How to Operate a $100M+ Holding Company | Michael Girdley on Holdco, Businesses and Success

My lens on thinking about retention is you have to give people these days an opportunity that's bigger than money. When you're the holdco CEO, you can influence kind of the systems the business runs with. You can secondarily influence kind of the values and the level of excellence that you have. And then, and then number 3, you can influence through coaching. The best moment that I had kind of in that journey was when I went on like a 3-week vacation from running a business, and I came back and everything was running better without me.

The place I want to actually start today is I was listening to a few of your other podcast appearances before we started recording, and you said something interesting. You were talking about how there's sort of like ideas people and operating people, right? And I think in the world that I live in, there's way more idea people who are like, oh, if only we could just find operators to run this, this would just work.

Right.

And you made an interesting point. You said there are more operators than idea people. Can you expand on that and sort of like contextualize that difference of like political CEO versus operator versus idea guy versus whatever?

Yeah. Yeah. I think it's, uh, it's, it's a true distinction. And I think that people who are in our world suffer from a level of selection bias, right? Where you're, you, who do you gravitate to? bunch of idea people that listen to podcasts and talk about ideas and stuff like that. Right. And it's, it's the same with like Twitter ends up with this echo chamber of people that are like, why would you ever want to work for somebody else? I'm an entrepreneur. It's like, well, actually you're just hanging around the other 1% of people that are just like you. The 99% of people in this world are either happy taking a job or don't want to live where you live, like on the risk-reward spectrum.

Right.

You talk to them and they're like, Why would I do that? That seems insane. The same way, like, you talk to me and I'm like, why would I ever take a job? That seems insane. Well, it's because to some extent, like, we're unique and there's a selection bias in the people we spend time with.

And you sort of went through that transition yourself where you switched from operating CEO to holding company CEO.

Right.

Can you talk about sort of what triggered that change and how that transition was? Before we sort of dive into like what is the whole point of everything else.

Sure. Well, the transition for me from operating CEO where you own and operate one business, like, and that's your baby, like eventually I had a couple of realizations. One was I wasn't having that much fun and it was mostly not fun because it didn't do the things that I liked. Um, and one of the things I like is to hopefully perform like at a high level. And like performing poorly is not fun to me because I know what good is and I knew I wasn't good at it. And my problem was I had too many diverse interests and I liked change too much to be a great, you know, opco CEO, right? Like you think about what your job is as an opco CEO. It's like 350 days a year of kind of boredom and mundane stuff, grinding out 0.5% improvements. To me, that seems really boring. That's just me. And then a few moments of abject terror that are actually very interesting because they're novel problems. I'm the wrong person to take a job like that. I actually want to be in a creative space. I want to be seeing different stuff that's going on all the time. I want to be exposed to new things that are interesting. I started to realize I kind of sucked, and I sucked, which was causing me not to have fun. That's where I started to get on a journey to change that to get to a role like I do today where I'm much happier.

And I want to ask you about that transition through the lens of engagement. Just to reflect back what you said to make sure I understood it right. When you're operating a company, it's just sort of like the same thing over and over again, so you're not really feeling engaged. And when you mentioned abject terror, when there were moments of turbulence, maybe you were like, oh, I can go be creative. I can go be fully engaged. So it's almost like your engagement was depending on the level of creativity that was required in the business.

Absolutely. Yeah, absolutely. Yeah. I thrive in hard creative problems that are novel. Like one of the things I like to joke about is I can do anything once incredibly well. The second time is kind of, you know, it's there. The third time I forget that I have to do it. Like, that's a problem. That's not good. You don't want that in an operating company. CEO. So at the time, you know, I didn't really have the toolkit I have now to where I could have automated and systematized those things. But, you know, trying to remember the 45 details that I need to stay on top of, of which 40 are not that interesting to me, like that was a problem for me as an operating company CEO.

One of the people I just interviewed was, I was mentioning to you before, Ayman Abdullah, who ran AppSumo, and he made a really great point where he was like, most companies should just have one product and you can with one product scale to about $5 million and then you should look at other products and doing more creative stuff, right? And I remember in the interview I was like, yep, we're going to do that. And then I'm thinking, I think I'm going to, after the 4th or 5th client, I'm probably going to lose interest before we reach that income level. And then when I came for this conversation, I was like, oh, I think what I should learn from Michael is When I'm growing to that, like scaling to that $5 million, I should bring in someone and operate it as a holdco. Does that, does that sound right? Like the right way to think about it? Or—

Look, I think the, I think the holdco lens should be inverted for everybody. Like, I think, I think the best way to figure out like how you want to drive your business is ultimately like what's in it for you. And at its core, the what's in it for you is what do you want to be spending your days working on? Right. And so, you know, I would invert that and not say, oh, here's the right thing to do it because there is no right or wrong. Like being, getting a job, that's perfectly fine. Doing what I do, perfectly fine. Being a bum and sitting on your couch, like also perfectly fine. It's your life. You can totally do what you want to do. And you deciding, hey, like I'm going to get bored. I'm going to bring in an operator and replace myself, or I'm going to elevate myself. Like those are all perfectly fine answers. Like, Because ultimately, like, I think the lens you have to use to look at all this is what do you want your life to be? Because too many people get stuck, frankly, where they become the servant to their business, and the business needs to serve them, right? And you'll see it a lot of times in how people actually treat their business. Like, there's that book, you know, Pay Yourself First. Have you heard of this book?

I haven't, no.

Yeah, I haven't, I haven't read it, but the title was great anyway. But, but it's basically this idea that a lot of people let themselves become a servant to their business as opposed to the opposite. Right. And I found myself doing this and like the pay yourself first idea is like normally what people do when they have a business is they pay this vendor first, they pay this employee first, they pay that other person first. And a few years ago, as I started to think about this, I was like, wait, this is all screwed up. Like this business should live to serve me, my family, and my goals and not vice versa. So like some of these like pay yourself first ideas are like, okay, your first budget item is how much money you're going to make this year, right? Like you're the business owner, you get paid first, and then we figure out all the rest after that. But most people invert that, right? They pay everybody else, pay the employees, they talk to customers, they give discounts, and then they look up at the end of the year and see what's left over. Like the idea is that's totally backwards. And so anyway, that brings that all the way back to your question, which is like, what's right? Like, they're all right. Nothing's wrong. So I'm not going to tell you, do one of these things or do another one of those things. How do you want to be living your life when you have that $5 million a year business? You could do what some of my friends do. They just stop working. It's totally fine too. None of us, and me or any other guru, is going to be the right one to tell you that one thing is better than another. Do what's right for you and make sure the business is your servant instead of vice versa.

So can you describe through the lens of your story when you were operating that company, Why did you switch to a whole co-model and actually even just define what it is for people? Um, and then I'll share sort of like where, where I'm struggling with it.

Yeah, 100%. Um, yeah, I mean, for me, like I started to think about like, what did I enjoy the most in terms of my day-to-day professional life? And what did I envision that kind of life looking like? And, you know, at the time I realized that the grind it out, Very important, very meaningful, like good, you know, very valid life of owning a business, working your ass off in it, running it very well, and doing that grind of one business. Like that was a perfectly valid path, but it wasn't the person and the life like I wanted to live. And it took me a while to get there. Like I make this sound like it's pretty easy, but like at the time there wasn't this idea of like what a holdco is or like a personal holdco. Which is kind of a great way to describe what I do, which is you end up having not just one business that you're very closely tied into and you lean into and comprises a good upside for you, but you have multiple businesses that you're doing that where you lean in usually from a board perspective and you're not operating those businesses. So in my example, like I have going on a dozen businesses now where I would qualify them as meaningful bets, right, that I'm making into businesses where I have significant equity stake. And over time, those are compounding and growing, but I'm not actually in there running those businesses. There's individual GMs or CEOs that are running those businesses, but I'm owning 5%, 30%, 70%, 100% of those businesses to where they're meaningful chunks and meaningful bets that, you know, I'm using to build wealth over time.

So I'll share sort of like why I even reached out to you. I think I'm in that similar, like, Point where I have to decide how I want to build this, right? There's a few different things that we do. There's one side of what I do, which is really consulting with really top-end creators and helping them grow their business or build a podcast or whatever. Within that, there's an option to build almost like a podcast studio. Then there's training, which is training creators. I think that's similar to your coding bootcamp, Creators MBA, which we can turn into more of a training thing for creators. And I see all of these as potentially like 7-figure businesses that could either be like in one or could be like independent. And I think when you were describing this sort of like living in the world of ideas and like not operating and just sort of like working with a team and having a GM, that sounds so ideal to me. So is that sort of like the right elements for a holdco and what should I be thinking about here at this point?

Yeah, well, so what makes a holdco for sure, like you need to have either geographically disparate or distinct customers amongst each thing. So like, like a business, you know, I talk about, uh, something that has multiple products or multiple businesses, but they all sell to the same customers. That's not a holdco, right? That's just a business with multiple SKUs. That's ultimately what that is. So I think that's the first kind of question to ask in terms of, okay, is this a holdco? Is, okay, do I have different customers? And then if you have different customers, right? Then you have the ability to go in and say, okay, well, I'm going to change my interaction model with this business, right? And this business's job is to take the capital I've deployed into it and then give me capital returns on it on an annual or semiannual basis, wherever you want to get it, pay yourself first. And then you can say, okay, my interaction model there is I'm going to delegate to somebody else the actual operation of that business down to the strategy, from the tactics down to the strategy. And I'm gonna let somebody else run that business as CEO. And I'm going to just reside, you know, in a semi-passive or semi-active manner supporting that company. So in terms of your multiple lines of business, that's why I would ask like, okay, well, are those businesses all targeting the same kind of customer base? And if they're not, then you potentially have a situation where you can create distinct businesses there, you know, all owned by you, where there's a GM for the training business and there's a GM or a CEO for your, you know, your consulting business and all that kind of thing. terms of going down that line.

It's definitely different customers in the sense of like how there's like Gap, Banana Republic, and Old Navy, right? Just from like what level people are at or whatever. So in terms of that, it is different businesses.

Yeah, so that could work. I mean, I think there's also, you know, when you start to get into the holdco model, where people often get tripped up is, okay, I'm going to own portions of all these businesses and all these different things. You need to ask yourself, okay, how much of that business is dependent upon your labor? And some businesses can't work that way in terms of being scalable. So, you know, if your consulting business requires you to win over customers, right, or your consulting business requires you to actually deliver the service, you know, that becomes very difficult to scale beyond that. So most people who end up owning multiple businesses or holdco type things are trying to figure out ways to work themselves out of jobs all the time. Because you can only really hire yourself once to run a business or work in a business, but you can definitely own multiple businesses very easily and scalably.

And I think that you sort of like hit the nail on the head, which is the consulting is so tied to me, but the training, I've wanted from the start build it so it isn't tied to me because that's the only way it's one scalable. And I actually just had a conversation today with someone where they're talking about how you can actually sell course companies, which I think a lot of people didn't know you could do. And I think that's the only way it's sellable. Um, so when I'm, when I'm looking at that, what are some of the disadvantages and advantages of going a holdco structure versus just like one company?

Yeah. What do you, what do you want to start? You want to start with the advantages? The advantages are much more fun.

Yeah. So let's do that.

Um, you know, the advantages are kind of parallel compounding. You know, they talk about serial entrepreneurship. I think holdco is really fun because it's parallel entrepreneurship. Like you can spin up businesses, you start them, you automate them. You keep them going, but you can do that in parallel, right? Whereas if you only own one business, like you're compounding one business at a time, that could be great. You just better hope that one business does really good because all your eggs are seriously in your basket. I think the other advantage is around lifestyle as well. You know, I think you have a situation where if you want to do the types of things that like are sitting on boards and coaching and working only on really interesting problems, or what I would say is novel, really interesting, big problems, hairy stuff. Like that's also there as well. You have the ability to, you know, follow your creativity and really follow your curiosity. I think when you're involved in multiple businesses, like it's super cool. Like I can become somewhat of an expert in lots of different markets as opposed to just being in one if you're owning an individual company. Other stuff that's interesting, you know, I think when you have a holdco and multiple bets, you're more resilient potentially. Like you have a situation where you own multiple things and it's unlikely that they're all going to go out of business at the same time. So those are a lot of the advantages. In the end, like I tell people considering it, like think first about what lifestyle you want to live, right? Because ultimately the things that you do when you own multiple businesses and you're You're semi-passive or somewhat active in them. And we could talk about how that model works. But when you do that, I think you have a situation where, like, that creates a different lifestyle for you. And you have to decide if that's the life you want to live. I have friends that understand entirely what I do. And they totally get it. And they could do it if they want to. They just don't want to. And that's totally fine.

Because they want to be the operators.

They just like being the operator.

Yeah.

They're just like, no, no, I just run this one business. I make good money a year. And I have a house down at the coast and it's great. Our coast, the Texas coast, it's not really a beach. It's kind of like a gulf. It's the Gulf of Mexico. Downsides are probably pretty obvious, right? If you delegate the operation of a business to somebody else, which is the right way to do it in a holdco, that's an increased level of risk, right? You also have an increased level of kind of the idea of— you've heard of the fog of war? Are you familiar with that idea?

No, I'm not.

Okay, so fog of war is basically kind of this idea that when you're a general running an army, your data points are very limited. You don't know what's going on in the opposing general's lines, across the lines, and then you're getting all kinds of crazy, stupid data points that are just lunacy. And so when I was running a business, I would get feedback from the field or from customers or different things would come in, and I eventually made a rule for myself. I just wasn't going to believe anything that I heard unless I heard it 3 times. So it could be like, somebody walking in and being like, hey, so-and-so, you know, like, location's on fire, or like, this is going on. I was like, yeah, whatever. It's like, then when I heard it the 3rd time, like, I was like, okay, that's definitely true. So, you know, that happens as you get more removed from the operation of a company. All that stuff that when you're the owner-operator of a business, You start to lose that kind of just things you learn by osmosis, like just by being around and being in the meetings every day. There is a disconnect from where your money is going because you have an investment in this company and how it's getting pushed around. There's a delay there, a delay there and a fog of war where you don't see what's going on as much as you did when you were in there doing stuff. That requires a level of trust and faith in people. Also, faith in your own ability to supervise things when you have limited information. It becomes a very different level of difficulty to supervise a business that you're not working in every day. Some people just aren't comfortable with that or they just don't want it. That's definitely one of the challenges. There are risks if you set stuff up incorrectly that you could create a situation in which one domino falls and brings down your whole empire. It's rare, but I've seen people make stupid mistakes like that.

Can you give an example?

Yeah. So for example, you know, in America, there is, um, an idea where, uh, you may personally guarantee debt, right? So, um, I've seen where debt has gotten out of control with people, and that could cause, say, if you have a bunch of personally guaranteed debt on one business, uh, that could domino where they would come after your other assets. So you've set yourself potentially up in a problem there. So that's an example of how it can happen.

This is like the Twitter Tesla thing that Elon has done kind of, right?

Uh, pretty much. Yeah.

You want to guarantee the other.

Yeah. So, you know, you're cross-collateralized in that situation. So that's a way in which you could screw it up. You know, uh, liability, if you don't do stuff right in terms of limiting liability, um, can be a problem as well. Those are all potential problems. It's rare, but like you can make dumb mistakes and end up with kind of that kind of situation. Um, you know, other downsides of the, of the whole co-model I talked about the The potential for inefficiencies, just in terms of you're not as close, so you can't run things as well as you do when you're very close to the business. You have to have board meetings and all that kind of overhead that happens.

You know what was interesting too, as you were describing some of the challenges, I was just thinking to myself, there's also an element of both surrender and letting go. Because you almost like, it's like personal development. Otherwise, you're just going to go back into the business, start like bull in a china shop, making changes. And then you're not doing what you're supposed to.

Absolutely. I mean, when I first started, started doing what I was doing in terms of running, running things like a holdco, like I would, I would like think that more of me was better, right? Like, and what I learned over time was the people that want to run these businesses and want these jobs that are CEO roles, like they actually, they have a mindset that they want to be running the business, right? And they don't want me in there, like, second-guessing them. And what I discovered was by simply showing up at meetings, like team meetings, weekly meetings, I ruined them. It was kind of like Heisenberg's uncertainty principle. You know that idea? Like, you can either know which way a proton is spinning or you can know what its charge is. Like, those are your two options. You can't know both. Like, something like that. But anyway, it was this idea that, like, by purely being there, like, I would actually ruin the meeting. So it wasn't like I was there seeing what the real meeting was. It was because when I showed up, like, I'm the boss's boss's boss, right? And I'm sitting through your team meeting and trying to be helpful. It turns out I'm just a really bad CEO at that point because, like, everybody defers to the person at the top. So, you know, you have to unlearn a lot of what your native kind of natural reaction is to problems or situations or how to deal with stuff and, like, do that better to actually help the company. And sometimes that's just Hey, get the hell out of their way and leave them alone. Um, and that's kind of great as a lazy person. I think sometimes do less, less for more is like the best thing I can ever imagine as a good— I'm like, you want me to do nothing? I'm your guy. Like, let's do this. Yeah.

Um, so, so what I'm thinking right now is like, we were, before we started recording, like we were talking about how you, like, you're doing a course and how you've structured that. And as I'm talking to you, I'm realizing it would be really good exercise to like, sort of like run through the process. With maybe the training thing as an example. So let's say I'm at a point where I'm like, okay, I have this thing called Creators MBA where we do education and courses. We've sold a few. There is demand. People are emailing us being like, when are you launching again? And I want to run this as a whole too, as not something I'm operating.

Yeah.

Is this something you start designing from the start, or is it I have to get to a certain revenue myself and then bring in someone? Or how do you How do you like sort of like do the quick start for this?

There's no right or wrong way that people get into owning multiple businesses and running them as a holdco. So some people like, and I've, I've done it both ways. Some people, for example, um, will start a company, run it, and then migrate their way out of it. I talk through in the course like how to do that and how I've learned how to do it. Um, TLDR, the best thing to do is just hire a great person and rip off the bandaid. Uh, like I've tried the like slow transition thing and it just never works well. Like, don't do it. People do that where they'll start one company, run it, be the CEO of that, and then transition to a board role as a chairperson. I've also done it where you start a company and from day one, you plan on never working in that business. You're just there helping, shaping, incubating it early on with the idea of either early on you bring on a CEO or you hire somebody that can do what you need for that period of time and then you bring in somebody. For me, it really depends on what the opportunity is and what the business needs to be able to do that. But, you know, in the case of the training stuff, you know, I think you would want to dig in there and understand, you know, what is required to get it to a point where you're comfortable having it support somebody who can work full-time and make that P&L their whole life, right? And make that strategy and all that kind of stuff their whole life. And you could do that a couple different ways. One is you can get the business to a size where the revenue supports it and you're comfortable hiring somebody. You also can come out of pocket. And I've done that before where I invest in the company and I'm like, okay, well, I'm going to underwrite this person's salary for a period of time so that they can get on the right end of the risk reward spectrum to do that. So there's no right or wrong way to do it. A lot of times what I always like to do is start with like, okay, where do I want this thing to end up in 3 years or so? And then I work my way backwards to kind of the decisions I need to make now. And you could do it either way. In your case, you know, I'd ask you, can you afford a CEO?

I think I could. Well, it depends on how much that would be.

There you go. Well, I asked to talk about how much they cost. Yeah, it's really interesting. I mean, with the CEOs, you're at the early stage able to do some pretty interesting stuff. Like, the earlier a business is, the cheaper equity is for you to kind of throw around because you don't really know if this thing's going to turn into a real business or not if you're incubating it. But ultimately, like, the lens I give people to think about hiring CEOs is, There isn't like a, like a database of what like small company CEOs get paid. I mean, they're, they're out there, but it could be anywhere from like $50,000 a year to $5 million a year. You know, it just totally depends upon the situation and kind of what's going on in the vision of the business, current state and all that kind of stuff. But in the end, like the lens is you're competing to hire a CEO versus all the other opportunities they have and all the components of what you're offering them from money, equity, Phantom stock, if you're going to do something like that, those are all options that you can use kind of as a playbook to combine with the unique experience you're going to give them that can combine to make that more attractive than the other things on the market. Or sometimes, like, some of these CEOs, especially if you're able to pay them in some equity at the start, like, you can get a significant discount to what they could get on the open market because you're giving them such a unique experience and opportunity, you know, inside the business.

That's fascinating. And I think in this case, like also I'm pretty confident we could like pre-sell the course and basically use that to fund the first operations person or CEO to start building it.

That's what I've learned a million percent. Like, you know, when we first started our training company, before we put together any curriculum or anything like that, and it's a 60-person company now, like it's pretty, you know, I consider it pretty successful. But when we were first getting it off the ground, it was a relatively novel approach to education, and we didn't know if anybody wanted to buy it. I had a long conversation with my co-founders, and they're like, okay, well, we'll start writing some curriculum. I was like, wait, we don't know if anybody actually wants to buy this, so let me go sell it first. I went out and sold it for 2 months, and I knew we could build it, so it wasn't like I was potentially going to screw people over. Also, we didn't spend their money. Until like later on, until, you know, we had built some stuff and delivered it. So I knew we could, worst case, we give them back their money, but like going out and selling stuff and to validate it, and then also using that to help fund development and do that kind of negative cash conversion cycle, like super awesome. Highly recommend that. So, and my course, like I've pre-sold the heck out of it. It's going, you know, we talked about in the early stuff, like, you know, I'm in the black. already, not counting my time building the course just from presales. So there's product market fit there that has me pretty excited.

So let's just keep going on this thread, which is, let's say you can presell, you collect a certain amount of revenue, then what you're doing is you're bringing in a CEO and identifying that person, and then you just start building it with them together. Does that sound right?

Yeah, that's totally an option. That's a path to do. Um, you know, I, I like doing it that way. Um, you know, at this point, at this point, I don't want to sign up for another CEO job. Like, I've done it enough that I'm like, oh, I don't want to do that anymore. I have much— I get much more joy out of coaching somebody else through the process and being their support system and asking them good questions and being the person they can call, you know, that's on their side and aligned because we have equity in the same thing, right? And we're, we're aligned that way. But yeah, so, you know, that's something you could definitely do. Um, and I think it's kind of the beautiful way to scale entrepreneurship. Yeah. parallel entrepreneurship idea. It's like you can only hire yourself once. So what if you want to work on 3 things at once and you want them all to turn out great? Well, that's an option. You just got to sell somebody to do it. So that's the hard part. Yeah.

And this is actually where I was going with this because what's funny is as you're describing this, I literally have the person in mind who would do this and we're literally figuring out how we're going to work together. So this conversation is directly going to influence what we do there, which is great. Yeah. I remember talking to a friend of mine who worked at Vista Equity, and he said one of the most unique things about Vista, which is the hedge fund that owns a lot of SaaS companies, is they have a really great executive bench of people they can bring in to any company that they buy. So in this personal holdco world, what have you learned about hiring top performers and not just hiring them, but actually retaining them so that they're like still like happy and growing the business and don't leave?

Yeah. Yeah. Well, I think that's, you know, my lens on thinking about retention is you have to give people these days an opportunity that's bigger than money. And I think that tends to center around 2 things. Number one is like the things they get to do every day and the experiences they're getting, like, are you helping them grow? And then the second thing is like, I think so many managers, especially people my age, I'm Gen X, like we grew up in the like, leave your personal stuff at home. And so many of like my friends still have a hard time getting out of that idea of seeing the people around them solely as professionals. And like my lens in which I try to work with people is how do I create a situation where I'm going to see you as a person and solve for that first instead of solving for money? Right? And so like, those are kind of the lenses there that are above and beyond kind of the financial aspect of it, because frankly, in this job market, somebody can always go find a higher paying job, period. Right?

Mm-hmm.

But how do you, how do you compete with that by competing in a way that's going to provide them a unique opportunity to grow and a unique way to be, right? And so I spend a lot of time leaning into those things, like every CEO that I work with, like, We're doing regular one-on-ones. Like, I'm spending a lot of time asking questions, coaching them, supporting them, like seeing them as people. Like, and it's not my natural thing to be like, how are your kids doing? And I genuinely do care. It's just that I'm not wired to think about it because of the generation that I'm in. Right. And we're totally— Gen X is totally different from boomers, by the way. At least, at least, you know, at least, at least Gen X is a little bit more the middle child in the whole generational thing. But like, so that's, that's my lens to look at that stuff. Like, I'm not gonna, I'm not gonna try to win based on paying you absolutely more. Now, do we need to pay you a super fair wage for what you deserve? Absolutely. And so that could come, you know, paying somebody fair wages could come different ways. So one is a great way is, you know, a good salary, right? Do you have a nice, nice salary in terms of what's being paid? Do you create alignment around the bonus structure? So I did a thread on Twitter where I talked about the way I like to do bonuses with people is to structurally align things to me, right? And what do I care about? I care about growth and enterprise value of the company. How do I care about growth? What derives growth of enterprise value of the company? That's increased profits balanced with increased growth, right? Those are the things together that you want to have a healthy growing EV over time. And so those are the things where I try to create alignment around those things through that kind of bonus thing. And then sometimes, and it's not always a must, like, you know, is there some sort of equity where a person's a partner in the business? And, you know, that's not a universal thing where people own portions of the business, but it's, it's a possibility. And it's just part of the toolbox as you're thinking about like recruiting this other person. Like, it's the third kind of thing that you have at your disposal. Can they own part of the business? Uh, and when somebody owns 20% of your business or 50% of your business or 5% of your business, it's a meaningful part of their net worth. Uh, it's pretty easy to do retention then because they're in the same bucket as you. They don't want it to go to zero.

And I can see like how, like, so like combination of equity and, um, profit share would keep someone aligned. Um, I bet it's really hard to—

Look, let's be realistic. If, if I'm doing— if you're doing your job right as a holdco CEO, you're not keeping them in line. Like, you want to hire people who are going to keep you in line. Like, I routinely am okay being managed by them. Yeah.

What do you mean by that?

Uh, so normally, so normally people have this idea that when you own a business, the ideal outcome is you are somebody that as the chairman or whatever is giving the vision.

Yep.

Or telling people—

That's what I had in my mind as a mental model. Yes.

I think that's exactly backwards. I think it's exactly backwards. Like, like if you want your your team to take an entrepreneurial ownership of the thing, do you think they're really going to give a shit about your vision for the business?

Like, well, then they're not being independent thinkers then. That's right.

No. Yeah, you, if you want somebody to truly believe in a cause, the best way to do that is for that cause to be their idea, right? And then you mutually agree that this is all going to work, right? So like, it's, it's actually backwards. for the chairman to walk in there and be like, I am here for 4 board meetings a year, and I've got this all figured out. And I'm going to tell you, based on all I've seen, this is our vision for what we're doing. Now, you can go in there and do some other stuff, but ultimately, you're much better off if the team comes to you and says, we've done an analysis of the market. We're watching which ways we're going. We understand your parameters as an owner and our needs as employees. And the team here as well, and all of our customers. And we think the best place we go is, we're going to go to this place a decade from now, and this is the business we're going to have. Does that align with your interests? What do you think? Can you— can we approve that? Yes. That's the way to have somebody feel like they're on an inspiring mission. Not for me, some jackass from San Antonio walking in there being like, hey, like, we got it all figured out. Like, I've been— I spent 45 minutes thinking about your business. And like, I've got— I've got the whole vision figured out. You do things right and you have the CEO driving and managing you as a board and taking real entrepreneurial ownership of it. That is so much more powerful than some rando who is up on high coming up with that kind of stuff.

It's almost like, sort of like you're helping them edit what they've created instead of writing it for them.

Um, million percent. Now, now I think there are, I think I don't want people to misunderstand this. There are things that you have to do as an owner. Right? Like, like the higher— I think the higher you get up in an organization, especially on the equity side, the more it's your job to manage things that are the meta around performance goals and the meta around performance. So for example, like one of the lenses I have is like, like a lot of my job is just maintaining very high standards. That's it. Just saying we're going to have really high— this is a, this is a culture of excellence. Or we're not gonna do, we're not gonna go chase that like quick buck, right? Because what we really wanna build here is XYZ, right? And so one of the examples is our coding business, the coding school, Coda. They have a, they have basically 100% tuition refund guarantee. Like we started doing this before anybody else. We realized we were in the help you get a job business. And that was going to help you change your life. That's our mission. That's the why of what we do. And that's the job to be done kind of idea. You familiar with the jobs to be done idea?

Yes, jobs to be done framework.

Okay, so it's like, that's the job to be done here. It's not teach you coding, right? It's, it's, we're going to help you, we're going to be Yoda to help you change your life. And so the North Star for that is, okay, like, we're going to have 100% tuition refund guarantee if we don't get you a job which helps you change your life, right? And so that North Star there, like, there were times where, like, we had a potential situation where, like, some regulators were going to make us stop doing that. Like, they weren't going to let us give customers their money back because they felt like it would hurt, I don't know, something. So that was a regulatory thing. And I was like, nope, we're either doing that or we're going to shut down the company. Like, those are the two options. You could just tell them that's how we're going to do it. So there's that high level of standards. In terms of what our core value is and what kind of business we're going to build. But like, it's very rare that I do that, but the 2 or 3 times a year or every couple of years, like, that's part of that high standards thing where it's like, okay, we're all agreeing what the sandbox is and you guys need to tell me what kind of castle we're going to build inside of it. And then we'll help you collaborate on taking that to the next level if we need to. But otherwise, generally, they're telling me what they're going to do.

I'm sure, It's not trivial to find these kinds of CEOs. So can you describe your process for hiring these and finding and hiring these CEOs, maybe with a few examples of companies that you've done?

Yeah, I mean, there is, um, there's a great, you know, a great situation where like you are, you're kind of incubating a business at this point, like bringing on a partner who wants to be the owner, a co-owner operator is something you can do very early, right? And that helps you de-risk the business a little bit because you almost get more of a co-founder in that situation, though you're usually putting in capital to make that work. So that's an option. You know, for me personally, I actually, and I guess this is a theme, like I invert it. And a lot of times I am building a roster of people kind of like Vista does, but they're just people I run across. Where like last week I got introduced to a guy who's Um, you know, has been a COO, GM for a number of telecom businesses backed by PE, decided to move back here to San Antonio. And I was like, okay, cool. Mental Rolodex. Got it. Like, there'll be a moment where I call that dude. Like, he seems pretty smart.

Mm-hmm.

So a lot of times I'm inverting where I'm starting with talent because that's actually harder to find talent than it is to find— at the very earliest stage, it's, it's harder to find talent than it is to potentially find deals. And I know everybody complains about trying to find deals is hard, but finding talent is a lot of times harder. So at that very earliest stage, like they can be coming as a co-founder or somebody like there, and that's, that's, that could be a good model there. It is easier to recruit somebody as a co-founder than it is like kind of your stage. That's how I would kind of think about them, than it is just to be a hired gun when there's not really a there there.

Right.

But as a business gets bigger, say it's if you're bringing on hiring a CEO for a $5 million or a $10 million or $20 million a year revenue business, it's totally doable to just run a process and hire a CEO for that business. And it's fascinating because there are orders of magnitude more people that want that job than there are jobs for small business CEO. Because most people run their small business like, oh, I'm going to own and operate my trucking company. Like they don't, they never even imagine hiring a CEO for it. This is a relatively new thing where small businesses like this have a professional CEO. But there, you just run a normal process. And, you know, my process is I go hard, like I go put it out everywhere. I write a job description for it. I write a good job description that's compelling for somebody that wants those kinds of things. And then I look at the candidates that come in. Me personally, the way I like to do stuff, um, is I don't like to hire the like tried and true old gray hair, been there, done it CEO type with a bunch of bad habits.

Mm-hmm.

A, they're going to want to be paid like crazy. B, they typically don't like to work very hard. And C, they don't have much to prove. I would much rather go hire somebody who is what I call a cusper. A cusper is somebody who is just about ready for the job but has to stretch to get there. So I've done things like hire somebody from an entirely different industry and just be like, okay, well, you seem like you have a track record of success in this other industry, so I'm going to give you a chance to learn all about this one. That stuff has worked out generally pretty well. Hire for, you know, as the Silicon Valley guys call it, you hire for slope rather than intercept. Have you heard that kind of quote?

I feel like I haven't heard that. I've heard the invest in lines, not dots.

So there's 2 different ideas. So invest in lines, not dots is like, you know, you're looking for trends. So, you know, that's why like a lot of VCs are like, I want to have 4 meetings before I give you money. It's like they made up their mind in the first meeting. It's like, let's be real, right? Like, you either pattern matched or you didn't. But anyway, we can go into VCs.

Exactly what I was thinking.

You can go to VCs if you want later. But yeah, so slope versus intercept is like, it's, it's, it's a— I mean, this is another typical nerd thing. Like, let's make a more complicated way of describing something very simple. Like, do you want to hire for potential? and trajectory of where they're going to be, or do you want to hire for what somebody's capabilities are today?

Right.

And when you hire for somebody's capabilities where they are today, generally you're going to be hiring them close to their ceiling, right? Because they've done it before, they did their best. So maybe that's the lines, not dots idea. But anyway, that's how I think about it. I would rather hire somebody that's going to be a 70% chance of being a 10x person than somebody that has a 100% chance of being a 2x person.

And that's exactly the person I'm talking to. The person who introduced me actually said something really interesting. They were like, this person is one of the fastest learners I know. And I went back, I was like, wait, do you mean fast or fastest? Because they're very different things. And he's like, nope, fastest. I was like, cool, this is interesting.

So one of the things that's very important to that, and this is also something I do that's Maybe counter to the way most people do it is, you know, back in the '50s and '60s, quantifying the person through assessments and all that kind of stuff, it went into vogue and it went way out of vogue. Like, it suddenly became not cool to give somebody like a cognitive ability test.

Mm-hmm.

Um, and I have come back to really appreciating kind of just the ability for somebody to take in, process information, to be quick, you know, quick on the draw, so to speak. In terms of processing ability, as a very, like, um, a very selfish person, I learned I liked spending time with those people much more. I hated explaining stuff 3 different times. Like, I wanted people who were just quick. So that's what I do now, actually. I'm very cognizant of, through my hiring process, I will screen out people even at executive level, uh, based on a cognitive assessment. And I use like one of the off-the-shelf ones. And by the way, Vista does too. If, if you, if my hiring process involves cognitive and personality assessments, guess who else does that? Vista does. So you've talked about Vista, like that's, that's where I got the idea.

Are there specific tests that you're using and even like questions you're asking that person to make sure they're a good fit?

Um, so 3 core systems, you know, in my hiring process, by the way, you can find all this on a Twitter thread. Um, I give everything away for free. So 3 core systems that I use that are all off the shelf. So number one, I use a cognitive assessment, and that comes from a company called Criteria Corporation that costs like $1,200 a year. They have a whole battery of assessments you can use, everything from typing to basically— they call the one I use CCAT, and it's kind of a Wonderlic-style SAT timed thing. So. So that's number one. Number 2, I love to use a personality trait assessment tool, and that's basically— it goes through and it's basically— think of DiSC, but it is done on a scientific basis. So DiSC and Myers-Briggs and all that stuff, like, the concept is great, but none of them actually have any real science behind them. So there are 2 tools that I recommend. It's like a selfie. It's kind of like astrology. Well, do you know how Myers-Briggs came around? Do you know where the name Myers-Briggs came around?

I don't, but is it astrology-related?

It's close. Myers and Briggs were a mother-daughter team who, back in the '20s in the United States, it became very vogue to get into astrology and personality assessments. This was very big across the United States. And they invented Myers-Briggs personality assessment from their living room based on their experience meeting people. That's how it all came about. There's a fascinating book about how all these personality assessments came about. And when you understand that Myers-Briggs was designed by Myers and her daughter, Mrs. Briggs, and started to sell this thing, like, you start to see how it's kind of bullshit. So anyway, the 2 tools I really recommend are use those same ideas as Myers-Briggs. and DiSC, but they're scientific-based. So the one I use a lot is called Culture Index. There's another one that looks just like it called Predictive Index. They basically do the same thing. They ask you to tell me adjectives that you think describe yourself, and then it builds a model of your personality traits. And not that anyone is right or wrong, but it tells me how you're wired and what you're interested in. And I can trace back all of my behavioral works and the things I do to that model of personality that comes out of that. It's interesting. I have colleagues that originally started being like, I don't believe that at all. I'm not going to use that thing. Then 2 years later, they're like, this is like a cheat code, dude. All these people, they were just faking it, and now they're like, now I find the job that's right for a person. The cool thing about, I think, a personality assessment tool like that is you have a situation where there's no right or wrong. You know, like the cognitive thing, if you score zero on the cognitive thing, I have bad news for you. You didn't do very well on the cognitive thing. But like on the personality assessment, there's actually no right or wrong answer. There's just right or wrong roles for how people are wired.

Right.

You know, you don't send somebody who hates rules and wants to live in a creative space to be an accountant. It's the worst job ever. Right. And so it was interesting when I went through the sales process for the personality assessment tool, The guy looked at my graph and he goes, Mr. Girdley— by the way, I'm an agent, but people call me Mr. Girdley, unfortunately. Mr. Girdley, I have great news for you. I'm going to pay you $5 million a year. I was like, that sounds great. Then I'm like, I'll take the job. What is it? And the guy goes, your job will be to sit in a room following rules, optimizing spreadsheets for audits. That sounds terrible. Like, I have no interest in— so you start to see, like, could I do that? Yeah. After a while, would I try to kill myself? Absolutely. Because, like, that's the worst possible job I could do. So Culture Index and Predictive Index, those are 2 tools that I recommend to people. They're not cheap at all. You know, you're going to pay somewhere between $8,000 and $10,000 a year for a tiny business to use them. But, you know, their argument would be, which I think is pretty right, You know, how much does a bad hire cost you? Is it worth it to do that? So we use that everywhere. And then the third system we use for interviewing is a system called top grading, which is all in a book from like 2003. And I actually had the guy that wrote it on my podcast. He was pretty awesome. He's like in his 70s and his name's Dr. Brad Smart. It's kind of a cool name if you're going to be an author, but basically Topgrading is a whole interview methodology that takes a lot of the common ideas that people have about interviewing and it inverts them. You'll notice a pattern here. I'm a natural contrarian. So it inverts all of those things and makes them— makes a lot of those ideas that we get wrong about hiring and flips them on their head. So super cool.

I love, first of all, the specificity with which you're answering all of these. The example that you described with the operations thing, I was thinking that too. I was like, if I was in that scenario and the guy was like, $5 million for ops stuff, I would never do it, right? Because you're— and like you said, you're not looking for right or wrong, you're looking for fit.

Absolutely.

Do you have examples of maybe where someone was in a role in one of your companies, not the right fit? Did one of these tests, shifted them around, and they just sort of like flew. Or how like you use the test to influence what the right role would be for a person versus the wrong role.

Yeah. Well, I mean, there's this interesting dynamic in a lot of hard-charging companies where you'll see that there'll be a hard-charging CEO, COO, like very driven type folks. And kind of what happens with a very driven leader? Have you seen, have you experienced somebody like that in the past? What happens to their staff?

Burnout.

They can get burned out or somebody needs to come along and, you know, as my buddy calls it, uh, the boogers and tears problem, right? Like they'll be just like, they just don't, they, they don't let feelings get in the way of the mission. Right. And there ends up being a lot of times in these companies, especially the successful ones, if you'll see a very hard driving CEO. There could be typically somebody on their staff who's actually running around doing a lot of that social lubricating and smoothing stuff out behind them. And so you'll see it, for example, they're usually very good people people and they get along with everybody. And routinely we've been able to identify who those people are going to be, who can run around and clean up behind the messes that the CEO leaves without the ship blowing up. Um, so that's a great example of like, if you know that person's there, you can put them in the right role to kind of do that stuff. Similarly, there's a personality profile that's really good at working on whatever the biggest unique challenges in the company, like kind of strategic type stuff. And then 9 months later, they're going to be bored invariably, and you have to move on to the next thing. They're like a professional smokejumper. So you wouldn't know that talking to the person, because if you just know them, you think they're like very, like, very personable. But when you see their personality profile, you can be like, oh, this is how this person is going to work great. Because if I leave them in the same thing for too long, they're gonna get bored and they're going to consider quitting. So I actually need to just let them go focus on one thing, go fix that thing, go smoke jump that thing like a firefighter, and then come back. So you can kind of create those roles that I think really, in my mind, are the greatest gift you can give to anybody, which is like, how do I find and craft the perfect role and situation for you as an employee or a team member to where you'll feel like it's not even work at all? And like, that's the most powerful. And it's a beautiful thing when you can do that as a boss, because you're just like, man, like, like, you're just like a Stradivarius violin being played in the situation. Whereas if I put you in something else, like, you're like one of those like Tonka toy Like drum kits, right? Like, how do I help you find that place where you're just going to be playing your absolute best music just because that's how you're wired?

I love that because you're basically helping people find their zone of genius. Going back to what you were saying initially, sort of like you're separating yourself as the whole co-CEO from the company CEO because you don't want to step on their toes. How do you actually implement this in terms of making sure people find their zone of genius when you're one or two orders of magnitude or whatever levels Yeah, I mean, there's a combination of things that happen when you're the holdco CEO there.

You can influence, you know, I think 3 different ways. So number one, you can influence kind of the systems the business runs with. Um, you can secondarily influence kind of the values and the level of excellence that you have. And then, and then number 3, you can influence through coaching. So we can talk, let's talk through each one of those. So systems-wise, like I've learned the easiest way for me to operate is to—

And by the way, uh, really quick, if you can share examples of each of those, that would be very helpful. Oh, cool. Yeah.

So, like, I, like, number one, so influencing through systems becomes really powerful for me because I've gone through and said, okay, like, everybody needs to use this mode of hiring and, or everybody needs to use this particular thing. So, like, in the case of how business strategy gets done, you know, I've gone through with everybody and said, okay, we're using this business operating system, this, this This system here, and the one we use is called EOS. It's— you can learn it out of a book called Traction. Yeah, I tweeted about that the other day. Also on LinkedIn, because, you know, I'm a LinkedIn influencer now. I don't even know what that means.

But, uh, it's that— I don't think anyone knows what that means anymore.

Well, I mean, I'm kind of enjoying, like, that's part of the fun, I think, when I, you know, I'm like, you know, Sometimes I'll write a tweet like, because I'm a social media influencer now, I have to shill you my course. So anyway, all pretty fun stuff. I joke about it. So like, for example, like using the EOS system, you go into an individual company, you say, okay, everything I'm involved in is going to be using the same system. I'm happy to change it. We can use a different system if you want, but you need to convince me it's better than this one, and I'll change everybody else over too. We're just going to use— we're going to pick one and we're going to use that one. Mm-hmm. So what that does, for example, like EOS is very powerful because it has a, you know, like a one-page front and back strategic planning exercise that you do, like business paint-by-numbers basically. And so for me, that's super powerful because if everybody's using the same common language, I can be in a situation where I can just look very quickly and understand, okay, what's your 10-year vision? Like, what's your unique value proposition to the market? Like, where are you going to be in 3 years? How are you doing goal setting? All that kind of stuff. All that stuff becomes very powerful for me and makes my job very easy in terms of interacting with these companies. I can also influence them to run the system and I know they're going to have to have the type of discussions with me that I want them to have if they're going to run that system correctly. That's kind of how you can influence stuff via systems. I talked to number 2 about this kind of values and you know, an ethics kind of approach to stuff. Like, you know, I think in a situation I talked about before, like where the regulator was talking about not allowing us to do our brand guarantee, right, where we're going to give people back their money if they didn't get a job, you know, like that was like, whoa, hey, like core value. Like, we're not going to do that. Like, not cool. Like, we're going to shut down the company because that's how important that is. And, you know, I think like there's also You know, values where it's also like how you react to those things. And that's kind of the third bucket of like coaching and the interactions. And like, so for example, you know, we had a situation at one of our companies where a man in his early 40s, he had a stroke and he'd been working with us for a few years. And so, you know, it was really important to us to keep him taken care of, right? Who cares about the money? Like, how do we take care about you first? And like, I don't know if you've dealt with somebody who's had multiple strokes in their early 40s. Like, it's a mess. Like, he could barely talk, he could barely walk. Um, you know, and my brother and I, you know, we said, look, more than anything, what values is people involved in all this? And like, we were very intentional about leaving him on our payroll for almost a year. We paid him almost a year's salary. Just because we wanted that kind of coaching and influence to happen to where we wanted to send a message about what's really important here, and it's not our bottom line or pocketbook. I think there are a lot of people that would have sent a different message, and we wanted to send one that was very different. That's that kind of coaching and interaction model type thing where you get to influence that stuff as well. Very rarely am I in a situation where I'm just like, this is how it's going to be and this is how we're going to do it. It happens a couple times a year, and that's fine. But I don't want to be in a situation where I'm doing it too much as a whole co-owner.

What I hear in that too is again, that sort of idea of you're not being the bull in the china shop going into the business and just changing everything or whatever. You're really stepping outside of it and looking at what are the different elements of the business that you can change, which is very different from being a company CEO. It's probably pretty jarring when you make that switch. How would you differentiate the day-to-day between like an operating CEO versus like a holdco CEO?

Yeah, like everything you do inverts basically when you go from opco to holdco CEO. Like, think about what happens right now in your business if there's like a problem, like you get ransomware.

Like, I'm on it. What do you do?

Yeah, you're on it. Like, when you're a holdco CEO, you know what your response is? Man, that sounds terrible. What are you going to do about it? How can I help? How can I help you? What do you want to do about it? Right? And so, you know, very rarely am I going in there unless obviously if the building's on fire, like I'm going to lean in and do stuff and that's what you have to do. But that's very rare, right? Invariably, you know, what you're going to see is problems get escalated to you when you're running a holdco, you know, you're passive in a business. You have to trust and then default to the opposite of your instinct when you're an operating company CEO. You don't lean into it. You actually stand by and say, okay, I'm part of your team. How do you need— what do you need me to do? How can I help? Sometimes they just say, just stay out of the way. I just need you to know about this. That radically kind of shifts that stuff. I think we talked before about the things that shift in terms of how close you are to things, what kind of decisions you get to make. Um, you know, there are times when the opco CEO makes decisions that I probably would not make that way if I was doing it. Uh, here's, here's a little secret about it. Most of the time they were right. But that's, you know, that's if you hire good people, right? Um, so if you have good people and the right person in the seat, they're gonna, they're gonna have a better hit rate than you. Um, which may be jarring to people who are like, I'm really good at business. Well, it turns out like You with limited information and partial focus is not better than somebody else. And this other person is likely, if you hire the right people, this other person is likely going to be better at running the business. Even if you had full information and full focus there, if you hire the right person for that situation, you know, they're potentially going to be better than you. That's, that's what I've seen. You know, if you, if you look at all of my significant positions right now, the people running those companies, are now doing those businesses better than I could.

I think again, it's like what I hear in that story is like sort of this idea of like not having an ego about it. Right. And I think of like, I'm like 11 or 12 years in business and I think 3 or 4 years ago, if you had asked me like what I know, I would have been like, I know everything because I'm like 6 or 7 years in. And when you hit like 10 years, you realize you actually don't know anything. Because the stuff that you don't know is so much. Did you sort of like have that sort of like personal evolution yourself where you went from, oh, I have to know everything, to, oh, it's okay if I don't know everything, and that's actually the better way of operating?

Yeah. I mean, the best moment that I had kind of in that journey was when I went on like a 3-week vacation from running a business. And I came back and everything was running better without me. I was like, wait a second, what's going on here? Like, objectively, things just went better when I was like, oh, I should just trust these people and let the great people do their jobs. So, you know, that was an evolution of stuff. And look, I think it's— I'm 47 now. I think there is a level of— it's easy for me to say, yeah, just identify what you're not very good at, you know, just like, don't do that.

Mm-hmm.

It's, but that's hard, right? When you're 30 or 40 or 35, your sample size is much more limited than mine. Like my sample size is, I've got almost 30 years in business.

Right.

Like, of course, like I have more data points about what I like and don't like and who I like working with and who I don't like working with. And, um, yeah, it's just a different, it's a different thing where I don't want to be that like older person that's like, oh, this is so easy. Like, yeah, you just do, you just do it that way. You know, and it's— I hear it all the time, like these older, like rich, like successful people are like, yeah, yeah, failure is fine. It's like, no, it's not. It's not fine. It's not fine to some 28-year-old. You want to know why? Because 28-year-old has not had 25 years of business success, right? And they haven't had W's, right? So for me at this stage in life, if I have some L's, it's like, you know, I had some L's, whatever. But like, like it just pisses me off when some 65-year-old is like, yeah, Just go out there and just do it. And it's like, well, no, like these people are scared of failing because that is a lot of failure to them, you know, because they haven't had any W's. So anyway, I don't want to be that guy that's like, yeah, just do the stuff you're bad at. But for, but for, I think the optimal journey is eventually you end up in this egoless situation where I'm just, I'll tell you right now, like, like you give me a contract longer than 10 pages, I got to find somebody else to read that thing or a lot of coffee to like go through and like say this. I was like, Because I just don't have it in me. Like, it's just not how I'm wired. But you want me to look at a very complex situation with a bunch of indeterminate information and pretty quickly give you what we should do right now? Yeah, I'm pretty good at that. So I'm good at stuff and I'm bad at stuff, and I try to do less of what I'm bad at.

Yeah, I think a lot of like creative people don't usually like the contract stuff and the accounting stuff. Um, let's say like you're, you're operating with Holt Quinn, you have like 2 separate companies, and you've learned all of this about yourself. What does the operations of a holdco actually look like?

Yeah, so there's different flavors of holdcos, um, you know, and I talk about that a bit in the course. Um, you know, there is— there's different flavors of holdcos that match kind of the assets you're going to be holding, right? So at one end of the spectrum, you could have something that looks a lot like Berkshire Hathaway, so Warren Buffett's company. That's kind of the holdco most people know. I refer to that as a purehold co, and that's just a set of heterogeneous things or businesses that are all independent. They have no shared services, and there's typically a very light headquarters staff. So I think last I saw Berkshire Hathaway's worth half a trillion dollars or something. They have 28 people in Omaha, like just very limited, right?

Mm-hmm.

So that's kind of one thing where sometimes you just have your headquarters staff whose sole job is just capital allocation. and, uh, and preparing financial reports. That's all they do. So, you know, that could be a pretty, pretty simple situation. If you look at the way I do stuff, I have a disparate set of things. I have basically no, no, no staff whatsoever. Um, I do have a chief of staff that started a couple of weeks ago who's like helping me be less terrible. Um, and then, you know, that creates kind of a situation where you can have a very light situation where mostly my job is those things that I talked about, kind of looking for new deals, looking for opportunities, trying to put those together, supporting the CEOs, and then being part of the kind of supervisory process of that stuff. And that's generally how I spend most of my time working with companies and that sort of situation. So that can work well in a pure holdco. And then there are other models where there's more centralized services. So one of the things, if you want to, is you can build a holdco and say, in your case, you could have a centralized accounting and HR function, and you have these different business units that all kind of centralize those things. There are different types of things that work, different types of asset types that work better in those types of things. I talk a bit in the course about the different types of those types of entities. One's called a platform, and the other one's called accumulators. You see some of those, and we go through those examples of kind of how they work. But in those situations in which there's more centralization, Your holdco CEO will be much more operational than, say, in the Warren Buffett style where he's just like sitting around waiting to see what he should buy next and then collecting, you know, collecting his P&Ls when they get sent in from their companies.

So in the second one, the holdco CEOs, when you said like more operational, you mean they're doing more of the running of the company, less of the vision or something else?

They— there is more stuff happening in the headquarters that they have to supervise and run. So for example, if you decide, let's say in your holdco, you like, you're building 5 different businesses and you want to have centralized sales, right? Or centralized marketing. Then that falls on the holdco CEO to provide that service, right? He, she will supervise that and you'll have more centralized stuff. So as you start to get into this situation where you go to these different models, you potentially have a holdco situation. where the holdco CEO, instead of being 100% allocator and 0% operational, could be 50/50, for example. And those are all kinds of models that you can decide what kind of company you want to build. There's no right or wrong.

In most cases, are you always incubating companies, or maybe in other cases you're taking a percentage of companies? So for example, like, here's what I'm thinking about, right? Which is, We have all of these services that we use, like video production and stuff. And I realized at some point that whenever I hire a company, we're actually working with them to improve their processes, change their IP and how to do things. And I was like, okay, either we need to have this in-house or I need to have a part of this company. Is that where your whole co would basically take a part of their company and that becomes one of the companies within your whole?

I mean, that would be definitely a possibility. I mean, you just start with where, you know, where you see an opportunity to go build something inside of your portfolio of assets. And does that align with kind of your vision of where you want to go? And, you know, in the course, man, I feel like such a guru. Like, let me tell you about my course. But like, it's— I built this course because I like got so sick of like everybody asking me the same 12 questions. I was like, I'm just gonna— I'm gonna record all the answers. Um, but I think the lens there to look at it, and I walk people through it, is you pick a long-term vision of what you want your personal life to be, and then you build the business around what you want in terms of that. And so you have to figure out what that vision for yourself and that life you want to have is. And then you say, okay, well, you know, what sort of portfolio do I need to start to build to reach that kind of goal? And in your case, like, if you see an opportunity to build a business that matches the lifestyle you want and the vision you have for yourself, where you could go say, okay, hey, like, I'm spending this much money on video production, but they're doing it all wrong. And I think I could do better by building a business around that and having that strategically synergize with my existing businesses. Like, that's a totally fine thing to do. There's no single path kind of to get there, but it all ties back to this idea of not like, what's the opportunity in front of me? It's like, how do the opportunities in front of me tie to where, like, I want to go in terms of your future vision for yourself and kind of your life and stuff?

The other thing I'm also thinking is, what you're sort of changing my mind on is, if you think of levels of abstraction, you can almost change the business model you engage with someone in based on this. For example, a lot of creators that we talk to are sort of stuck at their 200,000 or 300,000 mark and don't know how to scale.

Yeah.

And so my first instinct was we should create a course on operations And on how to operate a creator business and sell that. Right. And now what I'm realizing is, oh, maybe that is one option. But the other option is to almost set up a holdco that comes in and operates these businesses. And to do that, we could take a percentage of their businesses, those businesses, and that becomes like a holding company of different creator businesses where the head office is basically helping operate them.

Yep.

It would make me way more as a business. Yeah.

And there's, there's some parallel models to that. Like if you look at like physical therapy practices, have you heard of this thing called an MSO? I forgot exactly what that stands for.

I haven't.

But so basically the idea is like physical therapy, there's these things called MSOs. And basically what they do is they go in and they abstract out a lot of the stuff around the running of the business of being a physical therapist, right? So physical therapists are kind of like dentists. They're expected to be these folks who are basically like technicians, right? They've gone through— they have PhDs in physical therapy, but then they're also supposed to be like billing managers and facilities managers and staff managers, all that kind of stuff. So a lot of what, you know, what has happened is, is you've— people have centralized that kind of like a PEO does for your staff, right? You're familiar with that idea?

Yeah.

So imagine a PEO, but instead of just doing staff, what it does is it does like all your back office stuff. It probably does some other stuff as well, like coaching and personal development, and then also potentially does things around collective marketing, billing, negotiation, all that kind of stuff. It centralizes all that stuff for a lot of these folks. It basically becomes just like the business in a box situation for them. It seems like a good idea. I like it. Workweek and some of those other guys are trying different models around that. But I like that much better than just selling somebody a course, just because like courses are cool, but recurring revenue is much better.

And it's also like the upside can be so asymmetric, right? Like for example, I've coached creators on growing their business and I've charged the same amount, but the, like someone maybe like adds like $1,000 to their business or tens of thousands, but then I've had people who like paid $2,000 or $3,000 and they added like hundreds of thousands to the business. I was like, should have gone with a different model over there maybe.

Totally. Yeah. Like you get, you get $2,000 no matter what. It's very, it's very, uh, not asymmetric. It's asymmetric for them.

Yeah. And one thing I'm also thinking about is like, I'm sure like as you were starting to do this in terms of like legal or tax or compliance and stuff, you probably made a lot of mistakes at the start and then created a structure or a way to like handle that now. Um, if someone wants to do this, what do some of those like early mistakes look like? And then what is it kind of like team you want to have around you to make sure you don't end up in jail?

Yeah, well, it's— I mean, there's lots of ways to end up in jail, but generally the whole code's pretty hard. You know, I, I'm a big fan of there is no one-size-fits-all in terms of how you construct stuff, right? Like what you're doing in particular could be done with an LLC. It could be done with a combination of different stuff. You could own it all by yourself. Um, you could structure stuff in really radically different ways, different states, all that kind of stuff. So there is no one-size-fits-all, um, which is tough. But the key thing is it's also a one-time thing that you do, right? You're not in a situation where you're trying to like decide every week how you're going to structure a holdco. So the right, the right thing, and the thing I think I was very blessed with was, um, because of coming from a family business and being part of that from the beginning, we had a good set of advisors around us that I basically inherited. Like I didn't have to go find them. Um, but as I worked with my friends and sort of see how they did stuff and sort of see how they built their holdcos and also their individual businesses, started to understand like the universe of people you want to have around you. So you make the right decisions on these big one-time, one-way door type decisions. Like how you're going to name your business is actually a big one-way door. thing, and you kind of don't want to name it the Microsoft School of whatever, right? It's like they're going to come get you. You can really screw that up. So I walk people through this universe of people that you need to hire and you need to have around you, and everybody from a structuring attorney to tax advisors to trademark attorneys to your CPA to a CEO peer group, these are all people you want to have in your network kind of bench people because when you're actually running a holdco or starting a business, I think you know this, right? Like, it's a very lonely thing. Like, there's nobody who's actually a peer for you.

Yes.

Like, you can't go to your staff because they don't understand what you're going through because they don't have to make payroll like you do. Um, but all of that comes back down to, like, surrounding yourself with the right folks, coming up with the idea of what you think is the best way to go about it, and then going back and validating with those people to say, okay, here's what I'm doing. And what I've learned the hard way, and I've done this multiple times, so go to mistakes, like, like I've cost myself hundreds of thousands of dollars to save $500 in legal fees. Like I've done that multiple times. Uh, and it's just like, oh, like, you know what I should have done? I should have found a good advisor and trusted them and like gone through that process. And I talked to folks about like, how do you find the right people to be these advisors? How do you vet them? How do you, how do you determine who you want to work with and who you don't want to work with? So that's all part of the process of doing here. I wish I could give somebody like a recipe and be like, just do this. But it turns out there are so many moving parts that it's— and they change all the time that it's basically impossible for me to give you a recipe that's always going to be that way that works for everybody.

Which is sort of like where the custom based on the kind of business comes in.

Totally custom based on, like, for example, at your, you know, at your, at your holdco level, right? There are people that are doing holdcos where Let's say they own 40% of the business and they've sold 60% of the business to other people. Well, that gets structured in a certain way. How does that get structured based on what sort of entity should you choose based on tax ramifications? Well, tax ramifications depend upon what is the plan to exit the business? Well, when are you going to exit the business? Like, what state are you in? Where are the investors from? Like, did the people who put the money in, did they come from Canada? Like, all those things can start to get very complex very quickly. And I just talked about one permutation, which is At your root thing, like, what are all these things that you have to think about? And that's why it's like, it's impossible to like build a course where it's like a choose-your-own-adventure when there's like 8,000 different variables.

Yeah.

And then let's say you're in a situation where, you know, your holdco is wholly owned by you and you have 2 subsidiaries and they're going to do business with each other, but they have different ownership groups. Like, how are you going to think through kind of that flow of models? Like, all of those things become very complicated. And that's why, like, A, keeping it simple as a design principle is a really good idea because it's really hard to go back from complexity. And B, we're having people that do this all the time, like as tax lawyers and structuring folks, whether it's CPAs or lawyers, like they can help you through that whole process and make sure you don't like make a nightmare for yourself. So I have an example where like my lawyer saved me $15,000 a year for the next 30 years. Like, how much is that worth, right? By doing a little bit of research and coming up with a structure that was going to structure a bunch of holdings in a way that didn't require multiple tax returns. Like, that's an enormous deal. Otherwise, we're going to have to have a separate bank account and a separate tax return for everything. And so those are the types of things whereby, like, hiring the right person, you know, it can make just a huge difference in terms of how you, how you put stuff together.

I am so excited for your course to come out. One thing I'm curious about is, let's say someone's operating a business, like I'm operating a business, right? At what point does it make sense to come to you to learn this and start the second company, maybe in your portfolio or whatever? Are there heuristics for that, or would you say at any point?

Again, it all ties back to this idea of what do you want to be working on? What gives you passion and how does that tie back to the life you want to live? So I think, you know, we've built this course for the moment that you're thinking about going to get into your first business with the idea of using that as a stepping stone to own multiple businesses and kind of being this old co-CEO type person. Uh, it's also built for people that are on their first company and going to the second one. Like, that's totally there. That's totally accessible to them. Uh, it's also for people that maybe are at, you know, 2 companies and are thinking about, man, this is overwhelming. Like, how do I do it right to get to 5?

Mm-hmm.

Um, so all that is part of there. It's just, it really ties back to the moment you think this is the life that you want to be living. Like, come give me money.

So Michael, I'm ready. Tell me where. Uh, I've interviewed both Andrew and now you, and I'm like, okay, I'm collecting the, uh, what do you call it in, uh, Avengers, the sort of gemstones for all the whole cool people.

Wilkinson? You talking about Andrew?

Yeah, because I definitely want to go down this path. I know we only have 7 minutes left, so I'll end with the few questions we always end with, and then we'll drive this to a close. Does that sound good?

Wonderful. Sure. Cool.

Okay. So first one is, what 3 books have been the most impactful for you and why?

Yeah, so in terms of books I would recommend to other people, for sure, So other SMB people, Traction, and then Topgrading are 2 I would definitely, definitely strongly recommend. Um, you know, there is a great book that I would also recommend, which was, uh, The Daily Drucker. I would highly recommend that. It's not one that people talk about very much. So it's Peter Drucker. Do you know who that is? You heard of him? Yeah.

Yep. Management philosopher.

Yeah. So kind of the OG of like management socialization of kind of those ideas. So anyway, that's a book that rarely gets kind of spread around, but that was really impactful for me to kind of think about, you know, what the job of a manager is and how to manage time. And, you know, I liked, I liked the daily aspect where it was like they took Drucker, it turns out was this very academic long writer. So it was very hard to consume his material, but other people paraphrased it down into things that are really good. So, you know, if I had to tell people, go read these books, just because I'm somebody that just likes to see impact and that kind of thing. I think those first 2, the Topgrading and the EOS book, are ones I would definitely start with. And then Drucker is just one that people don't really think about enough. We don't talk about him enough. I think he's got some really good things.

Yeah. It's almost like it's getting like his teachings are getting lost and we're reinventing them again within companies.

It's super interesting. Like if I don't, I don't know if you've looked at kind of the self-help Like idea, like the self-help guru stuff, like you can trace it all the way back, like, like from Tony Robbins, like he basically, his book was like, the first book was like paraphrased for some ideas from somebody before that. And then that was all paraphrased from somebody before that.

Yeah.

And you end up back at whatever his name, Zig Ziglar or whatever the guy's name was, you know, the Think and Grow Rich guy. Like that's, you just read that one book and like, it's everything else just paraphrased over and over. Definitely.

It's like, yeah, like Think and Grow Rich, Zig Ziglar, and Maxwell Maltz. Um, Who really pioneered this. I'll change this question a little bit. When you're thinking of like cold call CEOs, who are you inspired by?

Of other ones?

CEOs in the industry.

Yeah. So, you know, there's the obvious one. People say, you know, Buffett and those guys. Mark Leonard, Constellation, number one. Bad dude. Bad dude. And I mean that in the goodest way possible, like Michael Jackson bad dude. So that guy legit, like, you know, having built, you know, a software holding company that is, I guess, like 1/100th the size of what they've built, like, I just look back in awe around that one. So I think those guys are badasses. He's amazing. You know, the Danaher guys, are you familiar with them?

Not.

Danaher is one of the kind of the coolest kind of conglomerates. Started by a couple of brothers back in the '80s, just compounded their way to creating some pretty amazing stuff. They have a whole business operating system that they use throughout all their companies that I think is really, really very cool. The TransDigm guys, Patrick O'Shaughnessy, they just did a really good podcast series on them. Serial acquirer of things that were done in terms of buying aerospace manufacturers. Really very neat. Yeah, they used to be an operating company that would go in and they would outbid private equity for companies for sale. Like, pretty, pretty amazing. And then they would run the businesses better than private equity did just because they were such good operators. So really good podcast, the 50x Podcast with Will Thorndike. Really, really good. If you want to think about kind of ideas around being a serial acquirer.

And then these are all people you can reach out to interview.

Oh dude, if you get Mark Leonard, good luck. That'd be amazing.

Uh, if I get him, I'll email you and be like, Michael, let's do this interview together because I have no idea what to ask him.

Oh my God. Yeah. I'll just be like, oh, Mark, you're so amazing. He doesn't do interviews.

Oh, interesting. He doesn't. Okay. Well, that's gonna be a little hard. Um, for you, like, what does it mean to be a conscious creator?

You know, I think we talked about it. in the pre-show, right? Like the more I have given back and just give people stuff for free, the more the universe pays me back. Like, so I don't worry about like hoarding knowledge or hoarding insights or any of that kind of stuff. Like we've basically like, you know, 90% of the course we've talked about a lot of it. There's the 10% of details you really should hear. So please, hey, please send me, buddy. But, uh, you know, I think that's, that's how I think about it, right? It's like, Like just having this trust in the karmic nature of the universe and like, it just continues to pay me over and over again. So that's, that's how I think about it. I'm also happy to hear from you anything you think I should be doing better.

No, that's, and that's one of the reasons why I reached out, right? I think you had posted a Twitter thread that was so insightful. It's like, okay, we got to have this guy on. Look at this, it threw away everything. I don't know if you've seen Matt Mochary. who's like a CEO coach. So he's coached like—

Is that how you pronounce his name?

Mokherjee, right? How do you think of it?

No, I pronounced it Mokherjee. I was like, I said Mokherjee, like, on it.

Yeah. That's actually how I've been saying it too. But then one of the people who worked with us ended up transitioning to his team, and she taught me actually how to say his name. I was like, oh, Mokherjee. And it's actually funny. There's a call that we were doing, and she told me like 3 times. I was like, Mockery, you know, Moshery, Moshery. How do you say this? And it just took me a while too. And he's just released all of his info, which I think he's doing a great service similar to what you're doing. And last question, which we can tie back to the course that you're doing. What are you excited about in the next 2 to 3 or 5 to 10 years?

Yeah, well, I mean, I'm loving being on this journey of compounding and building out the whole— I'm still in this phase of life where I'm acquiring and building assets. maybe I'll get to a point where I start selling them off, but like, this is, this is just like doing business, like in your late 40s, 50s. Like it's just the best time because you're like old enough to be very experienced and have seen a bunch of things, but like you're young enough to still be energetic. Right. And like, that's just, it's just like super fun. And then along the way, like documenting and teaching, like I just really like it. Like I could do things that pay better than shilling a course. No offense to everybody, but like, I just really like, I like doing it. And to some extent, like I've built the course because I like teaching, but B, it's a selection process where I know who I can lean into and we're like building a community around it. And like, you get time with me and there's like monthly calls and stuff. Like, I know the people that are willing to put money into it are taking it seriously. So that helps me take it very seriously with people. that are coming in and helping them. And I just like teaching and like doing this stuff. So those 2 things in parallel, like enjoying this teaching thing and then compounding, super fun.

Yeah. And I think one of the things I learned about courses was if you give a course to someone for free, they're probably not going to watch it. So definitely like charge because like you said, that becomes a selection process to find the right people Uh, my course is expensive because it's really good.

And that's a pre— that's also a pressure on me. Like, I'm like, oh, I'm charging $4,000 for this. It's like, well, okay. Like, I need to make sure it's really good. And so that's why it's like not come out as quickly as I'd like it to. Cause I keep wanting to go back and make stuff better.

And, um, yeah. And then I'm really excited to just like check it out myself because I think you're on the cusp of something amazing with showing people a different model to operate companies instead of like, just like going all in every day. Um, so if people want to find out about the course, uh, where they, where can they go?

Um, it's super fun. Right now it is holdcode.curdly.com. Uh, your, your ideas to change the, uh, the domain sound really fun, but right now it's holdcode.curdly.com. And, um, yeah, go there and enter your credit card.

And then I will see you inside the course, uh, too. Uh, thank you so much for doing this, Michael. This was a really fun conversation. Um, anything else you want to leave people with before we end?

No, thank you so much. Really fun.