The Mindset Shift That Made Me Millions | Robert Herjavec

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And a leadership mistake that quietly destroys great companies. You can't have a great pitch unless people are listening. The first thing you have to do is get people to listen before you get them to hear. What are the biggest lessons you've learned about sales? The biggest lesson I've learned. What do you think stops most people from breaking out from broke? Fear. Absolutely fear, fear of failure, fear of embarrassment, fear of rejection. Like fear is what holds us back. Kids don't understand no until we teach it to them. In our entire life, we're brought up with you can't do this. Don't go there. Don't do that. And it becomes ingrained, especially in immigrants. Don't be too loud. Don't make too big a deal of yourself, all those things. And I think people are just afraid. I think that's what holds them back. And also I hate to say it. Many people are lazy. Fear of hard work. You know what it's like, I worked really, really hard. But people don't see the 20 hours you put in, they see the end result. And I think a lot of people are afraid to work hard. Because they don't know if it's going to pay off. Like if we all knew how the book was going to end, we would never read a book. And that's your life. Like you don't know how it's going to end. But you have the ability to control the outcome. But it's hard. You're working out there. You're not going to parties. You're not hanging out. Your life doesn't seem to be progressing forward. You're inching along, hoping that it all works out one day. And I think people get scared. They're like, what if it doesn't? I'm losing all of this. Yeah. You know what's interesting is I've never thought about it that way. It's not even fear of hard work. It's fear of what if I'm giving up my life for something that never actually happens. Oh, and most people are willing to put in hard work if they can see immediate results. How many people are willing to put in the hours and the minutes and the months and the years without seeing hard tangible results? Like I spent 10 years to buy a Ferrari. And it wasn't a new Ferrari. It was a very old Ferrari. It barely ran. But the 10 years of hard work never dissuaded me from getting there. So what do you say to yourself when you don't want to keep working hard and you kind of want to give up? What's your inner monologue? I have this trick. So I'm a big runner. I run every day and I try to do a long run at least once a week, like 10, 15 miles. And people often say, oh, you must love running and I freaking hate running. There are many days where I didn't want to run, but I've never had a day where I don't feel better after I run. Somewhere during the run, I want to quit. I'm sore, I'm tired, this hurts, I'm old, and so I'm running fast and I slow down. I never walk, but I'm barely running. And then I say to myself, are you a loser? Are you a quitter in the minute in my mind? I say that. I keep going. I will, my legs will fall off before I stop. But my mind is like, don't say it, don't say it. It'll be easier to just stop. And I think for me, it comes from a greater purpose. So why did I start? Why did you start the journey? And going back to your original question, most people don't succeed because they have easy, flippant goals. Why do you want to start a business, Cody? Oh, I want to be a millionaire. Okay, well, that's interesting. Why do you want to be a millionaire? Well, it'd be nice. I wanted to make money to justify my parents' sacrifice for my life. My parents came here at 37 years old. No money. Left jail came on a boat with one suitcase to a country. They knew nobody and had no money. So what am I going to do with my life? Just get by? Like I'm the only kid. I felt if I didn't do something, it wouldn't justify their sacrifice. And so it's purpose. You've got to have a greater purpose. Why are you starting your business? Are you doing it for somebody? Are you doing it to build something great? I think you just got to keep going. Yeah. It's a good thing to ponder. Like if you don't have that one liner, that little story that's going to keep you going, you're going to have a dark night of the soul where you give up. That's true. You know, I think about this all time with my kids. Like people are like, gosh, you're so motivated. It was relatively easy for me to be motivated because my life was so hard. And I think when your life is hard, you get to a point where you either accept it or you say, I don't want to live like this. I got to change it. But what if your life is always easy? What if everything you want or dream about is there? Where's that hardship come from? And I always worry about that. Like if, and you don't have to be rich to have an easy life, you can be middle class and have an easy life. You can be, you know, lower class and have an easy life. But how do you get that motivation? Oh, yeah. We jokingly call. We spend a bunch of time in San Diego like I told you, but we would never have an office there. And we would never live there full time because we call it the place where young people go to retire. And so it's like, you know, everybody is just, there's nothing wrong with it. You can do you. But everybody's kind of baristaing, yoga instructing, just doing just enough to go to the beach every day. That's a great point. You asked me earlier, who do I like to hire? I like to hire people with military service. People with military going to this point, they understand a greater purpose. Life is about having a greater purpose than yourself. And so people in the military fully understand that. How do you know if you are an A player or not? Like I think a lot of people think that they're A players. But like what are the characteristics? You're like, you'll know if you're an A player if you have these characteristics. What do you think? I mean, I'm so biased, but I mean, a couple things. One, high signal to noise, like the things that you say and how you communicate is usually pretty direct and to the point because you don't want to waste people's time. Oh, it's a great point. You know, you follow through on the things that you say you're going to do. Very rare, actually. Right. You know, you are a proactive communicator and executor, so you don't always have to do everything right. But say, hey, I'm working on this. I know I was going to get it to you by that date. It's actually not going to happen. I'm going to do it at this date. And then for, I think you actually like hard things, not just you do them, but you've got kind of like that sickness. It's true. I like hard things. Yeah. I would say adaptability and progress, A players move the ball or the needle forward, B players get stuck in repetition or something, and I think B players wallow and misery adaptability is the ability to wallow quickly and move on. Like I can't change the past. It is what it is. Barbara Corcoran, I had this great conversation and asked her a similar question and she said, You know, when I made, she sold her company for $52 million, and people always said, "Do you ever have a bad day after that?" I was just like, "Are you kidding? I have lots of bad days." She said, "But the difference between successful people and others is not that they don't have bad days. It's how long they allow themselves to wallow in misery." And I've always remembered that because you know, you have a bad day, I have a bad day. My bad days are limited to very short periods of time because I've learned nobody gives a shit. Nobody cares, you just got to move on, work harder. Oh, it's so true. It's funny. You know, today I was telling one of my producers, D, who you met. This morning was funny because very little things, but you know, I was getting ready and I had this hair and makeup lady and she's super late so I'd be late to Robert and we're down in San Diego and then she leaves the house and I got like one eyelash, short of glued to my forehead and the makeup looks awful. So I redid it and then, you know, more annoyingly, we had this investor that was going to do one of these deals with us. That investor fell through. I had to go grab another one this morning and investors flying through was not a big deal to me, but I really, really hate when you ghost somebody. That's like a huge pet peeve. Just tell me, fuck off. No. No problem. No problem. But don't ghost because then I don't know where you're at and also don't waste my time. If it is going to be a no, get out. But you know, I had a hard time with that's that's great point. I had a really hard time with saying no to people. Oh, interesting. Were you a ghoster? I was never a ghoster, but I was a maybe or I didn't. And I always thought of what in me made me like that. And I realized I don't like to let people down. Now I'm okay with it. But back then I wanted to please everybody. And so it's not that I was leading you on, I was like I knew I wasn't doing a deal. Why didn't I just come out and say, no, whereas now I'm like, yeah, this isn't for me. But being on Shark Tank after 18 years and people pitching you, you have to learn that quality because people are pitching you all the time. Yeah. A fast no is such a gift, you know, as opposed to a slow maybe or a fast no and, you know, I was telling the investor, I'm like, hey dude, all you got to say is it doesn't meet X. And I go, okay, cool. If we meet X, I'll come back to you. And until then, no stress. I saw a great quote though on the point about bad days. Just remember your bad day today is somebody's dream. And that really hit me as I'm sitting in my beautiful house and my pool is leaking the other day. And I'm sitting there going, oh my God, I got to call the pool guy is such a nightmare. I was and I'm like, hang on a second. In this game of things, this isn't bad. So I was trying to, it's perspective. I think kids also give you perspective. Like the thing I've learned from my twins is the absolute constant purity of joy. Like when they're happy, they're absolutely happy. And little things make them happy, going swimming makes them happy, hang out makes them happy. And the things that are horrible that get upset about, they forget about them in ten minutes. And so I try to do that. I really like that idea of like, you're going to be more successful, the faster you move away from whatever's bothering you. Like yes. You know, and I think Elon's talked about that too. And maybe the flip side because you talked about those ten years you grinded to get the Ferrari or the ten years that you're going to get the plane. Like for the 25 year old watching this who needs to start grinding for those ten years, what is the one thing you'd tell them to grind on or the one thing that you would tell them, do not waste your time doing this? I think as it worked for me, expertise, I think people assume it's so easy to become great at something. I got into a field that was relatively young, cybersecurity in my 20s, and within ten years I became one of the top people in the world. But I was also an industry that was 10, 20 years old. So today we have the same opportunity with AI. How many people my age understand AI? How many businesses, how many service based businesses could be made better with AI? Like what a huge opportunity, if you're in your 20s, just the fact that you're in your 20s, you're a perceived expert on AI because you're young. So I think it's a bigger opportunity today than when I started. Yeah. So it's basically when you're young, just try to go become really skilled at something, like skill stack. Yeah. Your 20s are the foundation of education in yourself. Don't take a job for money. Don't do anything because it pays a little more, do everything to learn. Don't worry about the Mercedes or the Ferrari or the bigger house, try not to have obligations that limit you from taking big risks, take big risks, be bold, do great things, but be great at something. It's a very good point because I think something that the younger generation has had to fight against, and it's not really even their fault, is that in their face every day are people that they would never really talk to in real life. But now they get to see their Ferraris, their Bentley's, their planes, their houses, their fancy lives. I mean, you saw Kylie Jenner's metaglasses, you know, that just came out and it's showing her incredible house and her, you know, and so it's really in their face, all this stuff that you get once you're wealthy. And I think it's made them think, wow, I should have all that right now. And that's what success is. And so I better go low into, you know, day trading stocks or I better go and try to get into crypto. I need to do something to get fast money. And so I guess I'd be curious from your take, what do you think is like the most overrated business or money advice that a lot of people are getting today? Gosh, I think there's, I think there's so many. I think it's the fast path. How many people online are selling you a two year, six month? You can do it. Yeah, the reality is anybody can do it. But it's, it's going to take you longer than you think and you have to be great at something. And the stuff is not what it's about. I mean, you have to make a certain amount of money to get above debt. But once you get above debt, you have to have a greater desire to build something of value. Kylie Jenner is incredible. I'm pretty sure Kylie Jenner didn't start out just to buy a bigger house or buy a nicer car. She had a vision of building a brand and she has a road map for that brand and everything she does fits into that brand. Look at the cosmetics. Look at the meta glasses like, like I have so much respect for that family because their business acumen is fantastic. Yeah. It's a good point. I always used to, I used to not like that because I thought it was so materialistic. And, and then just a little tough for young women to see all the different ways bodies look and is that reasonable, is that healthy, should we feel that way? But after I've become less morally absolute, I think, I think that side is so hard to not see. I don't know. Like, I, I'm with you, like I, you know, my social media teams, I was like, let's do more videos with your plane and your car. And I'm like, to me, it feels shallow. Yeah. And it feels like you're telling people that pursuit is only for the end goal. If you don't enjoy the journey, I don't think you're ever going to get there, but everybody's different. Yeah. And I think what I've realized is it's inspirational. And so I think for a lot of people, it's like, I have a good friend, Andy forcello, who runs his company called First Forms and he's got all these crazy cards and he's kind of a crazy dude and he has a tank and all this stuff. And I remember I was kind of giving him some crap about it and he looked at me and he's a scariest guy. Like, if you have ever seen Andy forcello, we'll put a little video of it. He, you know, when I first met him, he has the scar across his face and his back and I'm like, what happened? And he's like, oh, yeah, I was walking through a park in St. Louis and this man, you know, stabbed me in the face and then tried to stab me in the back so I chased him and wrenched the night. I was like, oh, my God. You know, remind me to never make fun of your cars again. And he's so intense, but he stopped me and he was like, don't never make fun of somebody else's inspiration. And I was like, that's a really good point. It's a great point. Fair point. He's like, why is it better that you get inspired by small business ownership and that somebody else gets inspired by a car if we both building give back? And I'm like, you're absolutely right. It's not. Yeah. So I kind of had to get over myself. And so with the Kardashians now, I'm like, wow, you cannot build $1 billion business by accident, not to mention the six or seven or however many of that family has. That's fucking hard. And to your point, you know what you should, why don't you talk to us about, I didn't know that statistic. You told me earlier, you told me a statistic about how rare it is to be a billionaire. And I don't think most people realize it. Like how rare is it to be a billionaire? And how hard is it? I think what is it? There's 3,600 or 4,100 billionaires in the world and a billion dollars is 10,000. You could have spent 10,000 dollars a day since the day Christ was born. It's really hard. But certain things today with social media make it seem easy. Like SpaceX, when public, 4,400 people became millionaires in that day. 400 people became deck of millionaires. Like, how hard is it to make a hundred million? 500 million. A billion. It's hard, but just because somebody did it, what you perceive on as being overnight doesn't mean it was overnight and doesn't mean that most people are going to get there. It's still hard. It's still really hard. Yeah. It's a good perspective it have. Not to mention you have a lot more, you know, a lot more issues at that level of wealth. I mean, one of my friends runs a family office for actually some people in that ecosystem and awesome. When you need to build up your team to handle the growing chaos at work, use indeed sponsor jobs. Listeners of this show will get a $75 sponsor job credit at indeed.com/podcast. That's indeed.com/podcast terms and conditions apply. Need a hiring hero? This is a job for indeed sponsor jobs. And he said, I wish you not one more penny than $299 million. This was back in the day. And I remember saying him why? Because he managed a multi-family for a couple of these guys. And he's like, at some point, you can lose all sense of reality. And then he said jokingly kind of. He's like, and then you're always just like one yes away from an approved genocide. It's not your God. I don't know if I buy that. I think you are what you are. I think if you're a flippant and don't appreciate the things that you have, you're going to blow 50 million an act like an asshole. I think if you're grounded, love your family, want to give back, want to do great things, you're going to be the same person with 2 billion, 3 billion, 1 billion, 800 million. It doesn't matter. I wish I don't wish. I would definitely love to have more money. I definitely love to build another business and create even more wealth. But it doesn't define, it's not going to change my life. It's not going to change my kids' lives. It's not what I wake up to do. But what I want to do, yeah, absolutely because I can. I mean, it's what it's the game that I'm good at. And I think at a certain point in life, you want to play at the things that you're good at. Like, I don't want to start from zero again. I want to start at five and go to 10. You get really rich, even if you don't like rich people. Yes. Because I've met incredibly wealthy people who could care less about the money. Like, could care less. I've met incredibly wealthy people that Charlie, Charlie Munger. He just goes to his house once a month for lunch. When he first invited me to the house, it was team invited me to the house. It's in LA, in an area of LA. I drove around for 15 minutes because I couldn't believe it was his house. Like, I'm like, he can't possibly live there. It's such a crappy house. Sorry, Charlie. And it is. It was just like this crappy little house. And then I was like, I walk up to the door and I'm like, I opened the little screen door. And there was no buzzer, even I knock. There's no security. Nothing. I asked him about it one time. And he's like, just don't care. It's where I live. I'm like, did you ever buy a fancy car? He's like, it's just transportation to me. Cuban gives me a hard time about my cars. He always calls me shallow and arrogant because I love cars. And I always say to him, really, that's really interesting from the man with four jets. Exactly. Like, I'm shallow because I buy a $500,000 or a million car. And you're not because you have four jets. We all love something. And so, yeah, I've met rich people who just don't care, like just don't care. I don't think you can become successful if you hate other people's success. So there's a difference between hating or not liking rich people or not liking money or not being important to you. But there's a difference when hating how people got there. If you're rich and you did it in the business that you loved, I'm okay with that, right? If you got a billion or a hundred million, it doesn't matter to me. But if I despise your succession, your journey, it's hard for me to have that same ambition to create something. Couldn't agree more. I think it's kind of the same. Like, sometimes you'll hear women say, I hate men, men are awful. I don't want, you know, I can't date anybody. Everybody's terrible. I'm like, you're going to have damn hard time finding one. If you put that out there, you know, and maybe that you have had terrible experiences and a lot of dating stuff. But man, you're not going to be able to attract that. If every time you talk to a man, you're telling him how terrible they are. It's probably not going to go well. But I also think, don't you think that's part of the problem today? It is, we are, we have somehow or becoming a society that despises people's success and tie it to their wealth. Like, I have a house in New York. I love New York. I hated and I've met the mayor. I don't agree with his politics, but he seemed like a good guy. We had a meeting. I hated when he stood in front of Ken Griffin's apartment and said, basically, that that was bad. You don't have to love Ken Griffin. You don't have to love the fact there's worth billions. But I think you have to respect the hustle and the grind and what that man did to create that wealth. So I think I worry that we've become somehow, we look down on that. Yeah. It's one thing to look down on the wealthy when you're in Russia and you get, you know, oligopolys where their gifted thing was from the government or things are nationalized. That's totally reasonable. You know, we don't like thieves. But when you actually in this country have to create, I mean, how many trillions of dollars in valued is Elon have to create to become a trillion. Unbelievable. An incredible amount. Well, forget that side of it, the trillionaires billionaires. What I've always admired about you, even when you were first starting out when I reached out to you is your message is the right message in America at this time, which is anybody has access to small business. Anybody. There is no magic. There's no God-given talent you need. You just need a little help. And I think that's what you're doing for people. You're showing them how to get there. So you don't have to love Elon Musk or hate Elon Musk, but you can buy a car wash. Yes. And that car wash can provide a living for you and your family. And I love that. I love that message because that's what democracy is. And that's what capitalism is. You know, we came from a communist country. My dad hated communism. He got up. He was 22 when he got thrown in jail the first time. And it was in jail like 25 times or something. Because if you go to a bar, you say bad things about communism, you get thrown in jail. So one time I asked my dad, what's the difference between communism and capitalism? And my dad thought about it. And he said, a capitalist is somebody who owns more than one Cadillac. I don't know why I thought of that, but then just remember, like in his world, two Cadillacs or two cars, your capitalist, you're showing people how to build a single business. Too many people have lost sight of the fact that I can't become a trillionaires. So I should just give up. You know, like what's wrong? A donut shop, a bakery, a dry cleaning business. Like the business of America is consumerism. So many great businesses people can start everywhere. What do you think was the most valuable lesson you took away from the years that you didn't have any money at all? Urgency. Urgency. Tempered later on, urgency gets you out of poverty. Patients get you to wealth is what I had to learn. Without urgency, I would still be broke. I didn't wait for tomorrow. When a customer wanted a quote, I would say, end of the day. My competitors used to deliver the quotes or send them by mail or email. I would hand delivered. I'd be like, where's your address? And I said, I'll drop it off this afternoon. And people say, oh, no, you don't have to drop it off. I'm like, no, I'll drop it off. Like, why? I don't have time to see you. It's okay. I'll just drop it off. If you have a few minutes for me, that'd be great. If you don't, I'm okay with that. And I drop it off. And you know, the funny thing is 80% of the time, people come out and say, go to their office. I drop it off. And they're like, oh, my gosh, because how many people go the extra mile? How many people are willing to wait until tomorrow? So that urgency, like we got to go, we got to go now, now, constant, forward, momentum, like go. The downside of that is when your company gets to a certain size, you can't, you can't move 100 people or a thousand people at that same pace. You have to plan just scale. So good. Yeah. One of my other people that I adore, immensely, his name is Bill Perkins. And he always tells me that, you know, he doesn't win because he's smarter than anybody else. He just moves faster than everybody else. He goes, so by the time they've thought about it, I've already made three mistakes and found a better way. And so true. Yeah. And I, but it's really interesting because it's hard to get people to think that way. You know, we've been programmed. Like if I say, hey, let's circle around next. Everybody goes weak. Why? Why is it a week? That's such a weird thing. Why couldn't it just be later today? I think a, an action today is better than the perfect plan tomorrow. When, when I sold my business to an equity firm and I got into the equity world and I saw how much planning equity firms do, it drove me nuts because how many businesses you built on your got feel and to, to Bill's point, I'll make a decision today. And if I'm wrong, I'll know pretty quickly and I'll make another decision tomorrow. And I'm okay with that. Yeah. What can you do if you know you need to get faster? Like what would be a lesson to somebody that's listening right now? And they're like, God, I know I need to get faster. If you're like, just do this one thing every day to get faster. What would it be? Find a way to fail quickly. So if you're creating a product, instead of waiting until the product is done 100% wait until it's done 20% and call a paying customer. How many people wait till the product is 100% and then they beta tested with non paying customers. Finish 20% of it tested with the real customers because the beauty of commerce is when people exchange money. What do Robin Williams say in the movie Cadillac man selling something to somebody is as close as you can get to another human being without sleeping with them. And it's true. When I sell you something and you give me money for a product or service, it's magical. There's so many things that happen on subconscious level. I'm telling you I accept you. I agree with you like all those positive things happen. Get as fast as you can to acceptance or failure as quickly as you can. Too many businesses fail for constant evolution. How many billions of dollars and sales do you think you've done over your career? 10, 15 plus billion. Wow. And what are the biggest lessons you've learned about sales doing 10 billion dollars in sales over your career? The biggest lesson I've learned is great sales people solve problems and sell value. Bad sales people sell product or something tangible. So I've also learned great sales people never ask for an order. They make the client believe it is the right solution for them. I will bring you to my solution as opposed to forcing it on you. It's the complete opposite of what we're taught, right? Like going for the closed is always be closing and there's a magic to it. Sales is on a subconscious level. Those are things I've learned. It's so fascinating because on Shark Tank you guys are having people sell you basically non-stop every day. And you're either deciding who's going to hold the frame. The stronger frame is the shark that's like nope I'm out or the person who's pitching that's like no you should be in and here's why. And so sales, I mean we call it you guys call it or many people call it pitching on Shark Tank, but I really think it's just sales. Even if nobody ever pitches an investor or nobody comes on Shark Tank, I guess what do you think the best sales pitches have in it? Or if you want to get somebody to do just about anything in sales, are there lines you go to? Are there, is there priming that you do? I'm saying about Shark Tank, the power or the leverage is with the sharks to start when you come out. If all the sharks go out and there's one shark left, that shark has all the leverage. And you know we pitch, they pitch for about an hour, get said in a submit, but we often say when there's only one shark left, when they can offer and people don't like the offer, we're like what are you going to do? I'm the only one left. But if it's a great pitch, sometimes we all want to deal, then the leverage switches and now the sharks are selling the picture. Here's why you should go with me. And it's very real. Like when we see a great product, we really, really want it. And so I think that there's a switch there. Great pitchers start with the subconscious. So we talk about this all time. I think we always know what makes a bad pitch. We don't always agree what makes a good pitch. So what makes a bad pitch? Somebody that comes out and is, is not in line with what they're pitching. So you're selling me an enterprise software product, but you're wearing shorts and a t-shirt. On a subconscious level, I'm not connecting. Like I don't like what you're selling me, but I don't know why it's subconscious. Or you're selling a surf product and you come out with a jacket. Like if you're selling fun, be fun. Humility. If I don't like you, it's going to be hard for me to listen to you. We had somebody in season two come out and they were saying something and I think Barbara said something and they were rude to Barbara, which bothers me. And they said, you're not listening to me. And I said, hang on a second. It's not my job to listen to you. It's your job to be heard. And so you can't have a great pitch unless people are listening to you. So I think that's the first thing is you've got to find a way for me to listen to you and then you have to find what my need is. You know, the old, sell me this pencil or pen trick. The perfect answer to that is before I sell you the pen, can you tell me why you need a pen? Sometimes the answer is you just don't need one. You know, it's interesting. When I was on the set with you guys the other week, they were talking about how to value a company, right? And so, and I realized how few people know what numbers really matter if you want to get somebody's money. Oh my gosh. And so like, what would the answer be? What are like the three to five numbers? You better know if you ever want somebody rich to give you money. Well, the number one thing we see, the number of mistake people make when they value their company is they value it based on what they would like, not what the business is worth. So like, why is your company worth $10 million? Because we need $10 million. I'm like, okay, but why is it worth that? People don't understand the metrics in an industry. Every industry has a value, a car wash, a tech business. Is it a multiple of EBITDA? Is it a multiple of ARR? If you're going to ask somebody for money, you have to understand the range of values for that industry. And it's a guideline. You know that you're teaching people this all the time. Why does the donut sure worth? Well, here's what donut chops trade for in this range. So once you know the range, you have to tell me why yours is at the top of that range. And people just don't understand it. It's easy to find. I mean, people can go to you. You can look it up online. Everything has a real value. Yeah. And you can look so smart by just knowing a few numbers. If you're like, here's my profit and loss. Here's my margin. Here's my EBITDA. Here's, you know, what I think our enterprise value will be. Here's our multiple based on industry standards. You could literally Google or I guess you could AI all of these things. The best example I give people is if you're going to sell your house, would you sell your house based on what it's emotionally worth to you? I love my house. I'm going to try to sell it for a million dollars. Or would you bring somebody in? Give you the value of every home that's sold around you in the last six months. And then try to understand what makes yours different, no different than in businesses. Everything has a value. You have to understand why it is for your industry. That's so true. You know, what do you think most people don't understand about business? Even if they run one, but if they did, they'd make more money in business. Scale. It's a two-edge sort. Because the theory of scale, you can hire people to do. You know, when your company gets a certain size, you can hire professional managers. You can hire people to come in, to understand scale, to understand systems, to understand all that. But they can't go from zero to something. When I worked for Warren Avis, he said to me, you can hire You're a great man. very hard to find great entrepreneurs. And so, again, it's a two-edged sword because for me, I was very, very good at go and urgency, but it took me a few years to learn how to scale my business. If I would have learned how to scale my business better, I would be wealthier today. And I think most people running a $5 million or a $10 million business, every $5 million business that you're integral to is a point of weakness. I didn't understand that. I saw it as a point of strength. So, when we were $5 million, I was like, "Oh, everything I'm doing." I said, "Yeah." Later on, I learned I got to replace all those things and be kind of like the glue, the holds things together. So, if you're watching, you're running a $5 million business, sit down and look at. It gives your job post the boost it needs to be seen, and helps reach people with the right skills, certifications, and more. Spend less time searching, and more time, actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsor job credit at indeed.com/podcast, that's indeed.com/podcast, terms and conditions apply. Need a hiring hero? You go on vacation for a week, and don't call in, write down all the things that broke, and every one of the things that broke is holding you back. So, it's so true. Isn't it so hard? I mean, you start out in business, and you think that your skill is correlated to how much money you make, right? Because that's true. It's from the beginning. You get more skill, you get more money. And then, when you go to run a business, you go, "No, the more skill I have, the more revenue we make." And that's true at a certain point. And then you realize, "Oh, my God, my skill should have nothing to do, really, with the revenue that I make. It shouldn't be how much I work equals revenue. It should actually be how good is the business model, how good is the team, how good is the market." And so, that's a really hard lesson to learn. I think we all take a certain amount of pride in working hard when we start. But if you don't take pride in that, you'll never get. I mean, these are all first world problems, scale, getting bigger. These are all first world problems. Well, for somebody that's listening, I mean, you've sold. I know you've sold companies for $30 million. You've bought companies for $75 million I could find. You've done really big transactions multiple times, both building, buying, and selling as far as I can tell. I'd be curious, you're taken. What do you think most people don't know about businesses when a business, like the difference between a million dollar business, a ten million dollar business, a hundred million dollar business, a couple hundred million dollar business? What does it take to be an entrepreneur at each level of that game? What people don't understand is, when you're selling a one million or a ten million dollar business, you're typically selling some element of you. So, if someone's buying that, they're going to lock you in. There's going to be a non-compete. You're coming with the business. So, that's one to ten million, you're the integral part. You're the integral part. Or one or two staff is. Once you get past ten, you have to build a business that will stand on its own two feet. That's like ten to twenty-five or ten to fifty? Yeah, every time you bought a business above ten million dollars, I hoped that the founders would stay, but hope is not a great strategy. I also built the system to know that they left tomorrow. When I bought a one to ten million dollar business, I had to have the founders stay. So, I would lock him in with that big urn out. I would pay very little upfront, given big options, all that kind of stuff. Above ten million, I was okay if they left the next day. And then what about a hundred million dollars plus? Like, what are those entrepreneurs like that's different from somebody who can get to twenty million or a million? At a hundred million, you're providing something that is fundamentally disruptive to an industry or you have some element of scale. Interestingly, I actually worked less hours when we got bigger than I did when we were smaller. And that was a real key to me. Like, when I sold my business at the end, the last one, we were just about four hundred million in revenue. I used to go on vacation all the time. Like, I used to go away all the time. And we were fine. You know, the world didn't end when I wasn't there. When we were a million dollars, if I didn't call the office two three times a day, if I was on vacation, oh my gosh, it would be disaster. What system did you put in place that freed you up the most in your business? If you could go back and look at, like, gosh, when I started doing this, my business stopped owning me and I actually started owning the business. That's a great question because I wasn't getting there. You know, every business, people that don't run businesses think growth is linear. Growth is linear, plateau down, plateau up, and over time, it's linear. But in the process, it's not. So I hit a plateau and we weren't growing. We were just kind of stuck. And I didn't know why we were stuck. And what I began to understand is, I didn't understand cash flow and finance. Like, I wasn't doing a good job of managing money. And money is an asset, just like a machine is an asset. We weren't using our receivables, payable. Like, I didn't understand what was going on. And so I said, do I have time to learn this and become world class at finance? Or can I afford a world class syafo? I hired a world class syafo. And then, as we got bigger again, I didn't understand logistics. I didn't understand that I was good at it, but was I the best in the world at it? No, and then I hired those things and let those people run. And I found a way for those people to do their job but keep me informed. So I think every part of your business has a heartbeat. Finance has a heartbeat. In my business, it was cash flow. I need to know what our cash position was every day. I need to know what our receivables were in aging every Friday. Explain what receivables in aging are really quickly. In case somebody doesn't know. So whenever you sell something to somebody at a large company, very rarely do people pay you upfront or in cash. It's very sad, unfortunately. They usually pay in net 30, which means they'll probably pay you in 60 days. And today it's 90. But you have to pay for those goods in 30 to 60 days. So there's a balance between those two. And we have to balance those things. So I built my company to almost 400 million with my own money. We didn't have any outside capital. So that was really, really critical. And so we had to always constantly balance that for us. Every person I meet who has never started a business, has never run a business. And I asked them, why have you never done it? Number one reason typically is, I don't have the money. If I had the money, I would have started a business. I'm like, you know what? I had no money. Like people don't understand. And you and I were talking about the sunset. I bought 13 or 14 businesses in my tech business with no outside funding. Oh yeah, you got to explain that. So I went to buy a business the first time when we were smaller. And I said, I think it was a $3 million business. It was probably valued at two times EBITDA. So it was about $700,000. And EBITDA is simply how much a business earns. And there's a multiple of that, which basically means if a business earns $300,000, you pay it $600,000. It's going to take you two years for you to make the money that you paid them. But then after two years, it's all your money, simplistic explanation. So I sit down with this business. It's really key for us. It's going to change our profile. And we were only doing about $6 million a year at the time, paying a $3 million business. And I sit down with the guy and he's like, great, yeah, I'm on a retire older. How many businesses they are owned by people my age? Or a little younger? But they have no exit. Anyway, so I sit down with this guy and I convince him. I said, look, no one's going to buy your business. It's small. It's tiny. And he's like, great. I'll sell to you $600,000. Great deal. He's like, great. Cut me a check. And I'm like, oh, I don't have $600,000. I go to the bank. The bank won't let me the money. I go back to him. And I say, I don't have the cash. So give me another option. How much do you have? And it gave me the first idea of a nerd house. So I said, hang on a sec. I can pay you $100,000 on closing. I can pay you another $100,000 in 60 days. I can pay you the third $100,000 by the end of the year. So in 12 months, you will have $300,000. And the other $300,000, I'll pay you over two years. He's like, well, how do I know you're going to pay me? So, well, of course, I'm going to pay you. It's my best interest to. Continue to pay you. That's how I bought the first business on or not. So basically I used half my money and half the businesses money in order to buy that actual business. It's great. So good And you even did that with a $75 million business. It is a $75 million business I did with a $30 million business and people do it all time. You hear M&A activity. That's what it is leverage buyouts That's what a leverage buyout is. I know isn't it so funny so we talk about it like seller financing because that's what they call it Obviously in lower middle market or even you know Mom and pop acquisitions which really doesn't even touch Wall Street and what kills me is half the time Why people will not buy a business is exactly what you just said? I don't have the money and I'm like no no no And this is so hard for people to internalize. I have to come up with a better way to say it So maybe you have it and I always say there it is never a lack of money You never suffer from a lack of money you suffer from a lack of knowledge on how to get money But if you could fill the knowledge gap you will find the money and You know, could you imagine if the richest people in the world were constrained by their bank accounts? They would never be doing deals like KK are not doing deals because they have the cash sitting in the bank But it's it's our programming somehow has told us that if it's not in our bank account or in our 401k We can't afford to do deals if money and a formal education We're the keys to success Every trust fund kid everybody with an MBA would be wealthy There's a reason why most people never achieve wealth is because they look at their constraints Money is not holding you back Your lack of education is not holding your back your lack of knowledge is holding you back for sure You can find the money how many businesses in America today are run by people in their fifties or sixties That they have no exit plan. They're never going to get out their kids are not going to take over their business They're spouses not so in your town right now is somebody running a million two million dollar business making a few hundred thousand a year Been in business for 20 years loyal customer base That person's kids is not going to take it over their spouse has no interest to running it once they pass away What's that person going to do with it close it down? Close it down all that value all that inherent customer is Gone is that person not better off to sell it to you and Help you fund it for a couple of years and then continue to get money for their family for their kids and so on That's the sales pitch right there. You're not even selling them. Just tell it of why it's better for them It's no in Wall Street. Obviously. You call it earnouts Sometimes people call it also, you know, hey, we'll do milestone-based investing like if You're you buy the company for 75 million, but You know the company ends up doing double what you thought it was you could pay a more so you could even negotiate sort of these seller financing or else that was what I learned I Mean I over-simplified it, but as you can imagine that conversation with the first business I agree to buy that guy's company for 600,000 then I show up next day and say guess what I don't have the money not a comfortable conversation but to his credit he was a great guy and What I learned was I said well exactly your point if me running the business does better I Will pay you more so instead of paying you 600,000 Maybe I'll pay you 800,000 It's like well, how do I know you're gonna run the business better and I said well You don't but look at my track record. Yeah, so in a way he had to buy into me and once I bought the first one and paid him and actually paid him I think it was 760,000 or something The next one became so much easier Cuz people like well, why would I believe that so we'll talk to this guy again goes to your word and your credibility in business Especially for small business. It's so critical people need to believe in you Yeah, yeah, you know, it's interesting. It's like show don't tell, you know, they need to have you show them That you're gonna do what you said you're gonna you're gonna do not tell them how great you are what you're doing in this Feels like today more than ever. There's a lower trust society right everybody says a lot of things and then doesn't follow through So that's a great way to do it. That's selling by testimonial or selling by social proof or selling by Reference, you know, those are things that What you're doing is complex, but it's really not that different from saying if you buy this coffee a bunch of other people like it You know, if you sell your business to me a bunch of other people liked me and they're glad that they saw their business to me Yeah, in our business we call that third party verification. Yeah, people will always believe more What others say about you then what you say about yourself It's get a little bit more detailed on some of the deals like you have I mean gosh How many deals do you think you've done in your career including like shark tank and then buying in your business And maybe even some of your like complicated JV or partnership structures probably a lot was shark tank 50 plus over time in my business probably 30 over time. So you just have a lot of reps. Yeah, so for somebody who's like I can't even imagine Structuring some of these deals like what are some is there a deal where you're like this was really smart We did it this way or I'm really proud. We kind of finagled it like this. I'm really proud of my earn out deals I'm really proud of I'm Looking back. I'm really proud of building a four hundred million dollar business with my own money I'm really proud of that because I got to keep 100% of the profit. I got a whole time you never ever raised any account never good for you until I sold it Yeah, I'm really proud of that because I have so many friends That built four hundred million dollar businesses or billion dollar businesses and end up owning 8% of it or 10% of it That's what who say to people keep as much equity as you can For as long as you can People sell too early and end up with too little at the end and you know, I'm really proud of that I'm a big part of that was my ability To structure earnouts and to leverage cash flow within the business Yeah, it's interesting. We've we have one business that we raised for now Biscuit which is our business buying and so in marketplace. We didn't raise that much 5 million bucks. It's quite a large business now, but Raising is also really not fun, you know, it's it's not a fun. We got lucky because we had a lot of you know Social proof and so that that fundraise was easy, but I remember there's just such a difference You sit down with somebody who's actually operated companies while investing and buying in them It's always so valuable and then you know the other day I was so frustrated Robert you'll get a chuckle out of this, but one of the investors was like well, we like to invest In companies in the second round um, these are startups so going from you know zero idea little seed check to Series A or the next one based on how closely they perform according to their projections No, and I thought so I just had to go look at what this person's background was and I was like Oh, you've never fuck up built anything because that's the most ridiculous thing I've ever heard have you ever had one business where you're like Oh, my projections were perfect in the first three to five years. That drives me nuts like when when I sold out to equity and a guy to that world and Know a lot of equity people. I often go to these meetings. I'm sitting there and I'll be at a board meeting and Somebody on the board will say something with the equity people and and I'm like That doesn't make any sense and I realized they've never operated a business There's a difference with being a financial operator and actually operating a business And I think you can appreciate that now I wish I would have learned how to play equity sooner. Yeah, because in some ways I could have sold my business sooner and gotten more money than when I did Um, but I think every business is different some businesses just need a certain amount of capital in order to grow and start and get bigger I didn't understand that and I probably should have raised money and built Better systems and better software We had great sales great service a good product But we didn't have a great product Because our product was based on our ability to finance it If I were to raise money and give an up some equity I could have built a great product now hindsight is perfect I could have also raised money Blue up the whole thing and end up with nothing So you never know, but I've learned to appreciate both. I think some businesses. You just have to raise money Early. Yeah, I can't build rockets without it. That's for sure. Yeah Did you ever have a moment where you had to get permission for somebody in your business to get to the next level? And you were like man, you know I have to get this person to say yes to me or I have to get Within the business anyway, and They were like I'm not gonna bet on you like have you ever had somebody that's like created a chip on your shoulder, basically. - Not really, I think-- - Or do you just forget about that because you're more of an optimistic person? - I think so, every business has a speed and a cadence to itself. Tech is very fast, so I've always been in tech. Tech moves very quickly, and I used to jokingly, but not really say to people, I am a great person to work with, 99% of the time. The other 1%, you're gonna do it my freaking way. I don't care. So I used to get into rooms and we talk about it, and I'm a great guy to work with. I really am. I listen to people, I have a huge respect for people. I appreciate the hard work people put in, but sometimes, if I say we're going left, we're going left. And if you don't wanna go left, you are more welcome to leave because we are going left. And so that is the speed of the businesses. Many tech businesses fail because they can't make a decision. They wanna go left, and then they wanna go right, and they wanna go left when it's self-evident we should go left. When I sold my business, there was a small part of our business that was just growing as a new technology. And the people I sold it to didn't believe in it. They're like, I don't know if we wanna get into that. I was like, oh my gosh, this is gonna be huge. So I did a lot of market research, I did some studies, and all the studies said to them that it wasn't clear this business was gonna work out, that part of the business. So I said to them on closing, I said, tell you what, I will take less money from my business. Let me keep that part of the business, leave, and do that. I oversold it, my conviction was so hard that made them step back and say, maybe we should keep that part of the business. And they did, and now it's huge. When a decision is self-evident in tech, it's probably too late. Meaning when I know something is going to happen, and you know it also, one of us is too late, if we haven't done something about it. - It's a great point, because I think a lot of times in my career, I've failed, because I've started early as a salesperson, which sometimes meant I was trying to get consensus. Well, what do you really want? Well, what are you trying to, you know, and I kind of try to frame what you wanted, 'cause I wanted to tell you what I got. And the more I've realized an entrepreneurship, it's like, no, no, no. Whoever has the most confidence in this ability to execute is the winner. - Do you think Elon Musk sits around and says, guys, how, what should we do next with this company? He has a vision, he has a goal. I'm sure he's a great leader, brings the team along with him, but I'm pretty sure they're living his vision. And I used to be like you, I used to think, oh, because I think something, I can't be right. I need everybody else to be right. And very few people in life can see the future for until it's obvious. - Yeah, I'm also curious your thought. Like, do you think that even other successful people, sometimes they want you to tell them what's gonna happen? Not necessarily always, you know, get their consensus in it. Do you think that's true? - I think that's human nature for everybody. - Yeah. - I think we have a need for certainty. They most people want certainty in their life, because what's the alternative? How risky is it? Like, but when you think about it and you step back from it, how precarious is life? The other day, I bought this old vintage car, custom made bubble block. Anyway, long story made short. I started it and the accelerator gets stuck. And my house is up on a hill and I actually smashed into another one of my cars. Everybody was fine, cars were total. But if that car wasn't there, I would've gone off the hill. And you think about that. I didn't wake up in the morning. I didn't know what was gonna happen to me that day. Like, how precarious is life? But most of us want certainty. We always think the good is going to last longer than it is and same with the bad. And so people that have the ability to live with risk and make hard decisions and go where others don't want to go or can't see and bring others along, I think that's the definition of leadership. And, you know, I think Elon Musk is a great leader. Look at the vision. Like, the boring company, how incredible is that? Like, I just think about that. Like, Donald's underneath cities. That's so cool. Do you think that you can be a really good leader and a people pleaser? Yes. Yes. To a point, I think inevitably to be a great leader, you ask me good. Inevitably to be a great leader, you have to be great with people up to a point. And then you have to have that level where you don't care. I don't care if you agree with me. I don't care if you like me. I don't care what you think about me, but I need you to follow me. And if you're willing to follow me, I respect you. But if you're not in 100%, I need you to leave. Like, I think you have to have that edge. That was my problem. I was too nice a guy. I didn't have that edge. That's what guys like mark. I had like, oh, but you have to have that edge in business in order to be great. Yeah, my husband jokingly calls it being a benevolent dictator. So I always say, this is a dictatorship. It's a nice one, but it is still a dictatorship. My wife always says, 'cause sometimes we'll be planning stuff. And she's like, oh, Robert's in business mode. And it's true, like I'm like, okay, no, we're going here. We're going there. Like I, like, here's where we're going. Everything else is irrelevant. Yeah. I heard this great story about Johnny Ives, you know, the designer for Steve Jobs. And he talked about how at Steve's funeral, he kind of told a couple stories. And one of the stories was that him and Steve used to get into it quite a bit, because Johnny one time told Steve, hey, you know, maybe you could be nicer to the team. You're kind of too direct. You could be a little nicer. And Steve looked at him and said, why? And he said, well, you know, because I want, I like the team. I care about them a lot. And Steve looked at him and said, no, you don't. You care about them liking you. I thought you cared the most about creating an incredible product and having the best team in the world. And instead, you're actually being quite vain. And Johnny Ives was like, and I was so pissed because he was right. And I thought about that a little bit. I think about that a lot now in teams. You don't have to be a jerk, but maybe you do really have to hold the line. - The quote I was remember the mistake I used to make is, and now I get like, I shiver when I hear it, when people say, our business is like a family. - Oh, yeah. - We're like a big family here. And like, that's such bullshit. 'Cause there are things I would do for my kids and things I would put up with from my wife and my kids, that if you worked for me, I would fire you tomorrow. We are not a family. We're a team of people that respect each other towards a common mission. The best person I've ever worked with, worked with me in three companies over 35 years. I've never been to his house for dinner. We've had dinner maybe twice. Do I like him? Sure. Would I, if I had a free day, would I calm up and hang out? No. But I love his business acumen and I respect him more than almost anybody in business. That's the difference. - So true. - You don't have to like me. You have to respect me. And you have to respect the mission that we're here to do. - To grab up, what is the best lesson you've received from a mentor in business as you've come up? Do you remember a moment where somebody had that Steve Jobs, Johnny Ives with you? - Cody, I've been really, really lucky. I've had so many great mentors. I've worked for Warren Ava's. I've, you know, Shark Tank, you get to meet all these incredibly successful people. I think for me, the big churning point to create where I am now was the difference between a paycheck and creating wealth. And I always call it I had a poverty mindset and a wealth mindset and a poverty mindset works to make a living. I started my first company to make a living, started my first company to pay my mortgage payment. I got fired. I didn't have enough time to make a mortgage payment, started a business. Somewhere along the way I made enough money to earn a living, but not build a life that I wanted. And my dad had a great saying, it's great to dream, it's better to pay your bills. (laughs) - Good. - And it's so true. I think that's probably the best piece of advice I've ever gotten is once you've taken care of paying your bills in life, you can have grand dreams all you want. - What a good spot to end it. Robert, you're the man. I learned so much from you, watching you on Shark Tank over the years, but then getting to know you and watching you build, but then pour back into other people, it's just really inspiring. So thank you for being today. - Love what you do. - Thank you. - I think your message for America is the right message at this time. Anybody can buy a business and be successful. (upbeat music) Fall never arrives all at once. First the air, then the light. And slowly the things you love begin to find each other. A jacket meets a dress, a hoodie slips beneath a blazer. An old cap finds a new scarf because you don't simply step into the season. You create it layer by layer until it finally feels like fall. Find fall your way at Ross.