037: $200 Million with Only 3 Employees

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Hello, and welcome again to the Scaling Up Business podcast. I'm your host and Gazelle's business coach, Bill Gallagher. We have such an exciting show today. We're talking today about how somebody has grown $200 million in. In orders with only three people. How do you get to $200 million and. And in projects with only three employees? That is the secret of today. And we're going to touch on radical changes in business models and radically outsourcing on our show today. Our guest is Tim Danley and his company is Resource Converting LLC of Las Vegas. But Tim Danley lives and works in Dallas, Texas. So, Tim Danley, welcome to the show.

Thank you, Bill.

And I understand you're in Dallas today.

I am.

That's really great. So we're going to get into this. I think people are going to be really, their mind is going to be blown by this $200 million in projects with only three employees. You've got a terrific story to tell and an interesting connection, of course, that is totally relevant to one of our past guests and another guy with a surprising business who's grown from 30 people to over 800 after founding a company in 20. And I think you started this company in 2013, didn't you?

I did.

Oh, my God. All right, so tell us a little bit about, like, your history. I know we're both part of the entrepreneurs organization, and so tell me about your past businesses and how you got into this, how you got connected to EO and your birthing giants program. So take us through some of that.

Yeah, I, I've been an entrepreneur my whole life and I never, I never really had a job. I don't think I've ever been employed by anyone. And, and a strong desire for freedom and success. And, you know, from a young age, I just wanted to take over the world, I guess. And I've been involved in multiple entrepreneurial opportunities. And one of the main businesses that we did was in the printing industry. And we owned a wholesale printing company, company that was in Kansas City, St. Louis, Des Moines, Iowa, and Omaha, Nebraska. And we did, we basically did printing for other printers and, or other print brokers. And we did, we had that business for 20 years.

Did you, in Kansas City, did you do like Hallmark work or.

We didn't do Hallmark work. They did their own. But, but we did a lot of. Our specialty was the business. Cards, letterhead, envelopes.

Oh, got it.

And then we moved into the larger format, four color work. Printing was our main business for 20 years. But in addition to that, My wife ran that company while I went out and tried to do a whole bunch of other things like organic recycling. We had a large compost facility in Iowa. We had a sod farm. Multiple different. We had a equipment leasing business. All kinds of things. I just, you know, I learned all the things that I shouldn't do and some of the things that I should do. So. And then in 1999, 2000, myself and two other guys in Des Moines founded the Iowa chapter for eo. Oh, nice Entrepreneurs organization at the time.

Nice.

And so, you know, that kind of started my, my commitment to a lifelong, you know, opportunity for learning.

Yeah.

And we kind of just took that to the next level.

Yeah. So you have this printing business. You dabble in a whole bunch of other things. Mostly they don't go well or you. Or you don't decide to stay with them. They're not what you love, and so on. And then at some point, I guess you had the printing business and you did work that's deeply related to our scaling up and Gazelle's coaching world, which is the birthing of giants now known as the Entrepreneurial Master's Program, also by their acronyms, BOG and emp. Right. And tell me about that experience, what you learned there and how you applied it.

Yeah, I think it was. It was the best program I've. I've ever been through. I mean, I. It was just. It was great to show up every day in that program and know that there were. There was a whole room full of people just like me and they, Everyone kind of checked their ego at the door because they wouldn't be there if they didn't, if they didn't want to improve, if they didn't think they could get better.

Right.

And it was just a great experience. And there's people. I graduated, it was a three year program and I graduated in the class of 2008. And I still stay in touch with several of my classmates in that program. And it was just phenomenal. It was one of those things that you looked forward to year after year. And in fact, I teamed up with a few people in the class to kind of have accountability partners. And so we kind of talked on a monthly basis and still do that now.

That's really great. So you've had kind of an ongoing forum like experience sounds like focused mostly on accountability with those groups.

Right?

Yeah. So talk to me about how you got into this business. I know you were looking at doing some investing and you came across the idea. So let's get into that a Little bit, yeah.

I think through the experience with EO and going to 28 universities and traveling over 50 countries and just kind of studying and learning about different cultures, I just, I wasn't happy where we were at in the printing business because that was kind of the main business. And you know, the printing industry had been changing dramatically over the years and, and so I just wanted, I just set out to, to find out exactly how I wanted things to look. And, and so I learned a lot. I mean, I learned, you know, that there's several different ways to own and operate a business. And you know, what happened was, is that when we, when we finally sold our business after 20 years, the printing operation, we had a successful exit. It wasn't for, you know, enough money that we never had to worry about money again, but it was a, you know, at least we made it out and you know, with some decent money.

I know many people who just like to get out.

Exactly right. And so it was pretty rare that we were able to do that in that industry. So we did that. And then I was just, you know, I just kind of went to work looking for the next opportunity as, as everyone does. And this resource converting opportunity came along. And at first it was presented to me as there was a person that we were introduced to that had some intellectual property and he just wanted to raise money so that he could buy a piece of equipment and he could charge people to process their material. So using the printing analogy, he wanted to start a printing company rather than owning the rights for all printing presses. And so as I, as I looked at the, at the opportunity, I just, you know, we just kind of studied it and my partner and I, who's also a eoer, we sat down and we, we just kind of thought, listen, this, this doesn't make sense. Why would we. If, if what this guy is saying is true and you really can do this with this technology, then we want to control the technology. So rather than, rather than charging people to do, you know, a one off deal and have a building and put a piece of equipment in there and charge people to process their material, let's control that whole process and let's get into the licensing business. And I learned about licensing through the EMP program and through multiple people around the world that I talked to. And I always was fascinated about all these people that just made money, you know, practically doing nothing. You know, the checks just came in. And I always was fascinated by the fact that, you know, the same people I was seeing at these conferences and at these Universities were, you know, they were there year after year, conference after conference. And, you know, I just asked the question, how can you, how can you travel so much and how can you be here away from your business? And, you know, when we, when we learn more, we learn that it's because of, in a lot of cases, or in some cases, it's a licensing type setup where they control things and people pay them for that rather than being in the grind. And when you're in the grind, you're working for someone else constantly. And so we just wanted to do it a little bit differently. So sure enough, with resource converting, we, rather than giving this person money to go buy a piece of equipment so they could, so they could do this for other people, what we did was we went and negotiated a deal to buy the patented technology and have worldwide patent rights. And then we in turn commercialized this technology that was not commercialized at the time that we took it over. And so they had, they really didn't know exactly what they had. And we were able to start marketing and getting interest and finding out what feedstocks we could process. And so basically the technology is. It's a patented technology that's the only one of its kind in the world that pulverizes and dries agricultural and municipal solid waste.

So I just want to underscore this, right? So somebody comes to you, you're looking for a new business and something to get involved with. Somebody comes to you wanting to start to build machines and build businesses that would process things all over the world because they have an idea for doing something better, a better mousetrap. And I totally love that. My purpose as a business coach is helping leaders build a better world. So I think each of the entrepreneurs that we work with in one form or another, has a vision for doing something a little bit better. And I think that that keeps the world moving in a good direction and provides jobs. And, you know, I just love that. So totally lights me up to help people fulfill their visions, right? And so somebody comes to you with this thing, you see it, but you have a different idea about it. And the two things that I hear really big for us is one is a business model shift. Think about the normal business model that the inventor had and was bringing to you and their normal way of thinking about things, and you turn that on. The business model you selected in this case was a licensing model. But when we think about this, we could think about Airbnb and Uber and countless other companies today that have lots of revenue and activity going on but they don't control the stuff directly the way they control the infrastructure. They control the path, they control the technology. So in your case, it's licensing and theirs, it's kind of a network thing. And then the other thing is just outsourcing stuff. So even within that, like not hiring on endless people, you're giving people work and you're doing stuff, but you're not building an empire of people to command and direct and keep busy and feed. They can work with you or not and work with other things and so on. And those two seem like really big ideas, but then they also lead to payoffs, like not having to raise lots of money and not being beholden to lenders and investors with all different ideas about what and when you should do everything that you should do.

Right.

So you have three employees.

Yeah, that's right. That's what we did. Look at it differently. And we were able to figure out a way to. We knew that there were people out there, out there that already had all of the resources and the tools to do the selling, to do the inventorying, to do, to do everything. There were already equipment distributors out there that sold to the municipalities and the wastewater treatment facilities, and all of the people out there processing waste or people that are already there, they've already got the salespeople, they've already got the sales managers, they've already. They already have inventory, they already have the leads. And so why would we reinvent that? Why would we think. I mean, my partner and I, we don't know anything about the waste business. In this particular case, we don't know about, you know, we don't. We don't know how to take a piece of equipment and put it into the worldwide marketplace like this in the waste industry. And so we had to find people that did.

But others too do that.

Why would they, why would we do that ourselves? When someone's out, someone else is already doing that. And so without. So basically, by doing the distributor model, we outsource all of our sales, our marketing, our customers are the distributors, but the end customer is serviced completely, 100% by the distributors and the agents. And so it works out good. I mean, there's an upside and a downside. The upside is we didn't have to go raise millions of dollars to create all of this infrastructure and get all these resources. And so we essentially have no debt. But the downside is we lose a little control over sales.

Yes.

And given the fact that the, you know, the, the cheapest thing we sell is $4 million you know, these are high. These are high dollar items.

Yes.

You know, they don't. Sales don't happen, you know, every day. And so we need people to know what they're doing. We need people that are talking to the right people. And because our technology is the only one of its kind in the world, there is no shortage of interest in viewing our technology. And so that's why we have a 20,000 square foot demonstration facility out in Las Vegas. And we bring people in from all over the world. But there's a major process that we make our distributors take the customers through to make sure that these people just don't want to see this really exclusive technology. They have to be a serious buyer. And so that's the kind of the process that we take everyone through.

So you've got this 20,000 square foot demonstration facility in Las Vegas where you can bring people in from around the world to see how it's done and operate. And then they can buy the technology, give them the technology, which is manufactured by other contract manufacturers who build the equipment in multiple facilities. And that equipment then has to be integrated with their larger systems. And there are local engineers doing that work. And so you just have one primary engineer on your payroll that provides that liaison to translate and help understand from your entity to the local operator through a partner engineer on site.

Yeah, correct.

It's really brilliant. So we talked about how these notions of new business models are our brand new concepts and accelerated by a lot of technology and our ability to travel and communicate around the world really rapidly. And I think there are lessons even from history. As you were talking about it, I was also reminded, I was studying recently the story of the invention of television. And somewhat tragic. Philo Farrant Farnsworth is this American child inventor who comes up with the detailed idea for television and what it would take before World War II. As a teenager in high school, he conceives of this thing and exactly how it would work. Not just like, oh, I think it'd be neat if we sent things through the air, but how could you do that? What's the circuitry and the principles involved? So he conceives and then he spends years working on it. But radio is the dominant thing. And the head of RCA is this barren and powerful guy, David Sarnoff, who in no way wants to be displaced as the primary broadcasting. And he sees the power of TV and he works on developing his own thing, even though it's already kind of been developed by somebody else. Philo doesn't license to him. He tries to go and build the factories. He tries to, to our contract even to build things. He tries to create his own thing and it doesn't turn out. And he is quashed and held off by Sarnoff, who dominates TV and radio for years to come. Through RC and others get into that business, but not Philo. Now Philo's passionate about the whole thing and I mean he realizes some fulfillment in that. It actually happens that TV becomes a thing that unites and shares information around the world. And as I understand it, one of his sort of crowning moments of satisfaction is watching the moon landing, right? Which I don't know how old everybody is listening, but the moon landing was a powerful, powerful thing when I was a boy to see. And we all watched live around the world in 69. But I think there's a lesson here for us all in the growth of your business and the mistakes. If you want to have a huge impact, if you want to have your vision realized, and if you want to make some money with maybe less debt than others have and less work raising money and more on getting it out, then giving up control is an interesting way. And challenging the traditional business models can be a path to another kind of breakthrough. So you've got a piece of technology that's a breakthrough and then the business model that's kind of a matching breakthrough. And if you think about it, look, what you're doing is really cool. So if we can remove the water from municipal and agricultural waste, that's useful. And if we can turn the rest of it into fuel or compost or whatever else we do with it, that's if we can extract metals, if we can do whatever. But that separation has been really inefficient, not cost effective.

Right, right, right, yeah. And that's the missing piece. I mean, it's just been almost impossible. I mean, you know what it takes to dry a low, dry a, you know, a load of laundry. You know, imagine if you've got several hundred tons or a thousand tons a day of anything that you need to dry. It's, you know, it's not economical to have a gas powered or electric powered dryer to dry that, that quantity.

Right.

And our technology is a non thermal process that, you know, blows the material through at 600 miles an hour through a series of pipes and cones. And, and, and the, the water evaporates out of the top of our cones. And so this dry powder, like you said, can be converted into diesel fuel. It can be converted into some sort of electricity or alternative fuels. Or energy. And so this is a game changer. We really believe that we have a zero or as close to a zero landfill solution. And there's a lot of people jumping on board that, you know, the technology already exists, that if you've got a high BTU value powder, dry powder, you can convert that to all of these great things. But the problem is it's, it's almost. Up until now, it's been impossible to dry large quantities of high BTU value organic, you know, materials. And so this is what has, you know, propelled us. And so, you know, I think like what we were talking before, it's just what I learned was it's better to be the guy who gets a check for putting your name on a product than the guy selling the product. Mm. And because the guy selling the product has to, they have to pay for everything. They've got to have inventory, they've got to, you know, they got a market. The, you know, the, the product. They've, they have all the, you know, they have to have a bunch of employees. Yeah, what we would rather do is we'd rather sell a license for an entire country for our technology for several millions of dollars and then have them pay us every time they need to, you know, they need to buy another one of our systems. So that's what we've been doing.

So you do have to protect reverse engineering and knocking it off and a variety of things like that, right?

Absolutely, yeah. Yeah. That's always going to be a challenge. But, you know, you can either be, you can either sit around and worry about that and not do it because of that, or you can be the first one, first one going and have everyone chase you. And that's what we've decided to do.

Developing these kinds of systems, deploying them takes time and energy and a lot of investment. And the projects are bigger even than your piece of it. Right. Where is it already in use? In supply. I know you have the demo facility, but is it in use in places now? Is it impacting?

It is. We've got five installs and we've got a couple installs drying peanut waste. And again, this was a big problem because it was not only removing water, but it's an oily substance and it's just hard to dry no matter what technology you use. And we were the only ones. This large multi billion dollar company had been trying for years to find a way to dry their waste. And we came along and did it with success. And so we're in multiple different R and D projects with them.

That's really great. And how far and wide is this now? So where are the installs now and where are they going? And tell us a little bit about that. What's the footprint of this?

Yeah, we are currently selling licenses in different countries. And so because of this licensing model, the reason why we went this way is that we need to control what people put through our machine. And so that allows us to sell the exclusive rights for, say, municipal solid waste to the country of Malaysia, for instance, and then we can sell the rights to the country of Singapore, we can sell the rights to the country of Canada for municipal solid waste, and then we can sell the rights to a completely different feedstock to people in those same countries. And if we can control that, we get a license fee for each of those things. And we're in the process of proving out the value of those, because right now it's assumed what the value might be be to hold that license in that particular country or territory. And the more installs we get, and the more we prove this out, the more valuable those are going to become. And so we've kind of created a market where people are actually buying licenses and then, and then even selling them, you know, as an investment, because they're betting on us that we're going to be more valuable, you know, next year than we are today.

And so that starts to create a market for the technology beyond that, correct?

Yeah, correct. So the footprint is everywhere. I mean, we've got licenses all over the world and we've got licenses for territories, for specific, you know, cities and counties all the way up to entire countries. And it's, it's endless. I mean, there's probably a dozen, there's a dozen feedstocks that we, that we can process and dry. There's probably 100 more. But, you know, focus is everything. And, and we need to, we need to choose the path of least resistance and we need to solve. You know, if you're selling something for, for $4 million, you need to be solving a multi million dollar problem or, and, or creating a multi million dollar stream of income. It's not going to work. If, you know, we always like to say, if someone has to get their calculator out to figure out whether or not it makes sense to buy our $4 million machine, they're probably not in the market for it.

Totally got it. Well, I think we need to continue this, we need to do some video on site in some of your locations. I think all tropical warm places with beaches. I'm there with you. Let's go.

Well, it's interesting you say that because we've got a lot of business on island countries because they obviously don't have a lot of land to continue to bury their garbage and their electricity costs are very high. And so we can help them with both. We can provide to them a powder that they can create more electricity and cheaper electricity and also save their landfill.

Well, I've done work extensively in Bali over the years and neighboring islands, and I've done work in Malaysia and Singapore and I regularly do work now I have clients in Hawaii. So I think all these places, we need to get there right away. Absolutely, I agree. So let's talk about some next things. We've got some great, there's, there's great stuff here. And we'll put links in the show notes up to Resource Converting LLC and Tim Danley's profile so you guys can read up and learn more about this surprising and inspiring example of radical outsourcing and business licensing, technology licensing. So all that stuff will be out there. I want to thank you for coming on the show today. I want to tell folks where to get more information information. Subscribe now on itunes to get regular shows. We've got shows coming up on exponential businesses and some really great and surprising titles. I'm not going to tell them all to you, but we'll start to tease them out on our Twitter and social feeds. So look for us there. ScalingUpBusiness.com is the web address and Scaling Up Business Podcast is the podcast on itunes and your favorite location. We, of course, also have a YouTube channel and some of our things, well, all of our podcasts, both video and audio, go up on YouTube now. YouTube, Bill Gallagher is where to go from that. On our website, you'll find a free download growth kit that has an overview of the scaling up process and how to run your strategy and planning sessions for your team so you can get started on your own. And of course, we're starting to put up tutorials on many of these subjects on the YouTube channel. So lots of good things there for us. Subscribe also on the website for articles on the same related subjects. And our mission is our purpose really is helping leaders build a better world and we're out to impact millions of leaders over the next few decades. So thanks so much for being on the show today, Tim, and we'll see everybody next time on the Scaling Up Business podcast.

Thank you, Bill.