The Entrepreneurial Blueprint | Verne Harnish

This decision not only changed the company, changed the industry, but we think is the reason why the United States became the wealthiest country in the world. That's that butterfly chaos effect that we think this decision made. And that was in 1915. Henry Ford deciding, man, I can't get enough labor. I don't have enough people who can afford to get our cars. He's having both a demand and a supply chain problem. And so he came in one day and doubled the wages of his employees from $2.50 to $5, and the rest is history. That allowed them. Tens of thousands of people came to Detroit, wanted the jobs. Now that they're getting paid more, they can afford them to buy the cars. And it changed people's view of labor. I am an educator, and, you know, Joe, I've always been proud to just want to teach. And, you know, I'm kidding with the audience today. You know, all the stuff that I teach, you know, we teach companies in order to scale up. I actually don't like to do any of that stuff, you know, And I had to figure out how to bring people into our company because we know we have to do it, but I had to find people who would so I could continue to do what I do, which is teach. And I love it.

So how would you describe the successful entrepreneur? What are the characteristics of these people that truly make it? They make money, they make impact, they do it with integrity versus the ones that just flounder and kind of have jobs but call themselves business owners or entrepreneurs? I mean, what's the key difference between. I mean, there's a lot of differences. I know, and you've done this for many years, but what are some of the things that you see as just what makes a great entrepreneur?

Yeah, well, you've got the kind of standard stuff everybody talks about, which is you've got this huge vision. You're able to think 10x over everybody else. You've got this tremendous ability to be both disciplined, focused, and I don't think a lot of people think of entrepreneurs as being disciplined, but those that knock it out of the park have a lot of both of those kind of things. But what was interesting is this executive program I founded and ran for 15 years. I just made it a game to see if I could predict who, coming out of that course, would build the biggest, fastest companies. And I could. And it came down to something very simple. And that was those who were the hungriest to learn that had this really thirst for learning. It's the thing we were talking about where Mark Cuban in his book. And I'd known mark for 30 years, but I didn't realize he's had this fundamental routine, this habit, this daily focus of reading three hours every day. And he talks about it in his book. Warren Buffet, 500 pages a day. Bill Gates, who we talked about in the Greatest Business Decision, his famous Think Weeks, where, you know, his record, 112 books, manuscripts, PhD thesis, white papers. Mark Zuckerberg this year in 2015, focused to read a book every two weeks. Eric Schmidt saying on the stage there at the Milken conference, what was key to him really helping scale up Google. We think he's going to say some really big fancy stuff. He said, no, shut my BlackBerry off every weekend and read a book or two. And so it's this. You can't have anything come out of your brain that you don't get in first. And it's this intense ability to learn and then act on it. Bias for action.

Well, so the key there, acting on it because there's a lot of people that will go to seminars, they'll read a lot of stuff, they'll consume things, but they spend a lot of their time consuming and reading and less doing. So what is the action element? I mean, there are these unicorns that you can, some of the people you mentioned, people could be thinking, well, I can never do what Warren Buffett does or Zuckerberg. I mean, I'm just a, whatever, I'm a normal person. How do I apply that? Should I really read that much? I mean, what would be your response to that?

Well, first of all, I want to come back to this bias for action. You know, Tom Peters, who is my idol, he wrote the very first really popular business book, In Search of Excellence. And he was kind enough to endorse the first book on the COVID And he said, you know, looking back on the eight things that he found were key to building these significantly excellent companies. He said the only one of the eight that still holds, he believes, is this bias for action. And that's what most people miss. They have these dreams, but they don't really have visions. Vision is a dream with a plan that then you act on and then you have these fundamental routines like reading, like going over for three hours every day like Steve Jobs did when he was launching his retail store. It's what an Olympic athlete has to do that reaches to the gold level, is committing to getting up at 4 o' clock in the morning and practicing for three hours before they go to school. It's Jordan Spieth who we've just witnessed have the most amazing year in 2015 that doesn't happen by accident. He had a big, hairy, audacious goal. I want to not only go to the Masters, I want to win the Masters. And then he had this discipline and focus to practice. Did you read some of the stories about where when he'd go over to his family store, he would pick yards between then and he'd hit the golf balls from yard to yard to yard? I mean, this is crazy, this obsession, but that's what's necessary.

Well, and it is the thing that gives the edge. Well, you said something earlier today when you were talking to the EO group about having the, you know, not reading is no different.

Something along like having those who can't read. I mean, those who don't read barely have an advantage over those who can't. And I think we've lost a lot of that. Gotta wanna to learn.

Yeah, yeah. So how do you have four children?

We do.

What are you doing as a parent? Do you try to instill entrepreneurial values in them or do you just kind of let them be their own person, see if they kind of fall into that or what are some of the. How does this apply to how you're a parent?

Some of the things you learn, you know, I've always seen. Again, that's why I love being an educator. The word education educare means to draw out the genius. You know, your whole thing that's within everyone. And you know what? I'm purposely not focused on them being entrepreneurs. The founding fathers of the US said something interesting. We're soldiers so our children can be farmers, entrepreneurs so their children can be poets. And what I'm finding is interesting is all of our children have kind of gravitated towards the creative arts side, which, by the way, is the one thing robots can be. Kind of the last things that robots are going to take over almost every other job. Accounting, lawyer, doctor. The kind of things that our generation focused on is being automated. So, you know, I think they've got to go with their own trends and I just want them to have this thirst to learn.

So your latest book, Mastering The Rockefeller habits 2.0 scaling how a Few Companies make it and why the Rest Don't. What's this book about? Because I would recommend people get all your books and even all your Gazelle coaches. I mean, I've been to your events. You guys do amazing stuff. You have literally impacted, I mean, truthfully, with what your creation with eo, There are Millions of people that have been impacted by. By the seeds that you planted. So this is your latest work. Who's it for? What's it about? What will people get out of it?

Yeah, well, you know, a lot of companies start up and there's this craze about startups and accelerators and incubators and that kind of stuff, but very few scale up. And it's the scale ups, Joe, that really move economies, really drive innovation. And the problem is because they're not young, they're not cute, they're older, more established companies, they don't get any attention. And so we wrote the book for them. Those that have been kind of toiling away for five or 50 years and have finally figured out what they need to do and are going to take this thing from 10 million to a billion, and what are the key things that are necessary to scale up the company?

Gotcha. Well, I was having a conversation with Dan Sullivan. As you know, he's one of my dear friends and he founded a company, Strategic Coach. And we were having this conversation because we have a friend, I won't mention his name, we all know him, who puts a lot of emphasis on trying to help startup entrepreneurs and putting together programs for them. Dan just made this funny comment because I want to help anyone that really wants to grow and learn. That's why I put out my free podcast. It's like this interview. We're putting it out to the world for free. It'll help people that come across it. And dad made this comment. He goes, you know, there's all this emphasis on funding startups. He's like, you know, if you really want to make an impact fund, people who've like, literally had to borrow the money, had to, you know, go into debt on credit cards, no one was there to help him. He goes, that's what weeds out the ones that can make it and ones that don't. I mean, if you just hand over money to someone that's a startup just because you should give them a reward because they want to start a business, he goes, the ones that are really successful, they've gone through the crap, they've gone through the hell that they've had to. And I just thought it was good. Kind of funny.

No, he's right on. It's one of, I think the problem with the incubators, they baby them too much. And then when they finally set him free, they didn't get some of the basic learnings from failing that are necessary to take the venture to the next level. And Then what happens is when they do fail, it's at such a bigger level that it's devastating to their families, to their own net worth. It's a mess. And so I think you got to be careful helping folks too much in the beginning.

Yeah, yeah. I mean, I heard this line, and I say this speaking from ignorance because I'm not a parent. The quote was, don't handicap your children by making their lives too easy.

Yeah, for sure.

Although I think that applies to anyone. I mean, you can really baby someone trying to start a business, and you can rob them of the learning that comes from it.

Absolutely.

Well, you've created a lot of tools. What is the Buckminster Fuller quote that you gave today? I'd love that quote.

Yeah, I know. I'm a mechanical engineer by training. Got a worthless MBA on top of that. And Bucky had this notion that you can't really change the way people think. All you can do is give them a tool, the use of which will change your thinking. And I mean, think about what the phone has done to change our behaviors more than any other change management seminar that you might be able to go through. And so we're tool builders, and we wanted to build some tools that help people make those changes.

Well, I got a lap full of stuff here that I've books and everything here. So there's a bunch of growth tools that you. You have, and you're known for the one page strategic plan. Talk about what that is and where people can get it. Because I want the people that are watching this and listening this to not just have some business insight, but I'd like to send them off to where they can get access to some of the things that you have literally done with thousands of companies and have created that will make a big impact for them, that will allow them to think more strategically, more creatively. So talk about some of the tools you've created, specifically the onepage plan.

Yeah, it's the thing that we're probably best known for. Today, about 40,000 companies are using this tool. And it was a very simple idea. Everyone sits around and says, man, how do I get everybody on the same page? Well, you got to have the page first for everyone to get on. And we use the analogy of jazz bands. You know, I love jazz because you can bring these players in from all over the world, have never played together, but there's got to be a few things that have in common. And one of them is, we're playing the same song. And so we thought, hey, how can we put On a single sheet of paper. A way for people to get down from their core values all the way to what is the thing we need to focus on the next quarter in a simple format that they can communicate that to everybody else in the organization. And it's this common set of music that people can all play together. So that's what it does.

So where do people get this? Because I know you make it available online. I'll put a link to all the different places that I put this interview.

So go to scalingup.com or gazelles.com, but scalingup.com and they'll see a thing that says the onepage tools. And we've got them in multiple languages from Russian to Spanish to French to English obviously. And so it's there for people to use free of charge. We've had them up there for decades.

Great. So what are some other tools that you've created that have been really helpful to yourself, to other business owners that you've done?

Well, you know, it's a challenge. This whole life side and business side, everyone's talking about the balance. We see it more as a blend. And so we created a one page personal plan to go along with the one page strategic plan. So that if you can kind of as the entrepreneur get down and the executives in the company, what is I need to do on the personal side and then look at that in relation to what I've got to do on the business side and mesh those up. We find people who are much more successful in both aspects of their business. We mirrored the same people, strategy, execution and cash. But we said, look, let's look at the relationships, let's look at the achievements, let's take a look at those rituals that we do on a daily basis, our exercise and other things. And then obviously there's the wealth component that we have to pay attention to. And so the that's become a tool that started to really catch hold around the world as well. And then we're known for this Rockefeller habits checklist. What are these 10 habits, these routines, ones that John D. Rockefeller had in place over 100 years ago that made him the wealthiest guy on the planet, wealthier than any of the guys that we have here today, except maybe Putin. But. And these are things that you can put in place in any company from startup all the way to the largest companies in the world.

Well, let's talk about cash. We were talking about it before we started recording. I think a lot of people really poo poo. The whole concept of how important money is and what it does for good. So what are your thoughts on money? I mean, why do people do business? To me, it's like, well, they could say, I think it's freedom, but you need cash in order to have freedom, in my opinion. But talk about cash. What does cash mean? What's the pursuit of it?

Well, I think what's interesting is cash is the way we measure and keep score. I mean, it wouldn't be any fun to watch any sporting event if there wasn't a score. We were talking about going to the Olympics, and let's just watch people run or let's watch people swim. We go because there's a finish line. We know that at the end of the day, the packers have won one of my favorite teams, the Monday Night Football game. And so cash is simply a way for us to measure quantitatively, measure and compare the value that you're delivering. And if you're not delivering value, then nobody's going to eventually pay you in order to do that. In terms of me exchanging my labor for your labor and bartering just was a mess. So we created this thing called coinage to kind of keep track of the representation of that value. So for me, it's purely a scorecard. The funny part is I don't think entrepreneurs pay enough attention to it. They're obsessed about profit, getting their P and L once a month, skipping, looking at all the numbers but the bottom line. And we know a lot of companies that they're profitable, but they absolutely run out of cash, and it's game over. And that happened to me, as we talked about today, in 2001. So I literally get my cash reported to me every single day, and it moving in the right direction is my best indication that somehow or another the world's telling me that we're doing the right things.

How do you get it reported to you? I mean, it may seem like a basic question, but what? Text, emails? There are some criteria that you have.

Yeah, I get it two ways. So, one, literally, my bank, Wells Fargo, has set it up to where they can alert me to what my bank activity has been every single day. And that comes to me in an email, and I can take a look at it in turn. Our cfo, Kathleen, does a mini cash statement and sends it to me every day. And it tells me what came in over the last 24 hours, what went out, and it projects over the next few months, what that looks like. And I want that projection to constantly be heading north instead of south. And it's a good early indicator that you're having problems when it's not going the right direction.

Well, I think a lot of people come to. You come to gazelles when they're in a situation where they need to get their ass in gear or they're done.

Yes.

You know, not all the time, of course. Some people are very like, we're doing well. We just want to.

Yeah, we want to go 10x that. Exactly.

What could you say in terms of. Because the statement, a lot of people go out of business or whatever. I mean, there are people that are dying on the vine because. Because they're just not paying attention to stuff. So for everything you've learned, what are the things that people just. If they paid attention to these things, it would give them an advantage that most business owners don't have.

Yeah. Well, you know, we talked about my favorite book of all time, and it's Eli Goldrath's book, the Goal. You know, it's a very simple parable that he wrote, but it really got us focused on the fact that we all have limited time. Steve Jobs had a lot less time than he thought. Limited funds, limited resources, limited cash. And what we've got to do is make sure that we are always focusing it on the constraint, that thing that is most in our way next in moving up the business. And so what happens with business folks is they get distracted. They got a list of 100 things to do and they can get 90 of them done. But if they miss that one, that matters. If Mark Zuckerberg had not gotten Facebook mobile back just before he about the time he went public, we wouldn't be talking about him today. They'd be in the same kind of trouble that Yahoo's in. And Yahoo would be dead if Jerry Yanghu co founded the company, hadn't made that one great decision to invest in Alibaba. There's three or four of these kind of decisions that absolutely send you left or right. And you need to have had the learning, the think time, the immersion in the marketplace to get these handful of decisions right. And if you miss it, it's tough. It makes a tougher role.

Well, you've got your book here. The Greatest business decisions of All Time. So which one, in your opinion, is the greatest?

Yeah, we did. We actually identified 18. We decided not to put them in order except to name the number one, and it was Henry Ford. And by the way, this decision not only changed the company, changed the industry, but we think is the reason why the United States became the wealthiest country in the world. That's that butterfly chaos effect that we think this decision made. And that was in 1915. Henry Ford deciding, man, I can't get enough labor. I don't have enough people who can afford to get our cars. He's having both the demand and, and a supply chain problem. And so he came in one day and doubled the wages of his employees from $2.50 to $5, and the rest is history. That allowed them. Tens of thousands of people came to Detroit, wanted the jobs. Now that they're getting paid more, they can afford then to buy the cars. And it changed people's view of labor from just being this input into a manufacturing process to. To being something that you really invest in. Let's speed forward. We were talking about today, the Container Store. Here's a company named one of the best places to work every year. We've had the list at Fortune magazine and Kip Tyndall, whose book Uncontainable everyone's got to read. Here's a guy that's figured out we're all talking about $15 an hour wage. Like we've got. He's been paying 20 bucks or more for decades, twice what the industry's paid. Yet he's getting three times the productivity because the amount of training that he's doing for folks. And this is a company selling empty boxes. You know, it's hardly Google or Facebook. And that's why I want this book everyone to read who are just us mere mortals, you know, trying to build decent companies. And so that single decision Henry Ford made was so powerful for many reasons, and one that we ought to be thinking about more today.

I agree, I agree. Which leads me to think of having decades past, you can look and see the ripple effect, positive or negative, of certain decisions. Hey, I hope you're enjoying this video. And I want to let you know that I have a new book that's come out and if you'd like to get it absolutely free, there's a link below in the description. Or you can wait till the end of this video or you can simply go to Joe's Freebook and you can get a copy there. What is a recent entrepreneurial, be it decision or what someone is doing that you're looking at saying this is a total game changer. Is there anything that is the most recent business decision that you've seen someone do that you think is just maybe is comparable to that?

It is. It's crowd sourcing.

Crowdsourcing.

Yeah. We talked about what, you know, we have these unicorns. How did Mark Zuckerberg do in 11 years, that normally takes companies 100 and all of these. And they all have Amazon. All of them have one thing in common. And as they figured out how to get the most people on their bus behind their business model, let's look at Facebook. The valuation is tied to the number of Facebook pages that are up there. And what's brilliant is none of his employees are having to do that heavy lifting. It's a billion. Three of us that are doing are working literally for Facebook free of charge. And those of you out there that have got employees, they're probably working harder for Facebook than they're working for your own company. You know, the value of Amazon isn't the fact that they got a website that lists a bunch of products. I mean, how many of those exist on the planet? It's the fact that they convinced millions of folks to take the time to give feedback and stars and ratings. So it becomes the preferred place for us to go to see what the crowd is saying about my book, this product. My wife won't book a trip, won't book a hotel until we go to Trip Advisor to get specific feedback based on whether you're a family couple, alone one, a romantic one, an adventure. They've done that heavy lifting. Even Google. Let's look at Google. We are all just here to solve the customer's problem. And our problem is I'm searching for an answer and they give it to me in nanoseconds. Now, the old way is I'd have some geniuses typing fast, you know, well, that's kind of Encyclopedia Britannica. Wikipedia kind of figured out a different business model. And that's all Google's done. They figured out a way to tap into the collective intelligence of everybody on the planet that's been on the Internet and deliver us an answer. But I told you my favorite story. The Father son team in Australia, if you want me to share that, to me, because there you've got mere mortals. And to me, it's the story of 2015. So this father and son beekeeper team taps into a big wave, and we think you ought to go with the trends in the market. And one of those is that we're all getting really fed up with our food being poisoned by some companies we could name or not name here on this video. And so we're all wanting to get closer to our food source. And these guys said, you know, one of those is honey, but it's like a pain to kind of keep bees. And, you know, you get stung and they get disturbed. So they Invented this little 3D printed $600 product called the Flow. And like any entrepreneurs in Australia, hey, how can we figure out to pre sell a few, you know, thousand of them to raise the 60 grand or 70 grand we need to get this thing going? You know, last century we'd go around and find our friends and our family and fools to, you know, kind of help us out. But instead they took advantage of these cool technologies. We have Indiegogo being a case. By the way, it's not crowdfunding. Everyone calls these crowdfunding sites. These are pre sale sites. You know, we're getting customers to pre buy our products and services. And so they launch in February and in three hours they hit a million in revenue, which by the way, what it takes to get into EO in 14 hours. 11 hours later, they hit 2 million. They doubled their revenue in another 11 hours. And when the campaign was done 60 days later, they had sold over $12 million of a $600 product to over 36,000 people around the world. Here's a father son team in the bowels of Australia who's global, over 10 million in revenue in 60 days.

Could that ever happen?

That's right. But what the backstory is is they did the heavy lifting leading up to that campaign and identified about 3 million through all the kind of database work that you can do. 3 million who they thought would be potential buyers of that. So that when they were ready to launch, they got that word out. And that's why they had such success.

Yeah, which is key because everyone that I've ever spoken with that has done a very successful crowdfunding crowd source campaign, they always say it is a marketing game. You have to be able to reach people. You got to know how to get the message out there. Which of course is what makes that so key.

Well, and by the way, that's why we talk about in scaling up, the fundamental functional weakness that literally constrains scale ups is marketing. And it's not where people miss is you don't need marketing only to get new customers. You need it for investors, attract advisors, and most importantly, to attract talent, which right now is the universal constraint for most companies around the world.

Right, right. Well, okay, so let me talk about that because one thing. You live in Barcelona. Yes. I mean, you've had all kinds of roller coasters, I'm sure, in your career. And you live very far away. You have a routine. You said earlier that routines create freedom. And your emphasis is so much about getting the right person. I remember a conversation I had with Richard Branson on Necker Island. I've done six trips to Necker island and I was in his kitchen with him and I just said to him, I go, when's the last time you went to a grocery store, Richard? And he's like, I don't think I've ever went to a grocery store. And I'm like, what do you mean? You never bought beer for Sid Vicious or Johnny Rotten or something? He's like, I don't think I've ever been in a grocery store. And I'm sitting there like, how is that possible? He's lying. There's like, no way. And so I said, I go, when's the last time you did your laundry? And he looks up and he's like, really thinking. He goes, I've never done laundry. I'm like, what about when you're a kid? He goes, no, my mom did my laundry. He goes, joe, you don't do those things. You hire other people to do it. Then he went on to say, he goes, one hire, one great hire will save you thousands of hours in your life. And of course, Richard doesn't do a very good job explaining what he does and how he does it. I've interviewed him a lot. But that one piece of advice about hiring other people was huge. Now, most entrepreneurs don't get the importance of that, but you are constantly instilling, finding, putting the right people on the bus, your buddies with Jim Collins, I mean, you really understand this. Talk about that and then how you actually run a company, living in Barcelona and some of your routines. But I think it's so key to get into the minds of people. How critical of a decision, getting other people that are talented and skilled to assist you in whatever your enterprise or business or career is.

Yeah, well, and you just pointed out what is the other key constraint to entrepreneurs, startups being able to scale up. The reality is 76% of the companies in the United States are home based. 96% never get to a million in revenue. And the fundamental reason is the entrepreneur knows they're the best at doing things and doing everything. And it is impossible for many of them to let go and trust that somebody else can do even a piece of that as well as they can. What's even worse is they try to get somebody else to do something for them and they didn't choose that person correctly and that person screws it up and now they've been burnt. And once you've been burnt, you don't want to go back again. And so you're stuck having to do everything. And you only have 168 hours in a week. We don't get any more. And so Jim Collins said, you got to get the right butts and the right seats. But we thought we ought to put together a list of seats. And so we built a tool called our face tool, the function accountability chart. And it lists what are all the functions that have to exist in any business. You know, who's going to run it? Sales, marketing, operations, accounting. And, you know, when you're a startup, it's your name next to all this. Me, me, me, me, me, me, me, me, me is. Is figuring out which box you can delegate next. And it's this ability to delegate that none of us were taught how to do. I didn't take a course in my MBA called delegation. And there's a real art and science to doing that correctly. And most people think delegation is here. You do that, but that's called abdication delegation. My best analogy is that thermostat I got stuck in the H vac business, and we got this complex air conditioning system in here. But if you didn't have that thermostat, Joe, right over there on the wall that was constantly monitoring what's going on here and giving feedback to that system, we'd either be freezing to death or burning up here in Phoenix, Arizona, on a day. It's 102 outside. So you've got to put in thermostats within the organization to make sure that you close that loop on the activities that you've got people working on. And then, like Richard said, you've got to then say, all right, what are the things? And Marcus Buckingham helped us here. Marcus, he helped me more than almost any thought leader when he said, when he properly defined what is a strength and what is a weakness. Because let me tell you what gets entrepreneurs in trouble. They're too good at too many darn things. That's what got them into business, because they are wicked talent, talented. But that becomes their weakness. And when Marcus said, look, a strength is not just because you're good at it, but it gives you strength. It gives you energy. A weakness, even if you're good at it, is a weakness if it makes you tired. And for me, I know how to run a company. I know how to do all the stuff that we do.

But.

But it wears me out. And I had to decide that, you know what? I love teaching. I don't love to do any of this other stuff. I need to find people who love what it is that makes me tired. Be more specific. I've put PowerPoints together for my presentations. It absolutely wears me out. And so I went out to a crowd sourcing site. 99 designers. I've never met her. She's worked now with me for seven years. I found this woman, Jun Yee. She's part Korean, so highly creative, part German. So it gets delivered now and I just send her, I need a slide that shows a bus that has a bunch of people coming on it. And I send her the idea and magically in my in basket, within hours, it shows back up. And so that's what entrepreneurs have to do, is get a piece of paper out, make a list. And you know what, if you like to shop, and I know guys who do, it's almost a meditation, relaxation thing, then keep doing it. But if that wears you out, if that makes you tired, find somebody else to do it. And just continue to keep removing. There's this key word again. Constraints that are draining the life and energy out of you. And make sure that you spend your time on the stuff that gives you energy and then you're going to be jazzed.

I mean, so much of performance and happiness and results. Creation is just literally the proper allocation of your energy in the right places.

That's correct.

I was talking to Dan Sullivan a while back and he says that there's no such thing as bad work in the world. There's this bad work for certain people. Someone can look at someone like a gardener and say, I would never want to do that, or I would never want to be a janitor. And the reality is that's great work for people that get energy from it and are really skilled at it and love it. So part of it is just realizing what makes you tick doesn't make the rest of the world tick. And there's tons of people that you can hire that have enormous skills.

But I think we need to come back to when you get down to the nitty gritty, what entrepreneurs and most people know how to do is how do I source those people? We're very clear. If you need to hire someone to do something, you need to get at least 20 high quality applicants. It's a pure numbers game versus just hiring. The first person comes along and fogs the mirror. And then once you've got those applicants, how do you choose the right person? And the feel good interview is actually terrible. You'd be better off letting a dart choose than us doing the standard interview. Most of us fall trapped to. And so, you know, we're big fans of top grading. It's the only formal mechanism, methodology that guarantees at least 90% plus if you do it right, you've chosen the right person. And if you choose the right person, your life is golden. You choose the wrong person and your life is miserable. And so that's what we detail in the book, is how you do those two things.

Well. And see. So what I want to point out again, for people that don't know who you are, have never been introduced to your work, this will be their first introduction. What are all of the things that scaling up teaches and what are all the things that gazelles does that helps? Because I want you to actually talk about the resources that you have. Because it's one thing for someone to hear this. What I hope is that when someone watches one of my interviews or listens to it and I'm talking to a bright person and the person actually can help solve problems, help them get to their bigger future where they want to go, that they have some pain. Because usually if they don't feel some pain and some hurt, they're not going to do shit about it. I mean, there has to be either some great inspiration or there has to be some frustration and annoyance. And you're like, I'm kind of sick of it. You know, Dan Sullivan has this, this line where he says, irritated oysters make pearls. And, you know, I want people to be in a pissed off state, but also not just leading them, know, what do you do with it? Okay, yeah, I don't know what to do. But you have literally created just so much solutions for entrepreneurs. So what are some of the things that people will get out of scaling Up? And also, what does gazelles really offer people?

Yeah, well, and what we wanted to focus on, what Geoffrey Moore says is provide 100% solution. There's so many parts and pieces out there that's frustrating for business owners to kind of pull it all together. So we thought, look, let's give business owners a hundred percent solution. Let's get him the coaching support, let's get him the education, let's get them the technology tools, literally tools we've got in the cloud that you can run on your mobile devices so that we can help them kind of automate these components that are necessary to manage the chaos that comes with trying to scale up the business. Now we do that in how we started the interview in these four areas. Let me give you the test. First thing, why would you look at the people side of the business? Well, there it's purely your gut feel about, are you happy? Because our happiness is really tied to the people we work with. I can tell you when you're not happy because you're having an issue with your partner. You've got a salesperson who's mucking up the attitudes of the rest of the salespeople. You got a customer who's got too big a piece of you got a supplier that has you constrained. You've got a bank that is in your way of being able to scale up. You've got issues at home, you got a sick child and challenges with your spouse if you don't get or you just can't hire enough talent to keep up with the growth that you're able to handle. If you got one of those, you better focus your energy on getting that fixed. And we built tools, whether it's your personal plan, your face tool, the processes in the organization. We help you source employees, how do you manage them, how do you retain them? These are all the nitty gritty things around people. Now, generally you're happy with the relationships in the business. Then we look at strategy. Strategy is very simple. Are you growing top line and gross revenue dollars as fast as you would like? And by the way, you can grow too fast. You know, as Andy Grove said, more companies die from indigestion than starvation. But for a lot of companies, that's not a problem. I mean, you're not growing fast enough. That tells me your strategy is wrong. You don't have enough of what people want that they literally are beating your door down and standing 10 million in line on a Monday to want to buy your phone. So then we have tools to help you really figure out this industry dominating competition, crushing strategy that allows you to have a monopoly because that's what businesses want. Government doesn't want you to have it. Businesses want it. And there's the essential tension of capitalism. So we help you figure that out. Now, if revenue's growing as fast as you'd like, then we look at your profitability and how much just raw time you're having to put in the business. Let me tell you what's sad, Joe. I've had so many friends double, triple the size of their company over 2, 3, 4, 5 years, yet the bottom line didn't come with it. They're actually making less money, absolute money, let alone a percentage, and working more hours. And at some point you wake up and say, what am I doing all of this for? And most of them rightfully so. Fire everybody, get Rid of their fancy offices and go back when it was them and assistant working out of a spare bedroom and they were having more fun and making more money.

Right?

And that usually is because they're sloppy in execution. And I gotta say, most entrepreneur companies are sloppy. And by the way, we know one simple metric, revenue per employee. It's crazy predictive. But I ask people today, how many employees do you have? Multiply it times 100,000 and you pretty well have guessed the revenue. Large companies, these big exploded bureaucratic machines that we make fun of, generate two and a half times more revenue per employee than most of us mere mortals do. And that's simply because we have sloppy process within the organization. And if you come back then to what frustrates people you hire is they join your company and they have to both work with idiots. You didn't hire the other people, right? Or I got stuck. Stupid process. Things are frustrating. We can't even get an invoice out the door. We can't even get our product or service out the door without us having to work 18 hours, days, eight days a week to make up for this slop that's around here. And so we really help companies tighten up that execution. And then, look, you can get by with decent people, decent strategy, decent execution, but not a day without cash. And we're not talking about making payroll. That's important. But do you have the kind of financial muscle necessary to do some of the stuff we talked about today? You need to lock up that constraint. You need to get, you know, you need to buy one of your key suppliers. There are a couple of key acquisitions you need to make. You've got the cash to bring on that chief marketing officer. That's necessary if you're constrained by those cash resources to do what you absolutely need to do. Man, you age so, so much faster. And so we look at those four areas, we got tools in every one of those areas to minimize the pain that entrepreneurs feel when they're trying to scale up.

Awesome. Awesome. Well, I remember the first time I interviewed you, which I don't know how many years ago it was. It might have been a decade ago. I asked you about deadlines and you said that there's this misnomer that entrepreneurs work well under pressure, but under pressure, they just work. Do you still believe that to be the case? I mean, do you have any thoughts? Because a lot of entrepreneurs put themselves on the firing line way more than they need to because they don't prepare in their. Just, you know, and look, I'm Speaking from a guy who has gone through enormous amounts of, you know, add distractible shiny object pursuits taken on. I've become better than I ever have been. I think meditation has done more to help me than many things. But what are your thoughts about the behavior of these crazed entrepreneurs that are driven like crazy, but their drivenness is causing them enormous pain, broken relationships, poor health, all that sort of stuff?

You know, my thoughts are just what you said. And it's recognizing that this is both the source of our strength and the thing that gets in our way that the entrepreneur has to sort out. And Joe, we don't have enough time in this interview to unpack all of that kind of stuff that we just described. But I want to come back to this thing on the deadline. Let's take this big, hairy, audacious goal, this 10 year goal. Jim never meant for that to have a deadline. You don't have to get it done in 10 years. It's just like a North Star that you've put out there that you head towards. And a lot of entrepreneurs beat the deadline and others take longer. It's just the fact that you know what the finish line is and some folks run the hundred meter, you know, sub nine seconds and some take a little bit longer. But hey, we got to at least get across the finish line and that's why you got to set those finish lines.

So what I mentioned earlier about you living out of the country, how does, what are Vern's routines? Because you mentioned in your talk today, the routines create freedom. Whereas most people may hear that and say, well, no, I don't want to be kind of imprisoned by a structure. I want to have the freedom. That's why I became a business owner. The challenge with being a business owner is that you're your own boss. One of the greatest things is you're your own boss. So talk about routines and talk about how do you do it? Because you've been doing this a long time. And if there's anyone that has access to some of the greatest habits and rituals of successful people in business, it would be you. So I'd like to hear your perspective for the listeners of what they can take away and apply.

Yeah, two things. And one of them I took from an early, early mentor of mine, Willard Garvey. The late Willard Garvey. Garvey family was one of the Forbes 400 wealthy families. He, early on when I was in Wichita, took me underneath his wing. And Willard was just like every other business leader that had multiple interests. He had these Non profits. He had these political. He had various businesses that he was involved in and he did something very simple. He had these focus days that I think even Dan Sullivan talks about. And so I've just copied the same thing. So Mondays is when I deal with all of our Gazelles companies. And it's meeting Monday and we've got these series of half hour and hour meetings where we're just working through operations and our council and our counting and all the kind of stuff you got to get done. And because it's all batched together, I kind of can get in the flow versus them being spread out throughout the entire week. Tuesdays and Wednesdays is when I usually go out and do teaching and are most available to come out and do events like today. And I can be relaxed about it because we had a very effective Monday. And I think we get more done on a Monday than most companies get done in an entire week. Thursdays then is my day to write. And I know I've got to do that writing and I look forward to it. I'm geared up to do it. And I get in the flow and crank for several hours. And then Friday is my charity day. And so I'm on the chairman of the Reardon Clinic and several other non profits I'm involved in interest that I have. And Friday's the day that I make sure that quarterly board meeting occurs at the Riordan Clinic on a Friday. Now it does. And then Saturday is fatter day. That's when I get to just. We go crazy and eat and drink and have fun and just go wild and we fall off our diets and fall off all of our other habits and just go wild.

That's funny.

Then you can stay disciplined the other rest of the days. And then Sunday is for us, that day of rest. We attend church. It's time for family to be together and the like. Now, does it always work out? Perfect. No emergencies come in where I get to work on some of the charity stuff on Tuesday and something comes up with Gazelles on Wednesday, that's fine. But the fact that each of those days has a different focus allows me to make sure that I can move that needle a little bit in each one of those key areas of both our lives and our companies is what's been powerful. Those are the routines that I find set me free. The other thing is what's amazing and most of the entrepreneurs that have made their journey to Europe find, is that I'm six time zones ahead of the US and so my team is asleep When I'm up at 6, 7, 8 in the morning, it's not until 3 in the afternoon that all the emails even start to come in. And so you find just because of the time arbitrage difference that you've got this uninterrupted space that no one's really reaching out to you from when you wake up in the morning till about mid afternoon. And it's this fact that you're uninterrupted for these big chunks of time that allow you to move projects for it fast.

Yeah, I think that's so key is just if you're not in a situation where you live like that, the whole point is building in space so you can have time to think. Because if nothing else it's just taking the thinking time and not having all the crap that will, if you don't manage your life, it will manage you. I mean that's modern life. And so you've done a great job with that.

Well, and by the way, one of the very simple things entrepreneurs can do, John Ratliff did it, our dear friend and that is you need to find a half day or day a week where you go to an alternative office. You know, whether you've got to go to a friend's place, whatever it is you've got to have, or you just stay home that day to your home office, you've got to force that into the schedule and make it the same day every week where you just go. And I learned it from was Johnsonville Foods. You know, when Ralph the son took over that business and then took it to new heights. The key thing is he had an office down the road and he'd go there with a yellow pad and a pencil, we have iPads today. And he would sit there and really think about what do we got to do to take this company to the next direction. I mean the next level. And so it's forcing that into your schedule every week that's critical. The other one is that counsel, when we asked Jim Collins books what was the most important idea again for us mere mortals, he said the power of this thing that they discovered in good to great companies called the council. And it's different than your weekly management meeting. It's a way el nypos may be listening. It's the equivalent of having a forum meeting every week. And so my council's on Monday, it's 9:00am Eastern, it's 3:00 clock in Barcelona and it's where we bring our CEOs together the various companies and it's not an operations meeting. We're not checking through lists. It's one or two big topics that we just need some talk time around. I just need to get some counsel on in order to make one or two big decisions moving forward. And it's that hour with the council and then that think time that you schedule every week that are probably the two most important, important habits for entrepreneurs.

What is the best piece of business advice or direction? It could be business or it could be personal that you've ever gotten.

Yeah. This is going to sound so trite, but it's buy low, sell high. And you know, we all talk about it, but you can't believe how we violate that rule, that fundamental rule of business every single day. And that's why I talk about the second biggest weakness next to marketing is accounting. Entrepreneurs discount accounting way too much. They under invest and spend on that side of the business. Their attitude being, man, I've got to keep that overhead low because I just need a statement once a month and keep the IRS off my back. But the reality is when you get better numbers every day that tell you buy customer, buy sku by location, by salesperson, by geography, where I'm making, how much money I'm making versus not, it's mind boggling. So we just had one of our clients, a pharmacy in Australia, send me an email this week that said, vern, that really caught my attention when you wrote about that and scaling up. So we went back, they have a chain of pharmacies and they looked at their 8,000 SKUs and when they really analyzed it, they found out that 6,000 or the 8,000 were absolutely losing them a ton of money, draining their resources. And it's a little bit like Trader Joe's who figured out let's stock the right couple thousand SKUs versus the other hundred thousand that we need that has allowed them to be such an unbelievably successful specialty retailer. And that goes with every aspect of your business. And so pay attention to the rule buy low, sell high because you're violating every day and it's killing you.

Wow. Awesome. Okay, I hope you found that video awesome and useful. So if you want to get a free copy of my book, I want you to click here. And if you want to watch some more videos that will be useful and awesome, click here. Go ahead, you're over here.

Do it now.

Come on. Thank you.

Watch them.