FOCUS! Cut Out The Distractions

Hey, everyone, this is Mike Andes, and you're listening to the Business Boot Camp podcast. Today we're going to be talking about staying focused and what things are distracting you and your business from being more profitable. Before we get into the show, though, a big thank you. Today's sponsor, which is Gusto. If you haven't already, go check out gusto.com bootcamp if you're using Excel or you're using QuickBooks or you're using using an accountant or any other form of doing payroll and you're spending literally anything more than 30 minutes a week, this is absolutely a software that you want to look into. $6 per month per employee, you can't beat that. And that's going to give direct deposits, going to give a very nice dashboard for your employees to see their paychecks. It's just phenomenal. And you can try it out for 90 days completely free. Just go to Gusto.com Bootcamp and I promise you, you will not be disappointed. I have yet to meet anyone that has tried out Gusto and switched to another software, and that says a lot. So today we're going to be doing some really cool stuff and talking about a book that I think is really cool. But I also wanted to invite you to join the Facebook group. I've said the past couple episodes, and I wanted to make sure everyone is on the same page. If you have a Facebook account, just go to groups and then search Small Business Owners of America, and then in brackets, you'll see Business Bootcamp. Go ahead and just join. You just gotta request to join. And then I basically have to manually approve people to get into the group. There's only about 20 people or so in there now, 20 or 30. And so I can answer your questions directly. Literally within a couple hours, I'm able to answer your questions that are posted in that group. So if you have a question about what we're talking about today, any of the episodes you've heard in the past, you want some clarification, you want Exactly. Links or URLs, just like post in there. Other people can chime in, too, and offer you advice from different industries and from different experience levels. So really, really valuable. Check it out. Just search Small Business Owners of America and you'll find it in Facebook. Now, today, the book I'm talking about is written by Marc Randolph, who was the first CEO of Netflix. And so a lot of people know Reed Hastings, which is the current CEO of, of Netflix and sort of the brand image or the face of the business now but it was actually started originally as the CEO was Marc Randolph. And I really liked his book. And I've read other books about businesses as their startup phase and everything. Like, for example, I read Bad Blood, which is. I did not read it. I listened to it on Audible.

I listened to Bad Blood. And Bad Blood is about Theranos, which is a. Which is a startup that in the past couple years has completely collapsed due to just a huge amount of scandal and lies that were perpetrated by Elizabeth, the founder, and Sonny, the co founder, and things like that. Anyways, that book was good, but it was just like it seemed like there were so many characters being introduced and so many different moving pieces and parts and personalities and names of people that I just kind of got lost because.

I usually listen to the books in bits and pieces, like 10 minutes here, five minutes here, three minutes there. And so it was hard to follow the storyline without actually having a physical book that I can open and go back in and see the names and that sort of thing. And there's just a lot of characters involved. Whereas this book by Marc Randolph I felt was very succinct, very chronological, I could follow the storyline very easily. And especially after Netflix launched, which is like halfway through the book. I really like that from that point of the book and onwards, the first book, first half of the book is kind of like their startup process. And you want to read that to kind of get some back, kind of the back end story. But like from the time they launch in the book and forward, I really, really enjoy it. The name of the book is that Will Never Work. And the author is Mark Randolph, who is the first CEO of Netflix. And so I want to just kind of go over a couple of things that I learned from the book and things that I felt was really some key takeaways for me. And I feel like there's a lot of principles in that book that aren't even necessarily taught. They're just. It's a story about Netflix and how they started and all the things they had to go through. And so much of it could be taught. But the story is really the teaching that I felt was very, very powerful. And you all know I rarely ever get behind this microphone and start talking about a book. So I really, really did enjoy it. And I feel like there's a lot of valuable information in there. A couple things I took away from it is the launch that they had when they actually launched Netflix took them a couple years and they went through a couple million dollars of startup money before they even launched the product, which I'm not the type to do that. But this is a Silicon Valley startup. There was money in venture capital and things like that. And so they launch. And the problems they had during launch was amazing. Literally within 15 minutes, their site and their servers crashed because they got so many. A bunch of orders coming in. I think like 100 and something in the first day, 137 if I remember correctly. And it like crashed within 15 minutes. While Mark Randolph, the CEO, is on the phone with the press and talking about a product and how great it is and encouraging people to go visit the site, it literally crashes. And it's just incredible the amount of, like now what you know is Netflix being digital and very automated and a massive company that produces massive, huge blockbuster films and like, very, very popular original content. Back then, thinking about it more in terms of like DVDs, and they're literally like packaging them in the mail and like driving them to the post office. Just great stories if you're an entrepreneur, if you're a startup, you know, this is gold. Like, this is great stories that you just love. So I really encourage you to read the book. I also found it really interesting too, how they navigated around the tech bubble because. And he talks about it quite a bit, but I feel like that was actually a huge telling point of how they navigated throughout 2000, when every.com was bursting and going to pieces and going just absolute waste of massive amounts of capital that was infused into Silicon Valley and pets.com, toys.com, all these. Coms that were going under and had massive amounts of funding. And here Netflix was just outside of Silicon Valley, around Santa Cruz and that kind of general vicinity. And literally they have to navigate through that. And one of the ways they have to do that, because all of a sudden, venture capital just dries up. No one wants to give them money. And they know that they actually have to create a profitable business model. And so one of the things I found fascinating too was the way they had to do layoffs. And if I remember correctly, it was like 40% of their workforce they had to lay off. And the way that they did that, how they did it gracefully, how they worded it, to make sure that people wouldn't get mad and that the culture could move just the way that they formed the culture right from the get go at Netflix was very interesting to me. And how they sustained that as they continued to grow to 3, 4, 500 people, still maintaining that feeling of like, for example, their first day, a new hire would go into a room and have all these costumes that they could pick from that were from action films and different types of movies and things like that. And so they could choose a costume and then they would wear that for their first day at the office. Just little things like that, culturally. And the way that they really were a pioneer in culture in terms of allowing the culture to dictate what people did instead of making rules, regulations, policies, and really less of a policy driven culture. And one of the things that was fascinating to me was reading Bad Blood about Theranos and then reading this book from Marc Randolph about Netflix was the contrast in cultures between Theranos, which was an absolute, you know, catastrophe, and the massive amount of turnover in their culture and just very toxic culture. And people that were mad at each other and the very low levels of trust that were in was a part of the Theranos culture in comparison and contrasting that to the Netflix culture, that was very trusting, yet also require a massive amount of accountability and getting the work done and not being extravagant, being lean, creating the product, thinking about the customers first. And yet being having a culture where there was trust and there was accountability and yet latitude and flexibility. And like I said, trust, it really comes down to trust. That was in this culture of Netflix. And how they began to actually scale that as the company grew was really fascinating to me, especially as, you know, with Augusta, we were starting to scale this across the country and have franchisees and all that. How do we create the culture that we have now in our small business? How do we actually scale that? How do we actually replicate? That is something I was really fascinated about. And the way that they did those layoffs during the tech bubble, when they had to change their business model from just customer acquisition and getting new customers and new sales and changing promotion, just trying to get more and more users. And that's like a big tag word, is users, users, users. And all of a sudden they had to switch to, like, profitability, like, are we making money? And is it a sustainable business model? And so doing a layoff of 30, 40, 50% of your team is extremely difficult. The way they did that gracefully to keep the culture intact, I thought was very, very insightful. But one of the things I want to talk about today that I found was a recurring theme throughout the entire book is what Marc Randolph called the Canada Principle. And the Canada Principle was essentially, there was a point in time when Netflix was obviously trying to grow. This is before the dot com bubble, and they were trying to grow and one of the options was, well, can we grow into. Can we start growing the product and the website into Canada? And the reasoning behind that was like, look, we're pretty successful in the US and if we grow into Canada, it's immediately like a 10% increase in business because the population is approximately 10% of the US very similar demographic. Not too hard for the complications of regulations and things. But they knew there would be some, you know, registrations, there'd be legal aspects, there'd be copyright stuff that they'd have to work through if they were going literally into a new country. And so they figured that they would instantly get, like, not instantly, but they would very easily get a 10% increase in revenue, increase in users, et cetera. But they ended up deciding to not go ahead with launching into Canada at that time because they wanted to stay focused on their core competency. That was the United States. That was the demographic they were going after. It was the base that the DVD marketers, the DVD companies were going after. Sony and Toshiba, they were really penetrating the US Market. Like, let's focus on the companies or the area that we're already good at, the core competency, the United States, before we go out and try to figure out Canada or international expansion. And I feel like one of the reasons I kind of latched onto this was because it kept coming up throughout the entire book. Different avenues that they could have expanded into, different ways, different promotions they could have utilized, different ways that they could have changed their product to get incremental increases in users, incremental increases in funding. But they had to decide. They had to realize that they had to stay focused on the core competency of what they were doing. So, for example, leading up to the tech bubble, everyone wanted their VCs, venture capitalists and investors wanted companies. They thought all Internet companies need to become a portal to the Internet, sort of like Google or Yahoo, where, like, people would show up for whatever. But then it was like a portal to all these other things. So what it ended up doing is ended up making websites that were very generic, very, like, trying to serve everybody. So they wanted Netflix to not just rent DVDs. They also wanted them to sell DVDs. They also wanted them to have top 10. They wanted to have reviews of different videos. They wanted to have schedules of when the videos would be shown at local theaters. Like, they wanted to become the video of the video store for everybody. And Netflix was just like, very, very focused on that. Hey, we're renting DVDs, and that's it. We're not gonna sell DVDs. We're not going to become the place that people come for the newest and newest releases and our opinions of what's good about the video and what's bad about the movie and about the producers and about the cast. We're not gonna become that. We're gonna become the place where you come and rent DVDs. And at the first, at the beginning, that's what their core competency was. And so I felt like this whole notion of being focused and cutting out distractions is extremely important in business for all of us to learn. And you know, really the reason I was thinking about it is because even at Augusta, we've done this recently. So, you know, for so many years it was like, grow, grow, grow. And we were growing 30, 40, 50 plus percent every year. And a lot of the ways you can do that is just by adding services or adding products, whatever industry you're in. And so for us, we, we added like artificial turf, we added like tree services, we added irrigation and material delivery and all these other things that accounted for a lot of our revenue growth. Right. Well, this year we decided, you know what, we're gonna cut back. We're going to use the Canada principle and we're gonna cut out the things that bring in revenue but aren't necessarily our core competency. So we cut out those things. Irrigation, artificial turf, you know, tree service. We sold some of like the tree chipper.

We sold a big dump truck so that we don't have to do, we don't do material delivery anymore. And so did that affect our top line revenue? Yes. Like we are not going to have a 40% growth this year. It might be 10, 15%. But I can promise you one thing. The core competencies that we ended up focusing on became much more profitable. And the growth that we are experiencing this year will be like profit will be money in the bank. It will not be just because we bought new equipment or hired more people and therefore launched ourselves into a new service or product and that led to more revenue, but not necessarily more profit. And so what I would ask you as a business owner, like what are the different departments of your business? What are the different revenue streams? And are you having a Canada? Are you having something in your business that is taking your time, taking your energy, taking your resources and not actually driving bottom line revenue to your business? There might be times that you actually do sacrifice for a lot, like a loss leader that you are putting time and energy into. But you know, in the Future, it's going to grow and expand. But for example, Netflix always knew that Canada is never going to be more than 10% of their business model. So why would you focus on that? Why would you focus on something that is bringing in 10, 15% of your revenue, but taking 50, sorry, taking 50, 60, 70% of your time and your energy and your focus when the other 80, 90% of your business is generating all the profit that is generating all the growth is the thing that you really need to focus your time on. And this goes back to the fact that so many of us as entrepreneurs are looking for the weak spots in our business, looking for the weak spots in our personality, looking for the weak spots in our management style, looking for the weak spots of our leadership style and are trying to fix those things. Instead of just focusing on the things we're good at, instead of focusing on the things that we do really, really better than all our competitors, instead of focusing on the things that we personally are really strong at in our characteristics, in our personality, in our management style, we tend to focus on the things that we're doing bad and trying to fix them. If we could take that same energy and funnel it towards the things that we're doing really well, the things we're really talented at, and just focus on those things, the amount of growth would be so much greater if we were to do that. And so whether it be from a personal side, some people are good at selling, some people are not, some people are good at management, some people are not. Some people are really good at culture, some people are not. And being able to realize, being self aware is helpful, but then also knowing, okay, I'm not very good at that thing, maybe it's sales, I'm not very good at sales. I'm gonna go hire someone that can do sales, that's really good at sales, so I can focus on the things I'm really good at. Maybe it's management, maybe it's going out and networking. Whatever you're good at, you focus on your strengths. You cut out the Canada principle, You cut out the things that are taking all your time, all your energy, and really bringing in a marginal amount of revenue, a marginal amount of profit to your business. This might be a department, this might be a service or product that you're focusing so much time on and you're neglecting the things that are actually moving the needle. This might be a customer, this might be an employee that you need to get rid of that is taking all your time, all the resources from the customer. Service departments always funneled towards these few customers, and you're bowing down to them because they are a big piece of your business, when in reality they have. They're very unprofitable. They're taking all your time, all your money, and they're not actually doing anything positive for the future of your business. Same thing with employees. There might be employees that you're trying to coddle or try to keep around. Maybe you think that they're a really good performer and they're driving lots of revenue to your business, but yet all your time, all your energy is funneled toward fixing the fires they create or the cultural damages that they are ensuing to the rest of your organization. And you got to realize that if that time and energy you spend on that principle was allocated towards the strengths and the things that you're doing good at, the amount of growth you would have, the profits you would see would be much, much better. So today, all I wanted to encourage you to do is what are the things that are distracting you? What are the things that are not allowing you to focus on the core competencies of your business or the core competencies of your management style? The core competencies of your abilities? Focus on those things and cut out the distractions. You're listening to Mike Andes on the Business Boot Camp podcast. Until next time, be great, because nothing else pays.