#34: Nick Sonnenberg, Founder and CEO of Leverage — Bootstrapping your business; risk and how to ...

Welcome to From Startup to Grownup, the podcast.

My name is Alisa Cohn.

I'm an executive coach, an angel investor, and the author of From Startup to Grownup. Each week I talk to founders, creators, advisors, investors, and builders of all kinds about their insights and experiences in going from startup to grownup. Today, I'm thrilled to welcome Nick Sonnenberg to the podcast. Nick is the founder and CEO of Leverage, a company which shapes every business into an optimal organization through the most efficient use of talent, technology, processes, and systems. Nick is also the author of a new book called Come Up for Air: How Teams Can Leverage Systems and Tools to Stop Drowning in Work. In this discussion, we cover so much ground. We start with how Nick became an entrepreneur. After a successful career in high-frequency trading. We talked about Nick's experiences bootstrapping his business, his thoughts on risk and how to build confidence, and his very dramatic breakup with his co-founder and his lessons learned from that. We also cover loads of very practical tips for how you can make your business more efficient, how to hire, how to give feedback, how to delegate, and a ton of other stuff to help you save time every day and every week. This is a rich, honest, and practical conversation, and you're gonna love it and wanna take notes. So please enjoy this incredible conversation with Nick Sonnenberg, founder of Leverage and author of Come Up for Air.

Nick, welcome to the show. It's so great to have you.

Thank you so much for having me.

I'm delighted to have you, and I am so excited what we're gonna talk about today. But first, I just wanna give you a, everybody a sense of like, who are you and what's Leverage?

Who I am, I mean, that's a complicated question. I identify as an entrepreneur. I identify as an ex-high-frequency trader and financial engineer. I run a company called Leverage. We help companies and teams be more efficient. We go into companies and find where there's inefficiencies, where they could be collaborating better, and leverage technology in smarter ways. Then we'll do a transformation to— ultimately, the goal is to try to give each employee back an extra business day a week. Week just from being unproductive and going on scavenger hunts for information that they don't need to have to be in that situation.

There's so much to unpack there, but I want to just emphasize, give everybody back one day a week. That's like a— that's an important— it's like an important thing. And it just even conceptually, it's so nice for businesses to think that they can even do that.

I mean, in some cases it's even more. Oh, I also identify as an author. We'll talk about that.

We'll talk about that. We'll talk about that. Well, but I want to maybe start about leverage because you have this genesis Leverage as being this efficiency company or company that promotes efficiency, but it didn't start that way. No. So tell us the story of Leverage.

Well, we, we started back in 2015 and we had this wild success. We bootstrapped, we grew to 7 figures in the first year, got to 150 people on the team.

And what was the business back then?

It was a freelancer marketplace. But I was always— I was just coming out of being a high-frequency trader. I'm good with systems. One day I was having dinner with my now ex-business partner. We were brainstorming. It was the day Zirtual, which was a big virtual assistant company, they went under. We were brainstorming, "Well, why did they go under?" We were both geeks about efficiency. I geek out. I get obsessed. How do I save a second? As a high-frequency trader, I'm looking at nanoseconds and microseconds. Automation. So by the end of that, by the end of that dinner, came up with this business model where it's like, hey, this is actually pretty good. There's no freelancer marketplace doing this. Why don't you go out and get 5 clients? I'll build a backend with some off-the-toolshelves and we can launch and I'll do that tomorrow. We can launch the day after. And we did. And, and we, we gave a talk at a conference and we closed a big percentage of the room. And before we knew it, we actually had a decent amount of revenue. Now, to the outside, we had this wild success. You know, it's not many people bootstrap to 7 figures in the first year, but we did so many wrong things. We were optimizing for— we just cared about growth. We were growing at 20% a month, new clients in, and we got to a point where, Alisa, we were too big. We were too big for our own good. We didn't have the infrastructure and the foundation to sustain.

Wait, let me interrupt you. So what does that really mean? Because I think that everybody wants grow, grow, grow. But like, what does it mean that your infrastructure wasn't working?

Well, premature scaling can kill a business, you know, like you need, you need to have certain processes and foundations in place to be able to support, you know, that growth. It's like if you go to the gym and you try to go and bench press 500 pounds and you haven't been working out, like you're gonna probably hurt yourself.

Yeah.

You know, it's the same, same kind of thing here. So we were, we were, we got to a point like where we didn't have the systems and processes to support the volume of team and clients that we had. You know, and we were growing at that, that fast rate. But under the hood, there were all these problems, right? So 20% new clients in, but we were losing 15% a month, right? So net, it was 5%, right?

Right.

You know, we were grow, grow, grow. So we took on like $750,000 of debt and we were actually losing money. We were unprofitable. So, yeah, like you can, you can, you can shape whatever story you want. Like you tell people 7 figures and 150 people. That's impressive and it's not easy, but it wasn't all easy and all perfect.

Right. And also it wasn't working fundamentally as a business. No.

There's a lot of problems. Another thing that was a problem was we didn't have an org chart. My partner was the face of the business and he was in charge of people, so team and clients, and he was giving talks and people knew him. I was the— my background is in financial engineering. I like to build systems. And so I was behind the scenes. Let's fast forward. So that we started in 2015. In 2017, we're having coffee one day at a coworking space and he taps me on the shoulder and it was nice because we— it was a remote company. You don't always get to work together. And he tells me he's leaving and he's not leaving in 2 weeks. He's not leaving in 2 days. He's leaving in 2 minutes.

Wow.

Right. And my palms are sweating. I'm like, holy crap, like, we're going to go bankrupt because we had all this growth. But a lot of it was because, you know, he was the the face of these things, and people didn't even know who I was. So he's leaving, I got 150 people, I think like 4 knew who I was, like literally, of the employees.

Yeah, yeah.

Um, to the point where like we would do these, um, we had this bot called Donut that would randomly match you, and people would ask me like how long I've been with the company. Clients didn't know who I was. And so before you know it, the 20% went to zero and, uh, of growth, and I'm left with 15% churn. So in a, in a 3-month period, we lose over 40% of our clients.

Wow, that's incredible.

I lose team members left and right. Bank accounts are frozen. I'm cashing out 401s. My dad is taking a second on the house to loan it to me to make payroll. I mean, it was a mess.

That sounds like a mess.

Yeah, and this is my journey. I had 2 options. I could either bankrupt the company or try to turn it around. And I tried to turn it around.

Well, let me jump in for one second. So when your business partner told you, "I'm leaving," did he give you a reason? Was it very sudden?

There was some buildup. I mean, I don't want to go into the specifics, but it wasn't like a complete— like, it was a shocker the way that it happened. I thought that we would be able to resolve. We were kind of in co-founder couples therapy. We hired a relationship coach.

Yes, I support that.

So I really believe in coaching and executive coaching. I was a bit shocked, to be honest. I could either bankrupt it or try to turn it around. At that point, I had a really clear idea of where we were being really inefficient. 150 people is a lot in 1 year to start managing. I knew I needed to simplify. I knew I was working crazy hours. There were some huge inefficiencies. I started to realize— We need to fix how we're communicating as a team. It was super inefficient. There was messages all over the place. We need— we didn't have a great way of organizing work, our tasks, our projects. I couldn't hold people accountable. I didn't know who was working on what. And then I knew that we needed to standardize and structure our knowledge, our intellectual property, our processes, our SOPs, which I actually had done a pretty good job of. Had I not, when, when my ex-partner left, we probably would have not been able to survive if I hadn't been documenting. So I I started realizing that and I went on this journey and it took years to clean up. But in that process, I was able to clean it up. I turned it around. We're a fraction of the size now doing way more revenue, profit, etc. In that journey, people started reaching out asking me to help them with their operations. What I started realizing, Alisa, is the same kind of way that I turned my business around You know, we worked with massive companies like, like Reckitt Benckiser or Tony Robbins or Poo Pourri or smaller companies like financial advisors. And it didn't matter. The interesting thing, it didn't matter their size or their industry. Everyone also benefited from optimizing those 3 buckets. And so that's now the core of the business because we realized there's this huge opportunity. Like there's all these tools like Slack and Asana and Notion and Coda and Process Street and Gmail and Outlook, and no one's ever been taught how to best use them and when to use them. And so there's this niche, but it's really impactful. And so now we're all in on trying to be the best in the world at making organizations more efficient and getting the most out of these tools.

I love it. That is quite a journey. And I— every time you talk about these tools, I know you light up, your face lights up. But just way back to again, this, this sort of this dramatic moment where your business partner said he was going to leave and then you were like working around the clock to fix it. Yeah. Why didn't you quit?

I think I just had too high of a pain tolerance. There was a part— there was multiple things. One, I did see a path. I mean, if I'm being honest, I didn't realize how hard it would be. Um, you know, if I would have known, okay, it's going to take this much time and this much effort, and this— like, I thought it was probably a 1-year thing or a 9-month thing. Um, so that was one thing. But two, I think I'm ultra competitive. And I didn't want to live the rest of my life with the story that that happened. The competitive guy in me, it's like, "Screw this. I'm going to show them. All these people think that I'm not going to be able to turn around. I'm going to show them." And I have a high pain tolerance.

So that's how you did it and what you thought of it. How did you manage your stress during that period?

Honestly, coming from high-frequency trading, I'm pretty well trained in stress management. I was managing by my mid-20s. Billions and billions of dollars and had a lot of responsibility. And this was a different level of responsibility because I've got a team that's relying on me making smart decisions or else they're out of a job. So, I mean, one thing I always did prioritize was my health. So I could do better with sleep, but, you know, pretty much 5 days a week I'm like working out in the morning. So I think you need to do that. I eat relatively healthy. I worked out. I think that that— I never fell into that trap of like drinking or not working out. And like, I do work crazy hours, but, but I do balance it and do some healthy activities. And I think that that's really critical.

Yeah, that makes sense. And so now you're really focused on operational efficiency and to your point, Leverage, the name of the company, and like giving companies leverage. And you have— you're still a bootstrapped company. Why have you chosen to stay bootstrapped?

Good question. Well, now I think that the world is changing. I think it's harder to raise money. I think if I were to raise money, I missed the good time to do it.

For the moment. I'm sure it will come back.

I think that there's a lot of benefits to bootstrapping. I think that if I would have had $1 million right when I started the company, I would have made a lot of wrong decisions. I would have had that breathing room to fire bullets, but it would have been in the wrong direction because I was so early stage I didn't really know. So I think it's a balance. I think looking back, I probably would have had some less, less stress and a bit easier time. But I do think that constraints and not raising money and giving yourself a financial constraint forces you to really be lean and smart and kind of laser-focused. And it's, you know, not all companies— like there's certain companies that definitely have to raise money. There's some that don't. You know, now especially, like, we're doing consulting and trainings. You know, it's less of the type of business that you— we could benefit from it. Like, we're going to be building software, and like, once we kind of get into that, we might consider. But I think that not raising gave us a bit of a competitive advantage in some ways because it forced me to make super super tight decisions.

Right. You know, I think another point you're bringing up is that some companies have to raise. If you're a heavy hardware company, you have no choice. You need capital, right? Obviously.

Like, you're not going to bootstrap this and you're building a wearable and an app and—

Right. It can't be. But you have a company, you have a business which allows you to choose to bootstrap. And I had Gregory Gallant of MuckRock on the show, and he talked about how, you know, what you're sort of saying, these choices that you have to to make you be much more laser-focused when you do it. And also, you have to learn the job yourself before you're able to hand it over to someone. Have you found that?

Totally. I mean, pretty much like most core processes in the company, I did— I developed the V1. I do it myself. Like, I have this rule where if I do, if I do something more than once, how do I never have to do it again? So I do it, I try to perfect it, I document it, I hand it off, and like, it's kind of rinse and repeat.

Yeah.

But I'm curious, like, how you would answer that question. You're— I'm sitting with the world's number one executive coach and you used to be a CFO.

Yes, thank you.

So the companies that you're working with, are they a mix of bootstrapped and raised, or most of them have raised money?

Most of them have raised money. Yeah. And I— but I think your point in general, okay, this is not— there are many, many, many exceptions, but in general, the point about having very constrained resources requires you to just think methodically and in a focused way before you spend money. And people who get millions and millions of dollars, what they do is they hire quickly and then they hire sloppily.

Well, I think, I think hiring— people overhire. And people, I tell you this all the time, they hire to get more bandwidth. But usually hiring is the worst way to get more bandwidth. It's the most expensive. Like, not only do you have to pay someone to help with the recruiting process and the interviewing process. Then you hire someone, you have to pay them a salary. Then there's an onboarding phase where they're adding no value and you're just trying to train them. I mean, it costs a crazy amount. And in a perfect world, you find the perfect person. Every person, it's still adding exponential complexity. Every person you hire.

Right.

And so by constraining and saying, look, we're not hiring any more people, you got to figure this out. It forces people to drop the lowest priority stuff on their plate, forces them to start being more efficient. And I can tell you, I see this in every single business I work with. There's 20 to 40% more you can, you can get out of each person. Yeah, it's not even to get them to do more work. It, it reduces the stress and improves culture because then culture deteriorates in large part because you stop trusting people. And it's not that I don't trust you on an ethical stance. It's like, hey, I've asked Alisa to do this 3 different times and I'm not getting a response. Then I'm stressed out and I'm texting you, I'm emailing you, I'm sending you Slack, and it starts to break down relationships. And it's not because it's a bad person, it's because there's a bad system and a process.

Totally. You know, this book I read from Amazon, Working Backwards, this beautiful expression, which is mechanism solves what good intention doesn't solve, or something like that. The idea that good intentions, right, are all very well and good, but you need to have mechanisms and processes in place. But back to this idea of hiring, I agree with you. In fact, I always say the first step in hiring is don't hire, right? Clarify what you need, right? Make sure that you're doing it right. But how do you decide when it is time to hire a new person?

You know, I think I try to assess, are there— how much more efficiency gain can I get across the team? What are the skill sets of the team? Are we missing a skill set? So is it a skill set that we're missing, or is it truly bandwidth that can't be obtained through efficiency gains?

Yeah, but is there— does it someone that says to you, Nick, we have to hire someone, and then you have a conversation with them, or do you step back and think about it? Like, what's the actual, like, thinking process for you?

Well, we've— how much time do we have? I can give you 2 hours of content on this one. Yeah, yeah, yeah.

You're deep in this. Go ahead. Give us a couple of ideas here.

You know, we're having conversations all the time. We have pretty robust ways that we're prioritizing projects and OKRs and work. And so, you know, if I start, you know, going through a list of things that I think we need to do and it's like, hey, I start getting pushback, then we start having that pushback triggers a conversation, right? And if at the end of that conversation it's like, okay, there really isn't an easy way to squeeze this in for whatever reason, then we start thinking about hiring. But before hiring, I start thinking, how can I make each team member efficient? That could be tools. It also could be hiring— maybe let's just say, I'm just making this up, say we don't have the bandwidth. I'm a writer for Ink. Say we want to pump out 10 articles a month and we just don't have bandwidth. Right? So one, one knee-jerk reaction is we need to hire a writer to do these, right? Another is, hey, we have a great writer. Aiden on my team is my ghostwriter. You've met Aiden, he's awesome. Aiden, where are you spending your time? What can we— how can we free it up? Is there an inefficiency that a tool can provide? Is there anything you don't like doing that we could get off your plate somehow so then you free up your time to do those? So it might be that we don't need to hire. It might be Aiden spending 10 hours a week on admin, and we actually need to hire an admin to free up that 10 hours for Aiden, so Aiden can do it. So instead of hiring a writer that might be more expensive, we hire an admin that Aiden can leverage, and now Aiden has more bandwidth for it.

Yeah, right.

So you have to really be clear, you know, and if you don't go through that exercise, you might be making the wrong hire and hiring more expensive resources than you need, right?

I think what you're saying is rigor and just putting rigor in the brand, just really stepping back and just saying clearly, here's what we need. And then what I love you're doing is you're having this creative approach to like, yes, we need that, but maybe there's a different way we can get at it, which then brings out the creativity people?

And the longer answer is we do this thing that I created called dynamic role optimization. Here we go.

Here's the commercial. Yeah. Okay.

Yeah.

But basically what I do is I try to break down like Lego blocks every responsibility that people have. And not everything that people do is all worth the same to the company. You know, when Aidan's writing an Inc. article, it might be— we have this thing at levels 1 to 5, like level 1 is like like pure admin stuff. Level 5 is like a CEO-level thing. So maybe that's like a level 3 activity, but maybe Aiden's doing other things as level 1 activities, and maybe Aiden's a level 3 higher. So if he's doing a level 1, there's a gap of 2. So how do we minimize that gap and like Aiden only do things that are 3s or 4s?

Yeah.

And try to get any other activity off of his plate.

Yeah.

And we do that across all roles in the company.

And this is how we demonstrate that Nick is in his own genius by describing this. But let me talk about feedback for second, because if I'm not mistaken, you have like some group processes that you've kind of created with your team to people give each other feedback and for them to give you feedback.

How much time you want to spend on this?

Tell me what comes to mind.

I mean, I think that I'm curious to know how you are advising companies on feedback. I could tell you quickly how we do it. Like, we've done a few different things. Um, you know, we have like a tip, like a very lightweight perform quarterly performance where People submit, answering a handful of questions, so do I, and then we have a conversation. It's kind of casual. Sometimes we'll do— it matters if we're doing feedback on a person or feedback on a project or a process because they just fall differently.

What I'm picturing is that maybe, and I could be getting this wrong, but I thought you had a moment where people sat in a chair.

Oh, you mean the ritual descent stuff?

Yeah.

But that's not giving feedback on a on a person, that's, that's an example of saying like feedback on a, on a process. So sometimes if we finish an engagement or a project, we'll do a retrospective. Yeah, right. Where it's like, what went well, what didn't go well, what did we learn? Right. And we document it and we capture it. Right. Even if something goes wrong, it's an opportunity. You don't want to miss the gold in there and not document it so that in the future it doesn't happen again.

Right.

So there's always a feedback loop on a project or something some error that happened, you really have to make sure that you invest the time to understand why and capture it. What you're referring to is one time, like years ago, we did— and we do variations of it— but we did this exercise where I asked people to come up with ideas that they thought would be smart for the company, and they wear a mask. We called it ritual dissent. They wear a mask, they sit in the chair, don't face us as a group, and they pitch some idea. They have a minute to pitch, and then the judges and it would be like a group of 4 judges had 90 seconds to only say why it's a bad idea and just like completely crap on their idea. And you can't argue. You just have to sit there and listen. And then after that, you move to another group of 4 judges and you do another 60-second pitch. But you've just heard 4 people only saying negative things. So between, you know, station 1 and 2, you're able to understand where their objections were. "Fix some of—" If at the end it's like, "Hey, I actually agree with them. It's a bad idea," you can drop out. But after 4 rounds of that, we had some really, really good ideas that stuck with the company.

Because people would point out the flaws in the idea and people would get a chance to fix it for the next group and over and over. Also, it probably desensitizes you from difficult feedback like that.

Yeah, you wear a mask to depersonalize it. I think that might have been a little bit overboard. But the fact that no one was getting picked on, the whole exercise, "Hey guys, everyone is only allowed to give negative feedback." So it's not like, "Hey, listen, I loved your idea. Nick, your idea is completely terrible." Yeah, I love that.

I like the idea of having rituals. And processes that really do help get at the truth, right? So, be it personal feedback, in terms of professional feedback, or like ideas like you're talking about. How do you make sure that you get feedback from your team? Because it's really hard to tell the CEO the truth, and you're the founder, the CEO. Let's be honest, the team doesn't want to tell you the truth. So how do you make sure you're getting feedback from your team?

Mm. I think that I have a relationship with them where I push and I expect a lot, and I have a high standard. But at the same time, I'll admit, I'll be the first to admit that I made a mistake and show vulnerability with it. So I try to create a space where I'm pointing out when I make a mistake. So I think that I try to help make that give them a little bit more right to do it. Sometimes there's some people, look, also someone that is just hired is not going to have the same kind of encouraged that someone that has been working with me for 6 years, right? Yeah. So, um, you know, sometimes if someone pushes back, I might say, guys, what Aiden just did, like, I wish everyone did that, you know?

Yes, I think that's really good. So I was just thinking, I had Rahul Vohra on the show. He's the founder and CEO of Superhuman, and he was talking just like you just did about you got to hang out with people and build a relationship with them. And the newer people are not the ones who are going to tell you the truth, but you have to use old people as examples about how you are able to deal with the truth.

And I'm asking for feedback all the time. And usually groups is harder, but I'll ask people like, "How do you think that was handled?" Right.

"How are you feeling right now?" But what— how do you— have you ever gotten feedback that has like really been uncomfortable for you or that was really surprised you? And then how did you make changes that you need to make?

I would say one time I got feedback that I thought was inappropriate because it was in front of a group and it was kind of challenging my authority a bit. And whether what I was saying was right or wrong, I thought giving feedback, especially I think to anyone, whether you're an employee giving to the CEO or vice versa, I think it's not just what the feedback is, but it's the context and how you're giving it. So are you giving it privately? Are you giving it in a group? Are you saying it in an aggressive way? Is it asynchronous? Is it asynchronous on Slack or is it live? All these things are nuances to giving feedback. One time I got a bit pissed, not because there was pushback or anything, but I think it was done— One, I think feedback in general, especially if it's tough, shouldn't be done asynchronously, and it's something I talk about in the book. I'm a huge promoter of asynchronous, but there's a time and place, and sensitive conversations, it's terrible. 'Hey, Alisa, you really messed that one up.' That's kind of good. In a group channel somewhere. If anything, it's more not what the feedback is, but how the feedback is given that would frustrate me.

I see. Have you ever gotten feedback from your team that still stung even if it was delivered appropriately, it was a blind spot for you, and that it stung and that you made changes as a result of it?

Yeah, I mean, like, all the time I get feedback from the team. Like, sometimes nothing too much. Like, I think that for the most part I've got a good sense of things, but there has been times where I'm like, I didn't realize, like, what I said landed that way. I'm sorry. Yeah, right. You know, or someone say, like, I feel like nothing is good enough because, like, you keep pointing out that, like, this could have been better, this could have been better. And, you know, in the moment, I'm just trying to problem solve. And so when that's pointed out, it's like, okay, I could see how that is landing like that. I'm sorry. That's not my intent. What about you? When you're working with companies, what have you seen to be good frameworks for giving feedback?

Well, I think first of all, continuous feedback, regular feedback, and not making it this event where we're going to give you feedback. It's more just everyday feedback. The idea of pulling someone into a conference room and having a quick chat, in the world of remote work, having a quick text, you know, can we have a quick call, making it informal on a regular basis. Where I think a big mistake happens is that managers, leaders will save it up to performance review. You know, I'll say, we'll have a conversation with one of the CEOs that I work with, and he'll be like, oh yeah, I'm bought in. I'm going to give him that feedback performance review. When's that? That'll be in 6 months. Okay, well, that's not a very effective way to give feedback. And that's also not a good way to train your team to give you feedback. And I I really think the leader, and to your point, like, you have to reinforce for people, that was good behavior. He just gave me that feedback. That was good behavior. And so I think if you go overboard to make it, to normalize it, that is a very helpful thing. Totally.

I think also it's important, um, to clarify upfront expectations when people start with you. That's great. Yes. And I think that it's, it's, it's related to this conversation of feedback because like if you have to give someone on, hey, like, this isn't right. You know, was there an opportunity in the onboarding to have clarified expectations too? Right. So I think always, like, as a leader, you should be thinking, how did we get to this? And what could have been changed to have avoided some scenario? So one thing that we've changed in our hiring process is I go through, how can you be a hero to me? And what's going to drive me crazy?

Oh, I love that. How could you be a hero to me? And what's going to drive me crazy?

And I go through scenarios, like, if you do this, you're going to be a hero to me. Well, so tell us.

Tell us, how can I be a hero to you?

Well, if you're proactive, right? And not just do exactly— like, if you don't agree with something that I say, like, I want you to push back, right? And I want you to understand kind of the greater reason why we're doing something and suggest better ways, right? But I don't want to just, you know, do exactly this. I want to trust that that you're going to follow through with what you're saying, you know, and like show up on time. Basic things like show up on time on meetings. We're an efficiency company. You've got to be efficient if you're working with me. Like, it's going to drive me crazy if you're not getting to inbox zero and you're not using the systems and tools right. That would be incongruent with, with the brand. So there's just some like basic things. But I'm telling you this now because it's going to be an issue if you don't. And I want to set you up for success and I don't want to have to give you bad feedback or this feedback, right, in a month or in a week, right? And I'm here to support. I'll give you as much training as you want. We've got world experts on the team. You have literally all the support possible. But I'm just telling you, the people that haven't worked out in the past, these are some of the things that have happened, and we're trying to avoid it happening with you.

So good, so good. I love that. In the— I'm gonna take that on myself. So you wrote a book, if I'm not mistaken. The book is called Come Up for Air. Yep. What's the subtitle?

How Your Team Can Leverage Systems and Tools to Stop Drowning in I love it.

I love the title. What's it about? As if I didn't know. Let's hear what it's about. And then also, why did you write it? It's about juggling, actually. It's just a complete— That's right.

Right. Well, I wrote it. It's about my framework for operational efficiency. So it's Come Up for Air. My framework is CPR, communicate, plan, and resource. You know, no pun intended. You know, resuscitate the company and your team. I wrote it just because as we were consulting with literally thousands of people, everyone had the same issues. So the content that we're providing in our consulting, I wanted to write a book about it. And it just lent itself. I think that especially right now, we're in a recession. There's all this stuff. Tech is getting hammered right now. Budgets are getting cut. People, companies, and teams need to be more efficient. They're going to be restrained for budgets. They're going to need to get more out of people with less team size. So how do you do it? I think that this framework is a critical piece to being able to achieve that. So I wanted to get it in as many hands as possible. And I've been working out. We were in Mexico and, you know, you were working on your book, which was great. And congratulations on your success. Thank you. Thank you very much. From Start-Up to Grown-Up. And I was working on mine there too. That's right. Yeah. And, you know, excited. It's coming out February 7th with HarperCollins.

I'm excited about it too. And tell people, what are some of the key points that can go wrong in companies and why people are drowning in work? And what they can do about it.

I think a lot of problems in companies come back to onboarding. So this conversation, yes, like that we just had, I think also something that's neglected in onboarding is like, think about what you give to a new hire. You're giving them information about vacation days and health insurance and maybe core values, but not that many people give even that. You never say to people, hey, at Company ABC, we Slack, we use Gmail, we use Asana, we use this. This is how we use it. We've got these channels. You should probably join these. We've got these projects. We use it in this way. It's kind of like a language. Imagine you get hired and you speak German and I speak French and, "Hey, go and build some stuff together." It's going to be hard. This stuff is like a language. I think the first thing is you got to get people people from the very beginning speaking the same language, knowing the purpose of each of the critical collaboration tools. And that's going to save so much time because within a couple weeks they're already at full capacity on projects and it's hard to then fit the trainings in. So the more you could get people set up for success up front, the better. I love that. I think that people are over-hiring and not thinking about how can you get more out, right? Them more efficient. I think that companies have this scavenger hunt problem where—

Talk about the scavenger hunt.

Well, the scavenger hunt is by not having a set framework of where information should live. You know, sometimes I'll text you, sometimes I'll Slack you, sometimes it'll be an email, and before you know it, you're looking in 10 different places to find information.

Yeah, and by the way, that's anxiety-provoking. It's not just— it's like, I can't— is it a text? Oh, I can't find it in my email. Let me check the That's very frustrating. It's pure waste.

No one likes the scavenger hunt. And look, in your personal life, when you do your laundry, do you take things out of the dryer and just throw it all in one drawer? Or do you separate your socks from your underwear from your t-shirt?

Well, don't ask me. Most people. Most people.

You separate it not because it's the fastest way to be done with your laundry, but tomorrow or next week when you need to put an outfit together, right, it's right there. It's easier to find what you're looking for.

Wait, so I want to talk about that. That is a very great example because it's absolutely true that a normal thing to do is to separate your different socks and you hang up your shirts and you put your shoes in the tree. But people do not naturally treat Slack and email and text like that. It's the same thing. And most people, all, I would say all of my clients are drowning in work with, with this thing at the very source. Can you very quickly motivate people to get their acts together and to do the upfront— is upfront work— upfront work to kind of clarify their communication mechanism?

That's the hardest part because everyone is drowning in work and it's also boring. It's not— well, I mean, to me it's sexy, but right, yeah, to most it's not as fun as like talking about, hey, like we got a new strategy and we're gonna close like an extra million dollars. Yeah, and everyone's super, super busy, and everyone— a lot of people think that they've got a system that really works. You know, like how many people I've talked to, I have, I have this great system for using email, like I've got 10,000 folders but I know where everything is. Right. So people have their bias that they have a good system. Um, people are busy, um, and so it becomes hard. The change management's the hardest. So when we work with companies, we, we try to identify the quickest wins so that we can free up 2 to 3 hours almost— that's great— almost immediately. So good, right? And so once we do that, we've built trust, we've created a little bit— when people have no breathing room, it's really hard. So you've got to figure out a way— how do you get that little bit of breathing room? Because once I You get an extra 2 or 3 hours a week of your time. Now we can have some fun. Now it's like, "Hey, listen, I just gave you this. It was free. I want to just take an hour of that and I want to work on something else." That's magically convert those 2 to 3 hours to 3 to 5 hours. Now we're playing with house chips. Once I do that, now I don't maybe even need more than an hour. Maybe an hour, maybe sometimes give me 2, and now let's make that 5 hours, 8 hours. And it's kind of just like continuously reinvesting time, but it is a time commitment. It's an investment. It's like return on investment in finance. It's like return on time. Yeah, it's like you do have to have some investment, but we help to identify the shortest path to get that return.

And does your book talk about that? Like when people buy your book, are they going to expect to be able to make those kinds of wins on their own?

Yeah, the book does, does talk about what are some typical quick wins. Everyone's different, but there's a lot of tricks and tactics. You know, a quick one, we were talking about the tool Loom before. Yeah, the CEO, you know, one quick win, and we talk about probably hundreds of these in the book, is, you know, you could probably cut out 25% of every meeting and replace it with an asynchronous Loom video. And here's the benefit, like, say you have a 9 to 10— wait, if people don't know what Loom is, it's a tool tool that you click a button and it can record your screen, your face, or both. And it's on the phone, it's on the computer. You could also just— there's alternatives, but Loom is a fantastic tool. So you could take an hour meeting from 9 to 10, which might be the most valuable time slot of the whole week, right? Like you wake up at 6, you work out, you have a coffee. At 9 o'clock, your brain might be at the highest horsepower of the entire week, right? Because then you've got 10 Zoom calls for the rest of the day, and then every day past that. So that time slot, that 1 hour, is worth more than an hour from 6 to 7 on a Friday in the back of an Uber, right? So even if you could free up 15 minutes of a 9 to 10 meeting because it's just someone giving you a report out, and you could reallocate that— they could send you a Loom video and you could watch it during dead time when you're in the back of an Uber you could watch it at 2x speed, you could rewind it. If everyone— that's only 15 minutes one time, but if that's a recurring meeting, right, and say there's 4 people on that call, well, that's an hour of total bandwidth times 50 weeks, say, that's 50 hours right there that you just got back as a team. Yeah. Now there might be 20 of those calls, right, throughout the week. So that's a great example. Little things like that are quick wins that you could do right now and think about that doesn't require rocket science or a whole bunch of other shifts. And there's like literally hundreds of these tricks. I love that.

It sounds great. Why do you think it's a good idea for entrepreneurs to write books?

Well, I think that there's a lot of different reasons to write a book. I don't know if it's a great idea for everyone because it's a lot of work. It's a lot of work, right? I mean, you know this. Yeah. I've spent way too much time probably on this book. I wanted it to be perfect. I really wanted it to be a meaningful book. So I think you write a book for impact. Like, I want this to be part of legacy. Like, I think that— I'm hoping this becomes a foundational book, like how David Allen's Getting Things Done was foundational for individual productivity. I want this to be on that level when people think about teams being productive. So there's a legacy aspect. There's, you know, I hope it generates business, you know. Like, I think that this is going to get the word out and people are going to read this book and get value out of it and then be like, hey, I wonder how this company could help me, like what services or products do they offer? Yeah. So I think that there's going to be a legacy impact as well as I think it'll be— it'll elevate our brand and drive business.

Yeah, very good. I guess I'm so curious if I step back and think about you and your career. So you're a high-frequency trader. You were like doing all these glamorous things, making a lot of money. You gave it up to be an entrepreneur. You have this dramatic falling out with your business partner, and now you're running this successful company. You've been through so much. I'm just curious if you ever experience imposter syndrome.

Yeah, different phases. I mean, when I first came into this, I think when I first started high-frequency trading, I was like, I'm the dumbest per— actually, I'll even take a step back. When I went to grad school, I went to Berkeley for, for the Master's in Financial Engineering. And during intros at Berkeley, you have to stand up and give like a 30-second on who. And at that point, I was the youngest that they ever took. The average age was 30, and I was like 20. So I had no work experience. And literally the guy before me worked at Caltech and had a PhD in nuclear physics and was working on nuclear laser beams or some shit. I got up and I'm like, I'm Nick, and I like to play poker and chess. I'm sitting there like, why did they accept me into this? I'm like the dumbest person in this program. Yeah, but I worked really hard and like ended up actually doing really well there. And then the same thing happened when I was a high-frequency trader. Like, it was crazy complicated. It took me like over a year to truly understand all the different aspects. And yeah, I remember my team helping me and I was like, will I ever get it? Like, and be as smart? And I think like over time, I just built confidence because like in every scenario where I thought that, like, I overcame and ended up being a high performer in this space. And, you know, it just took time. So yeah, I think we all do. But I think you build confidence as you build wins and help solve that problem.

Yeah, actually, I always tell my clients and everybody I talk to to create a highlight reel, just like you're saying, you know, all these all these times which you were successful, and then you recognize that your luck is not going to run out. This is actually embedded in you and you're able to overcome challenges.

I mean, had I not, you know, had my experience with Berkeley, had my experience at high-frequency trading, I probably wouldn't have had the confidence to stick when I had the business partner situation. We'll just call it a situation. Yeah, I probably would have bankrupted. But those previous you know, those previous situations built confidence where I was like, I got this, I know, like, I'll figure it out. Yeah. And so I think it's important to put yourself into hard position— hard situations and really challenge yourself. And like, otherwise you're not going to build that resilience and those stories to, to, you know, give you the confidence to, to push through, right?

It's like a muscle, totally, and you have to build it. You know, speaking of that co-founder situation, What advice do you have for other people when they're embarking into a co-founder relationship?

Again, this one, a lot of thought too. Yeah. The quick answer is I think that the obvious thing is align on vision. Usually people just interpret that to mean business vision. And I think the big miss was not being on the same page as what's your personal vision. Right. Because it's one thing if you both think, okay, like the play here is to go the software route or whatever the route is. Right. But what do you— where do you want to be personally in 5 years? Where do I want to be personally? Like maybe you want to be retired in 5 years and I don't. Maybe I want to be, you know, building a billion-dollar company because like being a billionaire is important to me and you're happy with the lifestyle business. So it's one thing to be aligned on like strategy and direction of the company, but what are you looking to get out of this on a personal level? And does that align? And I do think I think hiring, you know, executive coaches, hiring a relationship coach, I think the earlier you do that, it's prevent— it'll prevent issues. A lot of what I talk about too with operational efficiency is not just moving faster forward, but preventing the issue. Because sometimes it's not that hard to move faster forward, but it's those setbacks. It's one person leaving that could set you back 6 months. Yeah. Or one situation that maybe you could have mitigated if you would have documented it or some other strategy. So what could you do right now to mitigate the probability that there is a blowup with a co-founder or with a key team member? And I think a great solution is you hire coaches and consultants to— sometimes it's awkward to bring up, you know, something that's bothering you, the co-founder. So having that third-party neutral person that can be like, what's going on, guys? Like, what has happened? Even if they aren't the world's best, like even just that is going to be a helpful, helpful space to hold to facilitate conversation. So you don't have things just build up because you don't want there to be buildup. Right. Totally.

No, that is so— that's such good advice. And I love what you just said because a coach or a therapist or someone, they just bring structure to the table. Like I have this concept of the co-founder prenup where you can actually talk through questions yourself about your vision for the future and kind of what are you like? And how do you handle conflict? And what's— I mean, even to your point earlier, what's going to make you a hero with me? You know, what's going to really upset me? And I think just having tools to talk about that and then practice talking about it over and over, practice talking about it, that's going to help you bring up issues. Yeah.

And I mean, like, if you don't go that route and like you decide to try to figure it out yourself and you let things bubble up, think about like all the waste. Any second that you're spending on that negative energy and negative thinking on something that bothers you, that's a minute or energy that you could be applying to a new strategy or vision to help grow the business. Totally bottom line value, right? So, you know, when I— looking back, I wish I would have hired a coach to help us navigate things earlier on. I don't know if ultimately it would have— I think that we just weren't meant to be co-founders because of the difference of personal vision. But I think that it wouldn't have ended probably the way that it did.

Right. So dramatically.

It would've been a softer landing. Yeah. And, you know, the amount of energy and wasted, like negative thoughts and wasted energy that could have been applied to better things, man, like it was probably millions of dollars worth of, you know, just wasted energy that was applied to the wrong place that I wish I would've hired, you know, a third party to come and help us navigate it.

Yeah, I hear you. Yeah. How has your leadership style changed or what have you learned as a leader? How have you grown as a leader in this journey of yours?

One, I think that I realize I don't think I'm a great manager, but I do think I'm a good leader. I think that my leadership style is a function of the team. And I think as we've matured as a company, the team has gotten stronger and that's affected my leadership style. Yeah, right. So I think that leadership style, at least for me, has been dynamic because if I'm with a more I'll feel like I need to micromanage more and I will get in and I could come off as more of a micromanager leader. If I'm with more of a senior team that I trust, I take more of a step back. I think the leadership style— one, I think you grow and you learn from mistakes. One thing I've focused a lot on is communication skills. I think that was— as a high-frequency trader, there's a lot of— I was really good at math and coding, but we weren't taking taking courses on communication skills. Right. Or interpersonal skills. I think that I've appreciated more the soft skills that I never really appreciated through grad school and through my past working life. So the soft skills— what was the question? How's my leadership style changed and how have you grown? Yeah, I think an appreciation for the soft skills. Figuring out how to have a successful relationship, working relationship, to get the most out of people, but not the most in terms of I want them to kill themselves and work, but I want them to be able to work on things that give them joy and tap into their unique ability. And so I think I've just gotten more clear on how to put together a team and be a team That's great.

I love that. Just a couple more questions. What do you wish you had known earlier on your journey?

How hard it was going to be. What do I wish I would have known? Let me just think for a second. Well, I think that one thing that— all right, this is probably the number one. There's probably a thousand. Person. I think that— and I'm big into acronyms because I think it's easier to remember. So I got CPR, don't forget that one, communicate, plan, resource, the core of my new book comeupforair.com. Now another acronym, ACR, attraction, conversion, retention. Um, I think that most companies, and I fell into this trap, make the mistake of going left to right. You know, attraction is what I call marketing, like how can you grow your the followers, all of these things. That's fun, that's sexy, but what's the point of attracting new people if you can't convert, which is the C, right? So you could get all these leads in, but if you have a broken sales funnel or sales conversion, what's the point? And what's the point of converting if you can't retain? So that's the R, right? So you could be the best at conversion, but if you're not able to retain clients, which was my problem, problem early on, right? Right. Like, we were attracting and converting at 20%. We weren't— we had a really bad retention, right? We were losing 15% every month. So it's kind of like you have a broken sink with water overflowing and you're just mopping faster versus trying to figure out where the hole is and patch the sink. So actually, the right way to go is from right to left. Focus on retention. Get your quality of service or product as good as possible. Then focus on conversion, right? Then focus on attraction. Now you have to— you can't just be that siloed in black and white. You have to be looking at everything. But one thing I really learned, Alisa, was I should be putting most of my effort on retention, which forces me to really get clear on what, what's product market fit, right? Before really investing money. So I overinvested in a lot of areas in the business prior to product-market fit and getting that retention. Right now, our retention's super high. We're expanding clients. They want to stay for way longer. The lifetime value of a client's way longer. So that's one thing. I think another thing is know your numbers, know the lifetime value of a client, try to figure out strategies to expand that. Right? So there's many ways. There's probably— it could be additional products that you could expand them in. There could be a million ways you can increase your gross profit margin. But know the lifetime value, know your cost of acquiring a customer, and know the ratio between those two. The LTV to CAC is a really critical number that really helps navigate, you know, should you be putting your foot on or off the gas.

I feel like what you're saying is that you wish you had known more about your— like, know your business. Like, know your business. Know the business.

In the early days, you didn't know business? Yeah, we were still figuring out— I think any startup, it's, you know, takes time to figure out. Like, it's very rare that like you just come up with an idea and like in 5 years that's the exact idea. At least for me, it's wildly different. It took a long time and it was really expensive to figure that out. I wish I would have invested more on, on that side of things. Another mistake too is There's so many opportunities. I fell into this trap of saying yes to too many things, and before you know it, every yes— it's like when we talked about adding more people, it's exponentially more complicated. Every product or service you offer is exponentially more complicated. Every, "Oh, well, this person wants to do this. Let's make an exception." Every exception is complexity. You make, you know, one in itself is not going to probably break you, but you have dozens or hundreds of exception cases. Like now you got to manage all that. So I would have said no to way more things, gotten way more hyperfocused and try to just keep it as simple as possible. As long as possible.

As long as possible. I love it.

We got too complicated too fast.

Last question. Nick, what advice do you have for other founders as they embark on their journey to grow into leaders?

For what stage kind of person are we talking?

Any, any stage.

I would say, I would say like always, always have a growth mindset. Always, always try to Be learning and growing. Try to hire as a last resort so you don't have to be leading as many people. That's probably the easiest way to solve that problem. And try to be as replaceable as possible and constantly trying to— I mean, look, as a leader, especially if you're the CEO, your job is to create the vision and finance the vision. But besides that, I think the third most important is make sure that you have a team of people that is doing work that could be the best work of their life, that gives them joy or taps into their unique ability, and try to remove any barrier that's preventing them from achieving that. That would be kind of the third most important thing as a leader to think about.

Amazing. I love it. The book is Come Up for Air. Comeupforair.com. Yep. Everyone should get it. We've got a bunch.

The book is 320 pages and HarperCollins wouldn't let me go really any any longer, so we had to compact it. It's packed with information. So the website comeupforair.com has all this supplemental and bonus content that didn't make it into the book to help guide your team through this journey.

Amazing. Thanks for being here today, Nick. It was such a great conversation.

Thanks for having me.

Thanks for listening to From Startup to Grownup.

If you like what you heard, give it a review on Apple Podcasts so other people can find And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.