Episode 206: How to Start a Business that Lasts with Warren Hogarth

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Sorry, somebody ripped up my paper so I have to put it back together to know what I'm supposed to be doing.

Oh, that's the outline.

Yeah.

Did I. Am I the somebody?

Were you the one? I don't know.

No, that's Ron. Ron is a fidgety guy. If anything's there, he starts like he ripped. Did you see the nextiva things over there to your side? Is one of them ripped apart?

But I feel like we did at one point remove that.

There are squeeze toys.

There's one that was written on too.

Yep, that's Ron. There's those squeeze toys from nextiva. And Ron, when he's doing the podcast, he can't help but rip stuff apart. He just rip. My books are right behind you. Where he says he could rip those apart.

Everything from his.

It's like a lion. It's like a lion. You just throw like anything you got in the thing, otherwise he's gonna tear apart the tourists.

And that's crazy. On that note, everybody, welcome to the Profit first podcast. I am your co host, Kelsey Ayers.

And I am your host. My name is Mike Michalowicz. You're listening to. Yes, the Profit first podcast. The one and only. I, in case you don't know, I'm the author of a book called Profit First. Also brand new book that's out called Clockwork. Actually it's releasing pretty shortly. So here's the deal. Yo, hop on Amazon now, get your copy. The subtitle gives it all away. Design your business to run itself and.

You can find us on itunes. Stitcher, tunein Radio, Google Play, ProphetFirstPodcast.com or any podcast or anywhere.

That's right. And, you know, here's what we do on the show. We like to talk about profitability from all different vantage points. Today we're going to talk about how to start a business. How to start a business and grow a business that lasts. You know, that's the essence of profitability. Before we do that, we do have a couple perfunctory things we like to do, but I want to do the most perfunctory thing we need to do. I have a little game for today.

Okay. Oh, I'm excited.

But first, I want to talk about your house.

Oh, okay.

So, Kelsey, just in case our listeners don't know, here's how this all went down. I came in to you was about two months ago, told you about. For the last 10 years, my wife and I have been saving money to buy a house. And we found the house. It checks all the boxes, and so we put a bid down, and we're closing on May 15th. Today's May 10th, when we're recording this. And, like, Kelsey, you're the only person. I'm not even telling my friends. I'm only telling you. Yeah. Because you know what you did to me. So I'm like, please don't tell anyone. I'm like, if you feel to get a housewarming gift for me, I accept. And you came back the next morning and said, I have a little gift for you. I'm like, oh, I'm surprised. What is it? And you're like, I. I'm buying a house. Three days prior to you.

Happy housewarming.

Happy housewarming. And then you tell the whole office. Everyone's like, kelsey's buying a house. Like, the place goes crazy. And then I'm like, I'm buying a house too. They're like, mike, shut up. Don't steal her thunder.

That's what you get for trying to keep a secret.

I know you stole my thunder. So I'm pumped for you that you're getting your house.

I'm pumped for you too.

Okay. It's a cross pumpage.

I'm pumped that I got in first too.

So here's my big question. What's the first, like, celebratory thing you're gonna do once you have the house?

Have tequila. So I have a deck off of my master bedroom. I'm gonna name it the Tequila Terrace. That's my drink of choice. So that's my celebratory.

I didn't know you love tequila.

Oh, yeah.

Oh, my God. That's my drink of choice, too. Oh, I didn't know that. I mean, I like margaritas. Do you just drink it straight?

Straight. On the rocks with extra lime.

What's your favorite type?

Milagro.

Milagro, I'm not familiar with. I gotta look it up.

It's a. A white tequila. It is so good and smooth and it's not horribly expensive.

Wow. Do you like to, like, drink alone? Do you like to sit there and you have friends over? Yeah. That's okay. I don't like to drink alone too often. And I actually pretty much stopped drinking. But this summer, as it gets weather warmer, I will be doing my margaritas and that. I actually enjoy this. Sit alone, looking out at the woods behind our house and just our current house and just sip and margarita now. Be the new house.

Yeah.

Have you ever had Don Julio?

I have.

I like the.

The blanco. Don Julio is really good too. I do like Milagro better.

Okay. Okay. Gotta write this stuff down. I gotta know this. Okay, here's.

And the bottle's really cool. It's clear, and it has like a indentation of an agave plant underneath.

Oh, that's awesome.

Really pretty.

Do you forget any of tequilas? And, like, the skull.

Yes. I haven't tried it. I've seen it.

Okay. I don't know what brand that is. I gotta find it. All right, here's. Here's our little game for today. Dead or alive. Because we started this. I said, hey, do you know Florence Henderson? And both of us, like, I don't know. All right, I'm gonna give you some names, and you tell me if these people are dead or alive.

Okay?

Angela Lansbury.

Alive.

That's right. Not only she alive, she's 92 years old.

Yeah. I love her. Murder, she Wrote.

Murder she Wrote. Yeah. Malcolm Young. The guitars from acdc. One of the guitars.

Dead.

Wow, you're good. Yeah. Sadly, he passed away. Alzheimer's. Oh, yeah.

So hard.

Jerry Lee Lewis, dead.

Didn't he just pass away?

Oh, no, I'm thinking of the wrong guy, I think, who does that voice. Yeah.

Great balls of fire.

Yeah, he's great balls of fire. Jerry Lewis. Here's.

Oh, I know who you're thinking of. Jerry.

Jerry.

Yeah, I can't think of. But I know exactly who you're talking about.

Jerry Lee Lewis list is still alive. But this. Maybe this thing's, like, from 10 years ago, so we'll have to look that up.

Maybe he passed away. Yeah, I mean, maybe he's alive.

Maybe he's alive. Maybe he passed away. We'll give him a possibility.

So is this whole game moot if you're not looking at something?

I just noticed it's like this is. This is from early 2018. Part of it and the other one's from 2017. So I'm like, this is stupid. A couple more. These names you wouldn't recognize. I don't recognize. Dick Enberg, famous sportscaster.

Didn't he just pass away?

I don't know. You tell me. You can't ask.

I feel like.

Yes, he's passed away. Just. Just. Jerry Van Dyke.

Alive.

Dead. Oh, yeah, sorry.

Is that recent?

I don't know when that was. It doesn't say the dates. How about one more? Two more. Mel Brooks.

Alive.

Yes. Well into his 90s. Still alive. And Doris Day dead. No, alive. Got you. I knew the voice intonation. I knew that would get you. It worked. All right.

I also haven't heard anything about Doris Day in forever.

I haven't either.

She fell off the radar, but didn't.

Fell off the planet. You know what I'm saying?

I know what you're saying.

Okay, so. So that was totally not fun. I thought it'd be way better than that. Well, I want to thank our corporate partners made the show at Reality Cal.

Go ahead, thank them.

Okay. Thank you for letting me thank them. I want to thank nextiva voice over IP phone.

Con gusto.

What was that?

Con gusto.

Con gusto. Yeah. Oh, gosh, your Spanish is so good. It's probably all that tequila drinking you're doing.

Yeah, yeah.

So nextiva is a voiceover IP phone system. We'll talk about them in a little bit. Receipt bank. And that's it. That's all the sponsors I know. There's one more on this list. They are not a sponsor, so I'm not even gonna mention them. And is there anything else I wanted to talk about? Yeah, that's it. That's it. All right. Now let's get to the exciting meat of the show.

Wait, what? Can we give a community shout out first?

Oh, yeah.

Okay. I want to shout out Kathy Whaley. She says, I implemented profit first last May. I had been dumping all income into one checking account. I paid all expenses and materials, but I was afraid to take anything out. I was afraid I wouldn't have enough money for taxes or my next big order. My. My husband was always saying, are you making any money? Yes, I am. My soon to be six year old little side business not only is paying me a nice little salary, but with profits, I Have shaved eight years off my mortgage.

Oh my gosh.

Yep. I now know at a glance where my money is and where it's going. Never have I experienced anything like this. It now seems as if there is plenty of money in my business to do what needs to be done.

Gah. I'm so proud of you. Congratulations. Eight years off a mortgage. Do you have a 30 year mortgage? I wanted to get 15.

I know.

Got 30. Got 30. But I'm gonna. My intention is to play it pay.

Exactly. Are you gonna do the like bi monthly payments that's supposed to shave off sometimes?

Oh, yeah. Because yeah, I wasn't gonna do bimonthly. I was just gonna do monthly, but maybe I'll do it bimonthly, I don't know. That's a good point. His name is Warren.

What's his name?

Warren Hogarth is the co founder and CEO of Empowerment, an app that helps entrepreneurs and side hustlers stay on top of their finances, get objective and personalized recommendations to make their money, go further and discover and save hundreds, maybe thousands of dollars per year. Is voted the number one of the best 25 apps in 2017 by Time magazine. Empower is more than just a budgeting app. It's an independent trusted financial advocate working for you. 2024 by 7. Let me tell you about Warren. He served as a partner at Sequoia Capital. That was a big hedge fund, and he's helped three companies go from zero bucks to one bill one billion. He's from Australia, but now he's living in San Francisco. Warren, welcome to our show.

Welcome, Warren.

Good morning.

So you worked for Sequoia, huh?

Yeah, I had a. Had a blast there for eight years.

Now Sequoia, that's a hedge fund, right?

Venture capital, private equity. It does sort of a broad range of things.

Okay, so let's just get a little bit more background on Empower. Can you just tell us a little bit more about that?

Yeah, you know, I. So as you mentioned, I'm from Australia. I came to the country 2004 now, so a little while ago and I came as a student and I was kind of blown away by how tricky it was to navigate the financial system here. I didn't get a credit card for the first four years I was here. So lo and behold, many years later, my credit score was good, but not fantastic, even though I never borrowed money or needed missed a payment in my life. So that impacted my ability to get things like car loans and mortgages just like you were chatting about, and then had all of these other situations where friends, families, relatives kind of, of getting screwed and making bad decisions. I'm like, this is just ridiculous. Like people just don't have time to, to stay on top of their finances. And you know, the what we've built self driving cars. Like we can build a car that can drive itself from A to B. Surely we can build an app that looks over your money 247 and sends you notifications when you're doing something that's screwing up or negatively impacting you or conversely if there's something you can do that can, can earn you or make you more money. And so I had enough. At some point it finally got to me and I said I'm going to do this myself. And so we founded Empower two years ago and, and that's our mission. It's really to just help people build them. A coach or an advocate that you know, you know, in, via an app can monitor your money 247 and just help you make the best financial decisions.

Cool. So you, through the experience of growing Empower and your past business experience, you're the guy who's, you found ways to start businesses but also make them sustainable. And that's what you're going to share with us today. So let's get into the meat and potatoes. Maybe our listeners brand new startups, maybe established businesses, but are struggling to really get the momentum and to have a sustainable business. Where do you get started? What's the foundational steps to building a sustainable, healthy business?

Yeah, so I think one of the most critical things early on is thinking really hard about the market and what tailwinds there are in a market. Is it a market that's sort of generally going to be improving over time because something has changed, whether it be there's some kind of technology innovation, you know, for example in real estate as an alternative example, you know, a city's landlocked, there's you know, good net migration to the city so you know, strong tailwinds where prices might be going up. But I think one of the most critical things is to pick a market where you can afford to make mistakes. Because the flip side of this is if you pick a market that's going the wrong direction, it just going to be a painful battle, a painful fight the whole time, no matter how good you are. So I think one of the most important things, you know, wearing the investor's hat or the founder's hat is just where, you know, what are the 10 year trends in the market that you're going into and how much conviction do you have over that? The other, you know, big piece that or two other big pieces that I focused on as an investor is the team and then the unit economics of the business. And by unit economics, it's, you know, it's the core of what you talk about is sort of how much gross margin or profit can I, for every unit that I'm selling, can I generate so that I can either a, reinvest that in the business for growth or take that out to, you know, as. As profits?

So I want to dig into all three of these. But first, first, let's go back to the trends in the market to predict the future. Maybe it's not so easy and maybe it's not even what you're suggesting, but I also think as a business owner, I know I've gotten stuck in my own bias. I'm so hyped up about my business that I falsely believe that the market's going in the right direction. How do I get a realistic, truthful representation of what's coming in the market?

You know, yeah, it's impossible to predict with 100% certainty. But I think I have a lot of experience in technology markets. There's this famous law called Moore's Law, which was the reduction in cost of compute power that people were able to graph over time. And it was very consistent. And there were very good sort of fundamental first principles, reasons that things were going to continue to get cheaper and cheaper. And as cost of technology got cheaper, adoption would follow. And I think in many markets, you see those kinds of trends, whether it be, you know, so we're in the consumer finance space today, and there's a few big trends. One is millennials, really. They grew up seeing their parents getting screwed by the traditional banks. And if you look at all of the surveys and data, they, they hate banks. They're amongst the least love of the Fortune 500 brands. So we know, A, they're kind of shunning banks, B, they're getting saddled with financial debt because of student loans and healthcare unlike any other generation. And then on the flip side, from a technology side, you've had these changes where there are these technological pipes being built between banks so we can build new services on top and create new products. And so it's fundamental changes like that that I think you can still try and objectively go out in any industry and, and see what's going on. I mean, even if you take the auto industry today, right, you've got. You can just look at what's going on with fuel standards and battery technologies. It would be tough to bet on something that is a gas guzzler car technology in the future. If you just look at all of the core trends and waves that are.

Going on and what's the source for this? Where do you find the trends?

Yeah, I mean for me it's wherever you can. It's about being scrappy. You know, I've done everything from email friends who end up in, you know, working in consulting or banking firms that generate research reports, to scouring the web, to picking up the phone and calling industry experts. And if I get too many people telling me the one thing I know I'm not asking the right questions because I really do want to get, you know, the skeptics view whether, whichever side of the fence they're on. So that there's sort of some, some really challenging assumptions. But you know, it's customer interviews, it's you know, industry so called industry experts go in eyes wide open though that everyone has a bias. You know, it's the full gamut.

So this reminds me of a story. I met with a company, this is maybe 10 years ago and they made a glove that was actually like a mouse. So it was very futuristic, kind of like the scenes in the Matrix where he's, whoever it is moving stuff around on the screen with their hands and they said this is the future of mouse technology. And they, they abjectly failed. No one bought it. But the market was, was seemed to be going that way. You know, more people needed devices to control their computers. There was opportunities in gaming. Can they, can people get misguided that maybe get too in front of the market and they're seeing a trend that's maybe not 10 years out but 20 years out. And if so, how do you know that this is an imminent trend versus a long term potential?

Well, I'll give you two points of view. One is the investor. So I spent eight years as a venture capital investor so I would invest at companies with super early technology, just like you're describing. And this was one of the critical things we had to make a decision around. But just for extra context with our investing, you know, we were investing every dollar we were investing, we were investing with a risk profile where we believed we needed to make 10 to $100 of return because we were investing in companies where we would be writing off a third of the companies. And so this is the pointiest end of like taking risk. And so from an investor's point of view on those kinds of businesses, it's really a question about making sure the risk and return are appropriate. And then you're creating a profile that if you're investing in, if one in three businesses is going to be a zero, then those other two businesses, you know, better have shots of very large outcomes. But on the entrepreneur side, I mean, it really, I mean, there's many reasons people start businesses, right? Some people, it's a passion project. You know, many entrepreneurs are very evangelical or a few standard deviations away from normal in terms of their, their personality, whatever that means. It can mean lots of different things. And some people you just have be true believers. And if you're doing it for the passion and less for profits, you know, you can, that still might be a great business because you're, you want to try and, you know, change the world in some way, shape or form. I would suggest that if you're, if you're a little bit more profit inclined early on, then you need to not just sort of believe in that trend. It's about getting out and testing as cheaply and as you can. And that could be just, you know, picking up the phone and calling hundreds of people or sending out surveys or building what, you know, people call a minimum viable product and putting it in people's hands, literally in this case, and seeing what happens. Will they pay for it?

Yeah, the proof is in the pudding, right? If you have a minimally viable product and people are buying it, then you've proven its viability. Let's talk about this, the second element, the foundation for building a company that will last you says the team. What do you mean by that?

Yeah, I mean, for me, it's a couple of different things. It's, you know, I want to be showing up to work every day and working with people that both I respect and that I'm learning from, but also where we're having a good time. And so it's, you know, part of it is about culture. Part of it is about working with, with people that. One of the entrepreneurs that I had a great pleasure of working with would always say, hey, am I hiring someone? Where like it increases the, the average or median value of the team or the intellect around the table. Like, and if you can go into, into your recruiting and your hiring with, with that kind of mentality, then it just, it sets you up for success. And that's because, you know, the other element of this is you start with an idea. There's almost no early companies that I've seen that, you know, get it 100% right the first time. There's generally some kind of course correction. 10, 20, 30% in one direction, often multiple times as you're hustling to grow your business and you're learning after selling to customers, maybe you, you're an enterprise business and you started off selling to large customers and you realize, well, actually the sales cycle's too long. I'm going to go down market or, you know, you thought you the biggest selling point of your product would be X, but it turns out that it's Y. And so you, you know, you course correct. And so you also need people on your team that both are comfortable doing that, but tuned in enough that you know that's also something that they're passionate about and can adapt and flex to and, and, and that can be a strategic weapon.

I'm reading Ray Dalio's book, Life Principles, and he talks about blind spots, the necessity to bring in team members that have different opinions, but also to get over our ego. And I'd love to get your perspective on this, Warren. You know, we have a very small business here. There's eight and employees here. I have an idea. I think it's a genius idea and it's, it's, I notice for myself it's very hard to convince me otherwise. Even though I trust and love my colleagues here and they've different opinions, I'll still try to charm them or brute force my ideas through. What's your ideas? How do we keep ourselves in check as a owner of the business?

It's, you know, there's, there's never a correct answer. Everyone has their own style. I think one thing I encourage people to do, and this is something again I learned from the investing side, is whenever we had a critical decision, we'd always try and recruit someone to be the skeptic, whether they genuinely believed that they were the skeptic or whether they just had to play that role and their job. Their critical piece of a discussion is to argue the other side and to put the best case forward so that you're going into a decision eyes wide open, open. And so I think for me that's probably one of the most powerful ways to at least try and get someone else who's objective to. You talked about the blind spots. At least fill in the blind spots and then you can, you know, come up with all sorts of ways you may want to make a decision. I think early on it's important to have, you know, one person making the decisions and making clear decisions. But there's a number of different. Again, people sometimes come up with matrix matrices or what have you to weight these things. But for me, the most important thing is getting someone to play the skeptic.

And so many of our listeners are very early stage. Some solopreneurs are listening in right now. Am I in trouble from a solopreneur because I don't have that outside perspective or is there a mechanism or tool that you can share with us for me to be my own skeptic to bring balance to my consideration of ideas?

So I'm very fortunate. I have a very understanding partner and wife who is often my skeptic. But there's a couple of different ways to do it. I think Another, another good sort of rule set that I've seen people use in the past is to say, okay, if this is going to fail in six months or 12 months or whatever you think a good time frame is, what would be the reason? If I'm sort of looking back on my phone like on myself right now, can I think of what's the number one or what are the two reasons that that may have happened? Again, another just sort of little framework to use or you know, another one I've, I've worked really hard on is to get some mentors, whether they be formal or informal advisors that either know me or know the business that I'm in, or ideally a sprinkling of both. Just, you know, personal example with our company today. Early on, early on we were very focused on product and engineering and we didn't, we didn't have a full time marketing person that since subsequently we've hired that person. But early on I was, I brought in some marketing advisors to, to help us out because we were sort of, we didn't have the full time to dedicate to it. And so whether it be simply that their finger on the pulse of like the latest and greatest ways to reach customers, what was working, what wasn't, or simply that they could give us guidance from their experience. And so even if you're a solopreneur, I think you can find, and again, you kind of don't want to find someone who's going to just tell you yes and pat you on the back every time you want to find that friend or colleague that you respect who will challenge your thinking. And that I think can also be the most fun part.

The last element you talked about is the economics of business or unit economics. Tell us how that's so foundational to growing a business that lasts.

Yeah, so the, the founder of Sequoia Capital. So Sequoia Capital was founded in 1972 by a chap called Don Valentine and over the last 46 years has invested in companies such as Apple and Google, LinkedIn, Airbnb, but has done it at the very, very early stages. Like they wrote 100k check to Steve Jobs and Steve Wozniak in the very early days when I joined his like the number one piece of advice he had for me was just simply gross margin and it, it represents so many things. This is what I came to learn over time in the business. So, you know, so gross margin obviously is if you sell something for a dollar, if it cost you 30 cents, you've got 70 cents of gross margin that's remaining and that you invest in sales and marketing and general administrative costs and then you've got your profits left at the end of the day. It, it what it represents. So the higher the gross margin means the higher the pain point for the product that you're trying to sell, which also means the, you know, the bigger problem that you're solving, it means the more likely your customers are to accept a product that's not perfect. So it has a lot of signaling in both the pain point in the market and the willingness of your customers to buy it. And you know, when you're early on in a business and you can't, you might, you know, not be able to put all the bells and whistles on whatever product it is you're selling. If there's a big pain point, they'll accept making certain trade offs. And that's all reflected in that gross margin number. And then on the other side of the table, obviously, you know, if I have, if I sell a dollar and I've got 70 cents left over to pay for all of those other things and then reinvest in the business.

I've.

Got a lot more room for error. And obviously there's also going to be a lot left for me on the table on the other side when either to reinvest in my business for growth, whether it be for capital growth, investing in human capital, or again to, to put in the, put in the side pocket at the end of the day. And so it's just, it's such a, it's that one metric that's indicates so much about the quality of a business and it compounds as well. If you can from that 70% gross profit, if you can keep 30% at the end of the day, that's a lot of money. You have to then go and reinvest, especially if you can continue to sell it at Those kinds of margins, then you don't have to go and raise outside capital, for example, you can just continue to grow your business organically and very, very profitably. Yeah, so that's, for me, it's sort of one of those hallmark lessons of quality of business, quality of product, quality of market.

Do you ever feel like that fails you though? Like let's say it's a startup and over time the scale doesn't correlate. So like their operating expenses increase or they get feedback and the technology that they use or the product or the materials that they use need to increase. So your profit margin goes down. Does that ever happen?

Yes, it certainly does. I think, I think where it, where it, I wouldn't say necessarily that it fails, but where you. Because as it comes down, I think risk goes up. And one of those big risks is the capital requirements of the business. So I think, you know, a great sort of counterpoint of these, say a business like Uber. So in, you know, you take Uber as a business, for every dollar that gets collected, 80% gets paid out for drivers, you've got 20% left over. That 20% then has to be split against marketing costs, all the human capital of the business, et cetera, et cetera. What that meant was that the business had to raise a lot of external capital to be able to scale before it could get to, I mean, it's still not profitable today in that case, I think because you had velocity in such a large market, you know, you were able to raise outside capital at insane prices. And so that's the trade off if you go into. And that's the trade off of most manufacturing businesses. Traditional manufacturing businesses, they require a lot of capital to invest in plant and equipment and you have low gross margin. And so you have to take these, you know, long term loans and what have you. It just means the, the business is riskier and you're going to have to raise outside capital and more and more of it. And so that's going to, if you make a mistake that will materially impact your returns. And if you're a solopreneur or you're an entrepreneur, if you don't want to raise outside capital, if you want to control your own destiny, or even if you do, it still ends up being one of those metrics that informs so much about your business.

Are there tricks that you have techniques to increase margin? And the perspective I'm thinking is many of our listeners are in highly competitive industries. Maybe they're commoditized, maybe someone's listening to an accountant or a lawyer? Well, there's countless accountants and lawyers out there. Maybe they make, they print books or print shop and you know, there's countless ones. Are there kind of go to strategies where we can increase that critical gross margin?

Yeah, I mean there's a handful of tricks. It depend. I'm, I'm just thinking through all the different industries you could be in. You know, obviously if you're in, let's say a professional services organization, you know, one, one side of things is can you find a, a customer? You know, there's either something you're doing or some kind of training or human or intellectual capital or expertise that ideally or hopefully you're developing over time that allows you to, to charge more. And then on the other side from a scaling of the business, you know, folks are really, you know, that's when the model changes to, okay, can I hire in someone for the tasks that I'm doing that I can't charge as much for that they, you know, that cost less. And so that's, that's taking the other side and that's when you end up with associates or different, other, you know, folks in the business that help you scale or grow the business and, and capture more. I think the other one is cross selling or other kinds of value added services that sit on top.

Yeah, I like that. The professional services. I heard like almost niche specialization. Become a category expert and cross selling is a great idea. Warren, I'm looking at the clock. I didn't realize we got a, we got a rock and roll before I let you go. Thank you for these insights. These have been very kind of mind opening, but I'm sure our listeners will want to learn more from you and learn more about Empower. Where can they go to get more resources?

Certainly. So I'm on Twitter aurenhogarth and you'll find me chatting about random things from finance to growing businesses to the latest in technology. And in terms of Empower, if you're looking for a financial coach or app that'll look after your money 247 and help, you know, you make better financial decisions, you can find it in the App Store and Google Play by searching for Empower or Empower Finance.

Fantastic. Warren, thanks for joining us today.

It was a real pleasure. Thank you very much, guys.

Thank you.

All right, punch me cows. Oh, that's what I need a nice.

I needed that too.

Really interesting insights. Like, yeah, you know, opens my mind. Now I'm like, oh, there's a lot more considerations going on here. So here's what we're gonna do. I want to learn what you learned and then I'll learn you on what I learned.

That makes so much sense.

I'll learn you one who was a cartoon or something, some show that used to talk like that. I'll learn you one before I wrestle you. I'll wrestle you for it.

What was that like Beverly Hillbillies?

Something like that. Sounds like that. And then we'll, we'll have a listener. Do we have a listener mail tonight? We do. Okay, so we'll do some listener mail. But first I want to thank our corporate partners, all two of them. Nextiva. You know, nextiva's been with us since the inception and they're not going anywhere. They're ramping up.

Yeah, I love them.

I love them. Have you met any? You haven't met Yanni?

No.

We gotta go out there one day.

You know, go to Arizona any day.

Yeah. So I have a dream of taking our company down first for a Savannah Bananas baseball game. And Ron's like, he's a no, no, I'm going to make it happen. I think I'm going to set up an account and just start talking money away. Dude, we have the money. That's what I do. Nextiva is a voiceover IP phone system. We use them at your brand new house. Are you going to have the nextiva phone system there?

Yes, I will have the nextiva phone system there.

Do you have Internet enabled?

Probably not yet, but I don't because the previous owners have to schedule their disconnect before I can set mine up. And they had, as of yesterday, they still hadn't done it, so.

Oh, so you can actually. So you could kind of pilfer their Internet for a while.

Yeah.

You know what, nextiva supports that. I'm not saying they're advocates for it, but it supports it. You could plug in over someone else's Internet because when I go to a hotel I can. I don't anymore because I do over my cell phone by, with the nextiva app on my cell. But I used to carry an Exiva phone with me if I was gonna be away for an extended period. Just plug it right into the.

Yeah.

And within seconds, easy peasy. Yeah. Full office phone. So get Nextiva. Nextiva.com receipt bank is a, is a tool that you can use to scan in all of your receipts. It syncs it right up to your accounting system and now you have all the documents you need. So when you file for the government, that big discount for, you know, all those lunches out and stuff. It's all now recorded properly should you ever get audited. But it's also just a great tool for productivity. You don't have to worry about all the manual process of entering this information. It's receipt, bank, check them out.

Awesome.

All right, Kelsey, what'd you learn today?

So what'd you learn today?

You know, Christina still listens to our show.

Oh, that's awesome.

She emailed me. She listened a few weeks ago. She's like, I love that show.

That's awesome. So what did I learn today? Well, first of all, the entire thing in terms of being an investor, I've never thought about that perspective. Honestly, not that I haven't thought about it. I've never talked to somebody, so I felt like that was great insight. But I think my favorite takeaway is that he considers the team as one of the top three priorities for a long lasting business. And I concur entirely. I just, I feel like he said work with people that you enjoy being around every day. I think that that is so important and I feel like I've been in all kinds of work situations and it just adds so much quality of life and so much inspiration to the work that you bring to the table every single day.

No question about it. Is this the best place you ever worked?

Yes.

Is it really?

Hands down? Yeah, for sure.

We have so much fun. Did you like the Ceba dance? Is it siba or Sia?

First of all, it's not Siba.

Sia, Sia, Sia. Do you like the Siba?

Cheap Thrills. So everybody who's listening, watch the Cheap Thrills video and then imagine Mike and two of our other co workers performing that with the wigs on. They weren't wearing nude leotards like I.

Wanted them to, but I wanted to. I actually wanted to.

Yeah, but it was hilarious because we.

Lost a bet bowling. So here was my takeaway. Put a time frame on the risk you're taking. Basically, like when you say I'm starting a new business, say if after six months or a year, it's not achieving xyz, that's the pull, the rip cord. I thought that was cool. I also liked. I've never heard this before. The bigger the problem you solve, the more likely clients are to accept imperfection. Yeah, that's pretty. I never thought about that.

Yeah.

And therefore the, the, the smaller the problem you're solving, the more they expect perfection. Isn't that funny?

Yeah. Yeah, I love that. Same thing. Going back to the team where he was saying no company or no plan is perfect no matter what. So you want a team that's going to be adaptable. And for that same reason, I feel like nothing is perfect that doesn't exist. Yeah, but you have the tools that support the rebuilding or the reaction to those mistakes.

Yeah, yeah. Now, fascinating insights. So that's what we learned. We also want to know, dear listener, what did you learn? Put that in the comments for our show. But before we go, I think we have some listeners. Pattern baldness. I gotta get something. I know you sent me the new audios. I gotta upload that one day.

Okay, so this one comes from Janet Kafadar.

I'm sorry, is that the game again?

Cafadar?

First of all, it's Jinat is the first. It's Jenot Kofidar.

Lies.

Okay.

Okay. She says, I want to start saving money each month from January 2019 so that I can start paying yearly for some of the biz tools and subscription that she 100% needs to run her business. She's not clear where to take that money from. She says she's read and reread the book, but she's still not sure.

Yeah, so let me just kind of reiterate. So, Janet, you have money that you want to save to pay for a monthly subscription, but you don't have enough money to pay for it. Is that what I'm hearing?

No, what she's saying is right now she pays monthly, but starting next year, she wants to pay annually. She'll get those benefits of the savings when she gets an annual subscription as opposed to monthly, but she doesn't know how to allocate money to pay for that.

Okay, so you continue to quote, unquote, pay monthly to a new account. So let's have an account called the annual account. And for for now, I break into literally a separate account. So the foundational five accounts for profit first are an income account, profit, owner's compensation, tax, and operating expenses. Maybe you have an account called subscriptions, maybe you don't. But let's say one that says annual payment, and make that a savings account starting today, start paying monthly on a monthly basis. Or if you have more money that you can avail, pay two months at a time every month. Then when the money's in there for the full subscription, that's where you pull it from. But you continue to pay into it on a monthly basis into perpetuity, into your own account. That way you derive the savings. I'm actually doing this with our cars for our house. We. For our house. For our family. I am driving my wife's Durango. I got the Durango and she got a new car. And I want to buy an electric car. I'm looking at the Chevy Bolt now or maybe the Tesla. We'll see. I'm paying for that. I don't own it. I want to buy it. I'm paying every month into it. I'm paying about two months equivalent of leasing it after five years. And I've been this for a year already after. So four more years from now, I'll have the money to go in and pay for cash, which you get major savings. So make those monthly payments still, but make them to yourself effectively into an account. That's how you do it.

But she's pulling it from opex.

Oh, that was the question.

Yes, there.

I answered none of it until just now. Pull from opex. Thanks, Mike.

Oops. Thanks for the question, Dan.

There we go. Is there anything else in our.

No, that's it.

Oh, okay, then I better queue up the music for our outro. Kels, here comes. There it is. All right, let's get out of here.

Jay, Faith and everybody, please make sure to leave us comments and ratings on itunes or again, your favorite podcaster and on Broadway first podcast dot com.

That's right. And hey, listen, this show is about driving profitability in your business. Our goal is to give you insights. I'll tell you the best way, the best way to ensure profitability is to have, like a trainer, someone that can work with you one on one and do this. And you know, the people that do it, who they are, they're called Profit First Professionals. We globally have. Did you say over 300?

Yeah, I would say globally. It's hard to gauge, but. Yeah, but it's hard to gauge because.

We'Re not really big gaugers here. We know here it's 200, 209 now.

Yeah.

And now in Australia, I think it's 20 or 30. And I know in Europe it's over 40, 50. All right, well, whatever. All over the world, we have Profit first professionals. These are people that have been trained by our organization to bring prop first to your organization, to be your trainer, to hold you accountable. And they're ready to work with you right now. Why hire an accountant that just says you're accounting? Why hire a bookkeeper that says you're bookkeeping? Why not hire an accountant or bookkeeper that drives profit in your business? Why not hire a coach that drives profit in your business? That's who we have waiting to work with you. So all you have to do is go to profitfirstprofessionals.com, click on find one, fill out the form, and then we'll hook you up. That easy. All right, Klaus, you gotta go buy a house. So let's get out of here.

So do you.

All right.