 30 bucks in a year or two, which is effectively vendor finance. And you have to do really well when the business grows XYZ. I'll give you another 30 bucks. But the reality is a lot of the people that are doing these deals and pricing them and structuring that way, they're like, oh, well, if I'm going to give you the contingent income, the extra 30 bucks for performing against these KPIs, well, I'm going to make $100, so that's okay. But then on the off chance that we don't make that, I want downside protection, and then I get a 30% discount on your business. You know, and so like again, come back to the point before knowing what you're selling and like what the game actually is. A lot of money, especially in private equity, a huge amount of the money that these guys make is through financial engineering. And engineering happens at the deal level. But that's traditionally, it's a little, it's a bit like black box slash opaque, you know, to people who are not in that industry or game. And a lot of people lose a lot of money as a result of that, but they're very unconscious about it on the way in, which is not their fault. Like how the hell do you... No, you know that first of all. You're a... Well, I mean, you have good people around you, hopefully. But I mean, like you said before, you had a company that was doing about 120 million. And you still didn't have people, well, you had some people, obviously to help you structure a deal. But you still said you felt like you're flying a mostly blind. Well, but this is part of the interesting aspect of like having good advisors, right? You know, I had a great legal team, really good at law. You had a great finance team, and I can't think, really great at finance and accounting. I had a great person doing tax, really great at tax. But was there anyone who was actually saying, who will hold on for you as the guy who's about to actually make money? Does this actually make sense? I can tell you the lawyer will say, legally, this makes sense and is normal. The tax person will say, legally, this is the right tax structure. But who's actually saying, well, hold on, no dude, like for you as an individual and shareholder, like, is this actually a good idea? And that advice at the concept of this advice almost doesn't exist. Because even if you go to a wealth fund, you know, to work with wealth managers, respectfully, I'm painting a very broad brushstroke here. Yeah, but like, respectfully, they actually give a shit about what return you get. That entire industry, and I'm just super clear to someone convinced me otherwise, that the entire industry is based on what, if the value of your investments go up, we get paid. The value of your investments go down. We get paid, you lose money. But either way, we get paid. Yeah, and so like a lot of the advisory industry is about, if you do a shit deal as a lawyer, I get paid. As a tax person, if you do a shit deal, tax wise, and you lose all this money and tax, guess what? I still get paid. Yeah, and so like a lot of the industries not actually shareholder or founder friendly, and it's not designed to be. It's interesting. That's scary for a first time founder. I think that as people are listening to this, they're trying to figure out now. Okay, so who do I talk to about my first transaction? My bits is going well. Is it about maybe just self-advocacy? Maybe, maybe it's maybe, and not to bring up another meta-cognitive insight or mental model, but is there a framework that you use to evaluate how to navigate, I mean, even your own goals as a founder, as opposed to outsourcing that decision to somebody else? Yeah, honestly, the way I've often thought about this, and this is actually an overarching insight about business in general, I think it's not that complicated. I think most aspects of business are not that complicated, but people don't want to actually spend the time thinking and reflecting. They want the answer, which comes back to a point we're talking about earlier. They're not actually interested in generating the skill. So like, for example, it's like, oh, what's a really sophisticated framework you can use to think about exits? It's like, well, what do you want to achieve? Like what in your life, what do you want? It's like, are you seeking to retire and you need like a lump of cash? Are you seeking to like liquidate your assets so you can kind of get some money and then go again? You're like, where are you at? And based on that, like, what actually are your goals? Number one, get really refined about that. And not just like, I want to sell for a hundred million. It's like, no, like, actually think about it. You know, I do an exercise a lot of people that I work with called the Personal P&L, which is like, put me together your personal P&L based on your current lifestyle, and then put me five or 10 years into the future and then design me the best possible life you think you'd live within reason, the best possible version of your life? Let's figure out how much that costs. And then we use that as the foundation to actually calibrate what are not deals and what not make sense. Because if it doesn't actually serve your life, which to be clear the overarching question is how does this serve me, right? If it doesn't actually serve your life, what's the point? And then all of the other, once you've gotten really kind of structured around what that looks like, all of the other stuff becomes easy. It's like, I'll, a whole bunch of people have come with me. I've got three offers of my business. I was like, okay, well, does it help you achieve that goal? Yes or no? You just frame all decisions through that. A hundred percent. Most people don't do this at the front, which to be clear, I wasn't super sharp about that. I was like, so almost deer in headlights. Cause like, as I was like in my early, mid 20s, when we first started going through this deal exit process, even if you see $50 million cash presented to you, it's like, whoa, right? And I was very fortunate early on. Like I made a lot of money on, from your distributions really early on. Like by the time I was 22, 23, I'd already taken nearly 30 million bucks out of the business. And so I'd been very, very fortunate. That's not the common experience. A lot of founders don't make money early on. They have to make it on the exit, if that makes sense, especially these sort of, you know, tech startups and whatnot. But, and I had no idea. I had no focus going into that deal other than let's sell the business. Was there an event or an inflection point that forced you to think differently? Yeah, it was the first transaction failing. Because it's been so much of the company's capital getting ready for the deal. And it was a slap to the face. Oh, huge slap. And also like very humbling, you're in a really good way. And, you know, this is a sort of time where I was like, you know, my living costs are going up, you know, like a whole bunch of other things were going on in the year kind of in the background outside of work. And then I was like, oh, shit, actually, if I keep running this way, that actually won't work. Yeah, and so this is another really interesting insight about a lot of founders. And I'd argue also a lot of like an influencer founders, specifically, you know, that they're not necessarily always very conscious business people. They're great promoters and marketers and maybe even sometimes good product people where they're not great business people. You know, and the difference between that is they're not like financially literate and or financially conscious. And so for all these people, they build great businesses with two, three, four, five years. But then they get to that point where it's matured a bit, it's slowed down. They can't really sell it. They have no real exit. It's not making much bottom line and they get this really stuck, you know, position. And that happens to quite a lot of people. You have been there with other businesses too. But it's hard, you know, it's simple, but it's hard. I want to change gears a little bit. When we first started speaking, I hope this isn't too much of a stretch, but I think you'll understand where I'm going with this. So when we first started speaking, we were talking about where to get advice from. And you were describing the perfect person to get advice from. There's through lines between the person that you look for to get advice from and somebody who you'd want to hire to work for you. A lot of the personality traits you were describing, because even before we press record, we were thinking, you know, what should we chat about? And you're like, well, let's talk about culture and hiring and delegation and finding A players. And, you know, everyone says they want an A player, but they don't know what that actually means. But when you were actually describing who to look for for advice, you were actually, in my mind, describing somebody who is like an A player personality. But you've obviously figured out how to do that from an advice perspective, somebody who's like a mentor or somebody who's sort of succeeded. The other thing that you like to speak about, which I think is very valid, and we should speak about it, is how to find that person to bring into your company. Like what is it, we can talk about, you take whatever way you want, you want to talk about A player and hiring with talent or culture or both because I think they are one of the same. Well, yeah, I don't think you can hire good people without having a really clear understanding of what you're called to do there. Yeah, sure. And this has all been a really, I think you're interesting like your topic of debate. Again, there's so many of these like books on culture and all these podcasts on whatever on culture. There's so much of them and I'm like, and the cut for all these people is, I'm like, well, define for me what culture is in one sentence. And if you can't, then you don't know what it is, right? And I would do better. I would define it in one word, culture, it's just your standards. That's it. It's your standards for how you work, it's your standards for how you behave, it's your standards for your goals, all these things, but it's the confluence of your standards universally in your organization, right? And part of the reason why I think that you can't really recruit good people or maybe I would rephrase that as like the right, good people near for your business, if you don't have a clear understanding of your culture, is that the whole interview process is like speed dating. And what you're trying to do to some of the points before around advice and mentoring and whatnot, as you're trying to say, well, have you done what I want you to do if that is findable if those people exist? Like have you done the thing that I want you to do? And if you have, it's all about, do I think you have the right behavior and attitude to fit in here? If you can't perfectly screen for have you done the precise thing I want you to do for whatever reason, because sometimes this thing hasn't been done before or those people are not available where you live or whatever country you're in. Well, then you go to put specificity, you go to the side and you've got to hide broadly and generally and you go, okay, well, what are the raw skills that I need? You do do this. And so as soon as you've screened for the raw skills and capabilities, then it's all back to behavior and attitude. You're effectively trying to personally map you to the business, right? And the simplest example of this is computer scientists who works in the government doing whatever it is that they do, a computer scientist who works in the gigantic corporate, doing what they do. Computer scientists who's like a CTO co-founder for a startup company, they're three quite different people. So even if they all program in, I don't know, objective C or Ruby or whatever it may be, it doesn't matter, right? Because they're completely behaviorally, they're completely different people and more often than not on average, they would fail if they moved to one of the alternate options. And so when you're screening for things like behavior and attitude and you're trying to find an A player, presuming that they've either done what you want to do or they've got the right raw skills to do it, or all of that screening is really a pressure testing like relative to the standards that we have, is this relationship you're actually going to work? And it's no different to your intimate relationship, but you would reframe it as values. It's like you can have all the likes and interests and commonalities with the other person, but if you're not compatible with a values level, like you fundamentally see the world in a similar way and you value similar things, well, the relationship is doomed from the start. And so to your point before, and like recruiting A-grade players, I think that's a bit of a fugazi. You know, like there's like it doesn't exist the way that people think it exists. Yeah, and for a few basic reasons, like one, and you said this before, which is really great frame, I said the best, the best, the best A-grade players are probably working for themselves. Right, not all of them, but let's assume that they're meant to get. I've always thought that the best person you can hire is an entrepreneur that for whatever reason, the season of the life that they're in right now does is not conducive. Yeah, entrepreneurs. I know it's kids age, whatever. I want an entrepreneur that needs a paycheck because he just had a kid. Like that's who I want, but it's hard to find those people. Of course, and then, you know, outside of the entrepreneurs, there might be other like really, really good people. And you know, I like to, not always, but very often rationalize my numbers, right? So let's just say that an A-grade player in theory or a conceptual level is out of 100 people that you could work with, you know, from a capability wise, however you measure that in one specific field, there at least one, if not two standard deviations above the norm, right? So purely based on that, they're 85 to 95% of people in that 100 are not A-grade players. It's like immediately from the start, which means that if you're interviewing for however many roles, you're gonna have to interview thousands of people just to find a handful of them, right? So mathematically, you can already see that the likelihood of you achieving that is low, right? Then when you layer on another concept that's like, oh well, the best players are probably gonna get incentivized the best and or there'll be more people wanting them, which means there's gonna be a concentration of capital when other like non-capital benefits for those people. So where does, for example, like the best tech talent will not, sorry, not the best, but a lot of the best tech talent will, the same way as this go. And they're paid an eye-watering amount of money. So if you assume that not all, but a huge portion of the A-grade players are incentivized by money and other like non-financial benefits, they're gonna get the majority of that in certain parts of the board and certain companies. So if you're a small to medium sized business, make in 10 to 25 million bucks a year, the likelihood that you've ever met one is low, that you can afford them. Here's even lower again. And there's the right stage of their life that you can afford them. You've met them and they wanna work for you is very, very, very low. Now does that mean that you can't, it really is, right? But does that mean that you can't get like, really good people to work for you? No, it doesn't, but it's just the idea of like, A-grade players are gonna qualitative and quantitative level is actually very unreasonable. Instead, you just want good enough people. They don't need to be the best, and I would argue the best validator of that idea is that when you're small, and everyone who's had a rapidly growing business can relate to this. When you're small, you recruit these three people, oh man, they're so good. There's so much better than the last people we have for these roles. Oh, this is gonna be great. And then the business three X's and size and 12 months later you're like, you bring in a new person like, oh, they're so much better than those three people. And so this is idea of relativity. You're like from a skill set, a competency level, and also relevance to the size of the business. You could be a great engineer at a $5 million a year business and put the same person into a $105 million a year business and they could be terrible, right? And so I think, again, this is a society at large. We wanna simplify and be reductive with our ideas because we don't want to actually think through a conceptual level of what matters is like, well, what's an A-grade player? So an ideally who has relevant skill, if they don't have the relevant skill, they have incredibly good role skills and capacity to think. And they are beautifully aligned culturally. That's what an A-grade player is. It doesn't need to be anything else outside of that. If you wanted to make it actually understandable and usable on a day-to-day basis. The HubSpot podcast network is a success story partner. Now, real quick, if you like this show, you have to check out iDigress. It's on the HubSpot podcast network hosted by Troy Sandage. He's great for taking this stuff that feels complicated in business so that could be growth strategy, scaling all of it and just making it simple. At episodes around 30 minutes, you'll walk away with something you can use that day. Hule is a success story partner. Now, I'll be honest with you, I am terrible at eating well when my schedule gets packed. I'll look up, it's two in the afternoon, I haven't even had a real meal and then I'm just useless for the rest of the day because I'm hitting a wall. So I started keeping Hule around. It's been an absolute game changer. They just launched into target source nationwide, which is huge. You can walk right into your local target. Right now, grab the black edition, ready to drink and the daily greens ready to drink. The black edition, this is a full meal, 35 grams of protein, 27 essential vitamins and minerals, no artificial sweeteners, gluten free and it's under five bucks. 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So if you are stitching six tabs together to run your company, like adding most of us are sometimes, just go look at this thing, odoo.com start with one free app. The thing that I see people being concerned with in not pursuing this unicorn mythical A-grade player is that it grades the culture and the quality of the business and then it turns these, again, mythical A-grade people away from the business and it, there's a quote or a saying, it's like A-grade people, attract more A-grade but then like B-grade will only hire C-grade. Like something along the way. A-grade is recruit, A-grade is B-grade is recruit, C-grade is. Is there any validity to that? I think so, but again, without, you know, yeah, without like, shunning orthodoxy here a little bit too much, you know, I think what will, let's get rid of A-B-C, right? And let's say experienced leaders will recruit better than inexperienced leaders. So regardless of whether you're an A-B-C grader, whatever it's like recruiting is a skill. Leading and managing is a skill. And if you're good at those things, you'll probably recruit better people. If you're not good at those things, you probably won't recruit good people. But then I would also go so far as to say, it's like even if you're a good leader, manager, A-grade, or whatever it may be, if the organization is not incredibly clear on the culture, how do you recruit good people in general any level? And just to be clear, there's a thank you see in small to medium sized businesses because they're not, they haven't like codified, you know, they're like organization of culture. So they're really good at recruit people, anyone's a match, right? And it's kind of like young people on the dating scene. It's like early when you go to date, different people, you go to kind of what, how do I want to live my life? I'm like, who do I get along with? Well, you kind of got to go through that process, right? But the issue is that founders and the good founder entrepreneurs, they'll sit in hundreds of interviews, they'll recruit lots of people, they'll set the other, and they'll fail with that a lot. But then they expect that they can recruit a junior person, train them up on that person who's never recruited the person in their life. Is going to be a good job at recruiting the next person. I was just listening to an interview with Brian Jasky and he says he still focuses all of his energy and time on recruitment. And I think he made a point and he said, if there's a person, he's talking to a C-suite. He says, if there's a person who you feel like you can recruit without my help, they're not good enough. So he sees recruitment as the most important. It's a little bit like, it's a bit like product, though. Like I know, there's a lot of this all the time. I found I was like, oh yeah, yeah. It's been so much time working in product. I'm gonna recruit someone to come and take it off my hands. I'm like, why the hell do you think the business is successful? Like you see and understand things in this particular arena that other people don't and what you think you can employ a person, there's these sorts of ideas that just make no sense here when you shine a light on it. But there's like ideologies that a lot of people want to run their business behind it again. As a founder, you can't do everything. No, that will try. Yeah, that's an impossibility. But I think the people thing is a really, really big deal. And one that's very often misunderstood a lot of the time employees will fail in inverted commas and then they get you know, terminated and managed out. I'm like, well, if you did like an analysis of that like a post-exit analysis, do you think that person was right to begin with? So if you get all the way back to like, when you recruit at them, were they a good choice then and maybe they were. Then the next question is, well, were they on boarded and actually like set up to succeed, you know, well at the very beginning. And then if not, it's like, well, are we surprised? Seven, eight, nine months later, that they've been terminated or we've, all they've exited, is that a surprise? And a lot of the time, not all the time, but the majority of the time people go, oh yeah, look, I mean, I probably shouldn't have recruited them and they weren't the right person. Oh, they go, oh, you know, well, I really didn't actually like manage them well. No, because we get so excited after we find the right person and then because at least something that I'm aware of for myself, I can't speak for everybody. But sometimes I get so excited hiring somebody because they're so competent. And I'm like, oh, they're hired, they're competent, great, go do your thing, I don't want to micromanage. You don't hire a great person, a micromanage, but there's a difference between micromanaging and being overbearing versus onboarding them properly. Totally. And also too, I think like micromanage is a broad term. So like for me, I'm like, I am fanatical about detail. Like unfairly in lots of scenarios, having most good sounders out to be honest. Well, yeah, but this is what I was about to say. I was like, but there's certain areas, well, you have to be. Well, and so yes, you might not want to be overbearing for like a management, you have a perspective and be literally peeping over the shoulder at this screen for eight hours a day. But I think you're like, whether you're on product stuff, customer stuff, brand positioning stuff, whatever it may be, is there certain things that's like, you can't really get worried about upsetting people with detail and micromanagement. Like if you want to win, you put a win. And like when you look at a lot of the society would call a lot of the best founders, like what do you reckon, like Elon Musk is like, arm zinc from the detail? No, the dude's literally on the production floor. Like Steve Jobs, same thing, Bill Gates, not as publicized, same thing, Jeff Bezos, not same thing. And this is why I actually think they get a bad rap because they are so into, like Elon will learn everything about things that he knows nothing about just so we can have an educated conversation with the person who's responsible. Which again, and maybe not everyone is blessed with the intellectual faculty that he has, but I think in a general sense, for most of what small to medium sized businesses do, and which is respectfully nowhere near is complicated as building rockets and sending it to space. But for most of what small to medium sized businesses are doing, I think people can learn all of that. And at least learn enough to have a reasonable conversation, you know, performance marketing, branding, content, some basic finance stuff. Like I think that's all the majority of the population can at least understand the fundamentals of that enough to have a conversation with the people that they work with. And I think if not respectfully, you potentially being a little bit lazy. I agree with that. I think that all the business, like to get my side of the business is the sales marketing a little bit of product less technical, even though I was running companies that were technical, so I have to understand a bit of it. But from my experience personal and with like the people that were my peers on the sales and marketing side, the companies that were successful were led by founders who learned all these skills at least a rudimentary level, especially sales, which is very important. All the companies that I ever saw being successful were founder companies, like founder of the companies, and the founders started off selling the product. They understood how to develop demand, build a pipeline, close a deal, and then they took that, and then they hired, once they had too much demand, and they couldn't jump on the calls or speak to all the customers, then they hired somebody to help with that part of the business, but what they didn't do was say, I'm a technical founder, I'm a product founder, I don't know nothing about sales, let me go hire a VP of sales, and then just figure it out. But entrepreneurship is kind of, in one way, shape of form is really this idea of ultimate accountability, and if you're just just to make it reductive, if you're a solo founder, even more so, because a lot of the time, you'll have a product or tech guy and a marketing, a sales guy, and then they'll be friends, or you have an operator and a product person, whatever, there's a few different combinations there, but if you are a solo founder, you kind of got to understand a little bit about all of it. And also too, I would argue that not even just getting to a point where like, okay, called checkbox, like I understand this thing, that's fine, but you still need to have some persistent degree of curiosity about all areas of the business over time, and also argue too, as a point before, like we get excited to recruit a person, if you become not at all curious about an area of the business, because you recruited someone to manage it, no matter how good that person is, one way or another, they're gonna end up off-pieceed, because you're not in the detail enough to maintain alignment, and I think it's like maintaining alignment thing is huge too, so you can get really good people, do a smart hard work and all that sort of stuff, but if you haven't been like really clear about where you're going and why, then you end up, everyone ends up running off in slightly different directions, right? I want to speak about some of the mental models that have been most useful to you, and I think this will be a great way to just like, close it out with some strong ways to think. So are there certain ones in particular? Frameworks, I mean, whether or not you want it to be like first principles thinking, like you pick the ones that have been the most useful to you on your journey, because I think the goal of this podcast, you've gone into a few different things, but ultimately I want to leave people with how do they actually think through problems, because that will probably be much more beneficial and useful to them. No, no, totally, you know, look, there's an unlimited amount of things here. The ones for me that I find myself using the most often, so this idea of like inversion, like the inversion principle, Eric and I would use that five plus times a day easily, and when I'm referring to that, I mean, something on the lines of gel a lot of the time in teams, we'll talk about like, hey, is this the right decision? Right, and we'll go, okay, well, yes, I think it is. Okay, why is that the right decision? I think it's the right decision because of these things. And it's all about, well, I think this is right, so I'll convince you it's right, right? Which leaves you then incredibly vulnerable to, well, how could it go wrong? Right? And so a lot of the time I will invert, you know, those conversations as someone goes, hey, this is the right thing, and I'm like, well, what would need to be true if this was definitely wrong? Right? And so I will reverse reason. Yeah, with a lot of these topics, because I think, again, came back to the point before, and failure makes everything really clear. I think if you position this decision immediately into failure and then try to like solve back from it, that makes things a lot easier from a problem solving perspective. So I think that's one thing. I think the second thing like along that line too is there's this idea that a lot of people make like decisions agnostic of commercial logic and reasons. There's like, oh, is this campaign a good idea? You know, is this brand activation and good idea? And we go, yeah, this is a cool idea. It'll be great. I'm like, okay, but what are we getting from this? And so I refer to this as like the car principle, the car framework, which is really basic. It's just the cost, the assumptions and the return. Right? I like that aspect. Yeah. It's something I came with, I think I came up with it. I don't know, but like a long time ago, and so I will very often say to people that I work or they present me a great idea. I'm like, okay, well, convince me like, what's this going to cost? What are you assuming is going to happen? And then base of that, like what's actually going to be the return on the other side and coming back to a point that we were talking about earlier around judgment. My job or a manager's job or an executive's job is then to look at that kind of car proposition, if you will, from your particular employee and go, okay, well, three really basic questions. Like, one, do I think that those costs are reasonable and right? Yes or no? Two, do I think the assumptions they've put are reasonable and right? Yes or no? And three, base of the assumption the cost, do I actually think that this return is likely to generate? So it's a really simple, like, reductive way, both for really junior, like, young employees right at the beginning of their career, all the way up to executives, you can have varying degrees of sophistication of how you present it, but at a conceptual level. To me, that's probably one of the best models to get teams to adopt, because what's the issue with a lot of junior employees? Everyone goes, oh, they have no commercial argument and blah, blah, blah. I'm like, how do you think they get that? Like, teach them. You know, so for me, this is really good. And I think these two things in combination. So, you know, I'll get people to, we use this framework or the one three, one framework. You know, show me the idea that you've got, give me three different solutions or like, you know, potential outcomes here and then recommend one to me. But when you're recommending it to me, recommend it to me showing the cost, the assumptions that return. And then when you come to me, I'll try to prove to you that you're wrong, which is inversion. And so this creates culturally, it's a really good idea, but pragmatically, it creates a decision making environment that's effectively based on, well, I explored model options. I think I found the best one. The best one is based off of these cost assumptions of returns. Now, your job is to try to convince me it's wrong. And if we can't say that one of the other three options is better and we can't convince you that the cost assumptions of returns are silly, well, then we should just do this thing. Right. And so it makes this decision making velocity feedback loop and your education piece like ingrained to the way a company operates. As opposed to, I'm big dog, I want this option. You're no one really learns from that. And also too, then when it fails, I go, oh, well, you gave me a shitty recommendation. So it ends up being culturally bad. But if you, I think you do things this way, with inversion, one, three, one, and you're the car principles, the decision making becomes very rigorous and it's incredibly valuable for employees from an educational standpoint. It also removes emotion. So yeah, yeah, sorry, yeah. I mean, I'd start from a position of no motion, but yeah. No, I think, you know, I didn't mean to, yeah, I didn't mean to say that you've left that part out. I think that it's just an important piece of it because I think that how every time you speak about a principle I'm thinking about, okay, so why don't people use this already because a lot of what you teach is very logical and pragmatic, which is hard for all the people, right? Like, as in, it's easy and this comes back to the point before around your knowledge and skill. I can say this here is this knowledge, right? And you can even take that away and put it in a document and then give it to an employee, right? But there is skill to using the knowledge, you know, to then actually make your decisions and the skill normally gets becomes redundant because of bias and emotion, right? And yeah, it's always been a fascinating thing to me. I mean, I am the way I am and, you know, that is me. But that sort of stuff from a decision-making point of view was never really like a huge meaningful blocker to me. Awareness was a big blocker, but the emotional stuff not so much. But yeah, with a lot of people I've worked with, it's a really good point you raised that sometimes they find it hard to be objective or at least as objective as, you know, we ever think we're back. I noticed it this morning. I pointed something out and somebody took offense to it because there was a personal skill that they had built and I said that the execution of said skill was not entirely appropriate for what we were trying to accomplish for a client. And for me, it was such a, it was, it was, there was such an obvious error. And but I realized that the error and the communication of me pointing out the error, it was like a video edit that we did. We screwed something up. And I realized it by pointing out the error, the person, the editor didn't see the error. They saw me questioning their skill set. Yeah, which is within emotion. Yeah, which is fascinating, right? And I actually have found that normally the really skilled experience people, not always, but normally the people who are really skilled in the experience, they can often actually take to feedback more emotionally than someone who's a beginner. Because the beginner, if the, you know, a self-aware that they're a beginner, you know, they normally go, okay, well, I'm a beginner. You're not a beginner, thanks for the feedback. Right, whereas if someone who's like super experienced, you say, I'll go away and do this thing. And you go, oh, actually, yeah, no, that's wrong. And they're like, oh, well, it's not actually. You know, and all you have, you have like emotional, you know, responses, which to be clear, I'd argue that, and I've always argued this, business is actually relatively straightforward, simple, mathematic, in most cases, not all. Yeah, brand product, there's this, some kind of nuance and qualitative stuff. But this thing that makes it really complicated, there's actually people, both inside the business and outside the business, and just to be clear, when I said that, I'm not talking about the customers, because that's a skill set to work with that. But like, I think internally, you're getting 10, 50, 150 people of different personalities, backgrounds, values, and beliefs to align, you know, on a goal, work on that respectfully, you know, provide feedback and receive it, you know, with best intent, you know, these sorts of ideas, they're actually really bloody hard. What would be one mental model that you are currently applying to yourself, not your business at this age in your life? So something I touched on before in a few different ways was this idea that, you know, of like a frailty or fragility, like of the situation that you're in. And I think one of the things that I try to reflect on all the time is that the better I get, you know, however you receive that, so knowledge, skills, result, sort of, maybe the better that I get, I have to match that with an increase in humility. Because the more you learn about things, it's really easy to fall into this thing of like, I know now, and I'm experienced, right? And so I've often tried to sit with this, like, concept and idea of like, you know, be like a perpetual learner, but a perpetual beginner, you more specifically. And that's saying that I've gone through sort of multiple different ways with my co-like, I really understand this topic now, but I'm like, but I don't want to think that and feel that because it makes me blind to the obvious stuff. And when you're early on at something, the stupid shit is obvious to you because you're learning like, what the hell do we do that and people go, oh, yeah, actually, I never ever want to lose that. And so yeah, for me, I'm spending a lot of conscious time and effort trying to bring myself back to like, yeah, always try to be a beginner. First of all, working people connect with you. Yeah, I'm following you online, LinkedIn and Instagram. Love to kind of connect with anyone that, yeah, he's a kind of chat business. So I just love this stuff, man. So no, I appreciate you. You were fun to chat with them. What's next for you? What do you want to work on? Is it just building another 17 businesses or? No, yeah, look, I've learned heaps from that. But no, I think for me now, I'm in the transitional phase of my career from being a founder operator to an operator investor. And so I'm operating a few businesses at the moment, but I'm also investing in a whole lot. And I would have thought that, you know, over the next five or 10 years, if I'm kind of reasonable of that, I probably end up being almost exclusively an investor is where I would like to end up. Wildly different skill set. Honestly, yeah, talk about going back to being a beginner. You make a bit of money from an accident. You're like, oh, cool, I'll invest that whole hold on. What the hell is this? Yeah, and it's like it's a completely different world, but it's what I'm really passionate about. And I hope that bringing the founder operator aspect gives me some sort of advantage at that. Other to people who are just professional investors, basically. I will hope that when you figure out that craft, you can come back and do another episode. Yeah, we'll be back here. I appreciate you so much. Last thing I like to end with, if you go back and tell your 20 year old self the most important piece of advice you've learned, why would that be? Yeah, honestly, care less about what other people think. Yeah, I think especially in my early 20s, I was so convinced that I didn't care what other people thought. Yeah, and then by my mid to late 20s, I was like, oh, shit, actually, no, I really care what people think. And then you get to my 30s and I'm like, okay, I'm starting to get a hold of what I care, you know, about other people's thoughts and how I separate my own self-assessment, you know, relative to that. But yeah, I think like, you know, to me, I think I would have done lots of other stuff faster and I think would have done lots of other stuff better. Yeah, if I was actually just focused on that stuff, you're not focused on how other people might, you know, consider all or look at that. And again, you're different in every country for every person, every life. But for me, I definitely feel like that's saying they're like, help me back from a lot of decisions, not from making the decisions, but from making them quickly. You know, I think speed is the game of entrepreneurship.