Why working harder stops working 🔁 Damon Flowers

I like efficiency. I like optimization. I like dialing, and I'm actually kind of quite lazy. I do like to build businesses so that I am extracting myself more and more to the point where I'm no longer needed in the business, but the business is fully dialed in. It works very well, low risk. The brand is well known. Customers love us, right? But it takes time to obviously get there. We like to say that business should be boring. Most people don't, don't agree with that, but business really should be boring. And so you want to get it to the place where you have visibility, just like the dashboard in a car to being alerted when something's happening. So you have plenty of time to pull the car off, get it to a service garage, whatever you need to do in order to get back on. Most businesses are not ready for growth. They think they are there. They think they're growing every day, every week. Want it, or they want it, but they're not actually ready for it. Growth means that you could deploy more money, more customers, more staff in your business, and it's not going to break. It's going to take that load and be able to scale up. You can now go from handling 1,000 to 2,000 customers, 5,000 customers, 10,000 customers.

This week's Millennial Master is Damon Flowers, founder of Modern Operators and a 4-time CEO with 2 8-figure exits. He spent over 20 years building and scaling companies across e-commerce, software, and coaching. Across those companies, he kept running into the same problem. The business grows, but everything still comes back to you. That's why Damon now works with leaders in that position and helps them step out of that role so the business can move without relying on them for every decision. In this episode, we cover why founders become the bottleneck without noticing, what changes when a business starts scaling properly, and how to build a company that runs without you. Damon, welcome to Millennial Masters. Where are you joining us from today?

I'm from Austin, Texas, here in the United States.

So we're back into America. Let's get straight into it because, Damon, for anybody who's new to you, What do you actually do and what sort of businesses do you usually drop into?

So my background is over 20 years as an entrepreneur and starting, failing, licensing, and exiting multiple companies. And so obviously that takes a lot of time and bruises along the way to figure things out. My current business, Modern Operators, is really built to help small and medium-sized businesses grow with the learnings that we've developed so they don't have to repeat a lot of the same problems. So we like to say that really operations is where we focus and operations is the new growth engine in this new age that we're in with AI.

The bruises sound all too familiar, Damon. So let's go into that actually. Take, take me back. What was the first business where you started getting obsessed with operations and execution and not just ideas?

Yeah, so for me, I used to work in corporate America as a consultant on professional services and remember getting fired from one one of my jobs because I was the guy that asked too many questions. Why are we doing it this way? This doesn't make sense. I'm in my early 20s. I knew it all at the time. And so I, that was kind of the impetus to move on, if you will, to starting my own business. I had started a business that my first business was actually founded on 9/11, believe it or not. Finally, my incorporation paperwork with the Secretary of State's office that morning, and then getting into the office and obviously learning what had happened. Along the way, really the first business that I moved out into full-time was as as a real estate developer and a real estate investor. And I thought that I knew everything that would be necessary to run a business. Man, was I ever wrong. So obviously running a business requires a lot of skill sets, right? In a lot of different areas. And so for me, I, like a lot of entrepreneurs when they're first starting out, kind of plugged into the areas that I was skilled at and things that were comfortable, but pushed off the things that were not, was not comfortable, right? Things that needed to be done were very important, but didn't focus on those things. So some of your audience can relate, the early days where founders are infatuated with the fonts on the website and the logo and all of that stuff. That'll kill you, right? It's not that. So it was kind of my first foray, if you will.

And how did that go, your real estate business? A lot of people have said naivety is a superpower in business, especially at the beginning when you don't know what's going to be coming after you and you do all the stuff that you like and then you run into having to do the stuff that you don't like. Sometimes you postpone it. Sometimes it's inevitable, you have to do it. How did that work out for you?

Yeah, I'd like to tell you that, man, from the very beginning I was incredibly successful and just continued to be successful all along the way, but that is not the truth. For me, the first 2 years were absolutely brutal. My income took a haircut is a thin way of saying it. I took a massive pay cut in terms of, and obviously medical benefits that go along with working with a company. And it got pretty tough being the guy that's doing marketing and negotiating deals and getting new buyers and projects lined up and getting crews lined up and finding money and buying materials and all of that stuff. It was kind of feast or famine. I didn't know how to create a pipeline or a sustainable business. A lot of business owners will kind of be in this feast or famine mode. So we, sometimes things are working and sometimes they're not, and it's not stable. That was certainly the case for me in my first couple of businesses. And I'll be truthful with you. I can remember times when things got so bad, like I was working what I thought was so hard in various areas and not having things work that sometimes I would just leave the house and go sleep in my car, like just to kind of, you know, mentally check out and get away. To be honest, it was tough, you know, but lots of learning. I think we all approach business from different angles. So some of us are really good at talking with people. Some of us are not. Some of us are You know, we, we're comfortable in certain ways, but not in others. Maybe we're comfortable talking with people, but not with money. Really, as a business owner though, you've gotta learn how to be comfortable in a lot of different areas. And so that's the, the way the journey sort of unfolded, if you will, for me. Obviously stuck in the game and just continued to take the bruises and the battering, but learning over time, you know, getting just better and better and better at various areas. And the thing I like to say too is that, You know, business is a reflection of who we are on the inside. It's an extension of us. And so how we think about ourselves, what we feel we're worthy of and capable of accomplishing, what we're comfortable doing, not comfortable doing, our habits, our subconscious programming, all of that plays a major role then in what we create again outside of us.

And what were you not comfortable doing in your business?

So for me, I was not comfortable really talking with people and letting go of what I thought should be and embracing what the market was telling me. And this didn't just happen from the first business or the second business. This is something that I wasn't even aware of for a long time until eventually seeing this pattern, right? There's a, there's a pattern that's playing out. And obviously to see those patterns, we've got to be able to take a step back and ask difficult questions like, What's working for me over the last quarter or the last year and what's not working for me? Where am I spending a lot of time, but I'm not seeing results. I'm not seeing success. So it was through that kind of self-reflection, which has been a major part of my journey for 20+ years of uncovering, wow, I have a fixed idea of what should happen and what the market should want, but that's not always what the market really does want. So letting go of those expectations and being very open and adaptable to what people are saying, what your prospects are saying, you know, what, what my clients were saying, and then moving in that direction.

So drop me into your world then when you realized you were firefighting in your own business. What was the first architect move you made in order to turn things around?

Yeah, so for me, I have a storied journey for 20 years and a lot of different businesses now from real estate to private lending to SaaS and e-commerce. To training and coaching. I ended up taking, I would say, kind of the long path, but I'm very, I'm driven by novelty and driven by change, driven by growth, et cetera. And it was really for me starting to partner with others in business and learning what I was really gifted at and partnering with others that were very gifted in things that I was not gifted at. So that was another unlock, if you will, for me.

So finding people with adjacent skill sets that you didn't have in order to complement what you were doing.

Yeah. Yeah. So another, another factor that I think is very, very important is the idea of to know thyself, right? I mean, it was written over the Temple of Delphi thousands of years ago, and it is so true. The idea of to know what you're really good at and what you're not good at, to know what you really, really want to do and what you really, really don't want to do. If you're the John Wayne of your business that is doing everything, then that's great, but you've got to really be willing to wear a lot of hats and do a lot of things. And that in and of itself can lead to getting overwhelmed and getting stuck in the business, right? Where the business is no longer capable capable of growing. And we can certainly talk more about that. But this, um, yeah, this idea of knowing that stuff. So for me, I really began to learn that I'm not really the phase 0 to 1 guy. I'm not, I'm not really gifted at the product market fit stage. My real world-class expertise and skillset is in scaling companies. So once a company has got product market fit, they've got some customers, et cetera. How do we take that company from $1 million to $10 million or $10 million to $50 million? That's what I really, really enjoy. And so as a, you know, everybody's different, right? Some people really enjoy marketing. Some people really enjoy negotiating. Some people really enjoy the design and development of products. And so I would encourage, that's a big part is figuring out what that is. I oftentimes say do fewer things more often and get better at them, right? So when you look at the real geniuses in business from Jobs to Warren Buffett to several others, they didn't do everything. They got, they got really, really defined and good in certain areas. And then they became experts and then they became world-class, right? And that is really, I think, the journey, not only to success in business, but also to happiness as well.

So you would say that you enjoyed more being in what would be a proven business model and scaling that and expanding it than building something from scratch up until a certain point.

Yeah, for me, that's, that's where I play best. Because in the, in the first model, it's sort of phase 0 to phase 1. You're really just having lots of conversations, letting go of what you think, just figuring out what do people want and being open to creating things that you may not be passionate about, but that the marketplace is telling you like, this is what I'll pay for.

Right.

For me though, I like efficiency. I like optimization. I like dialing, and I'm actually kind of quite lazy. So I do like to build businesses so that I am extracting myself more and more and more and more to the point where I'm no longer needed in the business, but the business is fully dialed in. It works very well, low risk. The brand is well known. Customers love us, right? But it takes time to obviously get there.

So what would you say is the point where a founder needs to start delegating and moving away from being in control of every aspect of the business to putting tasks aside from different people and in a way letting go of total control and relying on others. Because in my experience, and from what I heard from many others, that is one of the trickiest parts in transitioning from a startup to a scaling business.

Yeah, you're exactly right. It is a very difficult part or transition, I call it, for most. To talk first about what's the impetus or the drive that causes that to happen, I find that it's generally two things. Either A, a business owner gets to the point of such overwhelm that they decide, I just can't do this anymore. I'm not willing to work 80, 90 hours a week anymore. I'm not willing to put my spouse through this anymore. So I've got to figure out how to change. In order to make this transition. Second is the business owner that from the beginning is building the business as an asset. They're building the business to sell. They're not building the business as a means of just providing revenue. And that's a completely different mindset. If from the very beginning or somewhat near the beginning, you're, you're looking at building the business so that it runs without you. You're going to be making different decisions along the way, right? But let's talk about this transition for a moment. So it turns out this transition is really, really difficult. And I believe I've uncovered why that is. So as founders, we are very good at what? Identifying an opportunity or a big problem, rolling up our sleeves, going to work, figuring that thing out, and then leveraging feedback from the marketplace, from our prospects, our customers, vendors, all of that. And then tightening up what we're accomplishing, where we're going, what the problem is, and then going back to work again. Right? And so that mode that got us from zero to phase one or whatever, it's very, very important. It turns out then that becomes the greatest hindrance in transitioning the business to the next level because now the expectation is, well, my staff is not doing things the way that I would do them. Right? Or I bring somebody in.

And initially they won't, will they? Until how do you get them to do things exactly the way you want them to, or you expect them to? And I'm sure you'll say processes, but implementing those processes can be just as tricky, right?

So, it turns out it's not always, it's not only processes. So, and I'm gonna key in on a word that you mentioned and you said exactly. So, This is how a lot of business owners think. I need to get my staff to exactly do the things the way that I would do them, right? And ultimately, what's a business owner looking for? A founder, they're looking for confidence. I need confidence that things are going to happen the way that I would want them to happen, right? So I don't care. Anyway, if we unpack this a little bit, first, there's a mindset component. Owners and business owners, founders, entrepreneurs, there's a mindset piece that has to shift from I am the day-to-day guy. I am the firefighter. I'm the glue that holds my business together. You have to get away from that to, I am the leader of my business, right? I am the orchestrator of my business. I am the architect of my business. Completely different mindset. Second, we have to start training our staff on the information that's solidly in your head that nobody else knows about, right? Which is Where's the business going? Where do you want the business to be in 2 years, 3 years, 5 years? What is the, what's the real value of the business? Who do you serve? What's your ICP? Why do you do what you do, right? All of those factors go into helping staff to understand why they're there. Why do they do what they do, right? Why should they show up and write your marketing copy or make this phone call or do whatever? And most business owners don't share that. Another aspect is that we want to start looking at our staff as having some ownership in the outcome of the business, not just performing transactions for us. And again, completely different mindset change. Now, I don't mean necessarily ownership and equity, could be for people you want to go that route. But really what I'm speaking about is if you think about it, we're all in this together in a business, right? So imagine that we're leaving one shore.

Not everybody has as much skin in the game, but yes.

Not everybody has as much skin in the game, but I would argue that they actually have more skin in the game than they may realize. And so imagine we're all getting into a ship and we're traveling across the ocean from one continent to the other. And you have some folks that are working down in the engine room, some in hospitality, some in communication, some making sure everybody's fed and has water and all that. Well, if something goes wrong, let's just pick on the engine room for a moment. If something goes wrong and the engine stops working, does that just affect the engine room? No, it turns out it affects all of us, right? And so, as we start to kind of transition that mindset that, hey, we all are participating together on this journey, we all own outcomes, and what you do is important, you're actually going to help to unlock more productivity from your staff as a result. But the final piece is one that is very difficult for founders, and that is being okay turning over something and getting 60% of the results and then working with that staff member or, or helping that process to improve so that it goes now to 70% of results or 75 or 80, 90, 95% results. Most business owners can't do that, right? They, they want 95% results or 100% results. So they step in. It's not being done the way they want. They step back in, right? Take it back over again. And that's the wrong— you're training your staff in the wrong way. You're training them like, listen, if it just doesn't work, I'm just going to hand it back up to the owner and he'll figure it out, right? That's what you're training them to do. So ultimately, a founder has got to be comfortable with almost going left in order to go right. They've got to be comfortable letting things go and letting things break along the way and some failures, et cetera, to open the door for scaling up, leveraging out, going to the next level.

And what's the mindset around that? Because things in a growing business can be very tight. You wouldn't have, say, for example, the financial security of 6 months in advance or even 3 months in advance in order, say, to, to run a business, to allow a 60% operating capacity up until somebody gets up to speed with how you would expect things to be. Don, how do you tackle that middle ground there, transition stage?

Yeah, it's a great question. And it really does depend on what stage the business is at, right? So a business owner is gonna treat that question and answer it slightly differently if the business is doing $300,000, half a million, $700,000 annual revenue, and, you know, margins are maybe not very good, blah, blah, blah. Uh, that question's gonna be different if the business owner's doing $3, $4, $5 million, $10 million, $50 million a year because What do we have different resources, right? And so I think part of your question is, is how do we maybe from an early standpoint as well as from a mid standpoint, how do we look at the decision of deploying resources in order to buy back our time so that we can continue to focus on scale and grow, growing the business? And the answer I would coach there is that we want to look at the areas that we are the easiest, the lowest dollar, the areas with the lowest impact. There's several ways to look at this and starting to find outside help to come in, in those areas. Now, so an example would be bookkeeping, right? Most founders should absolutely not be doing their bookkeeping. Yes, it's going to cost you a little bit more. It might cost you $100 a month, $300 a month, $500 a month, depends on where you're at, plus. But it's very worth it to have a bookkeeper who is managing the books and providing the right financial reports back to you. View every single month, right? So you have reports that show up on the 7th or the 8th or the 10th of the month and you, you can clearly look back and see how the business is doing. That is an unlock in and of itself. So you want to think about those areas where, again, you don't have the expertise. You could pay somebody $10 or $15 or $20 an hour to do things that you really should be focusing on under $150, $200, $500, $1,000, $2,000 an hour, as well as the areas that you're just you don't want to do. So, I'll give you an example. I don't like taxes and I, you know, I could have the greatest tax knowledge in the world about the business, but I'm just not going to do it because I don't like it. So, I'm going to hire people to do that. But that's the answer. To me, it comes down to resources. And so, as the business is doing more and more, now we have the ability to bring on better and better resources. So, one of the questions too that I think a lot of business owners and founders get caught up in is, do I hire somebody that's maybe outsourced, foreign, overseas, lower dollar versus focusing on maybe bringing in higher-level talent locally, right?

So say an external contractor, whether it's local or international versus a staff member.

That as well as maybe do you hire somebody for, you know, $6, $7, $8, $10 an hour to do work versus hiring somebody, you know, in the UK, France, United States, et cetera, that's gonna cost more like $20, $25, $30, $40, $50 plus an hour, right? And that's a decision point too that you've got to make. Obviously, we get, we get what we pay for. So we, we can get lower level results, which require more time for the founder to come back and, and make things, get things where they need to be, as well as opposed to hiring somebody that is really an expert in that particular area. And so a couple of thoughts there. One is that it's very, very important to put together documentation and expectations no matter who you're working with, right? This is the primary function and purpose of your role. These are the 5, 6, 7 things that your role is— you're responsible for. These are the key competencies that you will know and I will know that you're being successful in your role. So I don't care if it's a part-time contractor. Or you're hiring like a superpower CMO for your business, you always start with a job role. It's got to be very clear, right? And so as the resource, that person begins functioning, executing against that job role, now we can begin to train them so that they get better and better and better at handling more and more and more of the decisions, more of the outcome. And ultimately you have a decision tree. I think this is something that's important for you. As to how do they think, how do they start coming up with their own suggestions, how do they solve their own problems, their own challenges that require less and less of your involvement as the founder.

So besides accounting or bookkeeping, what would be the next steps that a startup moving into a scaling business and a leader there would have to let go of, you think?

That depends on the type of business, right? If it's an e-commerce business or if it's a brick-and-mortar business, the answer is going to be slightly different. I would encourage folks to think about what is more transactional, uh, that doesn't have big impacts with the business. So transactional things may be more like, again, we mentioned, uh, bookkeeping. We mentioned research, or, you know, maybe research would be an area. Managing like a CRM system, uh, small updates and developments with AI to tie tools together, starting to be able to interface with your customers or your prospects to gather and talk and handle support, of course. The areas that I would encourage business owners to hold on to a little bit longer, of course, are the product direction. That's very important. And the brand. So putting in time and effort into the brand as well as the, as the higher level marketing. Certainly then you can get to a point where you've got a junior level marketer or even a senior level marketer that's coming alongside, that's executing more of the strategy. There's also a couple of ways to think about this too. And that is when you hire people, do you hire them? You have two paths. One, to, you're going to build the architecture and hand to them to execute and then train them on how you want them to execute, or you're going to hire them to develop that side of the business. So as an example, a sales manager, um, you're going to put together.

Yeah, that, that's one of the key parts as well, because that's so dependent on revenue. When you can hire somebody in the sales side, things can slip momentarily rather than go straight up. And what do you do then?

So do you want to, I think for most early stage businesses, you're the one that's architecting and then you're plugging someone in to execute against that architecture. But again, you're training them over time how to function best. How can they be the best they can be in that particular role? For others, resource-wise, if you're a little further along, you may decide that, look, I'm not a sales expert, as an example. So you may decide I'm going to hire somebody to actually develop the sales strategy for our business, right? And that's, that's different. Now you're looking to them to develop the strategy, develop the tools, the workflows, et cetera. Now you still need to have oversight into what they're doing. You still have to have knowledge of every area to understand if that that area is being managed well. And like on the development side, this can be very difficult because oftentimes founders don't have development experience. So how do you know that you're bringing somebody in who can do technical things and it's being done correctly? So suggestion there would be to tap into your network, have a friend, have somebody else that you know and rely on who you can say, hey, can you come in and kind of just shadow or just take a look at this? And they have the expertise to then tell you this guy's doing exactly what I would do, right? Or this, this woman's doing things exactly like I would do, or no, they're really not. They're really off in the weeds and here's why, right? So you want to be aware of that early on.

And that can be a real trap, for example, for first-time founders who haven't had this experience and say they had the idea for a great product, they developed it, it started growing, and once they started getting other people on board taking different responsibilities in, in the business, they, um, they don't know necessarily whether that's the right direction. So your recommendation for having a professional circle you can control, maybe a mentor, is key to making sure you're on the right track.

Absolutely. It solves a couple problems. We know one we just talked about is making sure you're on track. The second problem it solves is, look, you know, being an owner, a business owner, an entrepreneur, it's a lonely position. It really is, right? I mean, you can't go to your spouse and say, oh my gosh, you know, I'm struggling to make payroll here in 2 weeks, right? After the 37th time—

or tomorrow.

Or tomorrow. Yeah. I don't want to hear this anymore. You can't go to your friends. You can't go to your staff, you know, and talk about some of the gotchas or pain points or challenges because now they start to get really nervous about what they should be looking for another job. So, so it's really important to develop that network and just be regularly meeting with, with others as well.

Yeah. Yeah, because that was gonna be one of my next questions. You, you previously said, and everybody who's been running a business successful or on the way to being successful knows that it's lonely at the top, or as you said, the more successful you become, the lonelier it gets because you don't have who to talk to about these problems, challenges, or understand. Your position. At what point did you realize that, and what did you stop sharing with people and carried alone to start with?

So for me, I am trying to think back of a time in which I tend to be a very open book, and I have had times where I've talked to my staff about things that were concerning, but I learned to package it in a way where I was just asking their opinion. So not raising the alarm bell, for instance, it might be concerning to me, but I don't want to project that it's concerning to them. So that's one suggestion. Just for instance, hey, so I'm seeing, we're kind of seeing a dip here with this. What do you think's causing that? What do you think we should do? What's your recommendation, for instance? Now it might be concerning to me, but I'm not going to project that. I want them to be free to look at it unbiased and come up with a suggestion. I think what people will find too is as you make this transition from working in your business to working on your business, you will start to see a level of freedom open up where your staff is handling things in ways that you didn't, you don't have to anymore. And you have staff that really enjoy their job and they have, you have staff that have really taken over the outcomes of the business and you have staff that want to solve problems and challenges and they're not spooked by it. Because they've, they've got a track record of handling things in the past that you've given them, right? And they, they know they have you as a resource if they're not able to figure it out. So you will, if you keep along that path of transition, you will have a staff that really functions well in a climate that is, you know, up and down, unpredictable, right? The world that we live in, things are always changing, something new is happening. It's important to get your staff to the place where they can handle those things. And that happens because you You've supported them, you've guided them, you've mentored them. You're more and more relying on their input and their suggestions. And if they happen to be off, then you're talking with them about it. Well, instead of doing this, let's, let's try this first and see how it works out. Right.

So once you start training your staff and bringing them up to speed into your scale-up mode, you also said in, on your LinkedIn, I was scanning through your profile the other day. You said that founders lose control because they start lacking visibility in their own business when you delegate Maybe not necessarily too much, but a lot of the day-to-day work when you work in the business. So when you say visibility, what do you mean in practice?

Yeah, great point. So losing visibility practically means that you start losing visibility into, for instance, the marketing pipeline. You start losing visibility into how much you're spending on your marketing channels, your cost of marketing, cost of acquisition, right? A lot of those metrics that we, that are very important. We start losing the visibility into that because we just blindly handed that off to someone else to manage. Or we're losing visibility into the fact that the number of prospects that are coming to us are now declining, which is not a good sign, right? Or maybe our conversion from prospect to customer is declining. Or your lead time in getting product to send over if you're an e-commerce company is doubled or tripled. Right? All of those things can take a business under if you don't focus on them early enough. So we want to, we want to have access into both lagging indicators, especially in the beginning, but then we want to build those leading indicators as well. And so for us, we, we've developed over time a company operating system that we use for our businesses as well as the businesses that we consult. And one of the components of that is a dashboard for leadership. Imagine a dashboard that now allows you to see everything in one place from, uh, this is the number of customers that we've, we've had. This is the number of, you know, our conversion rates or our marketing pipelines and looking and seeing what our cost of acquisition is. What's our lifetime value, inventory control, all of that. But you really want to have your, your, uh, your, so that you now can make decisions and take action sooner than later, because if we wait too long, then the problem becomes too big and now it could turn into a fire. And I don't like fires anymore. You know, you shouldn't either, by the way. We like to say that, you know, really dialing a business in, business should be boring. Most people don't agree with that, but business really should be boring. And so you want to get it to the place where you have visibility, just like the dashboard in a car, to being alerted when something's happening. So you have plenty of time to pull the car off, get it to a service garage, whatever you need to do in order to get back on the road.

So what sort of indicators would a founder or leader look at daily, weekly, and monthly to, to stay on the pulse of the business? And in that vein as well, is there anything that you see people wasting time measuring the wrong stuff?

Yeah, so a lot to unpack there. The first thing I want to key in on—

it wasn't going to be an easy one, was it?

It was not going to be an easy one. Yeah. Yeah. So definitely there are a series of metrics that a business owner should understand about their business. And let's come back to that here in just a moment. The second piece that I want to drill in a little bit more into is that it is very important that you develop a cadence in your business of looking at analytics. Now that cadence needs to happen in 3 levels. One is on a weekly basis. The second is for most businesses that are in that million to 10, $10 million+ range, it's going to be on a quarterly basis. If your business is really kind of that sub-$1, sub-$2 million, it may be on a monthly basis. So weekly, quarterly, or monthly. And the next one is annually. So we want to think about the ability to take a step back at those regular intervals and just focus on looking at the data. Okay. And then from there, we're going to flip into analysis mode and what do we do with the data? And so as you're, as you're making those, those cadence cycles, you need to get set up in your business and think of it like taking the plane up in the air. So over the quarter, you're taking the plane up at 10,000 feet and looking down over the terrain, right? Then when we do our, our annual review, our annual retreat, we're taking the plane up to 30, 40, 50,000 feet in the air. Much bigger view. All right. From a weekly perspective, you want to be looking at the metrics for your marketing and your conversion and definitely product moving, product service. Those areas are very, very important. If you run an e-commerce company, that's also going to mean inventory control because inventory control has a direct impact on your ability to market. If you are marketing, you know, and spending $200,000 a month in ad spend and you don't have product, you're going to create massive problems with the business. So that that has to be in the mix as well. What can sometimes be in the mix and sometimes not is your customer fulfillment, right? So do we have any angry customers? Yes, no. How many positive reviews did we get? That's an area that I'll put as a nice to have, but the required, the mandatory is how well is our marketing doing and how well is our sales doing? We have got to keep our fingers on the pulse of that every single week.

That's the weekly stuff.

That's the weekly stuff. Yeah. And so you as the founder should be either going through that information by yourself if you don't have somebody else that sort of helps and controls that. Hopefully you've got somebody else on your team. So your marketer, director of marketing, something that you're meeting with on a regular basis to go through those stats. So then it depends on, in terms of marketing, what channel marketing are you doing? Are you doing newsletters? Are you doing YouTube? Are you doing paid ads and media buys? Are you doing email blasts? So whatever channel you're doing, you of course want to look at, you know, what are we spending there? And maybe in terms of time and/or money, but more importantly, what results are we getting back? So this leads in another area, which I don't want to maybe go into too much, but you want to create your marketing around a cycle, right? Where you're looking at the data, making one or two decisions about what's most important to change, putting that change to work, and then giving it time, i.e., in this case, for most of us, about a week, come back, look at the data again, right? So we want to separate the tracking of the data and the analyzing of the data. When we start to move to the quarterly level, now we're starting to look at broader metrics for the business and for staff. We're starting to look at staff health, for instance, and customer health and vendor health, other things besides it's marketing and sales. And then when we get to the annual side, we're now looking at everything because we wanna see full capacity, not only for our business, but we wanna see capacity also with the industry and market that we're in.

And you have a system that, again, you, you wrote about, about stabilizing, optimizing, and scaling. So we, we talked about stabilizing the business and we, we moved into the optimizing part. How do you then start scaling it in terms of, you start looking, you delegate, like you said, you've successfully managed to delegate. You start tracking all these indicators. How do you then start turning the dials up for everything in order to grow?

Yeah, great question.

Because people can easily get complacent about just hitting the target or what they were doing before and stay there when a business really needs to grow.

Yeah. So I want to leave people with a good framework, a good visual in your mind so you can tell where you are in these stages and therefore what you need to focus on. So it turns out there's really 4 stages, uh, had gone into those. So the first stage is stabilizing. Stabilizing just means that we may have some immediate fires or some immediate risks that we have to deal with, right? So You're at risk of losing your merchant account because your chargeback rate went too high, right? And you could get that turned off. And if it's turned off, you can't charge customers, you're out of business, or you're, you're at risk of making payroll or, you know, et cetera, et cetera. So we've got the first phase, which is stabilizing. After that, we go into the second, which is foundation. And it's in the foundation stage, that's when we really start to build and make sure we've SOPs in place, we've got job roles in place, we've got the vision for where the company's going, we've got those, our quarterly cycle, our weekly cycle, our annual cycle. We know where we're going to be at the end of the year. We know where we want to be at the end of the quarter. There's some other components too, but we're laying the first layer of the brick foundation down so that we can all stand on it and we can, we can now feel strong that we can move forward. The third phase is actually optimizing. Optimizing means that we, we now really install the dashboard and we're looking at, okay, for, for my business, what's most important? Is it, is it tracking channel metrics for these channels and CPC and CPA, CTR? There's a whole host of different metrics we could look at. But getting that dashboard in place and knowing your business, knowing what buttons and levers need to be pushed and pulled to affect your business, right? The tail end of optimizing is taking a look now at how your business compares to other businesses in your industry. So for instance, for my business, how much am I spending on marketing as a percentage of total revenue? Well, if I'm spending 70% of my revenue on marketing, and, and that's really way too high, but let's say your industry is at 15%, you've got some changes to make, right, in order to be ready for the final stage. So that's the last part of optimization. The final stage is actually growth. Most businesses are not ready for growth. They think they are there. They think they're growing every day, every week, et cetera.

Or they want it.

Or they want it, but they're not actually ready for it. Growth means that you could deploy more money, more customers, more staff in your business, and it's not going to break, right? It's going to take that load and be able to scale up. You can now go from handling 1,000 customers to 2,000 customers, 5,000 customers, 10,000 customers. You could dump, you know, let's say you've got your marketing dialed into the point now that you're spending $1 and you're getting $2.20 back for, you know, product A and you've got product B, product C. Guess what? Now you want to start deploying as much money as you can into those marketing channels, right? In order to grow the business. Well, if you do that too early, You now flip a problem and create chaos where your customers aren't happy because fulfillment breaks or your staff can't handle it and they're overwhelmed. And then what? The business just goes back to phase 1 again. So we want to have that strong foundation. We want to optimize. And then we want to ask the question, if we were to dump in money, customers, or staff, et cetera, would anything break? And if the answer is no, Nope, we're, we're good. Now's the time to really start focusing on that. Now, the thing I'll mention too is that today around AI, everything is moving much faster. So we want to be able to move through those phases even faster as well. And we actually use AI now to be able to do that much quicker than we were able to 5, 10, 15, 20 years ago.

So where does AI come into all of this? Besides, say, people would know it can help with, say, writing code quicker or creating marketing materials quicker or blog posts, you name it. But in, in the founder-led business and in terms of decision-making and managing people, where does it come in from your experience?

Well, unfortunately, where it's coming in today is most business owners are looking at it as another tool to plug into their business. Just, we've gotten this, developed this mindset over time that I need a printer or a vendor that plugs into my business, where I need a CRM system to plug into my business, or I now sort of have ChatGPT or Claude or Perplexity or whatever to plug into my business. But I would actually encourage you to think completely differently, right? And this is the cool thing about AI. AI is forcing us to think in completely different ways than we used to. And so the change is to flip this around completely where your business now is the context that allows AI to thrive in. Okay. So what I mean by that is you want to get to the place where your business is a package of assets and SOPs and, and this is how we make business. This is how we make money. This is who we are. This is what we do, et cetera. And now layer AI into that so that AI can participate and play pay just in the same way that a staff member would in your business. So what's an example of that? Well, for us, we've been developing an operating system for businesses. Uh, it's built on Notion. We've been doing that now for 7 years. We use that for multiple businesses that we've owned and exited. And this is what can enable you to go from phase 0 to phase 3 or phase 5 in a very short period of time. So what goes into this operating system? What goes in is the vision for the company, where it's going. What goes into this operating system is where do we want to be at the end of the year? What goes in this operating system is how do we do business? What goes in this operating system is who does what? Who owns what? What goes into this operating system is what's the brand voice of the company? And if there's one or two people in the company, like the founder and maybe the partner or co-founder that do social media? What's their brand voice? What, what product do we sell or service do we sell? How well is it selling? Like, you know, how well is our marketing doing? How well are our sales doing? What do our customers say? What do our prospects say? And all of that is in a hub and spoke model where operations is now the intelligent engine behind it. Now your staff is very much into alignment with, with where we're going and they have everything they need. We're now, now all row, we're all rowing in the same direction. But it gets even better. Now we can layer AI on top of that, and AI can now start to perform a range of tasks on its own. And it can also be a driver for staff members to unlock more productivity, right? Why? Because the AI understands your business now. It has what we call context, and everything that we're going to be starting to hear going forward in terms of business building is built around alignment It's built around context, et cetera.

So I'm wondering from your experience and this operating system, everything that I've tried myself with AI and what I've spoken to many other founders on Millennial Masters, you can't really let AI run on its own. It needs supervision. It's still not good enough at the moment, regardless of how much context you give it. Somebody has to take personal responsibility for, for the output and what it does. Does in whatever shape or form. In your experience, are there any particular parts that you can use its output as is, or it's good enough with minimal supervision?

So, I would actually push back, and I would say that even today, AI can generate results that are check the box, great, move on right now. And the reason I can say that is because, and the reason why I think most business owners and others are not getting the results that they want is because you're not training that AI to do what you want it to do and to give you the output that you really want. So AI is like a, a staff member, right? And it can do anything, right? It's every staff member. So it can do finances, you know, it can do marketing, it can do you know, it can have a conversation with you, negotiate stuff. But you've got to be really good at training it around who it is, that's the role, what context you're giving it, and what do you specifically want it to go do for you. Okay. And making that leap, that transition will start to drive much better results, right? And now your staff is able to use AI to get a task done at 85, 90, 95% complete, and then you're right, maybe they come along for a refinement or a tweak or a review. Yep, looks good. But even then, we've saved an enormous amount of time, which now allows your staff to start thinking and, and acting more strategically and not having to spend all their time tactically, right? Your staff can actually perform more for you. They want to do more, but oftentimes they're—

I take that point. What I wanted to ask you about is I was reading recently about not all the staff being on board with AI and delegating some of these productivity improvements. And for example, I had one business owner, she has a copywriting agency, and she was explaining how in the end her own prompts and the way she was using AI was producing better quality work than the other contractors she had for the business who were using AI very poorly and not producing results as good. So in the end, she basically ended up getting rid of all her staff in favor of AI. So there are cases where the staff are not as efficient at using AI as one would expect, which seems to be the best-case scenario that you're presenting?

So that's one way to look at it, but I think it's the wrong way to approach the situation. I think a lot of what we're seeing in the market right now is, you know, you're seeing CEOs and heads of companies and all these people saying, wow, badge of honor. I just let go of 60% of my company and now it all runs through AI. You know, how great am I? That is the wrong way to think about about it. The better way to think about it is, how can I train my staff to be even better at what they do using AI, right? I don't view that it's healthy for our world to just move to AI and fire everybody. If we don't have a job, nobody's eating, nobody's buying product, et cetera. So, but the truth is, think about how can you determine of the people on your team who's worth investing meaning that they're open and embracing AI, right? They do good work. They're a problem solver. They're outcome-focused, right? They're loyal, ethical. They've got good standards, good character, right? If they check those boxes, you need to keep those people and instead build into them, help them to become better at their job, help them to go through a prompt engineering course, help them to unlock and understand how they can even get better and better results. And now, that they feel a level of ownership and outcome in what they do, they're going to see an unlock that's going to then translate to your business and having more success than you could possibly imagine.

So even if you don't see the initiative in them, investing in your best staff in order for them to make better use of the AI tools that you are leveraging in the business is crucial for for the future and the future growth of your business.

Yeah, they may not be taking the initiative themselves only because they may not understand what's possible. If you share with them what's possible and they're still not taking the initiative and, you know, you meet with them once a week or whatever and they're still not, then yes, they're really not going to be the right fit. And ultimately you need to transition that person out. So once people become aware of what's possible for themselves, their job, their productivity, you need to check the box that they have good character, right? That they are open and growth-minded and learning, they want to learn new things and they want to get better, then yeah, you need to invest in those people. Even for my own business, I know really, if you think about it, if we were to ask a lot of business owners who are very successful, what's the biggest limiting factor? It's they have tons of ideas, but they don't have the resources to go put those ideas to work. Right? Even in my own business, I mean, tons of ideas. The problem for me is that I don't have enough people on staff to know enough about how to use AI in order to unlock all those ideas, right? Ideas that we could go test for new products, new services, new marketing methods, et cetera. And that's always going to be the case. But if we never build into those people, it's almost like if we never plant the tree, then we never have the shade, right? So So, when you start to identify those folks and build into them, your business will reap the rewards over time.

Well, I think this is a very interesting final point that we can use to wrap up our conversation, Damon. You need to invest in your best people, even if they are not necessarily reluctant, but not up to speed with what's the latest in AI, as long as they are willing and happy to learn. But if there's going to be one takeaway from that is that people won't do it necessarily themselves. And the whole embracing of AI and investing in AI still needs to come from the top, from the founder or the leader of the business.

Yeah. Imagine Business A is one where people don't feel a level of ownership, and they feel scared about what's coming with AI. And there's no communication from the top. They have no understanding of where the business is going, where it's headed, et cetera. And so to them, there's a lot of fear associated with that, right? And now they're not really sure, so they don't really do much with the business and they're maybe looking somewhere else for another job. Business B is a founder who is like, hey guys, like this is where we want to be in a year or 2 years or 3 years. And it's going to take all of us to get there. And I want to hear from you guys. Where do you think we, what do we think we need to do to, in order to get there? And in building a culture of growth-mindedness, building a culture of of, you know, where people really want to roll up their sleeves and dive in, that business will unlock in serious ways. And especially now when you combine AI with it.

And that's really something that possibly a lot of people tuning into this episode will have to think about in the coming weeks and months as AI and its capabilities are progressing pretty quickly be, and especially now in 2026. That's all we have time for today, I'm afraid, Damon, but thank you so much for coming on and sharing some of your wisdom and systems for people to be able to push and grow their businesses.

Been great, Daniel. I appreciate you having me on your show.

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