Scott Duffy On How To See Your Way To The Other Side of Hard Times, Episode 31

Good morning, everybody. This is Scott Duffy. And welcome to what now with Scott Duffy. I want to thank all of you for joining today. We have so much to talk about. There's a lot in the news this morning, a lot that impacts all of you. Entrepreneurs, small business owners, micropreneurs, mamapreneurs, datapreneurs.

And I want to welcome you from wherever you're listening. If you are watching this show live today on Facebook or YouTube, Instagram, Periscope, or now through the Connect Network.

Big shout out. Big shout out to the Connect Network. I want to welcome you for joining. We're going to give this just a couple of minutes for this stream to start to propagate. We are on the air in seven minutes, actually five minutes. And so we're going to give it a couple of minutes. But I want to thank everybody for joining. And we have so much news. There is new news about the PPP program today and how you as a small business could be affected by the ppp. There's a lot of talk out there on oil, and I want to talk about how that affects you. And really, most important today is I want to talk about how we get to the other side of this, what we have to do to get to the other side, the actions that we should be taking today, the things that we should be doing to come out of this. And really three things. Number one, is to stabilize ourselves personally, our personal finances. Number two, to stabilize our businesses. Number three, to position ourselves not only to ride this up, but to come out the other side even stronger. And so, again, I want to welcome you and from wherever you're joining or wherever you're listening to us, if this is your first time here, if you could drop your name in the stream, the industry that you're in, and the biggest question you have or challenge that you're facing is in your business. So that I can be sure to do my best to address that today. And I want to welcome everybody over here that I see that's joining us on YouTube and over here on Periscope. And to all of you, straight ahead on Facebook, I want to say hello. Hope you're having an amazing day and it is so great to have you all, to have you all joining again. We've got a big show today. Good morning, Todd Plymel. Good morning. It's good to see you. I actually drove by Loyola yesterday and it was incredible. My old high school, Todd's old high school, they've torn the whole place apart, the whole front. They're building a New building, they're building a stadium. It's actually pretty doggone cool. So we have just a couple more minutes before we go live on the radio and I just wanted again to say welcome to everybody and if you're just joining, please drop your name and in this stream, the name, your name, the industry you're in and the biggest challenge that you're having so that we can address that today. So much in the news to talk about, so much with regard to PPP and small business stimulus. And I just want to start by saying this. I feel like I got punched in the gut today by the government. I really do. With what we're learning, what's coming out about the way the small business stimulus has been handed out, I feel in so many respects like I have been tricked, misled, hoodwinked, like I. And I'm really upset about it and I want to share what we've learned and what that means to you. Also, if you're expecting money from the PPP or if it's something that you plan on applying for once this new, bigger package is gets through Congress. So we have just a few seconds here and we are going to get started. There we go.

Good morning. My name is Scott Duffy and this is what now with Scott Duffy. I want to welcome you from wherever you're listening. You can tune in each day at 10am Pacific time to watch the live broadcast on YouTube and Facebook, listen nationwide on Dash radio throughout the day or download the podcast. This show is for entrepreneurs, small businesses and those thinking about starting their own company. It's for people affected by this economy. Maybe they lost their business, their job, they were furloughed or saw their consulting contracts canceled. They just disappeared. It's for people asking, what do I do now and how do I come out of this period even stronger? And our focus today on this show is going to be how we get to the other side, what we need to do to get to the other side of this pandemic and come out of this period much stronger, stronger than we were when we first got into it in the news today. This is always, this is where we always start. The US is still reporting under 1 million cases of coronavirus infection with nearly 43,000 deaths being reported across the country.

For perspective, because I think this is important. 47,000 people die each year in the United States from suicide. Over 55,000 die of influenza and pneumonia. 79,000 die of diabetes. Over 2.8 million people die each year as a result of obesity and side effects from obesity So I think what is important and what I wanted to share, I'm not trying to make light of coronavirus. I'm not trying to do that at all this morning. And I think that the numbers are really low or relatively low because we've been in quarantine. But just from perspective, for perspective, where we are today, again, 41,379 deaths so far from coronavirus.

And 47,000 die a year from suicide, 55,000 from influenza and pneumonia, and 79,000 die each year from diabetes. So it's interesting to take a look at those numbers now. Approximately 20 states have begun the process of easing stay at home restrictions. And big cities like Las Vegas are starting the process of reopening. In fact, Vegas is hoping that it can be reopened in some form or fashion by Memorial Day. One of the things I want to talk to you about this morning, just really quickly, is oil prices. And I think that this is really important because so many people have asked me in the past couple days what it means to see this drop in the price of oil. And like, why is this happening? And what does it mean to me? What does it mean to me as a business owner and what does it mean to me as a consumer? Does this help me? Does it hurt me? Is it neutral? Does he matter? Like, what? What's this all about? So let's talk about oil for just a second and let me help you to understand this issue. First of all, oil, when you consider it as priced per barrel. Oil price per barrel in 2018, average $64 a barrel. Okay, 64 bucks to buy a barrel of oil. In 2019, oil on average was $57 a barrel in 2020.

For the first three months of this year, the average price of a barrel of oil was $41. Yesterday, oil closed minus $37 a barrel, minus $37 a barrel. Like, I didn't even know this was possible. I talked to some people down in Texas yesterday, by the way. Great to connect with you yesterday, Jim Blakemore, Some people in the oil business down in Texas. I asked them about West Texas crude, which is what's priced at negative $37 a barrel. And I said, is this even possible? Like, what does this mean? Because here's the thing, stores don't pay shoppers to take their goods. Like, imagine you went to Whole Foods and you went and you grabbed some bread and you walked to the cashier and instead of you paying the cashier, the cashier paid you $37 to take that piece of bread away. Just imagine if that were to happen, well, like it doesn't happen, right? That kind of stuff just doesn't happen.

But with oil, producers of West Texas crude will pay you, or at least yesterday would pay you $37.63 to take a barrel of oil off their hands. Again, I didn't even know this was possible. So how did that happen? How did this happen? The collapse in petroleum demand from pandemic driven lockdowns. A price war among the world's biggest oil producers that flooded the market right when this whole pandemic started. Plus storage facilities nearing their capacities around the world. Plus the monthly rhythms of the futures market. Like all of these things combined to create the perfect storm. So couple quick things because I want you to understand this first, why would a producer pay you to take oil off their hands? In the long run, here's why. In the long run, it could be cheaper for some producers than shutting down supply or finding a place to ship and to store the oil.

Many, and this is important to know too many producers are afraid that if they completely cut the flow of oil off, it may be difficult to turn it back on. They risk breaking the system and never being able to go to those wells again. So that's why they would pay you for their oil. So that's number one. Number two, where did all of this extra oil, where in the hell did all this oil come from?

Here's where either pandemic or price war could create these types of situations. We just happened to get both at the same time. So as the virus started to spread, it shut down the need for things like gas in cars and in planes and stuff like that. But it's not just those things. Oil is in like just about everything you can find oil in. It's an ink, it's in tires, it's in nail polish, it's in antihistamines. You probably didn't even know that you were ingesting oil with your anti histamine. It's in hand lotions, oils in just about everything. So add to that.

When you have the need for like transportation gets shut down. Now nobody's going to the store and buying all these other products that use oil. Add to that a price war. So what happened was Saudi Arabia and Russia were in an oil pact and they were disagreeing about how much oil to produce in order to control supply and demand and, and keep prices artificially at a certain point. And they were in a disagreement about kind of where the price should be. So they basically tried to cut each other off at the knees. And at the same time, completely opened up demand, production, flooded the market with oil all at one time. So you had the world stop because of coronavirus and people stay at home, stop buying products, stop traveling. And at the same time, two of the biggest producers of oil flood the market with everything they had to try and hurt each other. And this is where. This is where. Where we are, where we are today. So it's actually really crazy. Now.

Is there a deal in place? Because we've read that there's a deal in place over the past, over the past couple of days. And so, yes, a new deal was finally cut with Trump, OPEC, Saudi Arabia, Russia, US and a group of 20 countries to bring back oil production. 10% to cut production. But that doesn't even start until May 1st. And what's crazy is now what about storage? We think about storage. The biggest storage company in the world, which is Vopack, by the way, today they are at about 99% capacity. Imagine this. Every place that you've got, you pull all this oil up. Every place that you got is filled with oil. There's literally no place to put it here in the United States, just in case you don't know this, here in the United States, most of our oil is stored in Oklahoma. Oklahoma reporting near 100% capacity. So you've got more oil being pulled from the ground than any time in history when consumer activity is completely shut down. So there's no need for that oil. All of the storage around the world is around 95 to 99% capacity. It's like the perfect storm. And so now what you have is you have producers of oil that are saying, we don't know what to do. We're going to pay you to take it off of our hand. Cushing Oklahoma. That's right, Jim. That's where the oil is stored here. So that's what's going on. And this morning, President Trump says that he's going to work on a stimulus plan to help basically the situation by paying oil producers to keep their oil underground and basically not pull it out. So it's just crazy. So I hope that helps to explain what's going on with oil, because so many of you have asked me over the past couple couple days what that really means. And by the way, what does that mean for consumers? Because at the end of the day, I want to know if I'm going to the pump in California, does this mean that I'm going to see, you know, $1 per gallon oil? And the answer is, there's a lag in terms of the time like today until when these prices actually would hit or affect us at the pump. So figure three to four weeks out, okay? But there's only so far that gas can drop. And the reason is most people don't realize how heavily gas is taxed by the federal and your state government. So here in the. In California, well, the federal government charges about 18 cents a gallon for every gallon of gas. So for every dollar of gas that you put in, or whatever it is, 18 cents is going to California. And in California, they tax 61 cents per gallon. So it's costing about 80 cents in taxes for every gallon of gas that I pump. So oil can only. So the cost of gas, the pump for consumers can only go down so far before, you know, before you hit taxes. So, anyway, I know that's a lot, I know that's a lot, but I just wanted to share with you oil, because so many were asking, I thought it would be easier to share all of that at one time.

Concerned about, about Los Angeles. I'm really concerned about la. I shared with you yesterday that on Sunday night, on Sunday night, LA Mayor Garcetti, who I think has done a wonderful job through this crisis.

Had to give his State of the City address, his annual State of the City, before he released his new budget, which was yesterday. And what was interesting is that because of the loss of tax revenue because of this pandemic, the city is expected to be about a half a billion dollars short in its new fiscal budget, which is just crazy. And so for some perspective, again, during the Great Recession, Los Angeles saw 13% unemployment at its peak of the 2008, 2009 Great Recession, Louisiana saw a about 13% unemployment. On Sunday night, there was a new study from Loyola Marymount university here in LA that showed that today 55% of workers in Los Angeles are unemployed or furloughed, which is just amazing.

Also, if you take a look at how that kind of impacts industry or some of the things in this town that are affecting all of that.

After 9 11, LA lost 1/3 of its traffic through LAX. And that's so important. Our airports are so important. Air travel is so important because that's how business comes and goes from. So airports are so important. LA lost 1/3 of its traffic at LAX, and it took 10 years to recover from about a 30% loss in traffic. 10 years on 30%. In the last five weeks, LAX traffic has dropped 95%. 95%. So that's what we're facing kind of here, here in Los Angeles. And last night we had more. Yes, last 24 hours, more new infections and more deaths in LA than any time. We hit record numbers. Numbers for both. So. So again, it's just. It's. It's a crazy time. So never the bad news.

We already know all that stuff is going on. So the real question and the reason that we're here together today is really to ask, to answer this. These two words. What now? This question, what now? What does this mean? What do you do now in order to get to the other side even stronger?

And I can tell you, in short, that the answer comes down to this. It's. It's understanding that the same old things that we did up until six weeks ago, the things that made us, us, our superhero powers, the things that worked for us in business as people, those things kind of the silver bullet, the thing that we always went back to, our superhero powers six weeks ago, are our baggage today. And that's the way I look at this. And the greatest skill that you can have today, the greatest currency that anyone has, is their ability to adapt. And your ability to adapt is all based on how open you are. And so we've talked in this show before about this idea of beginner's mind. This idea in Buddhism, it's called shoshin. And what it means is it means that you approach every single thing that you do as if it's the first time you've ever done it. And when you do that and you come in with a truly open and beginner's mind, that is what enables you to ask the questions and be open to the answers. That enables you to learn and to adapt your business going forward. You know, I saw years ago, Phil Jackson get interviewed. And Phil Jackson is the most iconic coach maybe in American sports history, certainly in basketball. I believe he's won 10 or 11 championships. He's the only head coach to coach Michael Jordan and Kobe Bryant and win multiple championships with each one.

And I remember he was interviewed and he was asked, what is the thing, the difference that makes the difference, the most common thing between a Michael Jordan and a Kobe Bryant and everyone else? And his answer was that it was beginner's mind. He said every time they stepped onto the court, they were approaching what they did, and as if it was the first time they'd ever played basketball. And so they were that open, and that's the place that we need to be right now in order to get out on the other side of this even stronger. Some more good news. Italy's current virus cases, the current number of virus cases in Italy and deaths have both fallen for the first time. So this is really good news.

Also today we're learning from several independent studies that as it relates to coronavirus, sunlight, of all things, sunlight is proving to be the best disinfectant. What they're finding is when they put this virus in sunlight and it's exposed for a certain period of time, it's killed and it goes away. And so it's so interesting because I always say, got this from my buddy Dave Corvin this, that in business, the most important thing, sunlight, when you have a problem, when you have an issue, right. Sometimes what we tend to do as entrepreneurs is we want to hide from those things. We push them away, we want to pretend that they're not there. But sunlight is the best disinfectant.

By casting the brightest possible light on a problem, what we're able to do is understand what's really there. When we understand what's really there, then we can drop in and, and we can go and we can solve it and we can create change. So it's so cool to hear that for coronavirus, virus is looking like sunlight is proving to be, based on multiple independent studies, the best disinfectant. Also, more good news, there's a new at home test that was approved today. It was today or yesterday. It's an at home test. Think of it almost like a pregnancy test. It's a test for coronavirus that you could do at home, administer yourself and see the results yourself in minutes. And what's really cool about this is this enables you to know in real time without having to go to some kind of line, you know, in the parking lot of a Walmart to get tested. Or without having to go to the doctor and risk being infected by others, or without having to go to the hospital and you would be able to, to test yourself for coronavirus. Now, taking that a step further, what we know.

What we know is that one of the things that's going to be required for people to really get back to work and get back into office environments and group settings is.

The knowledge that we're safe. The knowledge that we don't walk into a restaurant and sit down to eat with five people in that restaurant that are all infected with coronavirus because that would suck. And so having the ability to take these at home tests and somehow to record them, maybe there's a way that they're connected to your iPhone or your Android phone or something like that so that you can show that you've taken a test and that, you're clear, is going to be a really interesting potential way that we get back to work and we start to feel safe. But, but this is all good news. It's really good news that Italy's cases are falling. It's really good news that nature, leave it to mother nature. Sunlight appears to be the best disinfectant right now for coronavirus. It is really good news that we, we have now approved an at home do it yourself test to see whether or not you tested positive for coronavirus. This is all good. Can I tell you what's kind of a bummer?

Toilet paper. Let's talk about toilet paper for a second. I have not been able to buy toilet paper. Actually I haven't been able to buy paper towels in six weeks. On the toilet paper side, I haven't been so lucky either.

And I'm not going to get any luckier. I've got that feeling. The reason is right now 25% of Canadian sawmill capacity has been shut down. Now why is this important when it comes to toilet paper?

Well, first, the reason it shut down, the reason it shut down is because these lumber mills, sawmill capacity, you know, they project their growth based on high volume, moving a lot of weight, moving a lot of lumber. And the amount of lumber that they move is typically dictated in large part by the amount of projected new building and new housing and things like that. But because the number, because of the way we expect, and they expect development of new housing to be affected by coronavirus, they've all had to cut back, they've had to lay people off, they've had to furlough. As a result, 25% of Canadian sawmill capacity has been shut down. Now, what does it mean for toilet paper? Toilet paper and wipes are produced from wood chips at these pulp mills. That's how we produce this stuff from wood chips at these pulp mills. So I would expect TP and other paper products, including wipes, including paper towels, to become much harder to get this summer. Not easier, much harder to get this summer. And a lot of the paper that's being used for things like cotton swabs so that you can do testing. A lot of the paper type of product that will be available is actually going to be pushed to those types of things as well. So again, I would not bet short on the toilet paper market.

I think it's in trouble.

So with that, we're going to shift here in just a second to kind of our business lesson for the day and Again, our focus is what we need to do and how we are going to get to the other side of this and get to the other side of this period even stronger. But first, I want to say hello to a few people that have joined us today. Again, good morning to Todd, To Todd, Mallory, to Jim Blakemore, hello to Sarah, to Sita, to Jim over here, hello to Bill, hello to Ashley.

Hello to Stephanie. It's great to see you today. And Julie, I want to thank all of you for joining. And again, if you're joining for the first time from wherever you are, if you're on YouTube, Facebook, if you're on Periscope, if you're on LinkedIn, what I ask you to do is please drop your name in the feed, drop your name in the comments, the industry that you're in and the biggest challenge that you're having or any questions that you have so I can help shape the rest of the show around you. Now, Christy.

It looks like you have a way to test for exposure by going to Save Me Magnets. Save Me magnets dot com. So I haven't checked this out, but I want to thank you so much for sharing that with us. I have a friend, actually have a couple of friends who have done antibody tests recently. And last night I was sent a link. I'll share that with all of you as well. In our group, if you haven't joined our group, what now with Scott Duffy on Facebook, join what now with Scott Duffy. Because in that group, every single day, I'm dropping in links to articles, to resources, things that you can use to help you to get through this period even faster. All right. We always start the top of our business, the top of our business lessons by talking about cash. And the reason is that when it comes to entrepreneurship, when it comes to building a business, cash is like oxygen. And I've always said that the most important job of every entrepreneur has nothing to do with business. It has nothing to do with leadership. It has nothing to do with managing a team. Writing a plan has nothing to do with any of that. The number one job for every entrepreneur is learning how to protect yourself, and particularly from, from a cash standpoint. So if things take longer than planned, they don't go as planned, they go sideways. You can protect yourself, not lose everything that you've built up. And you can adjust and you can bounce right back. So let's talk about cash for just a minute. First, on the unemployment, on the unemployment side, I have a couple of people that pinged me through direct message that this week they got unemployment from the state of California that. That has arrived. I know that there are several states that have completely exhausted their unemployment reserves. They're completely out of unemployment cash, and they're trying to be bailed out by the federal government. So I will report to you tomorrow. I promise I will look more into this, at which states are suffering the most and which states are still paying unemployment. That's number one. Number two, personal stimulus. Did you get your deposit from the government? Did you get it? If you have not gotten your deposit from the government, that personal stimulus, $1,200 and up, go to IRS.gov make sure to enter your Social Security number and your banking information so they have it and they can make a deposit to you. If you can't take an electronic deposit and. And you want a paper check, they can send that to you as well. I have no new information on the EIDL program.

But I want to talk about the ppp.

I want to talk about the PPP because I feel like I got totally screwed by the government. I feel today.

I feel like small business got a punch in the gut, got its knees cut out from under it. I feel like small business.

Was really lied to as it relates to this ppp. I am so unhappy this morning about it. I had to, like. I had to, like, get away and, like, go for a walk this morning because I was so frustrated. And the reason that I want to call bullshit on the President and the Secretary of the Treasury, Mnuchin, is this is that we were told, and we were promised that there was 350 billion. It's actually 349. $349 billion that was set aside for mom for small business out of this PPP. This, this fund that was created, it was backed by the SBA so that we could get loans, we could get business loans or grants in order to hire people, keep people on our. Pay our. Our staffs, in order to pay our rents, pay our utilities, pay our mortgage interest. We were told that if we did those things that up to. That all of these loans, 100% could be waived for us. We were told that this money was designed for small business. It was for small businesses under 20 employees. It was for micro businesses. It was for solopreneurs, momapreneurs, datapreneurs. That's what it was for.

That's what we were told. And then yesterday, the lipstick started to come off the pig. Yesterday we started to learn more. What we learned is that we learned that public companies like Shake Shack were Out there getting access to this money and what we've learned today. And by the way, the head of Shake Shack, by the way, I know I met Danny Meyer, who's the head of the group that owns Shake Shack and everything. He is a genius. He's amazing. Maybe the most successful restaurateur in New York and across the country in the last decade, really customer based and things like this. But this, what they did was terrible. What Shake Shack did was terrible. So what happened? What we've learned is, and by the way, he went on, the head of Shake Shack went on CNBC and other news channels and he said, hey, it was a mistake, we didn't understand it. Things like that. We're giving the money back. He wants to be applauded for giving the money back. He's given the money back because he got caught. And what I can tell you is this, is that in a time of the Internet, 24 hour news, the Internet, which is always on, and social media, if you try and do something, if you try and be something, if you try and portray something that you are not, you will get caught. You will found out. You will. People will call bullshit right away. And so there has never been a more important time than now to be transparent. Never a more important time than now to be transparent. And it was clear that that's not what was going on. These guys got caught. But I think what really upset me today was this. What upset me was of the $349 billion intended for small business. Now, again, tons of hype. Yesterday, Marco Rubio watched him. He said, look, the SBA has done more lending in the last 12 days than it has in the last 14 years. Last 12 days in the last 14 years. But, Marco, you forgot to tell us the reason that you did that or you were able to do that. The reason is that 243 billion.

Of the 349 billion. So almost all the money, two thirds of the money or more, went to public companies. It did not go to small business like you told us it was going to. The whole marketing pitch from the President and the Secretary of the treasury and from Marco Rubio and from Congress was bullshit. It was bullshit. $243 billion of the 349 billion went to publicly traded companies. Several have market caps over $100 million.

And we were told the program was designed to help the nation's smallest mom and pop shops keep employees on payroll and prevent mass layoffs across the country. Amid this pandemic, that is a quote. I think it's shameful. Not just from our federal government or the banks, but the 75 plus companies that are public that did this and that took this money, shake shack gave the money back. And they did because they were caught, by the way, the average size loan, just so you know, these companies all got big loans, but the average size loan right now for the PPP is $206,000. So why am I telling you this? How does this help you? How does this help you? It helps you because.

In a time of crisis, what people want the most is truth. What people want the most is they want to be told what's really going on so that they are able to make decisions based on real data. I know people that had really been holding on in their businesses waiting for this based on a promise that the government made. I know people that have applied for this loan. They have not laid people off. They have done certain things in anticipation they would get this money. And so that's why this upsets me, because I know a lot of people that are really going to be hurt or have been hurt because of what I just shared with you. Now, the government is supposedly going to release a new stimulus package, an extension of this ppp. Supposedly it was agreed upon.

About five minutes before I started the show today. So I'll have all the information for you later. My understanding though, is that a lot of that money is from the second round is intended to go to things like hospitals and healthcare workers and cities and things like that. I'm not. I'll. I'll know tomorrow and I'll make sure to post. And if there's a new way for you to be able to apply for version two, I'll make sure to post it. I'll share it with you. I will read everything. I'll break it down for you tomorrow so you'll have all of that information. But.

Two things. Number one, in a time of crisis, true leadership comes from speaking the truth. We want to be leveled with is what we want. And so here's the thing. I'm not pointing the finger right now. This is no longer about what we were told about the ppp. What I want to share with you is if you are a business owner right now, if you're a business owner and you have a team, you have a team of people and they're all asking themselves every day if you're still employing, you still have employees, you have independent contractors, they're looking around at the world and they're asking themselves two questions. They're asking themselves what does all of this mean to me and what should I do? And they're looking to you for answers. And the thing is, the people that work for us, like, we're so busy right now running our business, we're so busy running our business, applying for these loans, figuring, figuring out new ways to pivot into adapt and things like that. We're so busy, those people, they're talking to their clients, their customers, their vendors. The odds are by the time we deliver bad news to these people, they've already known it. In fact, they not only probably know it, but they figured out a way to adapt around it. They figured out a way to improve the company as a result of it. So here's the thing. People just want to be leveled with. And what I think is, I think that if you have a team of people that you work with.

The best thing that you can do today, the best thing is be straight with where the company is, be straight with what you're up against, and instill these people to come up to help you to come up with answers, to help you to come up with solutions. Really, you know, what happens in companies, and I've been guilty of doing this myself, is that people downline in an organization may have the answers. They may have the best answers. The problem is they've never been asked their opinion or they never. Or they haven't felt like they're in an environment where it's safe for them to share what it is they know or what it is they think. And so this is a great opportunity to really institute a whole new level of openness within your organization. Openness about what we're up against, openness about what that means to us, what that means to our customer, what kind of solutions you see that we can apply. And I think that if you do that, I think if you come from that space, it can really open up a lot of magic in your organization, which also leads to layoffs. I want to talk about this for just a second. I've had to lay people off in the past, and it was one of the hardest things that, that I've ever done. I've shared this story about how when I was at, when I had the Virgin company, when I was running that in 2008 in the market crashed, we were in a position where we were going to have to let a big team go. And.

It was so hard. And I remember the day of our layoffs, what happened was, first of all, I made some really big mistakes. I'm going to share them with you because I think they're very instructive, okay? And I wish that somebody had told me what to do now, that somebody had said, this is the way you should do this. Right? But. So what I did is I made small, incremental layoffs. Small, incremental layoffs. The idea was I would let a few people go, and I would hope that with the remaining staff, the economy would get better, things were changed so I wouldn't have to make more layoffs. But what happens is when you make incremental layoffs and the news in the market is bad, everyone else, as soon as they see that first layoff, they're like, I don't believe it. They're like, I think I might be next. And because they think there's going to be more layoffs. And that's what we did. We. We laid off one, two, maybe three times because. Because we did that. What happens is everybody stops. Your whole company freezes is what it does. And people stop paying attention to your work and what you're paying them for. Instead, what they do is they pay attention to updating their resume. They update their LinkedIn profile. They start to reach out to people as if they're looking for. For a new space. You know, things like that. And so the best thing that you can do if you have to make layoffs is don't wait, panic faster. I was talking about this. Panic faster. Which doesn't mean live in fear. It means make the decisions you have to make, take the actions you need to make today, and don't wait.

You need to cut once and cut incredibly deep. That. That's what you got to do. Cut once and cut deep. Do it one time, and then move on with a much smaller staff, if any staff at all, much smaller group of contractors, if any contractors at all. And what you'll find is those people, because it was deep, will know that they're safe, at least for a bit, and they'll be much more focused on your work. Morale will be much more, much higher, and they'll work much harder for you, and they'll do a much better job for you if you use that strategy.

It's totally not what I did the first time or the second time. Totally not what I did. Huge mistake.

And so that's what I recommend that you do. Think about it from that perspective, okay? And here's the thing. It's not just the best thing for you, it's the best thing for them. People want real data. They. They want you to be honest. And if they know where they Stand. They can go ahead and they can make actions. They can take actions based on real data, based on the best data, not by being bullshitted from. Which is why I thought it was really important to talk about this, and particularly in light of what we learned about the PPP over the past few hours. You know, that we learned that about $240 billion of the $350 billion that was supposed to go to mom and pops and to small businesses like yours and mine went to publicly traded companies, companies worth, you know, $100 million and more. That's where the money went. And so.

It always comes out, you know, so be straight. Be a great leader. Be straight. Deliver all the news, the good news, the bad news. Okay? And enlist the help of your teams. Now brings me to another point, because I want to talk about how we get to the other side. The way we get to the other side is we're fully accountable. We got to be fully accountable for everything that is going on in our life right now. It is really easy for us to look outside and go, you know, the reason that my business closed, the reason I'm in the financial position I'm in, the reason. The reason. The reason is because of coronavirus. The reason is because the government forced me to shut down. The reason is this. The magic happens when you start to change. The way you come out stronger is you got to turn all that around. And the reason is you. The reason is you going forward starting today. It's.

Whether or not you adapt. It's whether or not you learn. It's whether or not you rely on yourself or you rely on hope that someone is going to come in and save you. I remember in 2008, I remember there was this idea that I had that the cavalry was going to come and save me. I was on the phone this morning really early with my buddy Randy Garn. He's been on this show. I was on the phone with Randy Garn, and he's the one who shared that idea with me a couple years ago. This idea that sometimes as entrepreneurs, we get so locked down, we get so nervous, we get so that we wait for the cavalry to come. I'm here to tell you, the calvary ain't coming. The cavalry ain't coming. And one of the things that. The reason I'm harping on this today is because of what I've seen, what we were told versus what has actually materialized in the last few weeks with regard to unemployment. So many people have applied but have not heard a thing in the last Month with regard to the EIDL was supposed to be processed, approved, and funds received in three days. In five weeks, I haven't heard a thing, haven't heard a thing back with regard to the PPP that was supposed to be for small business, but today we hear has gone to public companies, most of it. And I want to share all this with you because I, I made the mistake and it's why I felt like I was kicked in the gut this morning. I made the mistake of getting caught up in this idea that somebody out there was going to help and it, with, with some of this stuff. And it all brought me back to Randy Garn and this idea that the cavalry ain't coming. And I want you to take that mindset on going forward. I really do. And the reason is for things to change, we have to change. And for us to move forward, we have to be the ones that take response, accountability, responsibility, take the actions, do the work. That it's all up to us. And when we do that, when we do that, it's incredible how fast things can change. And then when we do that, it doesn't matter what happens with the government, it doesn't matter what happens with the market, it doesn't matter what happens with shit. All that matters is that if we are the ones that are driving it, we're driving the conversation from a space of Totally Rocco Navy SEALs, total accountability, absolute accountability. If we go there, that's when things change and that's when we get. And that's how we're going to get to the other side. The people I know right now that have businesses that are doing well are all people that got on their toes and they adapted quickly. They got in their toes and they didn't say, you know what? This is the business I'm in. Instead, what they did is they got in their toes and they said, what is the business that I need to be in? Because this is where people are saying, this is what they need. They're the people that instead of saying, I'm going to get behind my computer, I'm going to look at research and data, I'm going to like, walk around, I'm going to meditate, and I'm going to come up with a new idea. Not those people. It's the people that got out in front of customers and they asked them, they said, what do you need right now? And what has to happen? How do you know that you're getting what you want? And then instead of waiting, they delivered the smallest possible version of those Things, the smallest possible version. I want to talk about Sita because many of you know my girlfriend Sita because we've been working on her mask business. You know, she was in a business that she's in the luxury apparel, lifestyle business. Like clothing business.

Kick ass business it was. The LA Business Journal this year named it the number one rising fashion brand in Los Angeles. That's a really big deal. Last year, one of the top three direct to consumer brands in the fashion space in Los Angeles. That's a really big deal. Almost 10 years of selling to wholesale, that's the primary business. Wholesale into hotels, spas, luxury resorts. In the yoga space had had best quarter ever. The best quarter ever in terms of new sales, new orders, new whatever. Like I'm talking five times. Like, this is how crazy it got. Totally hit a tipping point, like five times last year in the first quarter of this year. And then what happened? Coronavirus. They closed all the travel, they closed all the hotels, they closed all the spas, they closed all the yoga studios. Every single order got canceled. I mean, it was crazy coming to the door and every day these boxes returned of all the. Of all these clothes.

And so I remember talking to Sita and saying, so what is your business going forward? And she said, well, I don't really know. And I think she was pretty frightened. And she said, I don't really know. But what I'm going to do is I'm going to start reaching out to my spa ladies, is what you call them, my spa ladies. And I'm going to ask, what do they need? And what everybody needed was, was they needed masks. Now we hear about so many different people, you know, producing masks today, but she got on it really early. She called the LA mayor's office and she said, what do you need? After seeing Garcetti on TV and they needed masks. And overnight, I mean, it didn't take long. She became one of the only companies here in Los Angeles that was. That was given an exemption to go back to work so they could manufacture and they could produce masks. And now she's given extra masks to the city so that they can distribute those for their workers or wherever they want to distribute them. But she's selling masks. The masks. Now again. Okay, we gotta listen here because like, this is a great lesson, like this is a case study. So the masks were. The question wasn't just, what do you need ID masks? I always say there's a second part of that question. What has to happen? How do you know as a buyer you're Getting what you want. Well, this is the Four Seasons. This is the Ritz Carlton. This is the Golden Door. You know, maybe they don't want a medical looking mask, which I have a lot of friends that are making right now a medical mask. Maybe they want a cloth mask. Maybe they want it to have certain kinds of properties to it that help, you know, their antibacterial fibers or the whatever. So what she was doing is she kept asking people, what, what more would you need? What more would you need? One of the things that came up, private label. Could you put our name on the mask, on a label or on a thing? So what came back was this whole list of criteria that was incredibly customized for that specific space. So a couple days ago she launched this thing, and in two days she's almost completely sold out of all of the fabric that was remaining in the warehouse. And now is actually taking, considering taking apart old clothing that was made that was returned and using that clothing to use for masks. So here's the thing. I bring this up because it's not about asking or saying what business you were in six weeks ago, because I really don't give a shit. The question is, what business are you in today? And you will know what business you're in today by going to your customers and going to your prospects and going to the people around you and asking, what do you need? And what has to happen? How. How do you know you're getting what you want? And what you'll find is that many of the products and the services that are needed in your space, many of the products and services that you didn't even anticipate right are now needed. Like, you know, personal protective, you know, stuff. I mean, what if you were out of one business and you were in another because that's what people were buying? And what if you didn't have to really modify your stuff all that much, but you were selling what they needed? This is how we get to the other side, okay? This is how we get to the other side. It starts with this total. We're not waiting for the cavalry. We are taking total accountability. We are living and loving in this space. And then we are asking the right questions to find out what people want the way they want it. We don't hesitate, we don't wait, and we start to make. Now, in the case of these masks, here's what's important to note, okay? What's important to note is it wasn't about going and producing a thousand masks and then going to market. It was about making One mask and sending that sample to a handful of people in the space and saying, would you wear this? What does this look like? What does this feel like? Is this right? Like, tell me what you think. It's. It's actually. It's testing, it's getting real customer feedback. It's taking that feedback and then iterating it in what you do. And then when you find the right product, then figuring out what the right pricing is. Now you've got the right product pricing mix from five masks that are sent out to the marketplace. And now what you have is you have a product, you can go and you can make a thousand, you can make 10,000, you can make a hundred thousand. She's going to have to make a million of these things. That's what you do. Whatever the industry is, the business that you're in, don't wait. Take the simplest form, the very simplest form of what it is. Somebody says they need in the way they need it, and put it in their hands as fast as you possibly can and let them use it and play with it. One more example of this. When I started, I always go back to this company because I just. I mean, I. There's so many parallels around what I talk about and what people are going through today. So many metaphors I can use. When I started this company, Smart Charter, and the idea was to create Expedia for private jets, we had a really simple.

Before it was bought by Virgin, we had this really super simple.

User interface. It was a look and a feeling. It was a way that you could go into a site and you could see inventory. And so we aggregated the supply and aggregated the demand in one place and you could see the inventory was available and you could search for. It was really simple, really easy to use. We did our deal right. So Virgin buys the majority of the company and we decide that we're going to redo the graphic user interface.

And we're going to do some things, we're going to make some tweaks, we're going to make it better. So here's what we did. We went out. This is so crazy. We went out and we talked to people on the sell side, people who had planes that they wanted us to sell. We went out to people on the buy side, people that were looking for aircraft that wanted to buy, and we talked to all of them and then we created a look and a feel. We created a process that people would go through in order to use it. When we launched, we launched with that process.

And nobody used it the way that they said they were going to. Because when people got their hands on it and they were actually able to play with it, what happened was there were new distinctions, there were new things that came up for them. Well, what if I did this versus that? You know what? I actually don't book a private jet the way I do, you know, a flight on Virgin Airlines. It's a little different because there's other things I think about. What if this, what if that. So what happened was in the first month that we were open, we got all these phone calls. We were flood, people would take the buying process to a certain point and then they would stop and they pick up the phone and call us. They wouldn't complete the transaction.

Well, this is crazy. This is exactly what you said you wanted, right? This is exactly what you told us. But what we learned again was once they used it, it was different. And so that's why. And so what we had to do is go back and re engineer so much of the site in order. So, so it was doing what people wanted, the way they wanted it once they used it. So the lesson for you is launch fast, launch early today, 65, 70% of the way there is good enough, get it into people's hands, get feedback, become exceptional, become a badass and at getting feedback, processing this feedback. Don't, don't tell the customer they're wrong. As Gary Vee told me, don't disrespect the customer and tell them that they're wrong. Instead, listen with an open mind, adjust iterate, adapt your product, rebuild it and then 65, 70% of the way put it back out into that customer's hands and see what they do, see what they do now. Now maybe that they're playing with it in a different way. They think different things, maybe they liked it the first way. But what will happen is if you keep doing that and you keep those cycles happening quickly because you don't, you don't make things perfect. If you keep doing that, what's going to happen? You're going to find the right product market fit, then you're going to find the right pricing fit and this is the way we come out stronger on the other end. This is the way we recover faster and come out stronger on the other end. I only have, I only have a couple, couple more minutes, actually have about 60 seconds before, before I have to drop off. So I'm going to look really quickly through, through your comments to see if there's any questions I can answer quickly for you today. Before we hop off, I'm looking over here on Facebook now on YouTube over here.

I have a question. PPP money. When will we know more about the next phase of this program? It looks like from a browser that's up over here. There's some new information that's starting to come out tomorrow. I will update you on everything and I will do the best I can tomorrow to see if I can track down Kaedma O and bring her on here. Kedma, who is with the Small Business Development Council, worked hand in hand with the SBA.

And she's no better person in the country to break it down for us. I'll see if I can bring her on as well. Also, real quick, later this week we're going to be announcing our new sponsor. You're going to see a whole different kind of look and feel for this show. We'll announce the big event that we have coming up and all of that stuff. Love you guys. I want to thank you for joining today from wherever you're watching, if you're watching live on Facebook, YouTube, Instagram, Periscope, LinkedIn, I want to thank you. For those listening on Dash Radio across the country, I want to thank you or for those downloading the podcast. I hope you guys have an amazing day and I want you to think about. I want you to think about this one thing. By the way, Sita, would you please share your link to your masks or below. I want you to think about this. What now. What is your what now moment like? Your what now moment is that moment where you really, where you've, you've stepped back, you are totally open, you're asking the right questions, you're taking in what people are telling you. You're building, you're iterating, you're adapting and you're relaunching. That's what a what now cycle looks like. What is your what now moment? What will you do now in order to get on your toes and to really, really move into a position of total strength and dominance during this period? I love you all. Have an amazing day and I look forward to talking to you tomorrow. Take care.