Do This If You Want to Build A Business You Love (Dave Ramsey Interview) | Ep 844

You're about to see a fascinating conversation I had with Dave Ramsey, where we talk about how he makes money, the advantages of in-person versus remote, a project that he lost millions of dollars on that I think has underlying lessons that any business owner can take from them. And finally, 5 stages of scaling all entrepreneurs go through. I think you're going to love it. Enjoy. Welcome everyone to The Game. I'm here with Dave Ramsey, the man, the myth, the legend.

Honored to be back with you, my friend. I'm so excited with everything that's happening with you guys. You're blowing up, man. I'm proud to watch you. It's great.

Well, thank you. We're, uh, we're trying to, trying to follow in the Ramsey footsteps. There's so much stuff that I had written down, um, and prepared for today, and I doubt we'll get to all of it, but if you could walk me through just kind of lay of the land in terms of Ramsey Solutions as the business exists today, because I think it'll be helpful for the audience to give context.

Yeah, what, what ended up happening with us was we classic entrepreneurs, um, you know, we were, um, a wee bit ADD And so, uh, you know, just something, something flashy and shiny went in front of us, we would look at it because, uh, but it all came through the funnel of, or the filter of, does this serve our mission? And our mission is just to help people, uh, with common sense education and empowerment in some area in their life. It started in the money piece. And so when I first started, I was doing a free, uh, I was working for free at a talk radio station. Doing a little talk radio show on the local station. And I print a little book, start selling it out of the trunk of my car. So publishing was born, right? Uh, then we did an event at the local Ramada Inn. So live events were born. And so each of these, uh, in those days where everything was analog, of course the internet comes along and one of these kids working for me comes in and goes, hey, we need a website. And I'm like, what's that? And so we built a website. On one of those tiny little, uh, antique— you ought to look them up, they're cool— those little first little Apple computers, the first little— they look like a little shoebox. And, uh, he built it, built us a site on there with ColdFusion, and it was pitiful, but it was still cutting edge. Uh, it was a big time deal in those days because nobody had a website. We had one of the first people had a web store to sell stuff because it was a platform. Again, platform, platform, platform. So we're platform agnostic, and anytime we see a new owner emerging platform analog or digital. We're going to put our toe in the water and keep doing the ones we're already doing. We're not going to abandon them. If they die on their own, fine. Uh, if something runs its course, we're done with it. But, uh, but, but, and you know, we just go on and do the next thing. And guy walks in my office in the early 2000s, says we need a podcast. And what's a podcast? I don't know what this is. And we were one of the first, uh, certainly one of the first in talk radio to put a podcast out because the talk radio people resisted it. They were afraid it was competition. So on and on and on and on it goes. And now we end up today, we've got about 14 profit centers here inside the organization today. There's about 1,100 of us, 650,000 square foot campus that were, you know, that you've been here and hung out with us at our home. And, and so we've got the EntreLeadership brand where we're teaching leadership and coaching small businesses, and we've got events around that, books around that. The book we're talking about today is from that that idea. And we've got a huge coaching business in that area, coaching small businesses, 200 and fewer team members. And we're not real good with the large corporate goobers, we don't help them much. So, and then we've got the— obviously we've got all the stuff in the money space. Financial Peace University is now digital, it's no longer a VHS or a DVD or even an MP3, it's a digital format. We're rolling that up into— slowly, we're in beta to slowly start to move pieces of that into the EveryDollar app, uh, which is the largest budgeting, one of the largest budgeting apps on the planet right now. We've had 50 million downloads with that. Um, that app is huge. It's exploding and it's fabulous. It's very robust. Our tech team has done an incredible job. So that's the digital, very scalable thing, you know, on, uh, you know, one of the barbell. And then we've still got coaches over on the other end and we still do small high-end ultra VIP platinum events where 25 people go to my event barn at my farm and hang out with me for a weekend. So we go all the way, we stretch the spectrum from the high margin, high touch, expensive thing all the way over to free on the EveryDollar app or free on the podcast consumption or the YouTube consumption. Probably more of an answer than you wanted, but that we're all over the place. And all of these things, though, have to do with just, is there another way to preach this message? Is there another platform? So we're platform agnostic. Someone said, you're, you're a best-selling author. No, that author is one of the things we do. You're a talk radio guy. No, but talking on the microphone is just one of the things we do. Uh, we're not, and we're not, we're not married to any of them. I got one wife and that's, that's plenty.

All right, I have a, I have a bunch of follow-ups on that. So With all these different profit centers, number one is what you have 14 and it's been how many, it's been 40, how many years? 35 years, 40 years. How, since you started?

About 35 years.

35 years. So it's roughly like one profit center per, per 2 and change years, right? 2 and a half years almost, uh, on the nose. Um, that gets started.

It's been more than that cuz we've killed some along the way. Yeah.

Even better. So what makes something worth pursuing versus what makes something a no? Is it just it's on mission? Because I would imagine that there's— you have resource constraints, you can't do everything that you would love to do. So what, what makes something, quote, worth doing versus not worth doing?

Well, these days we are much better. In the old days, I was just— we just did it. I mean, it was like stupid. I was just stupid. And but nowadays we actually do run a beta on something and we look at the ROIs. and we look at the customer acquisition cost, the ROAS, and so forth. And we're looking at, um, you know, is, is this a good use of our bandwidth, of our marketing bandwidth, of our, um, of our leadership time frame, you know, the time invested, um, overhead, uh, committed to this project. And so, uh, I mean, we can, you know, we, we drop a lot of stuff in the test bucket, and, uh, but if it doesn't— if it's not going to have a great ROAS, if it's not going to have a great conversion, and if it's not going to have a great margin when we're done, uh, we can't afford to do it because of opportunity cost. We can afford financially to do it, but, but the missed opportunity on something that was working 10x of what this little thing that we fell in love with over here but sucks, um, you know, we have to just let the thing that sucks die. And it didn't make it out of the test tube. That's all it amounts to.

You take more of a test quickly, lots of ideas kind of strategy, and if something hits, then you double down on those things. Is that kind of how you think through kind of new product or expansion of kind of like profit centers, I think is what you said?

Exactly, and/or can we iterate it 5 or 10 degrees and cause it to work? I don't kill everything instantaneously, but I mean, if we're gonna invest even enough to get it into the test tube, we're gonna iterate, iterate, iterate, before we kill it, but when we lose hope that the thing is gonna have a scale or have a margin that is commensurate with the resources committed, as you said, then when we lose that hope, we've got to be grownups and go, "Eh, I really like this thing, but it's not good business." So with these new endeavors, the first thing I wrote down when you brought it up was, who does new?

And the reason I bring this up, because I'd imagine a lot of business owners have many ideas. You know, you said it earlier on, like shiny object, like, oh, this looks exciting, this looks exciting, this looks exciting. But for something to work, you typically have to have talent overseeing it. And I would imagine at the point that you're at now, you're probably not overseeing each of these kind of new profit centers or new ideas. Maybe they're, you know, brought to you and you review the metrics, but you're not really driving unless you are, in which case this is an open question. Who, who does new? Because are you going to take resources from something that's working? Are you bringing somebody new in, or do you have a specific testing department that's all they do and then they hand it off to somebody else? Like, can you walk me through that process?

Probably a, a hodgepodge of a little bit of all of that. I don't do it, no. Um, but, but what we have created is this collaboration, uh, freedom, uh, for anybody to throw an idea on the table. And then you got to defend it. You got to make a case for it. And so you can't just throw it out there and go, well, you guys go do that now because I'm so smart I came up with it. Because ideas are a dime a dozen. People who can implement them are the problem. Any one of the profit centers, for instance, EntreLeadership, okay, so it's got several components to it. It's got a digital component, EntreLeadership Elite, which is a digital coaching product for small businesses, right? So if somebody comes in and says, I got a great idea to add something, a tool to that digital product or whatever, that's usually going to bubble up somewhere in that EntreLeadership team from the vice president who's running that, Jason, or, you know, John Felkins, our senior coach over there. So he's got a lot of— him and his coaches, they're on the front lines, they're interfacing with a customer all the time. The customer's going to throw needs at them. They went, okay, we need to serve this need. How can we do that? Is that a digital thing? Is it a coaching need? How are we going to fill it? So fill the need, fill the need, fill the need from an entrepreneur's perspective. But what we do is we give a lot of power to the vice president of that particular business unit, uh, or sub-business unit, uh, to bubble things up. And then on top of that, if somebody's in another whole area, they're more than welcome to, you know, pull the pin on a grenade and throw it over in another area and go, hey guys, I got a great idea over here, I want to blow some stuff up. And so, but again, you've got to defend that, and then you've got to defend the, the resource usage to take it forward, to take it past gleaming idea that I had while I was on the running trail this morning, which you get a new idea every freaking morning if you're doing this, you know. It's just— and 90% of them suck when they actually come in, but when they're on the running trail, they're all great, you know, before they see the light of day in the actual business climate. So anyway, I'm convinced that, you know, everything Ramsey has done has been on about 10% of our ideas. 90% of them, when they made the light of day, sucked. And some of them really suck bad, but you know, you don't know that sometimes till you get in there swinging. So all that to say, it's bubbling up. Occasionally we'll have something that doesn't have a home, and we have a special projects win team that is an incubator. It's a Shark Tank, if you will, for ideas that don't— they can jump in. And so you've got some senior leaders representing several of the disciplines that sit in there, and special projects works on two things: broke things broken, you know, something— an area's got the flu and it's, you know, we're not meeting budget, we're not hitting our revenue goals, and it's a, you know, it's a good-sized thing and it's a problem. I sit in that, I sit in that work team. That's one of the things I sit on. It's one of the groups of work groups I sit in because I'm entrepreneurial and I love working on broken things. And we'll take a baby thing in there that doesn't have a home, an orphan, and, uh, you know, put it in NICU in there and let's get this thing, let's get it nourished. Let's see if we can get it moving. And see if it can survive. If we can get the thing to where it's past beta and it's actually— the business has actually got some social proof, we'll make it a new profit center, or we'll drop it into one of the existing ones that even though the idea didn't come from them, and go, look, this fits over here the best, so we're going to drop it with you guys. And, you know, we'll send a leader— when we send it over there, we'll put a new leader on it. and let, and then start to staff it out.

So when you put a new leader on it, that, so that was the who does new, that was kind of the heart. Um, so when you put a new leader on, is that, do you typically pull like a junior, like if your VP is head of a division, you pull somebody who's kind of one of their right hand, they get the opportunity from a career pathing perspective that they can run this new thing? Or like, how do you think through, through bringing those leaders in? Are you mostly, yeah, I would just love to know, how do you think through, through that part?

Probably 80%, maybe even 90% of the time, it's in-house. And we're constantly working on bench depth around here. And so we've got somebody waiting in the wings, and it might be them that, that birthed the new idea and brought it into special projects, you know. And so they may have been rocking the baby for a little while, and then they just get to— they get to grow it on up, right? They get to give the orphan a home, and they, they become the new mama daddy of the, of the thing. So Um, uh, yeah, that's how I like to do it, because if the person— if it was born in their heart, they will, they will fight all the enemies internally and externally for the survival of their baby. I mean, and they'll champion the cause, baby. I like the P— I like champions, uh, you know, they paint their face blue and, uh, you know, and, you know, ride a horse with a big sword coming through the thing to get everything. And, and Sometimes you got to set them down. I would a lot rather try to take somebody like that and pull them back and polish them a little bit than trying to light wet wood.

Light wet wood, that's a great analogy. Well, when you, when you start these new divisions, and I think I, I want to— the reason I'm hitting on this is because I think it— if you asked 100 entrepreneurs what's the number one thing that, uh, you wish you could do, would probably be more new stuff. And so I, this feels like a very, a very relevant thing to talk about. And I think that happens at all levels because, you know, in the beginning, uh, you're just barely figuring out what's going on. And so you're just trying and seeing what sticks. Later you have more resources, so you think you can do more. Um, but oftentimes you also distract the team, they feel whiplash, and then sometimes the core business starts to falter because everyone's looking at the new shiny toy rather than the main game.

We started it with one area, and it was tech because tech was exploding, uh, 20 years ago. And so, you know, we had the web department, you know, that's what it was called. That's how lame it was, right? And so, but these— so these, these, you know, these programmers and tech people are all sitting in a room, uh, but they're getting paid off the P&L of that profit center. So the guy or gal running that profit center wants some freaking accountability. But instead we had them just over here. They were on their own little island and we had to break that up. And that's when we busted it about— it's about 20 years ago we went to this matrix approach.

Well, this is a great segue. Um, so with each of these VPs, I would imagine these are, you know, among the most valuable people in the business, right? Because they're, they're fundamentally running a business unit.

Yeah, they got literally a P&L and they literally get paid off the bottom. Would they get billed for portions of the overhead, the rent for the building in their area, as if they were a you know, a standalone business, so to speak. So we're job costing, if you want to use accounting terms. And, um, and then they get paid off that bottom line. So if they— if their bottom line goes zoom zoom, their personal income goes zoom zoom. I, I want them to be very wealthy because that means they made me a lot of money. And so I love it. And, uh, yeah, and we want everybody in the building doing that. Also though, we have a high respect for the C-suite. We have a high respect for that senior marketer, uh, and the, the value that they bring, not just the entrepreneur running the, the vice president's role. Or again, a senior VP sitting some of those, and even some, uh, executives, uh, some of our operating board members sit in some of those seats. But, um, but that's how, you know, it all rolls up under a business unit.

And then the C-suite, I imagine, gets kind of compensated from the company overall.

Yeah, because what I've got is our operating board is half C-suite and half business units. And so what we've got to have is we've got to have this, um, uh, we have to have an accounting system and a budgeting system that serves the business units and notifies the rest of us if the business— how the business unit is performing. And so, uh, it's not really optional. You've got to do that. And if you're a, uh, a bootstrapped entrepreneur that came out of sales or marketing, you might not know how to do all that accounting stuff. And so I got to roll some accounting support up under you to make sure that, that you get to keep doing the stuff you're good at. But we also actually want to count the beans and make sure there are some, you know, pay taxes. Yeah, there's stay open, stay out of jail, all the good stuff.

I get, I get this question a lot, so I'm curious your take on it. Um, equity packages, stock shares, anything like that? Or is it all pure based on bottom line profit? Is that the kind of the performance compensation, uh, component of the, the leadership that you bring in for either business units or C-suite?

You know, when we first, uh, started sharing off the bottom line with people, that's when we had to answer the equity question, was are we going to, um, let someone have stock? Okay, so our end game We decided a long time ago, Endgame is not going public. Endgame is perpetual operation generationally. And so it's what Simon Sinek calls the infinite game. Okay, we— so we don't have an exit to an IPO planned. We're not doing that. We've decided distinctly 25 years ago, not doing that. We don't have a sale of any kind to a VC or anything else. We don't have a liquidity moment anywhere on the horizon at all. If you do, it would change what you're doing, maybe, okay? Because if you're going to take the thing public and you give some people some equity, that's not a big deal, okay? But if you're running it infinite like that, and, um, about the only thing that we're 100— about the only person in the building we're 100% sure is still going to be here is me. Everybody else could, might someday want to leave or have to leave. And so, uh, and, and I didn't want that. I wanted everybody to stay forever because I love our people. And I, I, you know, there's some of my best friends or my leaders here that, I mean, we do stuff socially with our wives and husbands and everything else. I love them. I've got high respect for them as human beings, as their spiritual character everything. But still, I have over, over all these years found that sometimes people leave, and I cry a little, but I cry a lot if they took stock with them. And so, uh, we don't have any equity positions at all. And, uh, you, you make unbelievably good money when you move into leadership, and you're paid off the bottom line here, like lights out scary good money. Um, like nobody, nobody does what we do. We're so freaking generous because these are the people that are running the thing. They're the people that through this, they deserve to get paid like they're a partner. And so I, I have zero greed over that. But you don't own anything. I own 100%. Well, I don't own the stock anymore. My— it's in my kids' names, uh, uh, from an estate planning standpoint. But, uh, and they're, you know, my grown kids, my— the, the next gen, uh, of, uh, grown Ramseys. So, but, uh, so I mean, I got 1%, to be clear, but the only voting stock. But the, uh— but anyway, no, in other words, no equity. There's no equity anywhere except Ramsey's. That's it.

Oh, I love that. Um, I would say Layla and I have a similar perspective on acquisition.com in that it's kind of our forever business. You know, we plan on just continuing to own it and continuing to operate it. You know, we will enter— we kind of see it as the goose versus the eggs, uh, at least how we think through it, which is probably like— we use different analogy but similar. You have 14 profit centers, those are the eggs, and then the goose is like, why would we get rid of acquisition.com? It's It's the, the mothership to, to use your language. So it brings, so that brings up, uh, two, two different points that are probably somewhat related. So one is, is 100% of Ramsey in person or anybody? Is anyone remote?

No, we all work at work. Yeah.

So there's no, like, like you don't have like exceptions where like, you know, uh, like editors or for, for, for social media or, you know, maybe some of the coaches or something like that could be remote. Everybody moves to um, to Tennessee.

Yes. And the, the, with the exception of the occasional temporary thing.

Yeah, of course. Yeah, contractors.

But in terms of the actual structure, and the reason is very simple, um, our quality of communication, in-person communication quality, goes way up. And so things are actually communicated. We all know this. Anyone that's got walking around since knows that 85% of communication is, uh, is body language and tone and pace, not words. And so, um, uh, when you are sitting beside someone, you can feel the spirit of what's going on, and you are getting a whole different quality level of quality of communication. What that does is it increases two things. It increases trust And it increases productivity. And then those two things increase speed because organizations move at the speed of trust. And so when I am not sure because I'm using a text or I'm even a Zoom, and I'm not really sure what she meant or he meant, I can't really tell if they were being passive-aggressive. But if you're sitting with them, you know. Right. If you're sitting with them, you know, and I can go, just go walk around the building and I can feel the air. I can feel it in the air. I've been leading a long time and I teach my leaders to do this. There's an old book, 1,000 years ago, In Search of Excellence. It was the Good to Great book before Good to Great, before Jim Collins did it. It was back in '92. And, you know, they studied great companies. And one of the things the managers did, they did management by walking around, just walk the floor of the plant. If you're in manufacturing, and feel the vibe of the workers. Feel the speed, feel the energy in the air. Look for, uh, chaos. Look for, uh, dirt and filth versus organization. Um, and I walk through, I smell food inside of our building. No, that's not cool. We have a cafeteria. You don't eat at your desk. Leave your salmon somewhere else. Nobody wants to smell that crap, right? And so, you know, they're just little stuff. But you just walk through and you can kind of tell, uh, you know, I walk past people, they're, they're on a, they're on a call, a coaching call on a Zoom call with somebody. I just pop my head in there, you know, smile, wave, and disrupt the whole call and then leave. Spread hate and dissension, right? So that kind of thing creates a cultural, uh, level of trust and productivity. Uh, I call them drive-by communications. I can just drive, I can walk past and I read through the weekly reports and, uh, so-and-so's mother's got cancer, and I walk past, just touch them on the shoulder and say, hey man, I'm praying for your mom, sorry about that. Third, you know, 6, 8-second interaction that does not occur if they're remote.

I think you might like this. I think it was either Uber, Airbnb— someone can correct me in the comments— but, uh, the They did a research study 'cause I think they were trying to prove or at least definitively know whether in-person versus remote, you know, which one is better, et cetera. And they found an "it depends" answer, which is, and I talk about this because obviously we're in person, we have a big headquarters here in Vegas, that especially, especially for the first third of someone's career, so basically like call it 18 to 35 is where those people get a disproportionate upside for being in person because of all of the unstructured learning that occurs that's not on your quote career path. You know, like if you're sitting right next to marketing and you're in sales, you know, you, you overhear, you know, what, what's going on in terms of the organic stuff. You overhear what's going on on the paid side. You, you start learning a little bit more about funnel, you know, about landing page and conversion rates and things like that. And then all of a sudden when you are on a sales call, you know, with a business owner or whomever and they bring something of that up, you're like, oh, I actually know something about that because, but if you were in an only Zoom environment, you lose out on all of that. And so I'm a big advocate, and because I obviously have a, a big, you know, percentage of the audience that I have that's in their early 20s, um, beginning their career, I would encourage you all to, to work in person. I really mean that.

I did read one— I did read one piece of research that you get more, uh, chances at promotion— oh yeah— in person than if you're sitting at home and you're only on the calls commensurate to the task assigned to you. And so, you know, we can add to this even further. You've been here, uh, we've got this massive, fabulous cafeteria, uh, restaurant at Ramsey. So, um, and on top of that, we drop several million dollars a year into that to subsidize the food cost. So you can eat here for about half of what you can drive down the road and, you know, get a fast food burger or whatever. Why do we do that? Because when people eat together, oh, that adds a whole nother level. When you break bread with someone else, it changes everything. And so what happens is people that don't work together end up eating together, and what you're talking about occurs. They learn from each other, they, you know, they talk about stuff they're working on. Sometimes they just talk about personal stuff, but then the next time an issue comes up, they trust that person because they've actually developed a bit of a relationship with them. I look over and our tech guys— and we got a bunch of techies in here, a bunch of programmers and stuff, and they're all over there huddled around some table playing some weird board game thing that I don't even know how it works, um, and, you know, that only programmers would play, right? And, um, or some weird card game, Dungeons and Dragons type stuff or whatever, I don't know. And they're having a blast and they're playing together and eating together, and that changes the whole vibe of the deal. I will tell you that if you just are only concerned about a task And that's it. A simple tactical, do this thing. That's fine for remote. But our stuff is always 100% of the time. We want more out of the interaction than the simple task being accomplished. And that's why we've stood firm on this. And we've lost some people to that. They want to go work and have work-life balance, which, or whatever they call it, and so that they can work from home. Uh, but what that actually means is I'm not planning to work 8 hours, right? Because if you're working 8 hours at home, you're not talking and interacting with your family. So I don't know how you added hours to your family unless you're cheating the company. And so, uh, I don't, I don't, I don't understand it, but I'm not mad about it. It's just why we've decided to do it. And then, but some people, some people jet, and we've lost some good people over that. And, uh, so we've had a lot of discussions about it here, but we're pretty firm on that.

There's a couple dovetails that I'll, that I'll hit on that. So one is you talked earlier about bench depth, and I would imagine that one of the best ways to build the bench depth is having more people cross-functionally learning in person from other leaders at cafeteria, at the water break area, um, and what have you. You also spoke about trust, uh, the speed of the company is based on the speed of trust. And I would, um, I would, I would, I 100% agree. And I think that translates into faster decision-making. And so I'm, I'm a big, I'm a big believer in the speed of decisions is the speed of the company, which can only be based on the trust that people have. If you have to double-check every single thing, then all of a sudden an approval process that has to get put in place, and then bureaucracy kills everything.

Well, and, and it, it interferes with delegation. The, the essence of delegation is trust. And so when I can let something bubble up from the bottom, it's because I trust the people that they're— that the idea is going to get filtered and vetted. It's— we're not going to go drop a million dollars on a bad idea. You know, and so it's not— I trust the competency of the people. That's a, that's a form of delegation.

And I think you spoke to two things there. You spoke to both competence and intention, right? So intention, you know, like, are they good at their job? And do they, do they mean, mean well? Which I think it kind of ladders up to on-brand versus off-brand. Is this a Ramsey thing to do? Is this the Ramsey way? Um, so if— just because I think everybody loves the good story— what's the most— what's the biggest goof-up you've had, uh, in 35 years on something that was off-brand for Ramsey that you were like, man, I can't believe we did that, right? Like, and, and what, what then, what'd you do about it afterwards? Because I'm sure every business owner's had a big goof-up and been like, shoot, that was bad.

You know, I, I, I don't know if it was off-brand, but, um, I think one of the most expensive things we ever did, uh, was that we got about several millions of dollars into the building of a debit card. Okay, a Ramsey debit card that it wasn't off-brand, it was right on brand. But, but what this was, one of those things we didn't know what we didn't know, banking regulations and, and so forth. So we're looking for a click-and-mortar bank to park the thing in because we're not in the banking business. We're certainly not going to open a bank. Good Lord, no. Um, that would be— there's no way. But, but there, there's tremendous, um, revenue potential in the transaction fees. And so we're looking at the Ramsey debit card and it's something that we could promote. We could brand it, had a nice little gazelle on it, had a nice little R on it, that kind of stuff. And, um, we screwed around. That, that thing was born in special projects committee. It was a baby, it was an orphan, and we put it— we brought it— that's a deal. We brought in an outside guy that knew the banking world and he still with us today, works in another area. He was a brilliant guy, really smart, and, um, I don't— I never want to lose the guy. But, uh, we got down into that thing and it, uh, you know, of course it has to survive through the pandemic, uh, and again, that, that slowed everything down, shut everything down for a while. I had to back— put it on the shelf, get it off the shelf and dust it off. Okay, get it going again, get the beta picked back up. Get the alpha picked up first and get the beta picked up. And I think we were at about 10,000 people in beta.

Okay.

And, um, the, uh, the, the, the, um, outside fraud, uh, bots started hitting the thing. And we thought that the bank had the, uh, the software to catch all of that. Uh, and then we're looking at, okay, we're responsible for these overdrafts that are being created. We have to cover them. In our contract, and real quickly the thing starts going sideways. And I'm like, man, I'm so many millions into this thing, I really don't want to kill this thing. But we're looking at the risk and the upside, and we just— we blew it up and we killed it. And I still got one of those little debit cards in my folder. I carry it to remind me of how stupid I was. We weren't stupid, really. We did everything correctly, but what we We were ignorant. We did not know what we didn't know about what our exposures were. And once those exposures became, um, evident, uh, we just had to go, hey, this is way scary. I can't breathe, and we're not doing this.

You're like, our losses could be infinite, huh?

Yeah, exactly, exactly. I'm like, yeah, yeah, if I write, you know, if we lose the several million we've got in it, that's, that pales in comparison to how bad this could be if we don't stop. So we're going stop now. And, uh, odd thing, the bank that we were working with, uh, later went sideways and was in the news and blew up. And so I think, I think, uh, God protected us by letting us X the thing early because we would have gotten the opportunity to exit anyway, or we would have to move the whole project to another bank when that bank blew up. But it was a click-and-mortar bank thing.

I feel like a lot of people have had that same, like, this is such a good idea on paper, why is this not working the way I want it to?

Exactly. And it was working. The customer loved it. We would have been able to track— and for the customer, track their expenses and give them report and feedback. The data we could have reverse furnished back to the customer was going to be— oh man, it was going to be beautiful.

Oh yeah, I mean, I see it. It's a— I mean, it would— it's compelling.

And, and the, you know, and we had written so many of the APIs and so much of the tie-ins, you know, to get all that stuff. We're running it on every dollar in the beta. But, uh, yeah, I got— it got hairy.

Well, let me, let me pivot from something, uh, from, from the super tactical of that to zooming all the way out. So a lot of entrepreneurs, myself included, you know, you start to, you know, build, build a lot of wealth, and then there's also the biggest percentage of your wealth sits inside of the enterprise that you run, right? And so how do you think about family office, it's like, you know, you start, you start getting this money, right, that comes into the business or comes out of the business. Excuse me. Um, do you have any kind of mental framework that you work through in terms of percentage reallocation to new, you know, new investments, uh, within, within the overarching structure? Uh, and where, where this gets more tactical for me to use, Layla and I have run almost everything inside of Acquisition.com. And that means like we own buildings, we own apartment complexes, all that stuff. It still sits in Acquisition.com. Obviously there's entity structures and things like that, but in terms of the team that helps run it, because, you know, Acquisition.com primarily is an investment, you know, it started as a family office, but it just, it spun up these other, uh, profit centers, to use your language, um, over time. And so I, I'm curious, have you Do you completely separate church and state, to use that language, in terms of, you know, Ramsey personal versus— yeah, can you just walk me through how you think through that?

No, we have done all other investing outside of Ramsey Solutions and in separate legal entities as well for risk management purposes. That's simple. And also for estate planning purposes. Uh, so for instance, the campus that you were on is, um, it's probably a $600 million asset, roughly something like that. Um, you own in cash? Yeah, yeah.

I just wanted the audience to— I just wanted the audience to know. Sorry.

So when we, when we bought the dirt to start laying the first bricks on the first thing on it, uh, that was a $10 million purchase, and it's the largest purchase I'd ever done in my life. When I bought the dirt. And I was freaking out, and I'm like, now I got to build something too. You know, now that I bought the largest thing, now I got to do something even bigger. And it's like, we're going to cash— so we cash flow everything, as you said, uh, but we immediately dropped that into the children's trust so that I'm not the owner. And, uh, and so you avoid, um, any— you, you don't avoid capital gains on the— or, I'm sorry, estate estate tax on the basis of what you put in there, but you do on all the growth. And so while we've owned this property, it's doubled in value. And so there's hundreds of millions of dollars that have now avoided estate tax by that being over there. Plus, if someone wants to sue Ramsey, which apparently is a hobby for some people, and then they, you know, that's not on the plate because Ramsey does not own the campus. Ramsey Solutions is a tenant of the Children's Trust. And then, you know, same thing if we own a bunch of other real estate, because I love real estate like you do, and I just buy that and then drop it into an LLC. And if it's anything over $10 million, I drop it into a single standalone LLC so that all risk associated with that property is contained within that property. And from a litigation standpoint, or, or maybe anything else. But, and also then that gives us some other estate planning things we can do with, because partial interest LLCs can be with one of the kids, can be, or a kid entity, a trust can be greatly reduced in appraisal value, and you can slip more and more of that into the estate plan and not have taxes on it. So we've been doing a bunch of that for 20 years and playing with all that stuff. And that, so the reason was estate taxes and risk management is the only reason it's there. Philosophically, it's all in one lump.

Well, that's exactly— and that really teases to the heart of it, because for sure the entity structure from a risk protection perspective, then, you know, uh, from, from a succession planning and avoiding estate taxes later, that 100% makes sense. I was curious about the actual team. So like, would the same legal team that does Ramsey stuff do some of these other deals? I ask because this is me selfishly asking because my, my, you know, my, my estate attorneys, you know, who manage all of that stuff. And I have our M&A attorneys that handle a lot of our, our, our deal flow. A lot of times we share, I share the same resources, same, same people for things that are, quote, personal versus acquisition.com. And I was curious if you had any like, like basically if you had had a mistake from that that I don't know about, I would love to know.

No, I have used— I've done both. So all accounting for the whole thing is in-house. Ramsey accounting team does it. Okay, taxes have been outsourced forever anyway. Estate planning has been outsourced forever. Nuanced litigation has been outsourced forever. But a little thing, if I need a— if I need somebody to look over a lease or verify that we wrote the LOI up. If we're doing a— I bought a piece of property this week and, you know, with— I've got it on LOI, I don't have it contracted. So, you know, well, my real estate team, which does not work for Ramsey, walk down the hall— they do sit here, but they don't work technically for Ramsey. Okay, they walk down the hall and run it past the general counsel, somebody at the general counsel on the legal team, probably. Yeah, but minor stuff. But pretty quickly if anything gets— like, if you're— if we're rezoning a piece of property, my legal team here does not do that. I've got— that's going to be an outsourced guy. I'm going to bring in a zoning attorney that knows what the flip they're doing and knows everybody at the county that can walk it through, because my guys would be stumbling around not knowing what they're doing down there. General counsel would be—

man, this— that was super helpful. For those of you who are, you know, further along in the path, like, some of this stuff that we're talking about with asset protection and entity structure, although it's something that you don't— I didn't— I wasn't like— I don't wake up every day and be like, man, I can't wait to learn about asset protection.

But it's, you know, I did not anticipate when I was 64 years old that I would own zero. I don't even own my cars. I don't own anything. Everything is in an LLC, and my wife holds the LLCs. I actually am a very poor individual. You know, we built this— again, we referred to it several times, but we love our campus, and I'm proud of this property. We've done a good job with it, but when we're sitting on the interstate, uh, 6-storey— 2 6-storey buildings with big huge Ramsey Solutions signs on them. And I thought, because I'm a real estate guy, I thought, okay, traffic count, that's branding. You know, people going up the interstate, they see Ramsey and they stop in and watch the show here because it's on the glass and it's all this customer interaction. And, and it was like, we're— you know, the stuff we're teaching is working for us. So it's proof text for the customer, right? And so it's branding and it's all positive, positive, positive. I had no idea that when you did something like build this building and put it on the interstate that you basically should have put right under the sign the words "Sue me" or "Bullseye," right? Bullseye, a little bullseye. Yeah, because I think people, some people got from that that this is now a target-rich environment. And then we've had to spend— we've had to spend some money convincing them otherwise, because I don't— I don't do well with this kind of stuff. I really don't negotiate. I'm gonna pound you into dirt. And I've got some of them that are 6 and 7 years now that I've been— that have been sitting in court, and I'm not going to quit. I'm going to destroy them because I cannot stand the thievery that that represents. It's— I can't stand a thief.

I love this so much. Um, I, I could, I could talk probably another hour on this, but I, I would have pivoted for the sake of the audience. Um, can you walk me through the 6 stages of scaling that you, uh, that you talk about in the, in your book?

Well, we came up with what we're looking for because the best-selling book we've ever done and the probably the most known thing in the entire Ramsey brand has been the Baby Steps, and that was the Total Money Makeover book, 12 million copies now. And what we discovered from that, teaching people the 7 Baby Steps, This is what you do if you want to go from broke to wealthy. Is it— when people have a clear path, it gives them hope, and they don't have paralysis of the analysis, and they don't have— if you have a clear map to get to Florida, your anxiety goes down if you're on the way to Florida, you know. And if you need a clear path— and so I didn't have a clear path running a business, and so I'm kind of making it up as I go, and I got a lot of bumps and scars and bruises. And, and I went slower than I should have because I didn't know, didn't know what the next step was. So as we've coached ourselves now through 30-plus years and about 10,000 small businesses, we're observing that businesses go through 5 stages. It starts with a treadmill stage when you're by yourself, you're a solopreneur, all revenue is based on you, all production is based on you. You don't even really own a business, you just own your job, because if you don't work Nothing happens! And so you come home from work and flop down on the couch— I would when I was at that stage— Sharon says what did ya do today? "I don't know but I did a lot of it!" Now exhausted... So if it's to be then up to me is not my motto but it is your motto. You get her done and that is fun; it's invigorating, it's a fun time. Still believe this business thing will be easy because naive at that stage, uh But it's not sustainable. You don't meet 10-year treadmill operators because you run out of breath. It's too hard if you just own your own job. They end up closing, going to work for somebody, or they end up growing the business. So what do you do to grow? Well, each of these stages, we figured out there's some things you do to level up. On that one, it's pretty simple: time management. You got to do what our friend Berger at E-Myth says, and that is to work on the business, not just in the business. So you've got to allocate blocks of time. You gotta start blocking time and say, I gotta work, I gotta have— I gotta start thinking about something other than Freaking Friday. And pay, you know, and the second thing is I gotta learn how to hire people, and I gotta bring on my first folks, and I can delegate to them so that someone is creating production and someone is creating revenue, both, that is not just me. So that if I'm hurt or I'm on vacation or one of my kids is sick and I need to tend to them, the whole thing doesn't stop. And when you do that, you level up, you know, get your first hire, you start a little bit of baby delegation here, and you get some good time management, you go to the Trailblazer stage. Trailblazer is just chaotic. It's crazy. I mean, you're trying to herd cats. You got 10, 15 people and they're running in 16 directions. Nobody knows what nobody's doing, but we're doing a whole lot of it, and it's Communication is, is really fun, and there's a lot of passion and a lot of zeal. It's a good stage. I love the Trailblazer stage. But again, it's eventually so frenetic that eventually you start to go, I really want to get a little bit more sophisticated than this because this is killing me. And so how do you do that? Well, you start actually doing some planning, which is a whole new idea for the tactical person like me. Because when in doubt, I bust something in the nose, right? When in doubt, I'm gonna run into the wall. Let's go do something. If I run into it enough times, it'll fall over. And I just start— you know, I got to stop being so tactical. I got to start thinking about long-term. I got to start really developing my first layer of leadership inside my team. That takes you up to the Pathfinder stage— or that's Pathfinder— up to Trailblazer stage. Trailblazer stage is the middle stage of the 5. I skipped one. And Trailblazer Stage is the middle stage of the 5. This is where you actually— where I first started hearing about strategic thought. I'm so straight commission sales guy mentality, tactical guy, that when someone said we need strategic thought, that sounded like corporate America. And I went, no, you just ought to go get your work done. And so, but then I started hiring some guys and gals that had MBAs and And they started— I think 100% of the MBA programs teach strategic thought as a primary thing. And so they start teaching me the value of strategic thought. They're like, look, you don't have to run into the wall. If you turn right and then turn left, you go around the wall. It's a lot less energy. You burn less calories. Calories. I'm like, how'd you know that? Well, I got above it. I had a 30,000-foot view. I wasn't just looking at the day-to-day, the moment-to-moment. Thank God it's Friday. Oh God, it's Monday. And so we blow past that. And we start actually doing strategic thoughts. So they— my MBAs that I hired and other people taught me strategic thought. I didn't know it, uh, and I always laugh and say I taught them how to work. So, uh, but, uh, you know, so we did that. And then you moved to Pathfinder as the fifth, and that's where it's really sweet, man. You're bailing money now. Everything— you got your systems in place, the processes in place, planning is in place.

What revenue levels is around? I'm sorry, what revenue levels would you like? Treadmill is like zero to a million.

You know, we tried to attribute it to that, and we could do that with our journey, but we really couldn't— it changes from industry to industry. So if I'm dealing with a guy that's got one heating and air truck and he's fixing, he's doing HVAC, you know, when he gets to 20 trucks and 70 employees, is he there? No, he could still be— he wouldn't be treadmill, but that doesn't necessarily mean he's Pathfinder versus Trailblazer, right? So because he could still be doing some of the dumb stuff 3 layers below what it looks like he should be doing. And that's what— that was me. That's what I did. The last stage is what we spent a lot of our time on, which is where we are today, and that's the legacy stage where you talk a lot about succession. What's your endgame? How you gonna hand off? And you've got a bench depth. It's the ultimate bench depth is how you're gonna replace yourself and, and move to the family office mentality, as you said, and those kinds of things. So we walk you through those 5 stages, show you a clear path, and then there's 6 drivers that drive those. I won't cover them all right now, but you know, it's, you know, it starts with personal growth. I am the problem and I'm the solution. I'm the thing holding the business back at every stage, and so I've got to get better at every stage, right? And purpose and people, the quality of your hires, the quality of your culture, the quality of the connectivity in the culture with the core values, all those things evolve evolve as you go through the stages and profit planning. And then you just cycle back through those 6 drivers. We think we've been through the 6 drivers at Ramsey probably somewhere 10 to 15 times while we went through the 5 stages because they change as you— you know, it's like you read a great book and then 4 years later you read it again and you're a different person, so you see different things. And so you change as you go through. But that clear path between the 6 drivers working to get through the 5 stages changes has set a bunch of our folks, our clients, our customers free. So we decided to put it into a book, and that's what Building a Business You Love is.

Well, Dave, I think we're close to, close to time, um, but I wanted to personally say thank you for the impact that I think you've made on millions of lives. I'm sure you hear it every day, but, um, I just, I want to say thank you because I think sometimes, uh, when you're, when you're at the top, you don't, you don't hear it as much. And so I think it's, it's, it's real good stuff.

Thank you, brother.

No, for real. And I think your heart is clear. I think people see what your intention behind it is. I mean, the man owns a $600 million campus in cash. He doesn't need your money. It's nice, right? But, but, but he doesn't need it. And I think I think it's really cool what you've done. I would love to talk for another hour on even like going from personal finance to, you know, the entrepreneurship brand. But I know, I know our, our time is limited. So anyways, I want to say thank you again for, for coming on the game. And I'm sure my audience will, will definitely, definitely have a couple moments of PTSD hearing some of the stories we went over and maybe hopefully avoid future PTSD by, by taking a right and then Very cool.

Well, thank you for having me. Let's do it again.

Yeah, no, awesome. Thank you. Hey, if you enjoyed this conversation, there's actually a second, uh, long-form conversation I've had with Dave. I had one, I think, 2 years ago. It's one of the top videos on the channel, um, that people seem to love. And so if you like this, you'll love that.