Episode 18 - LaSean Smith, CAGR Investments

So the big question is this. How are entrepreneurs who aren't scaling tech startups or building lifestyle businesses from scratch doing it? How do acquisition entrepreneurs find businesses, buy them, and then create generational wealth while taking on less risk? Welcome to Surge funded the Entrepreneurship Through Acquisition podcast. I'm your host Nick Law, and our guest today is lashawn Smith. Lashawn is the founder of the investment firm CAGR Investments, the namesake of the firm, Compound Annual Growth Rate, basically serves as the North Star for the firm's strategy, and they have now invested in over 12 companies, including a product studio, a financial wellness software for students, a software platform for college athletes to monetize their name, image and likeness, which is definitely a huge area these days if you're following college sports at all. You know, it's really changing the game a lot and really interesting times we're in, but definitely an exciting business to be in nonetheless. And LeSean himself has a bachelor's in Media and Computer Science from Southern Illinois University, a master's at Arizona State, an MBA from Georgetown, a screenwriting degree from ucla, and he has worked for or had clients including Electronic Art, Sony T Mobile, Target, Tom's Shoes, Warner Brothers Studios, Amazon, and he's currently a Google. He also has several patents in artificial intelligence and many other areas. And I didn't even mention that he's also a veteran of the US Navy. So clearly someone who has done a lot, has a diverse skill set, worked with a lot of really interesting entrepreneurs. As an investor, he's deployed over $450 million in capital across corporate R and D investments in addition to his own investments. And beyond all that, he's also written a really interesting book that I recommended and I've put a link to in the description. It's titled Values Based Business Design and I've read a lot of business books. I'm sure if you're listening to this, you probably have as well. After a while, a lot of them get pretty repetitive and they don't have a lot of new information in them or there might be one or two things you learn. But I really like this book because I thought that it had a lot of really interesting anecdotes and it also had a lot of new practical ways to think about things. And getting to this conversation. I think before we get into more of the work that you do now, one thing that I really enjoyed in the book is that you gave a lot of stories from your childhood when you had different entrepreneurial experiments and went actually really deep into them and lessons that you learned. I think a lot of people have stories, stories about childhood entrepreneurial dreams and goals, but yours were actually much more tangible and the lessons were even valuable for adults to read. So I think that maybe a good place to start would be just to learn a little bit more about your early influences and what it was that made you so interested in entrepreneurship, even from a very young age.

Yeah. Well, first off, Nick, thanks for the invite. Great to see you again. And you know, when you kind of play back all the hits there, I think one of the things that's important to both remind myself, but maybe some of the folks listening as well. The longer you stay in the game, the more naturally you're going to find some moments that you can reflect to and point to a success. But many of those experiences either didn't go well. They had some real struggle. Some of the products that I may have shipped at some of those stops flopped. And so there's all sorts of ways we can take this conversation, but I think it's important to remind us if you just stay in the game, you will win and along the way you're not going to have a perfect record. But back to your question kicking off for me, I have always been drawn to this idea. What I now articulate is financial independence through business ownership. Now, as a kid, I couldn't tell you those words. What I could tell you is if I bought this candy or some type of product from store, I could buy for a dollar, sell for two. And the idea that as a facilitator, I hadn't made anything. And now by figuring out marketing, distribution, these types of little rudimentary kind of baby versions of those skills, when I was a child, I could then go get, get cash and I could use that cash to buy a new computer, buy a video camera. I could do all of these things. And so for me, everything is rooted in the freedom and autonomy that entrepreneurship gives us. It's also why I'm a big proponent of bootstrap businesses or finding a path to raising capital that does not force you on an unnatural scaling clock. We've seen this as an industry across VC and public markets over the last 10, 15 years. When money is cheap, it's actually a great strategy to bet on as many smart, talented founders as possible and then just kind of use portfolio math to net out the ones that will become the superstars. However, when you're deploying your own capital or you are trying to have a more predictable path to cash flow, because that's how you get to financial Independence. And we can talk about that as well. I just believe that there's stops along the way. There's a great Charlie Munger story that I'll kick us off with is he says, psychologically, you got to get to that first hundred thousand dollars. I'm using USD here for simplicity. But his point was you got to have enough cash in the bank so you're not coming from a constant state of scarcity and distress. And I've kind of doubled that to 200 grand today with inflation. But generally I like to look at money as a tool. And if you can first get out of debt, if you have any, get to that first $200,000 in cash, then get to that first $2 million in cash. And this is like after tax, they need a lot more than those numbers, depending on where and how you're taxed. But the payoff there is, once you get to some of those milestones, it's a lot easier to look for a moonshot or tackle something that's going to take a very long time to come to fruition. Because ultimately, you know, as I said at the onset, the name of the game is staying in the game. And if you can make sure your personal life is covered, at least financially, that's gonna be a lot easier. So anyway, that's, I think, a good start off. And for me, getting back to Kid in a Candy Store, what happened? Just to tell you part of that story, I was with my mom and she took a friend to go to, I don't know if it was like a Sam's Club or Costco. These are stores here in the US that sell products in bulk. But it was some type of place that was kind of like wholesale for retailers. So you would buy like big candy bars and like these huge boxes. And I was just a nosy kid. So I think that's lesson one, stay curious. And I said, hey, can I go in there? And I saw the prices and I was like, wow. You know, I was trying to do my little kid math. I take the whole box and like divided by 12 or however many in there. I was like, this is like half the price of what it is in the grocery store. And I always, I was obsessed and so begged my mom to, you know, get back there another time. And I don't, I don't remember what I the exact bill, but it was around 20 bucks. And I bought 20 bucks and went to the playground and flipped that and brought back 40. And I was like, oh my goodness. And I just got into this mindset, you know, buy for one, sell for two, and margins aren't going to always be 50%. But it's a great lesson as a kid to see, oh, if you can add value with convenience or selection or other ways that you help people solve their problems or feed to their desires, you create a money making machine. And that was like magic to me. And one of the things I learned quickly in that experience was, and this I kind of stumbled on, this was I wasn't the customer. And I thought early on, because I liked a certain type of candy, everyone else would like that candy. And there was a particular type of candy here called a chico stick, and it's like a peanut butter type candy. And I love these things. I'm like, everybody must love chico sticks. And I'm just going to keep selling chico sticks. And after a while, people were like, why do you always bring these? Like, we don't even really like these. We bought them because, like, this is the only thing we can buy when we're out here playing. And I said, huh? It had never dawned on me, you know, as a little, little kid, what I like is not what other people like. And so what I ended up doing is testing and bringing other things. And it's not so much the customers always right, but it is creating a process to listen to that customer signal and say, hey, if I don't listen and give them what they want, they won't stick around as customers. So I learned a lot during those really formative years. I didn't know the vocabulary or the terms or how to describe any of this stuff, but it really was a great kickoff for me to see the potential and power of entrepreneurship.

Totally. I think if you take a look at the book, there are just so many great lessons even from a young age in terms of things like loss leaders or product market fit and all that that you discover just from selling candy. I think it's a little bit more than the typical lemonade stand story where, oh, I learned to reduce prices and get more customers or something like that. It was actually more in depth than real business lessons, which I really appreciated. And through your career, you've had a lot of success both in entrepreneurship and in the corporate world as well. And I was wondering if you have any thoughts in terms of what startups or small businesses could learn from corporate practices and also the reverse. I think a lot of times we hear about how big corporate needs to be more nimble and lean and move fast like startups do and need to learn from them. But I think it's not as talked about that startups also have something to learn from corporates. And so I was wondering if you could maybe talk about both sides of that equation and what you think that startups could learn from the corporate world to improve their operations.

Yeah, it's a great question to figure out. What can we learn from both sides? I've seen folks articulate some version of the grass is greener. Oh, I wish I was in some venture backed startup so I had the capital. I wish I was in some small business so I wasn't, you know, controlled by all these stakeholders. I wish, doesn't matter where you go, big company, little company, whatever your capital stack is. You know, I've seen folks look at the other side and I think it's quite simple on the corporate side and I'm going to put venture backed startups in the same bucket from a capital side. I like to remind anybody who has been in those roles, myself included, that you kind of, you know, it's really hard to fail, right? You have to do something malicious almost to fail. And so you can't stroke your ego and say look at me, I'm so great. You know, if someone invests in you at a pre seed seed, series A B round or you get a fancy job at some big tech company, what is failing? Not this, the product doesn't work or you go out of business, you run out of Runway, all of those things can be looked at as setbacks or what have you. But the way the ecosystem moves is those reps become valuable and some other company is just going to give you another chance. And so that doesn't mean you shouldn't have the right diligence and the right attitude and try to win and be the best. But it's a good reminder when I see folks who come from those situations and then they maybe try to start something on their own that's bootstrapped and they're like, oh, this feels different. Because the accountability and the consequence to me is much more extreme. There's no place to hide. And I really love the feeling of I'm on the hook, if this goes wrong, it's on me. But if this goes right, you know, it's not because of all the brand equity in this logo or the sales infrastructure that this company already had. And so we just have to, I think, be honest when we show up in a system and not take too much credit for what we're doing at the same time. Those can be great, you know, kind of lessons and places to acquire skills. So that's the backstory to your question. I would say, number one on the corporate side, having a deeply, deeply ingrained document culture. This is something I've seen run at multiple places. Probably best run at Amazon in my time there. That's a company here in the States that focuses on E commerce. And what I believe that forces folks to do is to have clarity of thought. So you and I are just kind of hanging out, having a conversation. We didn't go write down a whole document and say, you know, this is the only thing we're allowed to talk about. I'm not quietly reading all of your notes, you're quietly reading my comments. Like, you know, that's a very different type of energy. We're just humans having a convo. However, when you need a repeatable process, the time for clarity of thought and to go think through the points you want to make are not at the beginning of the meeting. You need to go do that the week before. You need to write a doc, you need to revise that doc, you need to share that doc in advance. And so the ability to use clarity of thought, especially in document writing, I think is a huge tool. Amazon goes as far as you will almost never see a PowerPoint, you know, maybe in a team building exercise or something like that. But if you're working on the actual product, pretty much everything is documents and it makes it so that you cannot cheat. And so even if you're a solopreneur and you are thinking, well, I don't have anybody to present to, forcing yourself to write it down, I think is very beneficial. And I love this concept of the personal board of directors. And this is where you have various folks to support you, to open doors, to set accountability standards. And on that last one on accountability, finding someone who's up here who is not part of your business to still read the documents you're writing, ask questions, shoot holes, basically attack the things that you're writing and you not feel triggered or taken aback, like, oh, why are you being so mean? Like, you want to feed on all of that. Because the goal is to get better, not to be perceived as better. And so document first writing cultures, I think are a huge lesson that smaller organizations can use. And when done properly, they're really effective on async work environments. And so asynchronous working is where you might have people working on different schedules or what have you. And it's super powerful when you onboard a new team member. So let's say somebody comes in four Months later. Number one, even if you record all the meetings, they're not going to listen to all those meetings, but they're not going to have all the context on those conversations. But if you point them to a folder and say, hey, it's going to take you a few days, but go and read these 18 documents, that's going to supercharge their readiness. And so I love, love, love this particular point of view and I think it's one of the biggest things to anchor on flipping to the other side. You know, what can maybe larger companies or more mature companies or folks who are maybe bot down bureaucracy. What can they learn from smaller companies or fast moving startups? I think two things, Number one is don't just give it lip service, but truly, truly, truly do iteration based product development. And so you know, it doesn't matter if you run a bakery or you run a software company, figure out what the customer wants, go run experiments, go test the experiment, go work that into your product or service offering. Go back and talk to the customer either manually or through any type of tools you might be using to measure their feedback at scale and just turn that into a flywheel. That is something that people intuitively understand, but I don't believe they deeply understand how fast great startups are doing this. So for instance, for me, if I have a small team where we're going to tackle some software product, we ship every week, period. And so every Thursday a build goes out. And what a build is is kind of like you take all the code that's been written, there's testing, there's other things that have to go into it and you release it to whoever your customers are. And many times back in the old days, software would be more like a video game. You'd go work for weeks or months and then you do a small little audience to test with. And you'd have all these struggles on how to get feedback because you didn't want to let people know, like maybe this isn't as good as it should be or it could be. And so there's almost this insecurity baked into your business process. So you don't want to show it until it's perfect. But the problem is you're just going to keep getting it wrong if you don't talk to the people who are going to give you money. And so this idea that you're going to move really quickly is something I don't think folks understand what the bar is. They understand this framework. No one needs to be listen to your customers, get Signal like folks get that. But I like to say big companies, bureaucratic companies move in months and weeks, growth startups move in days. And a true fast moving, early stage company should be moving in hours. And if you are looking at your process and you're like, wow, this takes me days or weeks to complete, you're moving too slow.

Absolutely. I think that people do knock the corporate way of doing things, at least in the starve while they do, but documentation is actually very important. I think in my own experience growing small businesses or startups have seen that when you're running lean like that, you don't really have the time to train every new hire. And so documentation is really important because they can read what's been going on and get up to speed faster. And I think also looking at businesses, diligencing them, trying to buy a business and run it, I mean that would be incredibly helpful the more documentation they would have. And the corporate world definitely has perfected that. So if you bring someone like you in who has that experience and can professionalize these small businesses, I think that would be amazing. I'd also be curious if you can expand a little bit on the other side of the equation. I mean it is something that people talk a bit more about and I think there have been more attempts to do this in terms of making corporates more like startups, but would still love to hear any insights that you might have in terms of how corporates or even the growth stage startups could speed up their feedback loops and move in days or hours.

As you were saying, I like the idea of one product, one process, one channel. And what I mean by that is you have one way to sell stuff, that's your channel. You have one thing that you're selling your product or service and they're all connected. Sales, delivery and support are all connected. You keep it all in your brain. There's no reason to pretend you have all these departments. That's not going to be super effective when you're going and then you apply what we just talked about and it's a lot easier to do that when you have one process. And then from there I think the challenge a lot of folks have is again, well, I don't want to damage my brand. One of the things I've done as a consultant and toyed with turning this into a product and think with some of the new AI tools this would be much easier. But setting up a shadow brand that you use for testing and if someone says, well, I don't have money to kind of Capitalize my current brand. This doesn't take a lot of dollars. Now, it takes time today. And I think you could automate a ton of this. But here's the general flow. Let's say you are in ag tech and you help farmers and folks in the agricultural industry increase the output of their crop, right? Pretty kind of straightforward. And you have to figure out what's the right marketing text on my landing page, how do I generate inbound traffic, how do I think about follow ups, qualifying leads, how do I close the leads. You know, there's all these things, how do I get feedback on what people actually want? And now testing the product. Obviously you're not going to make a shadow product, but you can just go grab a domain, make a logo, start buying some ads on whatever platform makes sense. Many times, depending on what market you're in, the ads can get really cheap. If you're in like cancer research, okay, the ads are going to be crazy expensive. But many times you can do daily runs of 5, 10, 15. And what you're trying to do is start testing your funnel before you build anything. And so if someone says, well, I don't have a website yet, it doesn't matter if somebody clicks that ad and they go to some random place, send them someplace useful, right? Your goal is not to pay off the click. The goal is to see did I write the right copy, did I present the right ad to make people click. Now when you're doing this, many of the organic content marketing efforts aren't going to work. You're not going to start a podcast or a YouTube channel or something that takes 612 months to start to pay off. You're going to do things that you can go test in minutes or hours. And so you can go buy an ad on meta platform, On Alphabet, on LinkedIn someplace and see how many people click through. And you can now instead of like circling your brain thinking like what if you can say, oh, when I run an ad it costs X and my click through rate is Y and now you have real data. And then it's like, okay, next experiment is to, you know, once you've tuned maybe which ad there is working is you go create a landing page that has no product to sell and you have a call to action. Maybe that's booking a meeting, maybe that is watching a video, maybe that is going to a buy page. Again, you don't have to have the product done. You don't even need to have your Shopify or Gumroad or whatever your your tool is. All the way instrumented, you just need a thumbnail of some sort and some copy and then see how many people are clicking into that cta, that call to action. And so, you know, I could get deeper into all these flows. But the whole point here is what you're trying to do is figure out, do you know how to describe what you would build to people in a way where they would move through your funnel in a cost effective manner? And this is going to cost you tens or hundreds of dollars if you're willing to do the work yourself. So this is not something where people are like, oh my goodness, but I don't have the money to go and do that as owner or founder of the business. This is work you're going to be forced to do anyway. So you should do it when the stakes are low. And then the beauty of this model, this is why I think there might be a product idea out there. I'm always looking for operators to help me bring to life some of these. And so if anyone is listening to some of the ideas we're talking about and you're interested in being an operator, reach out to me. Would love to follow up and have a conversation. But what I really think is valuable here is you have two forks in the road. If it turns out those experiments failed, you know, no one wanted your thing, what have you, you just let the domain expire and you stop spending ads. You know, in Amazon they call it a two way door. It's a decision that's really easy to reverse. The cost is low psychologically. It gives you permission to say, oh, it's cool to fail, but it feels different if you get your emotions wrapped up in whatever name of your new company is. You tell all your family members and all these things and like you're like, you don't want to break it. And so I love that this can break. But if it actually starts working and you end up getting some inbound traffic or what have you, then you just go update the landing page and say, such and such company is now so and so. And now all that traffic just redirects to your real site. So that's a quick, very tactical flow on how some of this stuff can come to life. But it's a very powerful way to think that if you iterate your way to success, that's going to get you to real data again. I've tested ideas in weekends where I had an idea and I'm like, huh, I wonder what someone pay for this. And by Sunday evening when I'm looking At the results, I'm like, nah, that's a bad idea. Right. I don't need this thing swimming in my brain for weeks or months thinking like telling everybody like, I have this great idea. No, the data will tell me if it works or not. So anyway, that's a long kind of breakdown and that's just scratching the surface, but hopefully that gives some people some ideas on how you could get started with fairly low consequence.

Totally. I think from my own background and probably for anyone who's done research on how to bootstrap a small business or startup, that is basically the advice that you get is that you're supposed to just start iterating and doing small tests and then you learn a lot and then you start scaling along the way. And I think that is good advice for anyone, whether they're an employee or an entrepreneur. When it comes to your investments though, I see that you are very focused on very highly niche vertical SaaS, companies like local B2B businesses. Your goal is to acquire them and help them innovate. Was wondering why that is your thesis. I know that you have had a lot of experience across businesses of all sizes, a lot of different industries. Why are those the type of businesses that you focus on and why is your goal to find ones that you think you can help innovate?

Yeah. Let's start with how I got to this place. I have a piece of advice that I give folks that I mentor that I have to take myself, which is love your customer. And what I found working in enterprise software and big companies was the humans were actually quite fine, but I didn't care if those big companies won. Whatever. Right. You know, there's a few that I felt were bad actors, but it wasn't so much where I had to like prove a point where it's like, I don't believe in big companies. It's just I was apathetic and I was like, I don't care. Have a great earnings report or don't. No different to me. And I really believe that before we pick our product or service, we should pick our problem. And before we pick our problem, we should pick our customer. And our customer should be connected to a tribe or community that we really feel an attachment to. And that has many benefits. But in short, it's going to make sure you stay connected. You're going to spend time with them and it won't feel like work. Number two, you're going to, if you build trust, you're going to find different products that you never thought of that you can sell this audience because you have that trust. And so for me, I started looking at who are the set of customers that I am most energized to help. And it is folks who are running their own business. It is folks who are early in their journey, maybe still figuring out if they should become a business owner or entrepreneur. And I don't really care what label people use. You know, whether you want to be startup founder who wants to create the next unicorn, or you want to be a solopreneur that has zero employees forever, I really get energized by people who are on that particular journey. And so I started looking at like, well, how can I help these folks? At big companies, there are products that they may sell, but invariably what you'll see, you even see this from consultants. It's like, start small business and then, you know, work up market and all of these things and you can do that. I just really get energized by the smaller business. And so I looked at different options and I said, all right, so, well, running one small business doesn't really help me show up in this community the way I want. Leveraging my assets, my experience, my capital, what have you. I said, but owning a collection of these could be a way that works both with my background, but also lets me show up and support, you know, what I'll call my people. And so once I started really digging into there, what I found are all of these opportunities along the journey of entrepreneurship where sometimes people pause or have a setback. And so I'm just on a mission to keep refining what that journey looks like and then identifying the milestones and where people can get unblocked. And if it's not a company, it's just information. I want to share the information. If it's not a company and it's not information that can be sold, like, give it away. And so whether that is an information product that's free, whether it is a done for you service, whether it is a piece of software, I look at the journey and I'm just trying to get a good articulation of that journey and then find the natural products that go along the way and just own a suite of companies that solve these various problems. And my goal over time is that anyone who wants to go through that journey, they don't need to buy anything from me, but they should be able to consume whatever content I'm sharing, whatever free events that I'm attending, and, and they can kind of piece it together themselves. And then for folks who want to go faster. Hopefully there's a product or service in my portfolio that they may want to buy. But the overarching pull there is. I think you got to be with your people. And there's a great book by Seth Godin, really short read, called to dip. And the whole punchline is you got to know when to quit. But if you quit too early, you might miss the upside. That's on the other side of that challenge. And I think it's really hard to stick to things when you don't care about your customer.

Definitely. I think a lot of times when it comes to business or even your career, people say that things are going to be tough no matter what. So if you're going to choose something, you should choose something that you're passionate about. And I think that that is true. But more important than passion is the people that you'll be around. Are these people that you want to stay around, keep serving, keep working with? Do they make you want to get out of bed? I mean, that is what life is about at the end of the day is the people that you spend it with. And so I think that's awesome advice and completely agree.

Yeah, I think that, yeah, good, good people. Great process. Like, that's like, if that does not ring true to whatever you're working on, like, go fix that. Don't work with people you don't like. Because here's the other thing I learned on accident. Those are going to be the people that shape and become your network. When you need somebody to call on, it's going to be the person you didn't like working with. That just makes no sense. Like, that's crazy. I mean, you tell me what's a place that you worked with where you kind of think back and be like, wow, I probably wouldn't call. You don't have to use the company name, but. But I probably wouldn't. Wouldn't go back to that group of folks. I mean, can you think of anything? I'm sure you have something.

Yeah, I definitely do have a company in mind. But, yeah, for those situations, I think it's just best to look at them as a learning experience. You learn what you don't want to do, you learn what you don't want to become. Maybe there are some things that they do well, but overall, you don't want to be those people. And I think the lesson is when you find those situations, just don't stay in them too long. Try to make the best of them.

Yeah. The reason I ask you, I mean, I Definitely have those. We have those. And for some reason, you know, we tell ourselves these weird narratives. And I'm like, it's just not worth it. Just go hang out with people that you like, focused on problems you enjoy, solving for customers that you love. And it's just like so many people don't have that trifecta of, you know, in, in the work they do. And I get that sometimes we have responsibilities, sometimes we make commitments that we can't undo. And so you can't just like hear some folks talking, be like, I'm going to go do that tomorrow. But it's a great reminder that we are in control and we can design many things. And my purpose of showing up and talking to people is it's possible. Now, it may not be common, so you got to go seek it out, but winning the game is going out and seeking those things out. And once you have those, back to the earlier point, it's just a lot easier to stay in the game. And you win when you stay in the game.

Yeah, absolutely. I think that is a key point. On that topic, how do you suggest a company improves its ability to create good relationships between people? Let's say that you've come into a business, you bought it, and then you realize, oh no, the culture's not what you thought it was once you acquired it from. For example, it's just the culture's not there yet, or there's some glaring problems that you missed. How do you change that and turn it around into a place where they are the type of people that you want to work with and it is the sort of work environment that you want to be in?

Sure. Well, so since I invest in relatively small businesses, I don't have the luxury of doing culture turnarounds. So if the culture's broken, I don't fix it. However, I have inherited teams working in corporate situations where, and I've never managed massive organizations, have this personal thing that anytime my orgs have gotten over 150, 200 people in my org, I just didn't enjoy the work. And I have peers who are like, you know, I'm not successful until I have a 5,000 person organization. And that just doesn't give me energy because I also like to be closer to making things. And you know, if you're going to set up your folks for success once you start to get to organizations that decide you don't have that. So that's a good caveat. Kind of say like, well, what size are we talking about? But when you have a small 10 to 20 person company. I say if the culture is broken, it's probably not worth fixing. You really want a great group of folks who have broken process or they have broken the demand gen funnel and people just don't know that they're great. Once you start getting to dozens of people and you feel like, okay, there's great leadership or there's great kind of building blocks, then I think you can attempt to do culture turnarounds. Even then, I think they're still hard. Some would say it's the opposite, where it's a lot easier to go turn around a small team than it is a large. And so the point I'm making here is not to say that's not true. I actually do think it's easier or more practical to turn around a small team. I just don't think financially it's worth it. It's just, you know, as an investor, I would not do it. So at point would I do it. It's when the team is big enough and they have enough kind of economic density that they're already creating that the headache is worth the headache. So that's the setup to your actual question. I think the first piece is to start setting some tenets that have consequences. There's so many times when somebody comes into an organization, these are the rules, and then nothing happens. It's like, okay, you have no incentive in place. People aren't going to know what's on the hook or not. And so a few quick things I'll rattle off. There needs to be clear consequence and accountability. And if people fail but are living up to whatever the tenets are, they should be celebrated. If people succeed, but they violate those tenets, they get fired. If people are mean to other people, they get fired. Like it doesn't matter if you have the best salesperson. You have a 10x software developer, you have some amazing recipe developer. I don't care what your business is. If they're mean to other people, they get fired. And this is really important tone to set. And for some businesses, they feel so fragile and brittle, it's like, well, if we lose this person, the whole thing falls apart. Well, that means you don't have a company, right? And like, you just got to embrace, like this thing is more broken than you may think. So having real consequences to the bad actors early on is really important. But it needs to be clear that they violate. It can't be, oh, I didn't like Bob. So Bob has to go. It needs to be articulated in a very Crisp way. But it's no like, oh, you know, Bob's going to spend more time with his family. No, Bob did not live up to our cultural values. He does not work here anymore. Right. And people are like, oh, okay. Now the flip side and how you balance that so it's not a totally mercenary environment, is to give people the psychological safety to both be themselves and to understand that failure is part of the process. And all you have to do is reinforce that. That's very, very simple. You tell people to do that. You observe folks who are living up to that, and then you celebrate them in your town halls or your team meetings, your all hands or whatever kind of motions that you have as a team leader. Instead of saying, here's the person who met their goal, you say, here's the person who failed and you make a big to do. And people are like, huh? They actually get credit around here when they. Because the goal is not to celebrate the failure. The goal is to say, this is what we're going to do from what we learned from this failure. And that's what you're trying to get people comfortable with. And you know that psychological safety also, as I said, comes to being yourself. So many people come to work and they're like pretending to be somebody who they're not. And that is just a taxing way to show up. And I believe you don't get the best work out of a team member if they're not being the same person they are at home. And so those are some of the key levers to start pulling the problem or the challenge, I think for many leaders or investors is you look at those. It's like, well, this doesn't work. It means I have no business. And I'm like, yes, that is the answer. And people, they want to have solutions that have no consequence. And I'm like, no, if you want to win, there will be consequences. And so those are some of the parts of my toolkit.

Yeah, those are all super great. I think especially that last point about celebrating failures. I think that that is not done enough in a lot of businesses. And it's not one I had heard before, but it makes a lot of sense things. It's a very entrepreneurial way to look at things. And to your last point, it does kind of go back to what you were talking about in the beginning, where you're able to make decisions out of abundance rather than scarcity. And if you are using that, well.

Getting to my book, the core piece of advice I will give folks who you Know, if you're like, hey, I don't want to buy another book. Okay, I'll give you the two quick punchlines so you don't have to buy my book. Number one, I deeply believe that a values based business, not a value proposition, but a values based, that means company or business that's rooted in a set of stated values, what those values are to the leadership in that company. To decide if you are a solopreneur, you get to make the same, you have the same agency and autonomy. But those are going to be what many customers seek out, both on the business and the consumer side. Because there's so many ways to get a product. Many times things almost feel commoditized. Is this salad dressing better than this other? Is this candle better than this other? Is this laptop better than bag better than. It's like so many things are going to be very similar because we've gotten so good at kind of manufacturing things. And so the story and the values that are underneath that product I think are so, so critical. And so the point in the book is if you start there, you are building what I believe will be the future of how companies are branded and marketed. But the second piece is you have to be willing to go out of business to protect those values. You don't get to change them every year. When a new trendy value is in place, you have to deeply think, what do we stand for? And that means don't pick trendy values. Pick something that can last for years, decades, maybe a hundred years. And through that lens, it's going to be a lot easier to stick through them. But the reason I call that out is I've seen countless teams, even companies who have these culture posters. You've probably seen them, it's like somebody smiling and then it's like, be your best. And it has some type of trivial tagline that doesn't mean anything. Save those posters for words that you're going to enforce. And if, let's say you say we care about the planet and you know, I don't know, maybe you make, you know, compostable forks and spoons. If you can't figure out how to live up to your save the planet value and sell these forks and spoons, you need to stop selling the forks and spoons. You don't change your value. And ultimately what all this is about is creating a thread of trust. Because it's so hard for customers, both business and consumer, to trust a company. And values based business design is how you can design a contract that is Inherently baked in trust. And if you stick to it, you'll be rewarded with retention, loyalty, word of mouth, organic growth. All of those things are way cheaper than trying to advertise your way into growing your company.

It's so important. Yeah. I think when you asked me the question about that organization that I'm not going to name, the one thing that really was the biggest problem, I think, is that their stated values could not be any more hypocritical in terms of the way that they actually operated. And I think that just created a situation where the employees weren't happy, the customers weren't happy.

Yeah, maybe that's the T shirt. Don't be hypocritical or no hypocrites. That's a bit more pithy on the T shirt. No hypocrites, totally.

Yeah, I guess. Stemming from that. When it comes to your acquisitions, how do you diligence, weather the culture or the values are actually there? Given that it's obviously easier just to acquire a business that already has that strong culture rather than having to turn it around. When you're looking at the business, is there any way that you test whether the values are truly what they say they are and there's a good culture in the company or not?

Yeah. So I had the fortune to work on some M and A deals on the corporate side when I was at a company's. And again, while there's definitely some similarities, these are very different deals because of the amount of liability and risk and all of these types of things. You could buy something even if the product works. Maybe they did some, you know, they signed contracts that are like, egregious and now you're taking on some liability. So while, you know, sometimes I call lawyers, the no police in the case of M and A, the lawyers are your defense boat. Right. They're going to make sure you don't break into jail. And so there's a ton of stuff from big deals that I won't pull in. But what I really think is important is the concept of the data room. And so the data room is where you go ask the seller or whoever's representing the seller. It could be a broker, it could be a banker. And many times they're going to kind of give you the story. They'll have a deck. But that's all going to be the goodness. What I want to see in the data room are the core financials. I want to see the whatever weekly operations motion they have. My companies, we use something called a wbr, a weekly business Review. This is something I pulled from other companies I've worked at. And this is just a typically a 30 or 45 minute meeting where it's not like a status report. Like, those are real time dashboards. You can get the data real time. It's discussing, here are the experiments we're going to run, here are the things that we need to change, here's the flow of the business. And then that rolls up to monthly reviews, quarterly reviews, annual planning. And what I like about looking through the data room is I can clearly see is this a writing culture. I can see what type of transparency. If they're like, oh, I can't get you this document because we don't have a way to have private permissions and somebody else might see, I'm like, okay, there's no transparency in this organization. So if you don't write, there's not great transparency. I don't see a repository of lessons learned or like things not to do. These are all interesting pieces. I also look at timestamps on the documents. And so if it looks like people are writing documents and they are kind of frozen artifacts that never get refined, I think that's a problem. You know, if someone says, oh, hey, could we just give you access to our wiki or music to my ears, right? Because it's not just about writing. It's about having a way to memorialize things that are naturally living documents. And so these are all very tactical pieces, but they're super, super important for me to go get a sense of is this business worth buying? Now, I say all that because when I get access to a data room, I am typically already inclined on the structure of the business. And I'm looking for reasons to say no. Right? And there's something that is broken that I don't believe I can help fix. Before I even get to that, almost always you have to sign an NDA to get access to the data room. Folks aren't just like giving you their financials and all of that. But before we get to that, I like to ask, you know, a handful of like really simple questions. What's your EBITDA or free cash flow? If it's a very small business where the owner is also the operator, I like to understand their sde, that's their seller discretionary earnings. And so that's basically subtracting out all the cash it would take for me to hire people to replace everything that the owner does. And many times when you actually do that math, the deal falls right apart. So I want to understand the cash flow and the growth on that cash flow. I don't care if it's steady. It's like, oh, it's not really growing. I'd rather have a business that throws off $750,000 cash a year, and it's been doing that for 12 years, than a business that's all spiky. You know, we had half a million, then we did 2 million. It's like much harder to tackle that problem. So those basic pieces, I want to understand why the current folks on the cap table, whether that's other investors or the founders, why do they want to sell? I love life stage changes. Somebody's retiring or maybe there's a health issue or whatever where they don't really want to, but life is telling them they have to go sell this business. And many times if you show up in an empathetic way, you can find something that works well. And then number three, what type of capital are they willing? So if someone is willing to do seller financing, I get very interested. Not just because it's an easier way to help finance the business, but it tells me a little signal on how well they believe the future of this business will do. Right? If someone's like, nope, cost $3 million, we need a cash, we need it in 28 days. Like anything where there's just like the speed of the deal is really aggressive on the seller side. I'm just not interested. So just by doing those three things, right, what is the financials, what is the vibe of the team? Why are they selling, you know, all of those types of things, These handful of pieces, they'll quickly get me to a point where I can go and write a term sheet. Usually I can do one in a couple of days, right? So these are not like long, drawn out process like a typical private equity deal might be, you know, months sometimes. Typically I get to a term sheet in a couple of days. And invariably I don't have the numbers off the top of my head, but I take a lot of meetings. And so I would say roughly, I'm probably in the half percent to 1% of deal flow to actually getting to a closed deal. Paper sign. Money is wired into a bank account, typically first or second call. It's not a business or it's in such disarray like no investor has any business buying it. And so most folks either don't know what their business is worth, they have too much emotional value wrapped up in what it could be. And when somebody shows up in a very objective way, I try not to be rude or come off as like, I'm just here to take your company from you. But for me it's are these decent humans to do business with and is the math directionally accurate? And in most cases the answer is no, very helpful.

I think that a lot of listeners here attempting the same thing. So really, tactical practice.

Yeah. I will add though the whole punchline here to if anyone is interested in this type of work, basically you have to be curious. Like, I pick a lane. So even, you know, my lane is very focused. I do a lot of research, reading, watching interviews, having meetings, finding folks in my LinkedIn network and having zooms or if they're local. Here I live in the Seattle area in the US buying them coffee or lunch or dinner. I'm trying to learn because I'm trying to figure out a thesis. And where I get most excited is where I have a view that other people don't have, where I see the world in a positive state and it looks like it's growing. Right. So compounding contrarian optimism, right. That combo is what I'm looking for. So people, you know, they say, well, what's your investment thesis? Or what have you? Like, if someone tells you like, you know, I think Gen AI is going to be a thing. Okay. We don't know exactly how it's going to work. It probably, you know, it'll go through its hype cycle, you know, valley, blah, blah, blah. But yes, it will have contributions. That's not contrarian. Even though it's optimistic. Other folks are like, you know, you'll never be able to have generative AI, large language model, do health assessments. No, that's going to happen too. Right. But so that's where they have a pessimistic view, right? And it's like, like this won't happen. And so what I'm looking for is some type of new customer behavior, business or consumer. That's compounding where I believe there's a solution and I'm looking at it in the optimistic viewpoint and other people don't believe that is true. Right? That's where I'm looking for the money. And so I'm going talking to people, having these conversations, reading things, looking for those moments. And then where I find those, then I start looking for really three things. Businesses I can acquire, operators I can hire to go run those companies if the founders or the operators who currently are in place don't want to stay on board. And then three, does it accrue to my broader portfolio. When I first started, I got Some random things like I have a media production company, I have like, I have three companies that are in the content related business and they're like opportunistic, right? Moving forward, I wouldn't buy those companies because not that they were wrong, but now I've like really honed in on this focus of I am here to help people who are in the early stages of their entrepreneurship journey or they are intentionally small businesses. And again, I don't like the word small business as a pejorative because I think with some of the new technologies we're going to see 100 person companies doing a legit billion dollars. Not paper valuations. We see that all the time. We're going to see 10 person companies doing $100 million in top line revenue. It's going to be commonplace to go see this. And I believe small is going to be in vogue. And so I am betting that today, where efficiencies naturally accrue to having large organizations, that we're going to see kind of reverse trend where there's going to be a lot of small businesses that are loosely coupled with each other and the ones that are winning are throwing off an amazing amount of cash. And I want to be there to be their automation supplier for all sorts of software products. And so that's my thesis is that I want to stay in this lane. But even there I got to go do all this research to find where I believe the opportunity is. And last thing I'll say there is, I'm not looking for short term arbitrage. Like if you go to TikTok or YouTube, you'll see this all over the place. It will be 10 greatest ChatGPT prompts that'll save you, you know, the FBA hack to make a million dollars in six months. Like you just see all these things from day trading to whatever. Mostly those folks, some are illegal, so, so like some of them legit are snake oil comment. But the ones that aren't illegal, typically they're focused on short term arbitrage. And through that lens that just means this is something that can work for a moment, but it's going to be a moment in time. The window of that opportunity is going to close. And so likely that person who's promoting that is going to make more selling their course on that topic than they actually are on whatever that arbitrage opportunity is. And so actively look at things where I don't believe it's short term arbitrage, it's actually some type of behavioral shift in that company that industry or that consumer segment, for sure.

I think that's a great thesis to follow. And I think it's really interesting that what sets you apart, not only from the core sellers on YouTube or TikTok, a lot of the other ET entrepreneurs, they're looking at a lot of really traditional businesses like home services or nursing homes, things like that.

Yeah, businesses beauty. I think of this is, I like to say people don't love to hear this. You want to get rich slow. If you want to be an employee, I still think you should prioritize financial wellness. If you focus and work for 20 years, whether you start at 22 or 32 or 42, in 20 years, you can be financially independent in almost every industry. In most developed countries, if you want to start a business, you can do that in 10 years. And if you want to be hyper aggressive and cut out a bunch of things in your social circle and other things in your personal life, I wouldn't advise this, but sometimes people will sacrifice their health. I think you can do that in five years. Right. But no one has shown me a system that will say you can go hit financial independence predictably in 12 months. Like, it's just not a thing. What is a thing is those milestones. And so what I understand from some of these folks who might be selling a course or what have you is they're still trying to get out of debt themselves. They're still trying to get their first $200,000, their first $2 million post tax. And so anybody who's talking to me who's like, hey, lashawn, here's the way to go. Solve this problem. They might be a subject matter expert at their particular world. And so I'm happy to support somebody who's going to help accelerate my learning where I have a gap or deficiency. But when someone's trying to tell me how to make more money and they got $800,000 in the bank, I'm like, you're not the person I'm taking advice from. Kudos for you being on your journey, but we're just in a different place. And so I think that's something to also remind folks that it's almost predatory if somebody's like, I have $183 in my bank account and this person who has 200 grand seems like the richest person in the world. Like, okay, expand your horizons. Think bigger and see what's possible. But then get to work on something that's very tactical. And, you know, there's that book by Jim Collins, I believe the title, which is the punchline, it's think big, start small, scale fast. And that's how I believe many of us can tackle our entrepreneurial journey.

I have to check it out. It's a great title and good model to live by. Just want to go back quickly though to something that you were mentioning before about automation and how that's kind of your value add to these businesses. I was curious what your thoughts are on how some of these more traditional businesses that you might acquire might be able to scale and become billion dollar companies, as you've said, if you enable them with AI or automation.

So, quick context. I believe many entrepreneurs don't want to win. And what I mean by win is not become filthy rich or what have you. Like, winning is whatever you articulate. But I believe I've observed many times someone will articulate what they say is their winning destination. And then when it comes time to do the work, they're like, oh, this is hard. And they cop out. And it is hard, right? So that, that's not, that's not a statement to say, you know, they didn't have the right assessment. But most people don't want to do what it takes to win when they actually realize what winning is. And again, I'm using whatever that person's definition of winning is like. They say, this is my destination. And then once they think through that and they realize what it takes to get there, they're like, oh, you know, that hike is too many steps, that car ride is too many miles, right, or kilometers. And so this is what I think many folks struggle with is they see what it actually costs and kind of don't get there. And the reason I start there is, you know, this goes back to, well, what are you actually trying to optimize? And if you just watch the news, you know, whether it's automation broadly or using AI as an automation tactic, you're just going to be inundated with all these things. You're like, wow, like, do I pay attention to this thing, to this other thing? What can I ignore? What I believe we're seeing right now is very similar to the early days of operating Systems in the 90s, Web Applications in the Web 2.0 World, Native Mobile applications in the first few years after 2007, with the iPhone in all of these areas, what you see is folks are trying to figure out here's a pain point that a customer has, does this belong in the os? Does this belong in the bundled applications from the OS provider operating system? Does this belong in the is this like a dedicated application that a company is going to build and we just don't know where all of these things settle. And I'm saying as a business owner trying to become a technology expert, to parse all of that is silly. Like don't do that. The better way to tackle this is to say, okay, I have one product or service, I have one process and I have one channel, one place that I sell things. And you're going to go write that down. In the old days this was called business process management, bpm. And so you're going to write all of this stuff down and you're going to say this is the process on how I run my business. And then you're going to go flag, all right, here are all the tasks and how they connect to make this total process. Here's the handoff, like here's the event or what needs to be true for this task to get handed off to this next task. Sometimes it's an approval, sometimes somebody has to make something, sometimes you're waiting on customer feedback, whatever it is. This can be just like a simple Google Doc. You don't have to buy like some fancy tool, just write this down in an unstructured document and then you write all these pieces down and then all of those tasks and handoffs, you write your success metrics. How do I measure if this is working or not? Right. And this exercise makes so many people uncomfortable, many times they give up. And so if you just go and do this, you're going to be light years ahead of so many other operators. And when I say operators, again, I'm talking about the people operating the business, not folks like me who are typically investing in the business. And so once you have that document again, you can put as much time or as little time into it. Then you go look at all of these automation tools out there and you can decide, all right, as a customer of these tools, which ones are going to solve this metric, which one's going to make this metric go up or down, whatever you're trying to, what lever you're pulling. And it's going to be so much less anxiety to go hear something like, oh, mid journey 5.2, just enter, like, don't worry about it. That has nothing to do with any of your tasks. Right? If you're just curious minded, take a listen. But you're not trying to parse. Is this going to kill my business, is going to help my business. You're just trying to optimize your process. So that's the Big, most actionable thing I would tell folks to think about now flipping that to people who might want to actually build some of these tools. I can't speak on what people should do, but for me I'm investing $00 in companies that are building AI models. I think it's just too early on to figure out who will actually have a defensible moat around these models. And so if someone's like we've created some custom AI to do such and such, I'm not giving you any money. If someone says we have some type of unique data set, we're going to build this custom model and it's going to like I'm not giving you any money. But if we get a bit more tactical, I'll just throw out some ideas. There are all sorts of businesses that are trying to do certain tasks and then you know, since it's very early days, if you want to build applications on top of these foundational AI models, I think there's all sorts of ideas. You know one of the big ones I see is Google right now is deprecating universal analytics. Ton of people with WordPress sites, square sites, webflow sites who are using Google Analytics in that way. And so it's effectively going away. So you got to switch to another Google product or you have to switch to another vendor. But the problem with Google Analytics is you have to, you gotta make sense of the dashboard. And most people don't know what to do when they look at those analytics. And so using a LLM to give people actionable advice on like what they should do based upon their web traffic, that's a whole business. There's a company that's automating user research. I'm super interested in this. I'm actually actively looking for a deal here where they are using AI to supplement the user research process of interviewing customers to get signal. And so it's not just a structured survey, it's a survey that gets a lot more free flowing pieces of information without the scaling constraints of having a human interviewer for every person that you talk to. There's more on the local business side. This idea that I think would be great is if you're an H Vac person, electrician or what have you, you should be able to just take pictures with your microphone on and look at the site and then get back home and there's a stubbed out draft quote waiting for you. Like there's no reason that is just not a done thing. Screening tools, seen a couple of these are not quite good yet on automating your job screening process, when you're hiring new contractors or full time employees, these are things I think one of the most interesting is there's two startups I've seen that are automating bookkeeping. And so you don't have to hire a bookkeeper for your day to day bookkeeping and it kind of preps you for your taxes to be almost all the way ready at any given time. So anyway, I'm just rattling a bunch of different places you can go. So whether you are the company who wants to buy some of these products or you're somebody who wants to build some of these, I would say on the buyer side, make your process, identify the task success metrics and then figure out which tools in short order days, weeks are going to help move that number to where you want to go. And if you're in the building side, pick a customer audience that you love. But also unless you're very well capitalized and you know it's like high risk capital, so you're going maybe the venture backed route, I would stay away from building any actual models and I would actually be building applications on top of these models that tackle some of these verticals.

That's really great advice. I think there is certainly a lot of uncertainty out there that AI is creating in the job market or just in people's lives in general. But at the same time there is the positive side that it makes it easier than ever to be an entrepreneur or a small business owner. Because a lot of things that in the past may have been a lot more costly or just been there only for larger businesses, pretty much anyone can do now. And you can really scale a company with not too many people. So there is that opportunity for people out there if they want to take it, I suppose. One final question I have, you've mentioned a few times that you look for operators for your businesses. That's kind of your model. I was wondering if you could talk a little bit more about that process, how you bring the operators in, how you coach them, where you look for them and how that's going so far.

Yeah, so typically when private equity or some type of investor shows up and says, hey, we're going to bring in new management, it's looked upon as like, oh my goodness, this is going to suck. Right. They're going to bring in the suits. I try not to do that. At the same time, you know, I have the luxury of investing in much smaller companies and so it's a lot easier to try to get It, Right, because you keep the whole team in your head and you can understand, at least at a cursory level, some of the early implications of bringing somebody in. But you know, for folks who are thinking about doing these types of investments, or maybe you're considering being an operator, the company stage, the maturity level, the way it's capitalized, is going to determine what type of operator is needed. For the businesses that I invest in, largely what I'm looking for is someone who is going to take on operations and demand gen. And by that I mean they're on the hook for sales and marketing and creating a operational machine. Right? And there's a lot of people who can dream. There's some people who follow rules. Having someone who can build an operational machine that maps to whatever vision is set. They don't need to be the visionary. That is what I am most interested in. And I'm looking for examples in their past where they've done that. I've learned, don't pay people's tuition, don't think, oh, you know, maybe they could get up to speed as an individual contributor, I give people flyers all the time and I'm like, well, let's just see what, what happens. I think you get all sorts of diversity of thought and shared experiences when you do that. But for the leaders, if you haven't done it before, no, you don't get the job. And the reason being is the person's probably going to have to acclimate it to the problem space. So for them to try to build discipline or domain muscle while they're also trying to understand the problem space, it's just, it's too much work at the same time while they're also trying to manage even a small set of humans. And so what I'm looking for is operations and demand gen. If someone's a bit more junior, let's say they're late 20s, early 30s, they'll likely be looking at, in my portfolio, a director of ops and growth role. Sometimes flip director of growth and Operations. The order of that is intentional to signal which one is most important, a COO role or a CEO role. And what I'm really looking for is someone who can kind of drop in and run demand gen operations. And then I have a system on the actual building of the product, right. And so I don't need people to help me make software. That's kind of the world that I live in. I have a whole engine and a whole staff that can go build software products. But somebody has to sell it. And so what I'm not interested in is in like great technical founders who know how to build things and they're like, well, who's going to sell it for me? No, I want the non technical founder, right? And that is I think maybe atypical. But the demand gen is the hardest piece building, you know, business applications, the places that I play, these are not hard problems to solve technically, but getting and building trust and selling the product like those are the more challenging pieces. And you know, I'm in forums and discord groups all the time where I'm talking to more technical audiences and they always give it a hard time. They're like, oh well that's cute lashawn. That's like a really simple application. And I'm like, listen, I'm not an employee. And what they're usually projecting is they work on a very complicated regulatory problem. You know, maybe it's healthcare records or it's transactional financial pieces or it's a big video game that needs to be like milliseconds latency so it's responsive. And I'm like, all those are great. I would love to be a customer of many of those products. I choose not to play the product development game on hard mode. Like that's just silly to me. Why? Because sales and marketing is going to be hard mode regardless. And so if you are working in a large organization, you have the luxury of saying, well, sales and marketing is someone else's problem. I'm going to solve this really hard technical problem. And it's not just for software. I mean that's where our conversation is anchored because that's my background. But you could be in oil and gas and energy, you know, trying to tackle sustainable things. You could be in process or engineering, manufacturing, you know, making cosmetics. Like there's all sorts of things you could be tackling. And my point is, if you are trying to bootstrap or find a path to building and owning a cash flow business, you should not play the product development, the R and D portion of your business. You should not play it on hard mode because the sales and marketing piece will still be hard. And for folks who are like, nope, I want to go make a legitimate rocket, that's fine. That is not a bootstrap business. That is not a business you should be. And when I say bootstrap, I do put capital in. I put as little as 50k in businesses. And I think the biggest deal we've done is three and some change. Three million and some change. So these are not large businesses. Right. But my point is, I can guarantee that most people listening, if they did two or three deals, they would replace whatever their current salary is. It would just replace it. Right. And so to me, why that's interesting is you can replace your current job and now you have maybe three hours of work to do every week to look after those businesses. And now your brain is free to go think about different things. And maybe it's go get a different job, maybe it's tackle some other problem. But the idea that you can buy your way, you can buy time is something that I don't think a lot of folks put a lot of thinking into. Like you legit can buy time. And so that's why I think these businesses are so powerful. It's not that they're going to become unicorns or they're going to go IPO or what have you. It's currently you go to a bunch of meetings you don't like, maybe you work with people you don't enjoy, and you're on a problem set or a customer segment that you don't love. And so what should you do? You should go buy time. And so that's why this is a powerful tool. Even if you decide to go solve a hard problem next, you need to get that $200, that $200,000, and then that 2 million, and then from there, do what you want. Life is a lot easier on the money side. You still got to sort out your health and relationships for sure.

Cash flow is the start of solving whatever issues you have. So I guess just to follow on to that, you mentioned to me that you spent a little bit of time in Malaysia and you're looking for some operators out there. I was wondering if you could talk a little bit about that, how you initially decided to go to Malaysia out of all countries, and why you thought it would be a place to search for businesses and find operators.

Well, one of the great benefits of working at a multinational company is I got to fly around the world on their dime. So, you know, spending time Europe, spending time on the continent of Africa, spending time in Latin America and all over North America, but start getting a set of trips in Asia, specifically Southeast Asia. So what I immediately noticed was how business was different. You know, let's say if you kind of hit the usual suspects, Hong Kong, Japan, Korea, that's what I knew, right? And then I spent time in Southeast Asia and I'm like, wait, hold on, what's going on with these? They call them the asean. ASEAN countries. So, you know, from Cambodia, To Philippines, Vietnam, Thailand, Singapore, Malaysia, that whole group of countries. And I was just really taken aback at number one, quality of education. Not, not amazing. I'm not going to say world class education, but solid education, but really good people. And this sounds silly, but I really believe that it is where you have a lot of volatility. It can be challenging. I've worked with folks in countries where it is more volatile, where you get some amazing, nicest people you ever met and then other folks that you know are like, oh my goodness, I'll never work with this person again. And so the baseline of nice people was just a lot more normalized in Southeast Asia. So that was a big thing. You have educated folks who have this normalized baseline. For me, since I don't speak Mandarin or other languages, that would be helpful in business. It's really interesting that there are certain pockets in Southeast Asia that are very English friendly. And so it just left me. It's like, oh, I should actually kind of come back to that at some point and see if there's opportunities. And then as I shifted to becoming a full time investor, what I started noticing on deals in the States were some of the most interesting businesses were folks who didn't have much credentials, but they had like this list of soft skills. And I just started like kind of making this, you know, jotting down this little list and it's like, oh, wow. People who have this seem to be better prepared to go run these companies than others. And it just, when I looked at the list, I was like, wait, this is very similar to some of the folks that I came and interacted with in Southeast Asia. And so kind of fast forwarding to today, my thesis is that those areas are under capitalized and undermentored. And the combination of those two is really just sponsorship. So if you can find folks who are ready to grow into that director of growth and operations role, I feel like there's a whole population of untapped amazing talent that folks aren't paying attention to and I can outpay what they're going to make locally. To me, that's the way I look at this. I don't look at this like, oh, you can hire these people for really cheap. I look at it as like, how much do they make today? Can I give them a 50, 100% raise? Right. And make it be the best job they've ever had? Like it's such an easy value proposition, right. And so through that lens, I just started to kind of hone in and say, all right, why there's too many countries here. I can't have businesses set up here, bank accounts, all these places. So I need to focus. And so where I landed through process of elimination, it really came down to Singapore, Kuala Lumpur and Manila. And as I kind of refined it even further, I made the decision that Kuala Lumpur is my number one, Manila is my number two. And of course there's deal flow that goes through Singapore. But I really believe those are two huge opportunities and I can add a ton of value. And the reason I anchored on Kuala Lumpur is the infrastructure and city life is. I mean, it's a international city. There are a few things that aren't world class. Like, you know, every country has pros and cons, but it is truly an international city. And the idea of being in a real metropolis where you have, you know, you can get around like traffic in Kuala Lumpur sucks. But if you pick the right locations, people can get around on mass transit. You have great density, the food scenes amazing. And like there are all these things that I want in an employee going to a work. I don't want to think like, is the electricity going to go out? Is there going to be political instability? Are we going to have to do all these weird rules and processes because the currency is so crazy that people don't know what their paycheck's going to be. I don't want any of that. And so I want all of that. I want all the city niceties and I want to be around nice people. And so that combination is kind of how I got to it. And truly the bake off between the Philippines and Malaysia, specifically Kuala Lumpur, you know, I'm not interested in like the more vacationing stuff in Georgetown or Penang or anything up there, but from a business standpoint, but just the infrastructure in Malaysia is so much better. And they have, this is, you know, maybe not great for real estate investors, but they have a overhang of real estate. And so you also can live there very affordably, whether you're an expat or you're been born there. And this is. We can talk about maybe this in a different conversation. The homes are nice and they are huge. When you look at the spaces of where people live, the offices you can rent. You know, I spent a lot of time in big tech and so I've had the fortune to be in amazing offices. And when I think about where I want my employees to be, I don't want them in some like tiny little cubicle cornered off into some place with bad lighting. You got to walk through this weird set of stairs. I want folks to come in like, I can't believe I work here. And the real estate footprints in Malaysia are large enough and the labor costs are low enough that you can hire amazing interior designers and go build amazing workspaces. And so I'm not part of the Malaysian tourism board or anything, but I really am excited about the potential last plug I will give. Why I think that's an interesting place. If you are an existing investor that's not full time. They actually have some quality visas. They're mm2h for a lot of traditional retired folks who have been employees who are now retired. They've kind of priced them out. Supposedly next quarter they're going to look at changing those requirements. But you know, if you're in the investor world, those requirements are quite trivial. And so it's one of the easiest places to get a five plus five renewable residence visa. But if you're in your 20s, 30s, and you're like, well, maybe this is an interesting place for me to go think about working. They have a Greek nomad visa, very similar to Indonesia and some of the other places in Southeast Asia. But they also have a relatively new entrepreneurship visa if you're in high tech. So if you're working on cybersecurity, sustainable energy, AI, you can get a, you can get a visa through their MTAP program, which is pretty straightforward. And again, these are all ways for you to kind of show up and add value to the country. And so I think my strategy can be applied many places. I have a friend who's doing something similar in Colombia, somebody else who's doing something in Mexico City. So I'm not saying like my way is the best way, but I have kind of gone through this process of elimination and landed on what I believe is just this untapped population of people I really enjoy being around. And that's, I think, the unlock for wherever you go. If you love the people, you'll probably find some magic.

Yeah, I've been a lot of places around the world and KL is still probably my favorite. And I do think the people have a very large part to do with that.

Yeah. What was your, what was your favorite thing? What would, what would be your number one thing maybe you agree with and then the number one thing you disagree with or I'm missing?

Yeah, I mean, I don't even know if I can just come up with one thing. I mean, I would say world class infrastructure, better than the US in a lot of cases. Really highly entrepreneurial, talented People, I think that that's something I would say even compared to some of the other countries in the region, is that the people are not only extremely entrepreneurial, but very culturally similar to the US More than I had imagined when I came there. I mean, the name Malaysia, Kuala Lumpur just sounds like such an exotic place. But then when you go there and they all speak English and consume the same online content that you consume and it's really diverse, reminds me a lot of being back home in New York for that reason. And because of that, the food is incredible and.

Yeah, well, and they've been forced to kind of do that, that cultural kind of mixing. Right. Because they, you know, there's Malay, there's Chinese, there's Indian populations that are large, there's other expat communities. But those three are, you know, they've had to figure out over the years if folks know the history to how to kind of work together. And there's been challenges, right. Where certain groups haven't gotten along, but I think they found a right good balance, at least for now. What I can tell is when I'm there, I can feel it. Right? Yeah. It's one thing to say like, oh, this kind of works. It's like, no, you can feel that it is working. And again, no places without flaws. But yeah, that's a huge one on the culture piece. What else?

For sure. I mean, there's definitely no place without its flaws. And I do think that being a foreigner there is probably quite different than it is to be a local. So we don't experience as much of the issues with the government there, for example. But maybe one other negative that I would add that's not really the fault of Malaysia is just that the time zone is so different. It's 12 hours different from New York and can be even more difficult if you join business on the west coast. So I think that if you do have US clients to co workers, then you may have to stay up later in the night than you'd like to or might be healthy. And so I think that might be the major negative that I would see with doing business in Malaysia.

So yeah, just lastly on that quick tactical point, I do my Monday kickoff teams with my team on Sunday at 6:00 clock here in the West coast of the US which is 9:00am there. And so there are these weird things where people are like, hey, you want to go grab some dinner Sunday night? Like my Sunday nights are for Monday morning kickoff calls. And so those are, to your point, some things to keep in mind.

Yeah, that's a really smart way to approach it and another great piece of tactical advice. Well, really enjoyed the conversation. Lashawn lasted a bit longer than my other podcasts, but it was all exceptional content. So really enjoyed this discussion. I'd love to keep in touch and maybe connect soon in Malaysia.

Yeah, great stuff. Great to hang out.

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