From Startup to Scale: The Founder’s Evolution | Scott Ritzheimer

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Welcome to another edition of The Profitable Creative, the only place on the interwebs where you will learn how to turn your passion into profit. I am your host, Christian Brim. Special shout out to our one listener in Clifton Park, New York. I have no idea where that is, but welcome. Thank you. Joining the show today is Scott Ritzheimer from Scale Architects. I'm sorry, I couldn't help it. Scott, welcome to the show.

Hey, Christian, thanks. I'm excited to be here, German name and all. There was this moment where everyone's like, we're gonna get a great accent on this episode. And then they heard me speak and it's like, oh, it's another American. So, yes, I am another American, but I'm really excited to be here.

And for the record, it's Ritzheimer, not Ritzheimer. Yes. My son would just shake his head right now. He'd be like, please stop. So, tell us a little bit about Scale Architects. I'm curious.

Yeah, so, um, there's about 9 ways of answering that question, but basically what it boils down to is, uh, I, I ended up as kind of an accidental entrepreneur and really fumbled through the first decade and a half of my career, uh, as an entrepreneur. I, I didn't really know anything else, and I had— I didn't know how to do that either. I was just making it up as I went and did a whole lot of things wrong. Um, but fortunately had a great team around me, and, and we really achieved quite a tremendous amount of success, um, gonna pinch me level success.

And, um, now was that in architecture?

Uh, no, had nothing to do with architecture. Um, it was, uh, it was actually an organization that helped start businesses and nonprofits. Uh, it was the— we did kind of the legal aspects of what you would do, the registration paperwork, all the stuff that everyone's super excited to do.

Uh, that and accounting.

Uh, yeah, it was, uh, so we did the— well, we started an accounting firm as well. Um, so the We covered the most boring side of, uh, of launching a brand new beautiful endeavor for profit or nonprofit. And, uh, and about 10 years into that, after having a lot of growth, we had, uh, about 55 people on the team at this point. Wow. And, um, we had run pretty profitably the whole time. Um, there was these, the early months, uh, I could say, but after the early months, we had done a pretty good job at dialing in a couple the right key details, whether, you know, we were smart or we just happened along the right thing. I'm not sure back then, but, um, but then 10 years in, we're, we're just having all this problem, all these problems with profitability. And every year we'd kind of walk into the strategic planning room and we'd have, you know, some plan to fix it and we're going to double our profit this year. And every year we'd come back, you know, and we'd had lost another 7 percentage points and. Um, that was driving me crazy. Not because it was like profits at the end of the day, but it's like, hey, I'm looking at the trajectory on this and we're not here in 2 years if we don't figure this out. And, uh, we tried a bunch of stuff.

So you were the founder/owner of this?

What, what? Yeah, co-founder, co-owner. Okay.

Yeah.

Uh, so it's me, a business partner, and we had a leadership team at this point as well that were helping us out. And, um, And so we're trying to figure out what's going on. Can't do it. Tried like reading a bunch of books, doing a bunch of seminars, the whole nine yards, what everybody does. Googled everything that we could think to Google and none of it really worked. And then there's actually a podcast like this with a gentleman who does have a fantastic accent, by the way. His name is Les McKeown. He's from Ireland. And, and it's just, it's magical. And I think that was it. Like, I think that was the magic piece because He was talking about one of the most boring things in the world, which was business lifecycle stages. But the Irish accent had me like just hook, line, and sinker. And, and so I'm listening to it. And long story short, he describes these different stages that businesses go through. He gets to the third stage. It's a stage called whitewater, and it's a mess, like just a hot mess.

Yes.

And I was like, finally, like, that was the very first time, Christian, I ever felt like, because I had started so young and it was my only job I ever had, I felt like it was the very first time someone actually gave me a map and I was on it, right? Like, I wasn't like way off the edge. You are here. Yeah, it's exactly it. So you are here moment. And so I went, I, after I listened to the episode, I bought his book, I bought it for all our team. And having had no profit for 3 years, we did the poor man's implementation and followed the steps in the back of the book kind of a thing. And it tripled our bottom line in a single year. It gave me so much confidence and clarity in, in where we needed to go and how I needed to lead and show up. And it was, it was a really hard transformation. There were some very difficult conversations in there. Um, we cut a million and a half dollar product line, uh, basically overnight. Uh, I had to fire some of my best friends. It was like, it was really, really difficult season. And in the midst of all of that challenge and difficulty, I remember thinking to myself, if I could help other people through this, like, so that they didn't have to experience it the way that I did, I think I'd die a happy man. And, and ultimately that was the very beginning of Scale Architects. So, uh, we were able to turn that business around, got it to a stable, steady place, uh, brought in some new leaders to run it for us. And then, I ultimately ended up selling that and starting Scale Architects. And the name is a little tricky because we don't architect, you know, anything with blueprints anyway. But what we do is we help architects scale. We help businesses and nonprofits who are trying to scale up profitably, sustainably, make a huge impact. We help them build scalable organizations.

I love that. There's so much that resonates with me listening to your story. So, to clarify, Scale Architects is a, a moniker, not who you work with.

So that's right.

Okay. All right, perfect. So you work with pretty much any industry, or is there a particular one you like?

Yeah, it's pretty fascinating. We've got, um, we're up to, I think it's 28 different scale architects, uh, folks who do coaching and consulting, uh, predominantly for founder-led organizations. And, uh, interestingly enough, about 50/50 nonprofit-for-profit split.

Uh, we, we work on both sides of that divide because that dynamic is very different.

It's very different and completely the same. True. It's— there's a couple of variables that, like, okay, we've got to translate this. Um, there are a few patterns, uh, that are, are, um, kind of facsimiles of each other, if you will. Uh, and they, they're parallel tracks. And having been at the intersection of, of for-profits and nonprofits, really my whole career now, uh, as soon as I started seeing those different stages and some of these other patterns fall into place, I was like, oh, like founders are founders, like entrepreneurs are entrepreneurs. Um, there's, there's, there's this cloth that we're cut from, you know, that, that's the same. Um, sure, there are things that are different, absolutely, but it's, it's about 99% the same and 1% different.

Hey listeners, are you ready to turn your passion into profit? Then grab a copy of Profit First for Creatives. Click the link in the show notes to purchase a copy. And if you're not ready to make that full commitment, you can download a free copy of the first chapter. Check it out right now. So what size businesses do you typically work with?

Yeah, great question. So vast majority, uh, of the work that I do personally is, uh, with small-medium enterprises, usually small enterprises that are trying to become medium enterprises. So we'll start somewhere between, uh, 15 and 50 employees, and, uh, depending on their vision and goal and how big they have to be to achieve that vision and goal. We'll go north of 100, 150, 500 employees by the time we're done.

So you focus on employee counts instead of revenue? Because I can understand that would be a different— so by industry, that employee count could translate to very different revenue account, right?

Which is why, yeah, exactly.

If you're doing professional services at 50 people, you're one number. If you're a 50-person manufacturer, that's an entirely different number.

It is. Yeah, it changes a lot. What, what's similar about the two, if we nerd it out for just a second, um, the, the reason I use headcount is because it's usually a very good proxy for human complexity.

Oh yeah, right.

How, how com— how complicated is it to get all of us doing this stuff together? Um, if you wanted to go one more down the rabbit hole, which you can't really do because it's not publicly accessible information and most folks don't even have it anyway. But the real, uh, the best measurement of complexity, organizational complexity, is actually the number of job descriptions.

Okay.

And because you think about it, uh, for us, when we were in this whitewater stage, we had 50-some-odd people and 67 job descriptions. That, that was— it was, it was very complicated. We still had multiple people doing multiple jobs. Okay. Yeah. Whereas if, again, like you mentioned, let's take a landscaping company or something like that. If they had 50 employees, they'd probably have 5 to 10 job descriptions with a whole lot of people doing just a couple of them. And so it's how complicated is the work that we need to do and how high an ability do we have to communicate with each other and stay aligned effectively?

So, okay. My experience I outline it. You used Whitewater or the Irish gentleman, and I'd love to— Les did, yeah. I'd love to— what was the name of the book?

So the name of the book is Predictable Success. Oh, yeah. And the name of the author is Les McKeown.

I have Predictable Success in my library.

Fantastic book.

Yeah. One of the things that You mentioned it was Whitewater. The term we use internally is the Badlands, and I think that that was coined by Greg Crabtree, author of Simple Numbers. But I've also heard it used in other organizations. So maybe he didn't come up with that name. My colleague and friend Drew Goodmanson, he refers to them as entrepreneurial plateaus. So the inflection points where the business can't grow any further, right, with the current structure. And I recently had this conversation with my leadership team. I reminded them, we're designed as a business. I don't care if it's just you or if it's 100 people, your business is engineered to exactly produce the results that you're getting. And that's a hard pill to swallow sometimes when you're looking at not getting the results you want. Because the reality is you've got to change something. And it's not just oftentimes around the edges, right? It's not like incremental changes when you're in those badlands or in whitewater or your plateau. It's a fundamental change. And yes, to your point, you said it brilliantly. It's shit work. I mean, you've got to have difficult conversations. You've got to make difficult decisions. And if you're like me, who avoid those kind of conversations, it makes it even more difficult.

Yeah. Yeah. Oftentimes, and I was guilty of this, we're looking for like a lipstick strategy, you know, which is if I get a little extra red in there, we're good to go. And the reality of it is we need heart surgery, you know, to totally abuse the metaphors in the space. Another Another very common principle that folks will think about is you've got to get the right people in the right seats on the bus. There are stages, the Badlands, right? Whitewater, where you got to get a different bus. It's not just enough. It's going to come out the other side something else. And, and so that's, that's what makes it so difficult is it's not more of the same. We have this idea that like there's this early phase and it's hard and you got to get the thing off the ground and that makes sense why it's difficult. And then after that, if you get out of that, it's just kind of up into the right forever. You know, no one actually would say that, but we kind of all believe that in the way we behave. And so when we run into different problems, the answer is, well, we just have to do more to get through it, right? We have to have more sales calls. We have to hire another person. We have to have more systems and processes. We have to just more. And more and more. And the reality of it is, for a long time, that's just true. It's that— that's not actually wrong until it is. And, and we— I love the word that you used for it, but there's these inflection points, uh, that we go through. And a fascinating thing, uh, there's something fascinating that I discovered as I'm, I'm really looking deeply at these inflection points, because you said it, the, the organization that you've built and designed is not the one that's going to get you from here to there. So What do you have to do differently? That's actually pretty straightforward. Uh, it's hard to do, but it's simple to understand. And what surprised me once I got into this, I was doing it full-time. I was helping, you know, a whole bunch of different businesses is, uh, the vast majority of them were doing something like what I had achieved. They're doubling or tripling their profitability in the course of 12 to 18 months. That's pretty cool. That's a lot of fun to be part of. And then there were a handful that weren't. Uh, they kind of did all the same things, right? But there was something about the way that they did them that it didn't click. They didn't get any type of benefit from it. And so a year later, they had done all of the, the homework, if you will, but we're just kind of in the same place with some more tools in their tool belt. You know, the house still wasn't built. And that really bothered me. I mean, it like really got under my skin for two reasons. One, I wanted to see them succeed, uh, and that's what, you know, that's what we were shooting for. But two, that meant that it wasn't the things that we were doing that were making at least all the difference. There was something else going on under the surface that I hadn't figured out yet. And so after, uh, 3 or 4 years of doing it full-time, uh, I started to see a couple patterns emerge in those who succeeded and those who didn't. And what I realized, especially in my environment where I'm predominantly working with founder-led organizations, was that the difference wasn't some organizational tactic. The difference was whether or not the founder, leader, most senior executive, executive director, CEO, whatever you call them, it was whether or not they made the evolutionary change that they had to make. Because your organization will never scale and evolve beyond you, not so long as you're leading it.

Preach. There's an article that I have pinned to my browser toolbar that I revisit at least once a year. Dan Marcos, who was or is a Scaling Up advisor, you know, with Verne Harnish. And the article is, "You Have to Grow Yourself to Grow Your Business." And he goes through those stages of business and what you as the leader have to change to be in order for the company to grow further. But I would say that even if you're below 15 employees, that axiom is still true, right? Like, I think that axiom exists for the entire life cycle of the business. Yes, in the sense that you get to that inflection point as an— and as a founder, entrepreneur, CEO, you have a choice to make. You can either look in the mirror, figure out what you need to change and change yourself, or you can hire it and get the hell out of the way. Now, most businesses, economically hiring somebody doesn't make sense. Which is why it is difficult to scale, right? Because you get to a point of profitability and you're saying, well, I as the founder need to be fundamentally different and I'm not willing to make that change. But it's going to cost me $300,000 or $400,000 to hire somebody to replace me. Eh, I'm not willing to do that. Now, rarely in my experience is it that clear. Like in the founder's mind, right? It gets all jumbled up there. But the reality is, is that faced with that clear choice, most of them aren't going to make that. They're like, I'm not, I'm going to stay where I am.

Yeah. And oftentimes they shouldn't, because even if you bring that person in, what's the, what are the chances that it's actually going to work, right? At that size and that correct, they tend to be quite low. So I would actually rewind the tape a little bit and say it starts before you start. Mm-hmm. Right? Uh, it actually— so, uh, in, in looking at this really closely, I've, I've found what I think are 7 distinct stages that founders go through from pre-launch to post-exit. Let's hear it. And, and the very first one is, uh, what I call the dissatisfied employee, right? They're, they're, they're out there doing something and they're just kind of haunted by the question, isn't there a better way?

Mm-hmm.

And there's a right and a wrong way of dealing with this stage, right? Um, there, first you got to figure out, should I really be starting my own business, or is there another way? Because if there's anything you can do other than start a business, coming from a guy who's helped 20,000 people do it, do it, do anything else, right? Because once you jump in, we'll get to that in a second, it's a whole different ball game. So that's the, the first one is you've got to take that dissatisfaction and transform it from wanting to escape something to being ready to actually build something. That's a very different mindset. And, and so when you get that right—

let me pause right there. Yeah, that's something I say a lot. And I think there's a particular wisdom into what you said. I say it this way: you can't just be running from something. You have to be running towards something, right?

Yes. Always, always. A funny way I like to describe it is you have to transform your how-not-tos into your how-tos, right? You're sitting there in your job, dead-end job, dead-end boss, and you're just like, I don't want to do it that way. I don't want to do it that way. I don't want to do it that way. You can know all the things that you don't want to do, but you can't start a business not doing things, right? Right. That doesn't work. And so just an example to take this home for folks, I have a couple of kids. Uh, oh, 3 now. And 2— my 2 boys were 2 years apart. And from the age of like 3 to 7, 8 years old, they like lived at the pool over the summer. Now we're here in Georgia, which means that the, the deck temperature, the cement is like a million degrees, right? And, uh, and so invariably, every single day without fail, my kids would be out there around, you know, noon, 2 o'clock, somewhere in there, and it would just be hot, hot. And they'd want to get from one side of the pool to the other. And so what would they do? They would just take off, right? Dead sprint across the deck, which, you know, my medical bills and, and, uh, would attest that's not a wise thing to do. And so the, the lifeguard, uh, on duty will blow their whistle, and then they'll say one thing. What is it that they say?

Slow down.

Right. Yeah, yeah, it's, it's walk, right? Because, um, and a lot of folks will think they say don't run. But it's not don't run. They don't tell them what not to do, they tell them specifically what to do. And the same thing for us, we have to recognize, hey, knowing how not to do something, you've ruled out 1 in the 10,000 possible ways of doing that. What you've really got to do is find how to do that thing, right? How to, um, you know, whatever it might be. How to— what's wrong about the way that hair is being done? What's wrong about the way that people's books are being managed? What's wrong about, uh, the the world around you and how can you fix it. That's really what Stage 1 is all about, even before you've ever started a business.

I love that. And so Stage 2, you, you've decided to have a how-to and yes, you are, uh, mentally ill, uh, you're going to start a business. What's the next stage?

You are one of the crazy ones. Yes. Uh, and so as one of the crazy ones, you stepped into Stage 2. I call this the startup entrepreneur stage and Uh, the, the best thing, the best strategy for a startup is to stop being one, you know, because it's a, it's a really hard season. It's a really hard time. And so what ends up happening is everything is cost 3 times as much. It takes 3 times as long and it's 3 times as hard as you thought it was going to be. Yes. And so what we, what we expected to be like some Garth Brooks song, you know, like starting a business is, you know, working 4 hours and then sitting on the the beach drinking two piña coladas, you know, one for each hand. And it's not that. I mean, it's, it's as far as you could possibly get from that. And so the defining question for those of us who have made the leap is, what was I thinking? Like, what in the world?

I tried to replicate my mindset at 27 when I decided to start my business, and I can't.

I'm like, what?

No. What was I thinking?

What was I thinking? And, and so it's just, it's a, it's a, it's glorious, right? It's amazing and it's terrible. And what we do, we walk around with what I call the entrepreneur smile, right? It's kind of like, it's like half smile, half grimace, you know? Uh, everyone's like, how is it going? It's like great. And you're, you're really thinking to yourself is we might not be here tomorrow. Correct. Um, and, and your show, I love the concept behind it, particularly for folks in this stage because Uh, in both, and interestingly, even in the nonprofit space, but in the business space, you have to find a profitable, sustainable market. You don't have to create an amazing product or service. It might be helpful if you did, but you don't have to. Uh, you don't have to have the best location. You don't have to have the best, uh, tax structure. You don't have to have the best tools and technology. You just have to find a profitable, sustainable market. You gotta figure out what problem you solve. For whom and how much they're willing to pay for it.

I want you to pause right there, and I— because I preach this, uh, many times, and I wrote about it in my book extensively. The— I think the thing that, uh, startup businesses and existing businesses, um, fail at— we failed at miserably is understanding the problem you're solving. Because we tend as business owners, especially if you've been doing it a while, like you've had some success, you've gotten through, is it going to last and is it going to persist, is you start thinking in terms of what you do. So, you know, we do bookkeeping, we do taxes, we do payroll, whatever. Instead of thinking in terms of the customer of like, what, what is exactly is the problem that you're solving?

Sorry, I just wanted to opine. No, it's 100% true. And there's an interesting additional facet to this for very creative individuals, particularly in the arts, because there's a tension that they feel more than most, not exclusively, but more than most, to, to kind of pursue their passion as a form of self-expression. Yes. Right. And there's nothing inherently wrong with that, but something that separates hobbies from businesses is whether or not the pursuit of that passion is done in the service of others or in the service of self-expression. There's nothing wrong with self-expression. But it's, you will, you'll constantly threaten that self-expression at a micro level when you're dealing with issues around the profitability of whatever it is that you do. And what happens is if you start your business for the primary, you know, uh, purpose and motive of expressing yourself in your art, um, you will begin to resent the business for what it makes you do. Right? To be a viable business.

Yeah. I mean, look, look, look at how many— I think the best example of that is recording artists and performers where they have some success and then the expectation of everybody, the fans, the managers, the producers, you know, everybody is, we'll do more of that. Right? Because that worked. And then they were like, but I'm tired of doing that. I'm a creative. I want to do something new. Yes. And they're like, you know, they put out some new album and everybody's like, oh, that's trash. What are you doing? Like, you're screwing it up.

Yeah. The root of the word entrepreneur, it's a French word, is to go between. And what we need to do and what creatives are unbelievable at, if they can frame it properly, is to go into that space in between, into that space in between what's available and what problems we still have, what we need. And again, to do it in service of others. Now, that doesn't mean that you do it without getting paid for it, right? But it means that you do it, though you use that passion to create an extraordinary amount of value for somebody. Those are your clients in the nonprofit world, your members. It doesn't really matter. But when you create that value, then if you're creating something that's enormously valuable for your customers, the rest of it is tips and tactics, right? Someone can show you how to get some profitability out of that. But if, if you don't figure out how to create that value, how to communicate that value to your customers, you're going to struggle with profitability almost no matter what you do.

Yeah. And that, that kind of dovetails with another concept that I struggle with personally. I mean, I can't believe that other entrepreneurs don't struggle with this. I don't think I'm unique, is that, you know, you have a vision of something and of solving this problem that you perceive, right? And you believe, and you may even know that the solution that you provide is valuable and would solve the problem, right? But if the customer or the prospect or client, however you want to phrase that, doesn't perceive the need, AKA they don't want it, uh, then it doesn't matter. You have to sell them what they want, not what they need.

Yes.

And that can be, that can be a real challenge sometimes.

Yes, it can. And, and this is where I think, um, again, if you are creating that value You, you do have to root it in a want. Yeah, that you don't have to stop there, but that's how you will get their attention. Now, what I have found is one of the best ways of dealing with the gap between their needs and their wants is stories. Getting good in these early days, especially getting good at crafting the stories that move them from their wants to their needs, right? Small incremental changes doesn't have to happen all up front, doesn't even have to happen pre-sale.. But if you can use stories of other people like them, of your past experiences, of other folks who've found the difference between their needs and wants, right? And use those stories to align their needs and wants. Then again, you can capitalize on that value that you've learned to create.

Yeah, I think marketing is one of those fascinating subjects because you're dealing with human behavior, which is predictably unpredictable. But I think one of the pillars of good marketing is storytelling, you know, and I'm not the one that identified that. Oh, StoryBrand, Donald Miller, you know, he does that brilliantly and explains the concept brilliantly because, you know, most people market from a self space. This is me. This is what I do. This is how well I do it. As opposed to just telling the stories of the people that you've helped. Because in that story, people resonate. They're like, they see themselves like, like you, you said they see themselves on that map. I am here, right? Like, yes. And that connects in a way that no marketing copy is ever going to connect.

Yes. Yeah. And so when you take that passion and you find a way to put it to use,, for others, creating a ton of value for them, and you figure out how to communicate that value effectively, what happens is, uh, things start to work for you. You know, like you get some more opportunities, uh, you, you work really hard for them. Don't get me wrong, but you start to feel a little momentum. You start to feel the gears start to, to tick into place, and then you start to feel completely overwhelmed because you have absolutely no time to take advantage of any of it. And so What do you do? You, you usually by virtue of pulse or proximity, you find somebody to help you out. If they're breathing and you're still warm, like they're in. And so we recruit, you know, our nephew, our niece, our friend down the street, whoever is close enough and willing to say yes.

And, and to put an end on that, you have no experience hiring anybody.

Like you don't know what to do whatsoever. What questions to ask, right? No. Yeah. And so if they weren't your niece, they wouldn't have said yes in the first place. So like, it's a mutually agreeable situation here. And, and so it's this, you, it's you in this kind of ragtag, like, who in the world's around? I don't know. They said yes, we're doing this thing. Uh, and, and it works. Uh, it, it adds a little bit. They're able to take a couple things off your plate. And so we do it again and we do it again, and then we've got 3, 4, 5, 10 people around us. And somewhere, it varies for everybody, but somewhere in the like 5 to 15 employee range, uh, you wake up, it's usually a Monday morning after having like worked all weekend to clean up one of their messes because they just totally screwed something up, and you're exhausted, like dead, dead tired. And you realize the week hasn't started yet and you're already this tired. And the, the kind of the most profound question that comes into your mind is, what's wrong with these people? Because this group of folks that you hired, they don't think like you, they don't act like you, they don't take ownership like you do, they don't solve problems like you do, they don't deliver value like you do, they're not as creative as you are, they're not as clever as you are, they're not fill in the blank. And whether those things are true or not is largely irrelevant. It's the way that you feel. And what's happened is we've moved from that startup entrepreneur stage into stage 3, which I call the reluctant manager. Because creatives as well, there's not a founder I've ever met who, when I asked him or her, hey, why did you start this business? And they responded to me, I really was looking for an opportunity to manage half a dozen people. That's what I was going for.

Yeah, that and to do my own taxes. You could put those right there together. Like, this is why I did this.

Yeah, it's— yeah, it's not there. Nobody starts their business to manage a group of people.

And again, but who— you— a lot of them— a lot— me, for instance, that don't have any experience managing people.

No, right. Well, and, and, and when does the need to manage people start? Does it start with the first person who just kind of does whatever you tell them to do? Does it start with a third? Does it start with the 72nd? Uh, there is— again, there's not this defined like, hey, now you're a manager. It's not like as soon as you get to 5, but when you wake up feeling that resentment, you're there, you know it. And what's happening is we have shift from this kind of player on the field mindset to a captain on the field mindset. We have to stop thinking in terms of I and start thinking in terms of we. Because if you don't, then your team actually becomes the primary detriment to your ability to do your work, right? As opposed to the primary mechanism by which you do our work together.

And I think, I'd like to hear your opinion, I think that's when a system like EOS is important to implement because it gives you the tools to do it correctly. It doesn't change your mindset. So one of the things that I see especially with professionals. I don't know about like manufacturing and those types of things that are more capital intensive, but when you're dealing with a service business, what typically happens is the founder hires people to do one of two things, or maybe one of three things. The things they absolutely loathe, the things they don't want to do, the things that are really low value., but need to be done and, and, or the things that they just can't get to, like, I'm out of capacity, right? And so it creates this strange dynamic where the founders got all this shit on their plate still, right? Like, they don't, they don't let it go voluntarily. They still, like, to your point, they see it as me. I've got to do this. And then you guys just kind of help out where you see, right? Yeah. And, and The correct way to do that, in my opinion, is to identify the 20% of your efforts that produce the most value, focus on that, and delegate, automate, or eliminate everything else. Get it off your plate. The quicker you do that, the quicker you'll move into this role that you're reluctantly in.

Yes, absolutely. And I love those three. I like to turn them around a little bit and say eliminate, then automate, then delegate, because you can delegate a whole bunch of stuff that should never be done in the first place. Right. The hardest of those three and the most fruitful of those three is elimination. And particularly at this stage, because you've been through that like catastrophic startup phase where it's like you'll do anything to survive, you're doing anything to survive. And the reality of the game has changed where you don't actually have to do that anymore. You don't have to take unprofitable jobs. Correct. You have enough lined up that you can actually start to optimize for the profitable jobs. Correct. So eliminating is a huge, huge piece of that equation. But you're right. Delegating is, is really, really important piece of this. And depending on your level of technical expertise or comfort, automation is, is doing unbelievable things now.

Yes.

But, uh, but, but staying with this theme, no matter how much you automate, at some point there's going to be a need to start to delegate.

Yeah.

And we, we do this thing, uh, as new delegators, and I call it walking away with the keys. So imagine that we're in a room together and, uh, the door, you know, has a lock on it, and I tell you, hey, uh, you're responsible for this door. You get to decide who goes in Who goes out? 100% up to you. Make sure all the right people get in. Make sure none of the wrong people get in. Got it? Great. And then we walk away with the keys.

Uh-huh.

And it's like, uh, you know, I hope that nobody needs to get in because I don't have a way of unlocking the door. And so we have to think not about delegating tasks. Yes, that absolutely has to happen, but we have to delegate the authority to complete those tasks.

100%. 100%. This was phrased to me a few years ago at an EO event, an Entrepreneurs Organization event, where it was a workshop on your second in command. And I can see his face. I can't remember his name. I'm sorry. But he said, don't delegate, deputize. And he said, you know, the sheriff has the authority, right, in town, but he can't be everywhere at once. So what does he do? He hires deputies and he gives them a badge. And when they're on the scene, they are, they are the sheriff, right? And to your point, you're delegating authority in that situation. You're not just giving them a responsibility, you're giving them authority, because responsibility without any authority is failure.

Yes. Then it gets worse because, uh, yeah, you have to give up authority, but then at the end of the day, things do have to happen the right way, and folks are going to mess up, right? When we delegate, we kind of think, well, like, if something goes wrong, maybe we'll do something about it. The reality of it is, yes, it's when, it's not if. And so what we have to get really good at at this stage, it's— and it's a skill just like anything else is we've got to get good at enforcing accountability. Yes. And, uh, yeah, go on. And so I think though that you can do all of this in, uh, 2 hours and 15 minutes a week. It, like, it's not something that has to take a ton of your time if you do these things right. You can do them in one team meeting and 5 15-minute, you know, send everyone in the or a direction huddle. And so there's not a founder out there who can't afford to save 10, 15, 20, 40 hours a week by investing 2 hours and 15 minutes. Uh, it's just—

yes, but to your point, it is not easy, right? It is simple, and it can— it can yield that, that bandwidth after it's implemented. But getting it, you've got to— you've got to start with simple things such as Processes. You've got to outline what it is that, how you want it done. Roles and responsibilities. Is everybody really clear on what they're responsible for? And then metrics around accountability. How are you going to know whether they're doing their job, right? Yes.

And what you're dialing in on here, yeah, is the third leg of the stool, if you will. So we started at delegation. That's actually the second part. The first part is to give clarity. Right. And, uh, I'm actually not at this stage, right at that, you know, 10 to 15, I'm not super crazy about processes. Uh, I, I see because of the brilliant work of folks, uh, like the E-Myth and, uh, even in the EOS world, there's a whole lot more support on process. Most of those people were speaking into an environment where process didn't exist in the entrepreneurial world at all. And I feel like we've actually over-indexed on that a little bit in these small organizations. So sometimes a process may be necessary, but here's what we're really going after. We're going after whether or not the results are clear. Yes. And so to the extent— yes, the outcomes. And so to the extent that the process is an outcome itself, you got to be real careful with that because it usually isn't. But to the extent that it is, sure, great, include it. But otherwise, you just have to take a step back and say, hey, what's the outcome I'm looking for? Like you said, what's the measurement, you know, by which we measure our success? Then delegate authority to achieve that outcome and then hold them accountable to that outcome. Yes. Far more than the processes that may or may not get you there.

Yes. Now, to your point, we way overdid processes initially and our big mistake was that it was top-down. It was not bottom-up. You know, the best processes are ones that are designed by the people that do it well. Yes. And they don't need to be real in-depth. You know, I think the EOS standard of if you hire a reasonably competent professional that understands the job, like you're not training them to do the job, they know, they know how to do this. This is how you do it. So, you know, marketing, it might be outlining, you know, these, this is our target market. This is our messaging. These are the core principles of our messaging. And these are the channels that we message in. Like, it doesn't go into this is how we run Google Ads or, you know, how we post on social. It doesn't do that. And so, you know, I think any process at that stage that is more than a couple of paragraphs, definitely more than a page, is not— it's too much.

Yeah. I like to call them at this stage best practices. Yeah. Right. What's the best practice? Because there's value in sharing, hey, here's what I've done that works. Right. Like, that's a great idea. But you don't necessarily enforce best practices. You share them. Yes, you share them and you train on them. And so that, that to me tends to be helpful language, especially for my more processor-oriented founders, which there are some of them. Uh, and so there's this really crazy thing that happens at this stage. Uh, when you get that, those 3 things, right, right. Giving clarity, uh, delegating authority and, uh, enforcing accountability. Your growth potential is astronomical, right? You'll see folks who have double, triple, quadruple digit growth when they crack that code. It's, it's hard to figure out, like you've mentioned several times, but boy, is it worth it. And so when you look at it through an organizational lens, the thing explodes. Uh, it's just like growth after growth after growth. And, uh, from the outside looking in, everyone's like, man, they've figured this thing out. They've cracked the code. They're writing magazine articles about you. Maybe it's local, maybe it's national. Doesn't matter. People are looking at you like you're a success story. Story. And by a lot of measures, you are. A lot of things are moving in the right direction, but there's some problem with that that at first we can't really put a finger to, and then it's just downright debilitating. Uh, so several years ago now, uh, our third child, our daughter, um, was, uh, was born. And so we had— we had a big gap between them, so they were 10, 8, and 0. And finding a babysitter for 10, 8, and 0 is not a practical thing to do. It doesn't work very well.

And you don't want to leave your 10-year-old son in charge of the infant.

Oh my gosh, no. Uh, no, uh, I'd probably leave the 0-year-old in charge, uh, before the other two at that stage. But, um, so we didn't get out a whole lot, uh, my wife and I on date nights without the kids. And, uh, I had kind of had enough of that, so moved heaven and earth, found, um, somebody who was a close friend who was miraculously able to handle all three of them and with much fear and trepidation, walked out the garage door to go and, you know, achieve the height of romance here in the suburbs, which is dinner and a movie, right? Like, that's what you do. And so we go to dinner. It's nice. Go to a movie. And it was right when Top Gun: Maverick had came out.

Yes.

Which was like pretty cool because like, you know, seeing the original one and then like the music matched and like all the just subtle allusions to the first one. Tom Cruise is there. What's not to like? And, and as I'm watching the movie and there's all these cool things about it, I'm kind of getting more and more depressed as we go through the movie. Because when you think about it, like, everything that can go wrong does go wrong. He crashes a plane at like Mach 10 in the first scene, and then it's just all downhill from there. Like, his boss hates him. You know, the world's leaving him behind. He's got relational conflict with not just the son of his dead wingman, but also the, you know, the girl in the story. And it's just— and then they, then they go on the mission and he gets shot down again. And it's just like everything that can go wrong in the story does go wrong. And right then, I think he's about to get shot by a helicopter or something like that. We get a call from the babysitter. It's SOS right now. Everyone was healthy and like no one had a nail sticking out of their head or something crazy like that. But the 0-year-old was falling asleep. That's a legitimate possibility. Oh, yeah. Yeah, we've been there. So we rush home, get everyone to bed. I didn't see the end of Top Gun: Maverick for like 2 years, right? It was 6 months after it was streaming ready that I finally had enough time to watch the end of this movie. And all I can think about is like, does Tom, like it was going bad for Tom. Like what happened to Tom? And I see the end and everything transforms. He gets the girl, they win the mission, relationships are restored. It's all magical and wonderful like you would expect from a movie. But what I realized in that experience is that founders do this a lot. We get to that stage where Tom was. We're about to get shot by the proverbial helicopter in our business. We get to this place where it's grown so much, it's changed so much, and it's all a little underwhelming. We're sitting there thinking like, is this it? Is this really as good as it gets? I've achieved all these things that I want. And I've realized that businesses get bigger, they don't get better. In fact, my problems have gotten bigger at probably a faster rate than, than my profits for sure. And we hit this wall, this, that inflection point that we opened up with, where we just don't know if we even want this anymore. I mean, there were times in my business where I would have quit if I was, if I didn't own the thing. You know, like, I would have quit if I could, many of them. And we reach this place, and I call it the disillusioned leader, because just one by one, all these illusions of what we thought we were building have been stripped away. And we're really faced with this question: What do we want? What do I actually want?

So to clarify, what stage are we at of the 7?

We're at the— this is the disillusioned stage. This is stage 5. 4 in the process. Okay. And it comes off of the back of figuring out the management stuff. And now we're in this stage again, stage 4, disillusioned leader.

Scott, I would love to extend this for another hour. Unfortunately, I can't. So maybe we have to have you back on because I like— I don't want to wait 2 years and find out the end of the story. How do, how do folks find out more about Scale Architects and and you.

Yeah. So where can folks find out about us? We've got, we've got our website, scalearchitects.com. And if you go to scalearchitects.com/founders, you can get a free copy of the book, digital copy, you can download it instantly. It's got all 7 stages. And so you can find out what's next. We'll leave you on that cliffhanger. It's pretty awesome. By the way, stage 5 is amazing, biggest single transformation in the entire process, and worth every bit of the challenge of stage 4. So get a copy of that scalearchitects.com/founders. Architects.com/founders. Uh, the name of the book is The Founder's Evolution. I'll take you through all 7 stages and show you how you can— something we haven't dialed into on this conversation, but, uh, show you how you can enjoy every stage of the process. There's something special, something unique about each stage that makes, uh, that makes it not just, uh, you know, something that you can survive through but thrive in.

Scott, you have blessed us with tons of wisdom. Thank you very much for coming on the show. Listeners, if you like what you've heard, please rate the podcast, share the podcast, subscribe to the podcast. We'll have the links in the show notes. If you don't like what you've heard, shoot us a message, let us know. And I don't know how we could replace, but we will replace Scott. Until then, ta-ta for now.