How to Build a Business That Can Keep Up With AI | Ted Horton Billard Episode

Welcome to the Legacy All-Stars Podcast. We feature inspirational stories from people who dedicate themselves to helping others. Here is your host, Alan Pavlosky.

All right, welcome back everybody. This is the Legacy All-Stars Podcast. I'm your host, Alan Pavlosky, and today's guest has spent more than 40 years learning how organizations really work, from overseeing presidential security details as a Marine Corps captain to the courtroom as a trial attorney to the boardroom as an executive and entrepreneur. Ted Horton-Bellard has served as managing partner of a national tax law practice, division head of a litigation unit, and adjunct professor of law at 2 law schools, where today he's principal of THB Consulting Services and fractional general counsel to digital niche agencies and other companies, where he helps founders and executives navigate operations, compliance, and growth. He's a longtime mentor to veteran entrepreneurs through the Jonas Project and a recipient of the Presidential Volunteer Service Award. Ted's new book, Beyond the Business Plan: Building Companies That Move at the Speed of AI, is a playbook for leaders who want their organizations to adapt and execute at the pace of AI now demands. Ted, so glad to have you here. Welcome to Legacy All-Stars.

Hello, Alan. It's a pleasure to be here. Thank you for having me.

Yeah, my pleasure. Well, let's get started. Let's jump right in. Your career started as a Marine Corps captain overseeing criminal investigations and presidential security details. How did those years shape the way you lead and make decisions today?

Well, I would say that that was really the first time in my life where I was prepared to execute a plan. And then with the understanding that if for some reason that plan didn't work out, I needed to be able to adapt, adjust, and then go ahead and execute an alternate plan in order to achieve the outcome. And so I think that that was really the first training that I had that helped me to learn what I think is probably nowadays perhaps one of the most important skills that anybody can have, and that's adaptability. Absolutely. As things are changing so quickly, being able to adapt to those changes is so important.

Yeah. You and I talked earlier about thinking on your feet, and certainly the ability to improvise and think on one's feet is such a valuable skill.

Yeah, certainly being able to communicate in an extemporaneous way is also an important skill. But I would talk much broad— more broadly about adaptability. Adaptability is going to include all kinds of things that help you adjust to whatever environment you find yourself in.

Yeah. So you moved into trial law, handling hundreds of high-stakes litigated cases before eventually running a national tax law practice and a litigation unit. Looking back, what thread ties all of that together for you?

It is kind of an unusual path. You know, I started out as a deputy district attorney and tried over 40 jury trials as a deputy DA. And was recruited out of the DA's office by the premier insurance defense firm in the Central Valley of California at the time, a firm called Clifford Jenkins and Brown. And I was fortunate enough to be mentored by one of the partners in the firm, a fellow by the name of Craig Jenkins, and got a tremendous legal education working under him. Got to represent some huge clients, major oil companies, major auto manufacturers, and then was eventually recruited away from that firm and then recruited away again. And what ended up getting me to sort of shift gears in my career was a trial result I had. Hmm. It involved one of the first civil cases where the question of someone not wearing their seatbelt was considered comparative fault. California had just passed the mandatory seatbelt law, and insurance companies didn't know what the value of a case was if the plaintiff had been involved in the accident, not wearing their seatbelt in violation of the law. Was it a 10% discount? Was it 20%? What was that percentage of fault? And so my case was one of the test cases, not by choice. It was a terrible case in terms of the facts. I was representing a Hispanic gentleman who looked terrible. He was a former gangbanger, had tattoos on his neck, but he was the nicest, most decent human being in the world. He was a father. He raised a family. He was also a foster parent, was raising foster He was cited twice for heroism in the county of Kern for having saved a fireman and a small child that had been overcome by fumes in a storage tank. I mean, the guy was just a real stand-up human being. He was a painter. And so he'd just gotten off work painting, and somebody brought a couple beers, and he had a couple beers, got behind the wheel of the car, but he hadn't metabolized those beers. He just consumed the beers quickly. They really hadn't gotten into his system yet. Gets up to a stop sign, stops, pulls ahead, and here comes the plaintiff who had right of way. She didn't have a stop, and she T-bones him. She ends up with comminuted fractures of both kneecaps. And at the time, the insurance company thought the case was worth about $200,000. The plaintiff wanted millions. And so the case ended up being forced to trial. After about a 3-week trial, jury came back and the plaintiff was found 87.6% Comparatively at fault for not wearing her seatbelt. And partly they came back so hard against her because she lied about the seatbelt usage. She claimed she was wearing it, but we were able to prove with physical evidence that was just not true. So anyway, to make a long story short, the insurance company industry was just thrilled. Now they had a percentage, you know, that they could use in terms of evaluating seatbelt claims that saved them an enormous amount of money. Wow. So needless to say, I was recruited into the insurance industry. And at a time when, you know, I was ready to make that move, you know, I had young kids, my wife was also an attorney, so I thought, you know, more of an 8-to-5 job might be the better way to go. As it turned out, that wasn't true. I ended up working the same hours with a lot less support in-house, but I did get promoted 5 times within 6 years and ended up as a division head for Farmers Insurance. I helped create and then manage their in-house For those that don't know what bad faith is, it's when an insured, a policyholder, sues the insurance company and claims that the insurance company breached what's called a covenant of good faith that's in the insurance contract. And if a jury concludes that the insurance company did in fact breach that covenant, the jury can go ahead and award not only the damages that the plaintiff suffered because the insurance company denied the claim, but also punitive damages, 3 times those damages. So you'll typically see a plaintiff's attorney in these cases standing in front of a jury and saying, well, you know, this insurance company makes $10 million a day. And so in order to punish them and get their attention, how much do we punish them? One day's profit, 2 days' profit? And you can see very quickly how these cases can be extraordinarily expensive. And I had literally thousands of those cases across the country that I was managing. I had over 800 law firms that were reporting to my division on those cases. And I have to be honest with you, Alan, I had a full head of hair when I started the job. It was very stressful, but, you know, very rewarding too. Oh, wow. And I did that for 7 years. And then the company decided to go in a different direction. And here I was in my 50s, a lawyer who had been working in-house now at this point for 13, 14 years. I didn't have a book of business that I could take into a firm. My salary was too high. You know, I couldn't find a job working in a law firm that met my needs. So I ended up becoming an entrepreneur. I went into business with a friend of mine from college, and we started a telecommunications company in Colorado. We made $750,000 net profit in the first 3 months of a startup. Wow. And within a year, we were in bankruptcy because my partner got addicted to crack and we lost everything.

Whew.

So here I am now, homeless, okay? I'm living on my ex-wife's couch, and I get a call from a fella that I knew from another role that I had served in many years earlier. I had served with the State Bar of California's JNE Commission. The JNE Commission is the Judicial Nominees Evaluation Commission. In California, when the governor wants to appoint an attorney to become a judge, by law, governor has to refer that to the Jenny Commission. And we would then investigate that attorney's qualifications to be a judge and make a recommendation to the governor whether they were qualified or not. Well, one of the other commissioners who I hadn't spoke to in a couple years calls me out of the blue and says, what are you doing? And I said, well, I'll tell you, Sam, I'm living on my ex-wife's couch. I'm homeless, I'm broke. Could use a job. What are you doing? He said, great, I need a managing attorney to manage my tax practice. He goes, I know you don't know anything about taxes, but I know you know how to run a law firm and manage a business. So I went to Beverly Hills and I became the managing partner for a tax practice. We ended up in the years that I was the managing partner expanding to 12 remote offices around the country. We did exceptionally well. But as it turned out, you know, I needed to do something different. And so that's when I started THB Consulting, and that was now 14 years ago.

Wow. Let's talk about your new book, Beyond the Business Plan.

Okay.

You call it the playbook for organizations adapting to a world shaped by AI and robotics. What made this the right time to write this book?

Well, in my practice, in my consulting practice, I'm dealing with a lot of businesses right now that are struggling with how to manage AI. And, you know, it's a tool like any other tool. It's got a tool that has some characteristics that make it very, very difficult to manage and create enormous amounts of risk. And so if you're not well organized in order to manage those risks and do something, what we call in the business community governance, if you can't govern your business in a manner that ends up, you know, ensuring it operates in a sustainable away, then you've got some problems. So I wrote this book in order to help organizations basically reframe, recreate a new architecture for their business that would enable that business to be more adaptive. So as AI and robotics continue to evolve and new tools continue to become available, the company is well positioned to take advantage of those tools. And basically, you know, seize the moment, so to speak, and position themselves well ahead of their competition.

Yeah. For a leader who built their company on a traditional 5-year business plan, what's the first thing they need to unlearn?

The 5-year business plan. They need to throw it out the window. Right now, in my book, I talk about this at length. You can no longer use a static document to try to manage something that's moving so fast. And so I, suggest what's called the BOLT Framework, which the first element, the first pillar of that BOLT Framework is the business plan. But instead of a 5-year plan, I'm recommending a 12-week cycle where you're basically renewing the plan, challenging some of the assumptions that you've made relative to that plan, and rewriting the plan literally constantly. And the plan continues to evolve as the business and the evidence that you're looking for to support you know, the tests that you're running suggest is the right direction for the company.

Got it. Let's move on to THB Consulting. As a fractional general counsel to digital niche agencies and other companies, you're inside a lot of growing businesses.

Yes.

What are the operational or compliance mistakes you see most often and the ones that are completely avoidable?

Well, the issue for most startups and smaller businesses is always money. And, you know, if you're a bigger company, a mid-sized company, you can afford a general counsel. You can afford that advisor who's with you 24/7 and can basically help guide your organization in a way that mitigates risk and, you know, basically protects the company's interests. If you're a smaller company though, you don't have that luxury. And most entrepreneurs find themselves wearing many hats, including the general counsel hat. Yeah. And so my role at THB Consulting, working as a fractional general counsel, is typically, you know, being called in after, you know, the crap has hit the fan, so to speak, and clean things up, which ends up for the owners being obviously a much more costly proposition. You know, if you take those steps at the front end to avoid these issues, then you don't pay so much on the back end when they do eventually arise. So that's kind of role that I typically find myself playing in as a fractional general counsel. But some business owners, you know, do recognize the value of that prophylactic message and will bring me in to help them identify where potential risks are, how they might mitigate those risks, what they might do in their organization, how they might look at their vendor contracts, which are a big deal right now. All those issues really impact how, you know, the business is insulated Against what are an increasing number of pretty scary risks.

Yeah, the proverbial pay me now or pay me later.

Yeah, or pay me a lot later. Yeah, yeah.

Right, right. How does a leader protect culture and trust inside a company while everything around it— technology, regulation, and the market— are changing all at once?

I actually spent quite a bit of time in the book talking about that under the T for BOLT, which is teams. And one of the things that is so important from leadership point of view is making sure that you get the buy-in from your employees and staff. And all too often, management comes in and says, we bought an AI product. This is how it's going to work. Learn it or you're going to lose your job. And that is absolutely the wrong approach. You should include your staff, your people on the front end of the decision to even buy the AI. And what I recommend in the book is that you should do a complete workflow analysis of the organization before you even consider AI. Because AI, all AI really does is it eliminates tasks, okay? It doesn't eliminate people. The choice to eliminate people is a management decision. That's not a byproduct of the technology, okay? And what I advocate in the book is really a collaborative approach where humans and machines come together to produce an outcome that the company can feel comfortable with, okay? Because it's humans that provide the judgment, and they're the ones that are gonna deal with the situations where the AI may not be performing as expected. So that's so important. And you can't accomplish that if you haven't done that work on the front end to get those employees to buy into what you're doing and help them understand that their jobs are not at risk and that this is in fact an opportunity for them. And in fact, in the book, I have a couple of different examples. I talk about this one fella. It's a case study involving a kid by the name of Miguel. And Miguel was a mechanic working in a factory. And when he heard that they were bringing in robots, was terrified that he was gonna lose his job. Instead, the company upskilled him, taught him how to work on the robots, and now he manages an entire fleet of robots. So that's the outcome that we're really looking to try to achieve here when we adopt these tools, is find that synergy between humans and machines that produces the best outcomes. And so in order to do that, you have to get the employees' buy-in, the staff buy-in, and maintain that culture where people don't feel threatened by the AI. So I talk about that at great lengths in the book.

Sounds like a great read. I'm definitely going to dive into that. I haven't had a chance to read it yet, but I'm going to get into it for sure. And I encourage my audience to definitely check out the book.

And Alan, when you finally do, I'd love to hear your feedback. I'd love to hear what you think. I'm in the process— in fact, I just turned in my second book to the publisher yesterday, uh, and the second book focuses on just one aspect that the current book talks about in a much broader sense, and that's governance. That is really the big issue now, and it's in the news every day. The latest, of course, was the discussions between all the heads of these AI companies concerning safety and wanting to be regulated by the government. Those are governance issues. If you're on a board of directors and your CEO is giving public speeches telling everybody that the product that you're providing to the public is unsafe, I mean, what do you do as a board in terms of governing that issue? And is there maybe a different agenda involved here that might be driving those statements? So, those are the things that I talk about in this new book.

Awesome. Let's shift gears a little bit. I want to talk about mentorship because you've been a longtime mentor to veteran entrepreneurs through the Jonas Project. What do you do with that work? And what do veterans bring to entrepreneurship that they don't often see elsewhere?

I love working with veterans, and they come out of the service thinking that the skills that they developed in the military have no value. And partly because the civilian community doesn't appreciate what those skills are. And so they tend to discount the value that those veterans bring to the workplace. They have tremendous values. One of the most important is that ability to adapt. I love working with them. And I started with a charity called the Jonas Project years ago. Jonas Kinsell was a Lieutenant Commander for SEAL Team 6 and was killed in Afghanistan. And his parents started a charity called the Jonas Project, which was focused on helping veterans who were coming out of the service start their own businesses to become entrepreneurs. Mm-hmm. I started out as a mentor. I later became one of the members of the board for that charity. And I worked with a number of different veterans to help their businesses start. In fact, I still have one veteran that I started with over 10 years ago who's still a client and I serve as their fractional general counsel. It's a company in Southern California that many know. It's called Blue Bolt. And this was an Army veteran who came outta the service who had this idea about serving these superfoods bowls of stuff. And frankly, I told him at the outset I was a little skeptical. I mean, you know, when he, when he first hit me with the name of the company, Blue Bowl, I was like, yeah, I don't know. But he's done tremendously well over the past 10 years. Took on a couple of partners. Of course, I helped him with the legal aspects of that. And then grew the company to the point where they now have 12 stores across Southern California. They're continuing to grow. You can even buy their product at Disneyland now. Wow. And I couldn't be more proud of them. You know, they've done very, very well and just celebrated their 10th anniversary back in July.

Definitely nothing better than mentoring somebody and having them succeed and then being the proud mentor that celebrates with them, for sure.

It's almost like being a parent, you know, and seeing your child succeed. Yeah.

Yeah. You're the recipient of the Presidential Volunteer Service Award. What does that recognition represent to you in terms of how you've chosen to spend your time?

Well, you know, I've always felt that I've been very fortunate in life. I started out, you know, from very modest means, but was successful in everything I tried and ended up doing very well and have nothing but gratitude for that success and have always tried to give back. So that award was a recognition of my service And I'm flattered for the recognition, but I don't do it for the recognition. I do it really because I find it terribly rewarding to help others. And that's part of what caused me to write this book. I saw business owners struggling with this situation that they can't get a handle on, being inundated by vendors that were making all kinds of promises that they couldn't keep and being exposed to all these risks, some of which insurance companies aren't even covering anymore. And wondering if they'd have a business next week. So I felt like somebody needed a light. Here's a path that you can follow that will help you keep your head above water. And so everybody who looks at the COVID of the book says, oh, you wrote a technology book. And I said, no, I didn't write a technology book. I wrote a book about how to survive technology. And that's really what it's about.

Well, after more than 4 decades in law, business, and service, how do you personally define legacy?

Oh my goodness. I haven't even thought about legacy yet. I have too many more years to go and too many more things to do. I guess if I thought about it, I would say I just want to be remembered for, you know, the contributions that I made to help others. Beyond that, a good father, a good spouse, you know, that's what I would want to be remembered for.

Nice, nice. What's one question every leader should be asking their team this year that they probably aren't?

Probably, I think the most pressing issue right now is education. What are you doing to prepare for the future? And I think, you know, to the extent that your employer isn't helping you do that, you should be thinking about doing it on your own. And I'm also a big advocate for starting the education much earlier. I really think now preschool, we should be teaching kids already about how to be adaptive, how to, you know, adjust when circumstances change and build that skillset now early on with these kids. Because what we're teaching them now in school is not preparing them. them for the future that they're going to be dealing with. Right. And it's so sad to watch it. I mean, these kids are coming out of school now with poor reading skills, with poor math skills, and we're doing very little to prepare them. You know, I really think that, you know, anybody who's looking for an opportunity to make a real impact on society, that's where the focus needs to be. Let's, let's get the kids educated, get them prepared, because The world that they're entering is a very different world than what we've been teaching them in school.

Wow. Well, that's exactly what we espouse at our preschool that my wife and I own and operate, all about resilience, adaptability.

Yeah. That's the future.

Those are the skills.

Those are the skills that they need. Yeah. I agree with you 100%, Alan.

Yeah. Well, Ted, we've come to the end of the episode. It's been amazing having you on the show. I want to really emphasize especially how you showed us what it looks like to lead with both discipline and heart. From the presidential security details to the courtroom to the boardroom, your work reminds us that the businesses built to last aren't the ones with the most detailed 5-year plan or even a 5-year plan at all, as you said. They're the ones that are led by people willing to adapt without losing who they are. I definitely encourage everyone to pick up your Beyond the Business Plan book and check it out. I'm excited about reading it myself.

And when you do, Alan, I'm expecting a call back. I want to hear what you thought. 100%.

Maybe a follow-up episode as well, Ted.

Oh, that'd be wonderful. Yeah, I'd love to, love to come back after you've had the opportunity to read the book and talk about the book in more detail.

Yeah. I also want to really just celebrate your mentorship and the work that you've done through the Jonas Project and helping others. That's what this show is all about. And I And I really want to celebrate that for what you've done and contributed to the greater good. So thank you very much.

Well, thank you. And thank you, Alan, for doing what you do, because you're also helping to get the word out to others who might be inspired to do the same. And to the extent, you know, we're all here on this earth to help each other, that's really where we ought to be. Society's becoming much too divisive right now. And, and I really think that We need to try to find ways to work together and help each other rather than fight over things that at the end of the day, in 100 years from now, nobody's going to care about anyway.

Couldn't have said it better myself, my friend. Thank you very much.

Thank you.

All right, everybody, I'm Alan Pavlosky signing off for Legacy All-Stars. Tune in next week as well. We're looking forward to having you all join. Subscribe, tune in every week. Thank you very much.