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The Founders Sandbox

The Founders Sandbox

Hosted by Brenda McCabe

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May 2026

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The Founder's Sandbox, produced and sponsored by Next Act Advisors, is now in its fourth season. Hosted by NAA founder Brenda McCabe, each episode features in-depth conversations with founders of small and midsized, owner-operated companies, and operators that support the ecosystem including board of directors and service providers. Together, they explore how to build scalable, resilient, purpose-driven businesses underpinned by strong governance. You'll discover: - Inspiring origin stories and pivotal "aha" moments - Strategies for scaling without sacrificing your company's core values - Techniques to cultivate mission-aligned, engaged teams - Tips for balancing ambitious growth with genuine fun Intro music by Daphne Willis Artwork and graphics by Whitney Otte Learn more at https://nextactadvisors.com

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May 26, 2026Episode 649 min

Season 4, #6- Resilience & Purpose: A Little more Social

In this episode of The Founder's Sandbox, host Brenda McCabe sits down with behavioral scientist Nicholas Epley of the University of Chicago Booth School of Business to explore the surprising power of human connection. Drawing on decades of research and his new book A Little More Social, Epley reveals why we consistently underestimate how positive social interactions can be—and how small choices, like expressing gratitude or starting a conversation, can significantly improve our well-being, relationships, and workplace culture. Together, they discuss the science behind social connection, the hidden barriers that hold us back, and practical ways leaders and professionals can build more resilient, purpose-driven organizations through simple, intentional human interactions. You can find out more about Nicholas and his book at: about Nicholas Epley Accolades Nicholas Epley Book him for for speaking events at: https://www.wsb.com/speakers/nicholas-epley/ or pre order his new Book out May 19, 2026: A Little More Social Here: Amazon, Bookshop) You can also find his book Mindwise here: Amazon, Bookshop transcript: 00:04 Welcome back to the Founders Sandbox. I am Brenda McCabe, your host. Now in the fourth season, my mission with this podcast is really to bring in company owners, founders, 00:31 professionals, board directors that like me share a common mission, which is making change in the world through enterprises, small, medium or large. em And each of my guests um have em in their own ways built resilient, scalable, well-governed businesses um to really make that change. And I'm absolutely delighted to have Professor Epley, Nicholas Epley, 01:01 from the University of Chicago as my guest for this month. um Welcome to the Founder's Sandbox. Thank you, Brenda. This is a delight for me to have a former student back with me in conversation. I love it. It's amazing. I've been pursuing you for at least two years, and I kept getting delayed because of his writing a book. And today we're going to talk about um his new book that will be launching on May 19th, A Little More Social. 01:31 So before we get into the material, I need to make a proper introduction as I do to all my guests, all right? So um Nicholas Eppoli, he is the John Templeton Keller Distinguished Service Professor of Behavioral Science and Faculty Director of the Roman Family Center for Decision Research at the University of Chicago Booth School of Business. He is an author. We'll get into some of his work today. And he has many other accolades. 01:59 that are just too many to go through here because we'll eat into valuable time. And he has back to back podcast to announce his new book. I do want to call out one accolade. You were named by Ethicast, I guess, a business leader in ethics back in 2018. And business ethics, as we all know, corporate governance is very near and dear to my heart. So those accolades will be in the show notes. 02:29 em Dr. Epley, or Professor Epley as I'll call you, right? You study social cognition, how thinking people think about other thinking people to understand why smart people so routinely misunderstand each other. He teaches an ethics and happiness course to MBA students called Designing a Good Life. I was a... 02:56 an alumnus. I took your course back, think in 2017, 2018. So you're going to be forever a professor to me. All right. So I often speak of your class designing a good life and the pro-social exercises and other stats and experiments that now that you have this book out, I realized you were using the classrooms. Yes, I was. Yeah, I was doing a lot of the experiments in the class. I mean, the best way to teach 03:25 people something is not to tell them the thing, but to show them the thing. And so I could tell you that reaching out and expressing gratitude makes you feel better, makes other people feel better than you think, but more powerful is actually have you do it. Right. So we're going to talk about the book. And I think it's in chapter seven that you talk specifically about how gratitude is such a powerful mechanism. um Again, my guest here, I like to uh 03:56 kind of identify resiliency, purpose driven or scalable. m I think that what you teach and what we're gonna hear about here for my listeners is an example of resiliency practices. And I believe it's very much key in bringing it back to my listeners, Professor Upley is I work with a lot of company owners, business leaders who I think would benefit from learning some of these practices outside of the classroom today. anyway. 04:23 I took your class back in, I think, in 2017, pre-pandemic and in person. And my life has uh really been impacted in an incredibly positive way. I bring it into my personal life, some of these experiments that you're going to share with my listeners, as well as the classroom, where I do teach business ethics. And I have them um do a personal responsibility statement uh at the end of their. 04:51 their semester with me. That is awesome. So again, accolades. Thank you to you. So with my guests, I want you to make a little introduction and share your origin story. Why did you choose to become what's called a behavioral scientist? I won't make it too long. I do remember I got to college. I wanted to be a football player, college football player, small college division three. 05:20 at St. Olaf. I went to St. Olaf because I liked the football coach. I thought I was going to be a biologist. I took those classes. They were totally boring, but I took an intro psychology class, which was all self paced. It was supposed to take a semester to do. I was done with it about a third of the way through the semester. I just ate it all up. I went through it like wildfire, which I took as an indication that this is something I might be interested in. 05:51 I started reaching out to faculty, started doing research. And one day my senior year, early my senior year in college, my em undergraduate advisor grabbed a book down from the shelf and handed it to me and said, I think you might find this to be interesting. It was Tom Gilovich's book, How We Know What Isn't So. And the book describes how the psychological processes that give us beliefs and expectations and opinions about the world, thoughts about other people. 06:20 can often lead us astray, give us perceptions and beliefs that differ from the way the world actually is. And I found the work so fascinating. I read that book in a day. I took it and I went right through it. And I thought, that is the thing I wanna do. I wanna do research like that. I couldn't think of anything else more interesting to do than that. So I applied to a PhD program to Cornell University, which is where Tom is on the faculty. I applied to a bunch of others too. 06:49 em I was fortunate enough uh that I was waitlisted at Cornell, somebody declined their offer, and I got in as a PhD student. And the rest then is kind of one lucky break after another, after another, after another, after another, things working out well. And me just following things that seemed interesting at the time. em I was lucky to have Tom as a PhD advisor. 07:16 We started working on really interesting things. My first year there, turns out we underestimate how positively others judge us when we do something that we're kind of embarrassed about. Other people cut us a lot more slack than we think. And that interest in understanding, and in particular, understanding how well we understand the minds of others was something we were working on right away. And that interest... 07:44 just as grown and grown and grown and grown and grown. I've stopped thinking about other things. It's the only thing I kind of can think about. And the mistakes we make about the minds of other people are all around us and problematic. And so that's how I got here. Thank you for sharing that. um And specifically at this time in 2026, uh 08:11 So how does the mind of a behavioral scientist work? What experiments do you whip up to test some of the hypotheses? All right. for your first book, right, there was some, right. And the preface of your second book, you said, that morning I decided to test a different approach. As a psychologist, I try to understand human behavior using experiments. 08:34 But this time I decided to put myself into an experiment instead of ignoring the person who just sat down next to me, I would try to connect. So how does work? So one, I think the important thing about being a researcher, we're all researchers out there in the world in our own ways, right? So founders are starting companies and they're doing research constantly about what works and what doesn't. 08:59 As a scientist, we get to run experiments that sometimes have a little more control over them than what you have out there in the world. But the thing that is common to both the scientist and the founder or to almost anyone out there in the world is that you ask why questions. And so as a scientist, it's not so much the experiments we conduct that are critical, although those are critical. The critical thing is that you... 09:28 We look at the world in a slightly different way than others might and therefore notice things that other people might not notice. And that's where our hypotheses, our ideas come from. So one morning on the train, for instance, I was coming in to the University of Chicago where you know all too well where I work uh and I live on the far South side. And I was writing a chapter for MindWise, which was my first book describing how we have this mind uniquely equipped for brain uniquely equipped for connecting with the minds of others. 09:58 And I was describing how we often and why we misunderstand each other. And I was writing one of those chapters describing how we've got this brain uniquely equipped for connecting with others, made happier and healthier by connecting with others. And yet I was sitting on the train and I had this kind of eureka moment. Here we all were, and I've been doing this for years by now. Here we all were sitting on this train, highly social animals, made happier and healthier connecting with each other. And we were all ignoring each other. We're not connecting at all, treating the person next to us. 10:27 Like a lamp shade, right? And that was where I thought that seems weird. Does this make sense that we do this? Social connection is a choice. It's a decision about whether we reach out and engage with somebody or hold back. And that was the thing that I noticed. That was the perspective that other people might not have is that that's a choice and understanding that our perceptions are sometimes wrong or miscalibrated. 10:55 suggests that sometimes we can make those choices wrong, make them incorrectly or unwise. And so that morning I decided to enroll myself in an experiment. I had a woman come sit down next to me. I was probably at this time, I'm 51 right now, I was probably in my mid 30s, 35 or something like that at the time. This woman, she's probably 55 or so, African-American woman, uh clearly dressed for work, uh really looking sharp, had this beautiful red hat on. 11:24 almost like a bonnet, had this big wide brim. It was beautiful. uh And I decided that morning to put myself in an experiment. What would happen if I actually engaged in conversation and to really pay attention to what happened, right? Because that's another thing we do as researchers is we measure things closely. We pay close attention in our measurement. So I just started having conversation. I opened up with a pretty weak joke. uh I said, I love your hat. I have one just like it, right? 11:54 Yeah, not in the conversation hall of fame there, right? uh But she turned to me and she just like lit up. I remember so distinctly the reaction was like she'd almost looked like a different person. Her face, the face that we carry around with us, the dead face, right? Our resting Grinch face is kind of Grinchy, right? But as soon as you engage with somebody, you perk up, your face smiles, your eyes lighten, you look. 12:23 almost like a different person. So she turned to me lit up and uh the conversation then just flowed pretty easily. We had a nice conversation, half hour, time went really fast. As I got up to leave, I remember she held my wrist uh as I was getting up just to express some sincerity and she said, thank you so much for talking with me today. It wasn't just like, hey, that was lovely. We really meant it, like it was nice. 12:52 And the thing that I remember so clearly is that it wasn't just nice, it was surprisingly nice. That surprisingly part is critical because there was a gap between how I believed the conversation might turn out. I a nervous, what do I have in common with this person? I don't know. Will it go well? Do they really want to talk to me? Probably not. Will she misunderstand while I'm talking to her? Maybe. 13:17 You know, mistakenly think I'm hitting on her or something or make her feel uncomfortable instead of just having a nice conversation between two human beings. So all that stuff was going through my head, but it was misplaced. It was wrong. And so the conversation wasn't just positive. It was surprisingly positive. And that insight that social connection is a choice and that our choices could be wrong led me to run a bunch of experiments to test whether this is just something unique. 13:45 to me as a kind of weirdo or whether this is something we might see a little more widely. And so we started running experiments on the train that I ride. We recruited people for an experiment. We randomly assigned them to do one of three things, to either try to have a conversation with a person who sits down next to them that morning, so this is the connection condition, to... 14:11 keep to themselves that morning and just enjoy their solitude or to do whatever they normally do. 14:17 At the end of the survey, they reported how the conversation actually made them feel, how positive it made them feel on a couple of different measures. And then we asked another group, we asked them to predict how they would feel if they were actually in that situation. To report their beliefs, their expectations about how they would feel. Because that's what actually drives your behavior. It's not how you actually feel. You don't know how you're gonna feel. You're projecting, right? Yes. It's not gonna happen, yeah. Exactly. So you sit down and you think, well. 14:45 what would happen if I did this? Those are your expectations. And people's behavior is driven by their expectations. And what people expected was that they would have a more positive commute if they kept to themselves than if they had a conversation with somebody, which is what people are doing, right? So they're behaving rationally in line with their expectations. But when we actually had people do these things and report how they actually felt at the end, it was those in the connection condition. 15:12 that actually had the more positive commute and those in the solitude condition who kept it themselves had the least positive commute. People's expectations weren't just wrong, they were precisely backwards. They thought that keeping it in themselves would make them happier. In fact, connecting with somebody else is what would make them happier. And that was just the tip of a very big iceberg. For the last decade and a half, it just, we've been seeing these things all over the place. I'm like a guy with a hammer who sees nothing but nails. 15:41 I can find these phenomena all over the place now. So it's nearly two decades of research. That first experiment, you speak to it in the second book. don't know whether you also put it into the first book. It is wise to understand what others think, believe, feel and want, which is your first book. um So two decades later and pushing your five years of writing and you were avoiding. 16:09 being a guest on my podcast and that rightly so. Yes, took a long time. But as then. of 2026, your book, A Little More Social is being released. And we'll have how to get that book in the show notes as well after this podcast goes live. So what I wanted to do is really ask you what made you want to release it now in 2026, right? And 16:39 Again, I was able to get a pre-read of some of the material and uh while not stealing your thunder, what I was, I like how you've set the sections or the why questions. So back to the empirical, right? Research you do as a social scientist. Why, why not? What if, what now are the four sections of the book? But I will tell you this, I read the prologue and when I started reading chapter one, I was depressed. It was really hard to go on. 17:08 So I'm warning, just so with that, I'm not gonna give the spoiler alert. What made you want to publish this year finally after two decades and right? So I will say that I think the message of the book is fundamentally empowering, not depressing. It was just first chapter. I was like, wow. Just the first chapter maybe about the importance of social connection and how we're not choosing it. But once you see that, 17:38 Once you see that your beliefs about other people might be off a little bit, it's an invitation to test those. And to see places where you and your life are holding yourself back, not because social connection is unpleasant or you're not good at it, but because you're not even trying and finding out that you could be wrong. And once you start to see that the bars in front of you that are holding you back from reaching out and engaging with others, 18:05 having stronger relationships, communicating more clearly, having more joy and enjoyment in your life and making people around you better. Once you start seeing that those bars that are holding you back sometimes, making you overly fearful about engaging are actually made out of pasta noodles, it's easy to break through them. It is empowering. The people I talk to a lot in this book who spend a lot of time talking to other people, almost all describe themselves as having a superpower that other people don't have. 18:35 They're not afraid of engaging. And hence they don't hold themselves back from opportunities that they could have in the better life that tends to follow when we're connected well with other people. As to why 2026, I wish I could say it was something like market timing. I was getting exactly right. The world is a disaster, is a dumpster fire at the moment. are uh going deeper, deeper into loneliness in our lives. The world's a mess. 19:03 hostile and violent and unfriendly and we're trying to pull back from this. I wish I could say it was market timing. uh It wasn't market timing exactly. It was more, uh I don't know what the right word for it is in the innovator world, but I didn't have the product until today. Right. Or serendipitous as well. Serendipitous. Yes, serendipitous. I do think there's a timeless element to this too, which is, it is always the case, I think. 19:32 I don't think these phenomena are totally new. There are new elements to them, but there are times where we can always make our relationships a little bit better. But yes, right now there is some serendipity, I think. We could really use it right now. I agree. Tell me how it is to make a choice. So we all are different human beings, right? Talk about human beings. 20:01 condition, right? We're very social and some of us are more introverted than extroverted. how, and with your book, how can we be more empowered to make that choice? So I think the important insight from behavioral science here is that social connection and therefore the happiness and wellbeing and relationships that follow from that is to some extent a choice that we make. All social interactions that we have a choice over 20:29 you get to a point where you have to decide, I refer to it as the choice, because I think it is arguably the most important choice we make over and over and over and over again, which is, do I reach out and engage with you or do I hold back? And that choice, the choice shows up in lots of different forms. Do I talk with a stranger? Do I type to you or pick up the phone and talk to you? Do I... 20:56 ask deep and meaningful questions or do I hold back? Do I share this compliment or this feeling of gratitude or request for help or honest piece of advice for you, honest feedback? Do I share those things or do I hold them back? So the choice masquerades in lots and lots of different ways, but at its core is this conflict between approaching, wanting to engage and fear or avoidance, being nervous about it, right? And when both of those things are strong, we get 21:26 approach avoidance conflicts where we'd like to do this thing, but we're nervous. I'd like to go up and talk to that other CEO I'd like to meet, but maybe they don't want to talk to me. That's approach avoidance conflict. What we find in our work is that, well, other researchers have found that these two systems in our brain are independent of each other. That's approach and avoidance. Approach and avoidance. Yeah. The factors that govern approach, the system that governs approach in our brain is different from the system that governs avoidance. Okay. 21:55 That's how you can get both of them being very strong at the same time. They're not dynamic with each other. They can operate independently. And when you don't have any interest to approach or any interest to avoid, then you're indifferent, right? But the opposite of that is approach avoidance. And um people do vary a little bit in the strength of these two motives, uh in what guides their choice. 22:21 Extroverts tend, for instance, to have a little bit stronger approach orientation or rather a little less of the avoidance orientation. But I think the important insight is that what extroversion and introversion is really about is how you make the choice. And this is something that people, think, routinely misunderstand about what personality actually is, or at least the way we measure it as psychologists. I think that's the important thing, the way we often measure it as psychologists. 22:49 It's not describing the type of person you are. It is describing the type of choices that you make. So for instance, people might often think that introverts and extroverts, actually enjoy different things. That extroverts like talking to people, whereas introverts like talking to people less. That turns out not to be quite right. When you put people in experiments and you actually have them talk, introverts and extroverts both enjoy talking to people, right? 23:17 They both get tired talking to people later, but they're energized during it. They both actually feel more authentic when they're talking to someone and engaging in social interaction than when they're not. What differs between the two is how they make the choice and therefore what they think they will like or enjoy and therefore the habits they create and what they do. And that I think- that's kind of a revelation. uh 23:47 But psychologists have been discovering this for decades. So you go back to 1980 was the first published paper testing whether happiness or wellbeing was related to personality. Now in theory, you wouldn't expect it to be, right? Actroverts like talking to people. Proverts like uh reading books and keeping to themselves, more quiet time, Enjoying more solitude. Great, there should be no differences in happiness. We get what we want out of life. 24:16 That turns out not to be true. Extroverts tend to feel more positive, have more positive affect, more happiness in their lives than introverts full stop. And it is not a small effect, it is a huge effect. The correlation between extroversion and positive affect, essentially happiness in your life, positive mood in your life, is around 0.5, which is as big as the correlation between the heights of fathers and their sons. It's huge. It's huge, right? And so... 24:43 Psychologists learn then over time that that comes in part because extroverts tend to choose to act a little more extroverted. If you ask people to act more extroverted, everybody tends to get a little happier, uh introverts and extroverts alike. If you ask people to act more introverted, people tend to get a little less happy, introverts and extroverts alike. So I think that's a really important insight that introversion and extroversion is really about choices and habits. 25:12 more than actual experience. You know, m I extroverts to choose to do it more often. Is it a? Is it oh a game of numbers? Is it like betting? Is it just showing up for yourself more frequently? Independent of being an extrovert or introvert where I'm going is how can we apply this in the workforce with our workmates and things? Right? Is it just, you know, just choosing independent of what the outcome may be? 25:42 more often. So our data suggests that our assessment of the odds and all of life is kind of a gamble. Our choices are gambles on the future based on what we think is going to be relatively positive or not, what's going to be relatively rewarding or not. And our data suggests that we get the odds a little wrong. Extroverts and introverts both do. And actually, I don't want to focus too much on that because it's a much weaker, it's a much weaker phenomena than we actually 26:12 You might imagine that it is. People tend to think on average they're more introverted actually than they really are em because extroversion is public but introversion is private. So we all know our own private introverted side. It makes us feel unique, more unique than we actually are. But I think our data suggests not that you go out and you talk to people all the time or you share every detail about yourself. It suggests we get the odds a little bit off. 26:40 It suggests when it's easy, when it's possible to connect or to engage or when you have a thought that you could share that you think might turn, you know, be positive. If you recognize that that avoidance motivation is a little too strong. 26:55 Recognize you have to dial that back that your first thought might be overly avoidant your second thought a lot of times might suggest No, I'll give this a try. I'll give it a try. I'll give it try. I like that. Somebody said me lose right? So with that why not right part two of your book? Do you want to talk about a little bit about? The the how well you've talked about the have connection, but hello stranger, you know really just making it happen. I 27:23 I don't know whether you can make an inference into the workplace. I would like you to do that for me. Yeah. Yeah. Because we are human beings and whether we work in hybrid, we're totally remote, or we are working back in the office, we get things done through interactions with our colleagues. And so how might your work and a little more social uh make our, uh I guess, our interactions 27:53 more empowering uh and just overall lifting up. I think our data suggests that you can look for times in your life where there's kind of dead space or kind of gray space. Time where you could engage or connect with someone but are choosing not to in ways that wouldn't take you away from something. That's a place to start. Like I'm on the train in the morning coming in. 28:18 I'm just sitting there. Usually I'm not doing squat anyway. I'm scrolling my phone or reading the news. I think it's really important, but come on. Sometimes we do things, but often we're not. And that's a place that's easy for me. Like I did this morning, I had a conversation with Brenda on my train. um Brenda I've known for a while. I don't see her that often, but this morning she was on the train and we had a lovely 30 minute conversation. She gave me a hug at the end and she said I was really what she needed today. 28:48 Oh, right. And that's amazing. Yeah, she's a lovely human being. She's a great name. Yeah, she's great. But I don't see her a lot. Maybe a few times a year we'll be on the same train. But every time I see her, I know her. I remember I wrote her name down and I can have that conversation. It's easy. But that's something where I wouldn't have been. 29:13 social otherwise, it's easy to do. And if I know it's gonna be more positive than I think, then I would choose to do that than something else. When I get to my office here at the Harper Center here at Booth, I walk into the door on the way in and I got maybe a 250 yard walk up to my office here on the fourth floor. And I've started making it a habit that I take a hello walk when I come in. When I walk by people, I don't just sit there and just walk to my office. 29:42 I greet people when I'm going by. So I say hi to Nigel who's sitting there at the same table every day this winter quarter uh down uh in the winter garden here at the University of Chicago. I say hi to Keith and Mario and Linda on my way to the elevator often who are down there. These are often our staff people or uh other folks around in the business school. When I get up the elevator onto my floor, I walk past uh Jane's office and Eric's office. 30:11 uh Emma's office, Virginia's office on my way. And I say hi to people, right? Hi, Eric. Hi, Jane. Hi, Emma. Morning, Virginia, when I go by. Now, it's not taking me a lot of time, right? It's not slowing me up from anything. It's not really interrupting them too much. They're just getting started with their day. But it makes that moment brighter, right? It makes that walk better. Virginia came by my office the other day. I've gotten to know her. She's one of our new junior faculty. She came by my office. uh 30:40 to talk about the book that I've been working on to talk through it, because she found that interesting, she's an economist. I don't think she'd have done that before if I hadn't said hi. It's been nice. So, you know. So there's small, little initiatives, you just have to make the choice. They don't have to be massive things. There are many opportunities that are easy, seem small to us, they end up being, I think, 31:09 much, much bigger than we imagine them to be. And we just choose not to take them. And that seems like a tragedy. And once you start looking for these moments, these opportunities, you walk to get coffee at the office or something. Take a friend with you. Ask a colleague to walk with you. Ideas come out of those. Connections come out of those. Well, being comes out of those. You never know where it's going to go. Can you, for my listeners, discuss or share the experiment and how 31:38 people underestimate how much they'll enjoy talking to strangers or the letters of gratitude. It's your choice, you can do both. I mean, can share my own personal, know, living that. um It remains with me. I would love that. You do that. That would be great. know, the enjoying talking to strangers is uh during the last week of the course of designing, right? 32:06 a good life, we literally had to, um I think we had to report back and we had to do a kind act towards somebody that we didn't even know. Right? Yeah. Yeah. We were randomly assigned or we, right. I think you were, right. In that case, I asked you to go on and a random act of kindness for somebody. Exactly. An act of kindness. And it was amazing that then the person reacted. so it was a very, it was aha moment. Again, I'm 32:36 This was seven years ago, eight years ago. So I'm drawing a blank, but I just recall it was an amazing experience. we all kind of got to know each other's names. We were like 80 students in the classroom at that time. Another thing that I do recall with fondness is writing a thank you letter, graduate letter. you gave us the op, it was prior to getting to campus, we were to write a letter. 33:03 we could actually share with you who we writing that to. And that person had the opportunity to share with you what they felt or not. So it was kind of blind. And I did go ahead and write a thank you letter to a color out Betsy Berkamer. She's also been in my podcast, influential person in my life. uh And uh lo and behold, she wrote to you and as did other people that were recipients of a thank you letter that was two paragraphs. It made their day. 33:32 But the questions you ask, how did, you you had to get the guts up to write that letter, right? Because you had to really be touchy-feely and share a specific event for which you felt gratitude. So, yeah. So that's an, so these, the, the choice to reach out and engage with other people or hold back crops up in lots of places. So one of the things we know as psychologists is if you want to have a good day, one thing to do is to think about somebody else who you really appreciate and feel grateful to and make their day. 34:02 by writing a note to them and explaining why you feel grateful to them. What's interesting- that here on the podcast on the Founder's Standby. So this is major. Say that again. If you wanna have a good day, reach out to somebody else and make them have a good day by explaining why you're grateful to them. What's interesting though is if you ask people, can you think about somebody you feel grateful to, but who for whatever reason you haven't reached out to express this? Almost everybody can right away think, oh yeah, I can think of somebody. Why do those people exist? 34:32 Why haven't you told them? There are lots of reasons why, but one is often, it's gonna be weird. Is this the right time? What am I gonna say? Can I really put into words? All of these steel bars in front of us that we think are so powerful, but they turn out to be pasta noodles when you actually sit down to write them. So what I have you do in my class towards the end is I have you think about this person, sit down, write a note to them. 34:59 anticipate how they're gonna feel, right? If you think that they're not gonna, you you underestimate how positive it's gonna be for them, or you overestimate how awkward or weird it's gonna be, right? That creates friction. That's a barrier to reaching out and engaging them. That's your avoidance voice shouting a little too loudly in your ear, that cringe voice, that you shouldn't do this. And we can find out whether that's calibrated. So I had you predict how the recipient would feel, how- um 35:28 the extent to which they'd be surprised to learn what you're grateful for, extent to which they'd be surprised to receive how positive or negative they would feel and also how awkward they would feel. I then, if you were willing to share with me the recipient's email address, I reached out and said, well, student of my class, um sent you a gratitude note as part of a class exercise. uh They thought of you for this. And I would love it if you could just tell me how that made you feel. Maybe terrible, maybe great. 35:58 but they go to the survey, they fill it out. And then we just compare those numbers essentially. And the students are not confused. You weren't confused that this would be positive. You thought it would be good. What was surprising or what's super robust is that it's even more positive than that. So Brenda, your little two paragraphs that seemed like nice, nice, but they were really, really nice to the person who received it. You thought they would be, uh 36:27 kind of powerful, they were really powerful. She probably printed that out. I had a student this year say in class that their recipient, who was a relative of theirs actually, their recipient asked, can I print it out and put it on the wall? Oh, that's amazing. Of course they do. Yes. It matters a lot. Surprisingly a lot. That's the important thing. Surprisingly a lot. 36:56 I could go on and on with more examples of the experiments that Professor Epley made us do in class that have marked uh my life. uh I use a lot of these things with my clients or even my students. And one of which is I do have the personal responsibility statement that we wrote at the end of our... uh 37:20 with you and it had to be short and sweet. You framed it, gave it to us. want it. If we ever want to change it, we had, you know, uh a beeline to you. You can send me a note. I'll change it for you. I'll send you new one for sure. And I framed it, framed it and printed out because otherwise you never would. Right. And then it's almost like it's an accountability manager. Right. We have Professor Epley who holds us accountable. Here, by the way, is mine. Yeah. You want to see mine? 37:48 I didn't know you were going to mention it, but yeah, here it is right here. Yeah, mine's here. And actually, because I asked my students, oops, I don't know whether you see it too well. There it is. Yeah. There it is. Signature, sorry. Sorry, because I have that screen. uh And yes, I even have some students that say, Professor McKay, but it's really hard for me to write mine when you share yours. of course, I'll share it. Yeah. 38:13 You may remember I put mine up in class. I showed you in the last class what mine was. Yeah. Yes. Yes. So yes, tell me. Yes. Go on. So the purpose of that is this is really about sustainability, I think, and resilience in organizations that the business case for ethics for being good out there isn't just that it feels good, sometimes even surprisingly good, which is really what's in the book and in a little more social. 38:43 which I describe in lots of different ways. But uh the business case for ethics is really one about resilience and sustainability. That you can be a schmuck for a little while and take money from people and succeed. You can lie and cheat and steal for a little bit. It's very hard to do that for a long time. Wow. People don't want to work with you. They don't want to work for you. uh They don't want to lend you money uh if they think you're uh unethical and shady. 39:13 And so for an organization, way to design one, for founders, the way to design one that is resilient and sustainable is to make sure that your values, your mission is front and center in front of everything that you do. so identifying a powerful, identifying an actionable mission statement, like your personal responsibility statement, this is at the organizational level, is a critical first step because everything else can be woven out of that. 39:43 Those ethics have to be kept top of mind all the time, woven into how you hire people and fire people and promote people and evaluate people and what you talk about day to day and what your norms are in the organizations, what activities you do, how you financially compensate people, what kinds of non-financial incentives you have in your organization. All those need to be tied to the mission statement and to the values that those suggest so that they're kept top of mind when you're out there in the world. So they become more of your first thought. 40:13 rather than needing to be your second thought. And the personal responsibility statement functions at an individual level that way. uh It prompts you to think about what is the thing you wanna have top of mind guiding you when you're out there in the world. So mine is to teach and research so that people are inspired to make wiser decisions and live better lives. Okay, that's what I focus on. 40:39 m Mine is always be original creative, loving, giving back, thankful, spontaneous, daring yourself while being content with enough. And my podcast is actually one of those creative outlets for me. now into my fourth season, it's been amazing. You know what I like with, you know what I didn't see, m wouldn't have seen when you wrote that, but do now is the last part being satisfied with enough. That's an important bit of self. 41:06 compassion there to recognize we do what we can do, nothing more, nothing less. And we give it all we got and that is enough. So the idea is that just like with a mission statement, if you can keep that top of mind guiding your behavior, you'll be a better organization if you design that well. Same thing is true for individuals. Well, before we go to my last three questions, which is really uh the essence of what I do with... uh 41:34 Next Act Advisors, my consulting firm around resilience, purpose, and scalable. I really wanted to give you an opportunity to let my listeners know how to connect with you. It will be in the show notes. And specifically, you do speaking, you're a keynote speaker and you can be hired in different, so can you? 41:58 share a little bit of how we can connect with you and to what do you typically like to speak about when you are um hired as a speaker? Yeah, so I do a lot of uh public speaking, which I think of as just another avenue for teaching about our research, which I think is meaningful for people and can be very powerful. The speaking agency that I use is WSB. They're in Washington, DC. They're fabulous people. And I can talk about 42:28 A few things I can talk about why we misunderstand each other and how to help people understand each other better, which is really about management and leadership, all of those essential skills. And then the work that I'm doing now about human sociality is really a lot about organizational culture, uh happiness and learning. But a lot of it's about organizational culture, I think of it as. And how we uh might act in ways 42:56 uh that don't optimize our culture in ways that make it sustainable or keep us resilient or keep us happy and motivated in organization or learning as much as we could. The individual stuff people also take out of this as well. The book is really written at the individual level for you to think about yourself and your own life and why we might just like we don't act maybe exercise as much as we ought to, why you might not be as social as you could. Thankfully, exercising sucks, it's unpleasant. So we all know that. 43:26 That's hard. reaching out and connecting with other people. know. I know. Thank you. But reaching out and connecting with other people is positive. know, like, you know, it's surprisingly positive. So that's an easy habit. That's an easy habit to make. So I talk a lot about how, you know, where these barriers come from and what you can do in my presentations, what you can do to turn these into habits to make your life consistently better, resiliently. 43:54 And then for connecting with me, do use LinkedIn. I don't use a lot of social media because it makes me miserable. But I do, I have been having fun a little bit recently using LinkedIn. So that's a way, but you can also email me. That's probably the easiest way. All right. So all of this will be in the show notes and, and your book, a little more social will be released on May 19th. There'll be a launch party. I believe it's, it's available on Amazon and bookshop. 44:23 and you have your own website. again, this will be provided in the show notes. Well, I like to do around the Robin lightning question, so my guests, all of my guests get to answer three questions. I'm passionate about resilience, purpose, and scalable or sustainable. And so I'd like to ask you, Professor Apley, what does resilience mean to you? It means being able to accept the negative things that happen in our life by 44:51 but by continuing to carry on with it. So one habit that I've picked up, I don't remember that I actually did it deliberately. I sign off all of my emails, typically, not always, but usually, and I type these out. This isn't like a form with onward. um And it's kind of a mantra I keep in my mind. uh Research is hard. There's a lot of failure. There's a lot of frustration. 45:21 Writing papers is hard, getting published is hard, speaking is hard, teaching is hard. It's all hard stuff. I mean, we're all doing lots of hard things, but they're those hard things. And there are lots of setbacks. And in academia, it gets personal because the ideas are yours, just like founders, right? These ideas are your baby. They are precious to you. And when they don't work or when they're threatened, that is hard and it's threatening. But you can't get mired in that. It's easy to get stuck in that. And so I try to... 45:50 This is just a little thing I do to keep myself focused on, all right, what's next? Now what? Onward. We're gonna carry on with this. That's resilience to me. I love it. Thank you. Purpose. What does purpose mean to you? Yeah, purpose is more, I think, the long run drive. Like, why am I doing this? um What's the meaning of my work? Which is usually not something you see right in the work itself. It is above the work. It's bigger than the work. It's what's in your personal responsibility statement, right? 46:21 My research is really oriented towards trying to identify wisdom, right? That's understanding. That's what all scientists try to do. We try to understand. I don't try to advocate. I don't tell you what to do. I try to figure out what the facts are as best I can. And so that concept of wisdom, for me, that's my purpose. Just to try to figure out wisdom. That's the long run goal, the high level goal. I think that is essential for me. It's also, it is perfectly aligned with 46:50 what I'm trying to do as a researcher. Amazing. So my second to last question, scalable or sustainable? can be anything. So scalable I struggle with. As a behavioral scientist, that is hard. It's hard to take individual stuff and increase it at scale, in part because the things that you do to increase something at scale are not the things you do to make an individual life better. So at scale, 47:18 You typically don't target people's beliefs. You navigate around them in some way. So you don't tell people they ought to play more with their neighbors. You build a playground. So they're different approaches. uh So scalable, I struggle with a little bit. try to, in my research, because I'm understanding individual minds, that's where I focus. And so I make it purposefully personal, our researches. Sustainable, though, 47:47 I think our research is really all about in many ways is that at the end of the day, at the end of our experiments are questions, dependent variables. And those dependent variables are typically these days about wellbeing, some measure of wellbeing and happiness. And that is the thing that you need for sustainability to keep things going, right? To sustain yourself. 48:17 is some positive reward. That's what sustains action. m And that's what our work focuses on, think, sustainability in part because for understanding social misunderstanding, the social misunderstanding creates friction. It ruins relationships, causes ah conflict and hostility, which is not itself sustainable. We're trying to encourage some insight into what the opposite would look 48:48 Last question, Professor Epley, did you have fun in the sandbox today? It's very fun, It's great seeing you, Brenda. Makes me regret I didn't do it uh the other times you asked, but it is a lot of work to write a book. It is exhausting. it leads my students to, my PhD students and postdoc doing research with me to contemplate homicide if I don't get to their paper soon. So anyway. Well, with that. 49:17 I let's sign off. You did enjoy yourself to my listeners. If you like this episode with Professor Epley, Nicholas Epley, sign up for the monthly release where founders, business owners and professionals um share their own experiences on building scalable, resilient, purpose-driven organizations, profits for good, and making the world a better place. So thank you until next month.

May 14, 2026Episode 647 min

Season 4, #6- Building Reputation with Purpose

In this episode of the Founder's Sandbox, Brenda McCabe sits down with growth advisor and author Vanessa Golsby to explore what it really takes to scale private equity-backed SaaS companies. Vanessa shares the story behind her new book, The $100M Push: The Four Decisions PE-Backed SaaS CEOs Make to Deliver Growth in 100 Days, and reveals the four critical decisions CEOs must lead to build scalable, resilient growth: defining the ideal customer profile, aligning go-to-market execution, making strategic investment decisions, and creating long-term operational accountability. Drawing from her experience advising more than 100 middle-market software companies and serving as an operating partner in private equity, Vanessa offers an inside look at how investors think, why commercial alignment matters, and how CEOs can create predictable growth through disciplined execution. The conversation also explores the role of generative AI in modern go-to-market strategy, the importance of reputation and purpose-driven leadership, and the entrepreneurial leap Vanessa took to launch her own advisory firm. This episode is packed with practical insights for founders, SaaS executives, and growth leaders looking to scale with clarity, confidence, and purpose. You can find out more about Vanessa at: https://www.linkedin.com/in/vanessa-goolsby/ https://www.linkedin.com/in/vanessa-goolsby https://vanessagoolsby.com/ Or order her book at: https://www.amazon.com/100M-Push-Decisions-PE-Backed-Deliver/dp/1963549309 Transcript: 00:04 Welcome back to the Founder's Sandbox. I am Brenda McCabe, your host. Now in the fourth season, the Founder's Sandbox is a podcast that gathers business owners, founders, professional service providers. 00:31 and corporate directors. And we all are working towards the same mission, which is building scalable, resilient, purpose-driven companies to build a better world. We do this with underpinning, with great corporate governance, and really working with the founders to build that resilience and scalability. My guest, um join me here in what I like to consider a fun sandbox. 00:55 And this month, my guest, I'm actually delighted to invite Vanessa Golsby. Vanessa's joining me from, is it Dallas? Dallas, that's right. Dallas, Texas. So um more here, but thank you Vanessa for joining me on the Founder's Sandbox. And I wanna give a brief introduction to why Vanessa's here today. There's multiple um boxes that she checks, largely Vanessa. 01:22 has her own firm. She is a growth advisor who specializes in scaling private equity back middle market software companies. And it's an interesting time and that space that I'm certain we're going to get to a question here in a minute about the impact of generative AI and all those models out there and the effect on software businesses. You're a seven-year veteran as an operating partner. 01:48 in two private equity firms and portfolio SaaS CEOs. She has helped more than 100 middle market software companies drive growth, execute go-to-market companies, go-to-market, pardon me, turnarounds, and deliver investor returns through sharper commercial execution. That's all in the commercial execution, isn't it, Vanessa? That's right. Yeah. And prior to advising, she was a former operator leading product and commercial. 02:16 teams for 18 years at brands like Travelocity and Financial Times, which I didn't know that when we first were talking. I hadn't realized when we had our first conversations of your corporate experience with Travelocity and Financial Times. So you brought a lot of that corporate kind of know-how into the private equity world and you actually started your own firm. it four months back? 02:44 October, October of 2025. My goodness. So you're not even into your first year. I know. So, and, and, uh, you are an author. So your book, um, so I don't know when you found the time, Vanessa, but your book, the 100 million push the four decisions PE backed as SAS CEOs make to deliver growth. And a hundred days is out. 03:13 Matter of fact, this last week and we're in the third week of April, it uh hit bestseller, right? That's right. Amazon. Yeah. And in that book, we'll get into it. You distill the framework that you've developed. I don't know when, while setting up your own firm, but you developed over decades in the trenches, codifying the sequence behind the big four decisions. 03:40 that enable CEOs to scale with speed, clarity, and confidence. So welcome to the Founder Sandbox. Great. Thanks for having me. Happy to be here. Well, I always like to start with uh my guests to really talk about your origin story. And I think what's very appropriate for today's uh episode is what drove you to actually write a book, right? 04:09 because it distills both your professional as well as um this new tool that you got out there in the market. Yeah, you know, I never thought I would set out to write a book, if I'm being honest. I had, I'd spent, at this point, I'd spent probably about five years as an operating partner, so as a growth advisor for PE firms. And so in that role, I had been 04:38 pretty well practiced at writing best practices. So I understood how to codify a framework and explain it, you know, in long form, basically. But I never had dreams of being like a full author, like writing a book is totally different than writing a best practice. uh But a really strange thing happened about five years into my career as an operating partner. So I'd had about 18 years, as you mentioned, like in the trenches, like a tactical, and then about five years as an advisor. 05:06 And um over the course of those five years, I had developed for myself this framework because when I moved to the firm that I was at at that point, I was having to work on about 10 software companies at a time. And it's really difficult to show results uh efficiently when you're having to focus on so many different companies who have different industries and different sizes and different needs. And so I created this framework just so I could work at scale. 05:35 And uh I had been running it probably about three years at this point when I needed to go back and take a look at some of my case studies. So I wanted to collect case studies. And luckily, because I was still at the firm, I was able to get access to actual data from these companies that had been running the framework. And oftentimes what happens, because I focus on middle market software, there's a sales cycle. So oftentimes what happens 06:04 is we'll run through this framework and we'll see immediate results by way of pipeline and maybe bookings depending on the sales cycle time. But oftentimes we don't see the actual bookings and revenue results until a quarter or two after, depending on what it is that we're selling. So this was really the first time that I had really paused and like done, if anybody here has had to do a case study or fact finding exercise for a PE firm, know like what a... 06:32 slog it is to have to like go look through all this data. I like found the time, I prioritized it. And what I found was, I mean, there was no surprises in terms of like when we wrapped up our, usually my engagements, I try not to be there longer than 90 days. So it's either a 30 day, 60 day or 90 day plan that we run through. It's pretty tight ah in terms of how we manage through it. So by the end of our... 06:57 I have a sense of some results, like whether it's pipeline or early bookings. have some walking away knowing that we've seen some lift, but this was the first time I'd been able to go back like a couple of years to see like, what about those first companies that ran through it? And I'll tell you, Brenda, I fell out of my chair. I was like, I cannot believe the consistency. You can see in the data, like the trajectory, the upward trajectory from when we started working on the framework and then where they were today. And 07:27 At that, that was like the first seed. Like that was like a Thursday. And I was like, I don't know what to do with this information, but I have this information. Oh my gosh, this works. can't believe it. Right. And I really had to sit with that. And over the course of like two or three weeks, a few other things kind of happened that led me to the path of writing a book. Um, and one of those is I was listening to a podcast. I'm an avid podcast listener. 07:54 And I was catching up on April Dunford. She wrote a book on positioning. Obviously awesome. It's a great book for positioning. And I was going to have to run a positioning workshop. And so I was like, oh, let me like get into my head back into the game on messaging. So I just like queued up like the latest podcast I could find from her and then went on a run. And then I was like a captive audience. I went on this run. It turns out the podcast I had queued up was not about positioning. It was about her journey as an author and writing her book. 08:23 So I spent an hour listening and getting really inspired. And when I came back from that run, I thought, you know what? I have to tell the people, there is a way to consistently build and scale companies when they're going from, my framework is very from 10 to that first 100 million. And so that was really the inspiration for me. then it's just been a journey from there. 08:52 We'll get to it, but you uh codified um when you had those aha moments, right? You went back and looked at the cohorts of the companies that you had been working with, right? 30, 60, 90 day framework, for lack of another word. Can you share what are those four things that enterprise SaaS CEOs do? 09:18 Sure, so my framework is an order of operations. So everything that happens at the beginning has like downstream implications on the other activities. And originally when I created this order of operations, I hadn't high leveled it in terms of four decisions. I did that for the book because I wanted to write the book for CEOs. CEOs are such a, especially going to the first hundred million. CEOs. 09:45 have to have their hand on the strategic wheel of commercial growth. not yet mature, they haven't yet matured out of that. There is a place over a hundred where you can start to delegate more of the idea of commercial strategy to like a, you know, top tier executive CRO, for example. But when you're working on the path, especially if you're PE-backed to a hundred, you really need to stay involved. And that had, I had noticed that that core ingredient oftentimes was 10:15 one of the gaps I was inadvertently closing when I was working with these companies. And so because of that, I wrote the book for CEOs. And since I was writing it for CEOs, I was like, oh, I need to go one level higher than my traditional order of operations, which is very like activity sequenced and like talk about more of like, what is like, what is strategy? Strategy is making a decision and committing to it. So what are the four decisions that a CEO needs to direct and commit to have their team commit to in order to see this growth? 10:44 And those four decisions kind of tell the story of growth from up to the first hundred million. Frankly, it's kind of the same above a hundred, except the last decision actually becomes the first decision over a hundred. But anyway, that's right. So four decisions that CEOs that you were saying that are 10 and get to and to get in order to get to a hundred million, they have to be really continuously involved. 11:13 in the growth of the company. They cannot delegate until they reach that um upper level. They don't necessarily need to direct or be boots on the ground in these areas. But when they make these decisions and they guide their teams and champion these decisions, what happens as a byproduct of this is they inadvertently align their business in a way that is 11:43 successful for commercial strategy. So for example, I'll just walk through the decisions quickly to give you an example of how this works. um So the first decision, I high level it as the ideal customer profile or the ICP, which is just another way of saying who are we going to target? And my bit, my specialization is being PE backed. So part of what CEOs and companies hire me for is certainly the pattern recognition of working on over a hundred software engagements. 12:13 but also that sort of behind the scenes view of what the investor is expecting. you know, bringing that idea. When your PE backed, once that investment round closes, are inadvertent, not inadvertently, you are inherently um signing up to expand and grow either within your market, into an adjacent market, or in some other capacity. And just by that definition, you need to, 12:41 understand who your target is going to be, who your best buyer is going to look like for this next round of growth. So it's generally, this is such a major trigger event, this idea of becoming um PE backed, that it's generally a signal for CEOs to say, okay, now let's take a look and see if our existing customer today is going to get us to where we need to be in five years. Because that's five year journey is what you've signed up to take on essentially. So the first 13:10 The first decision is that ICP decision. Once we have an understanding of who we're going to target, then we focus, especially with the commercial side, we focus on how are we going to turn those targets into opportunities, right? So in software, it very much goes from like lead to opportunity to closed one deal, right? So that's what I mean when I say opportunities and or pipeline opening. And this idea of how do we turn targets into opportunities? I high level this decision as the SLA. 13:40 which is a pretty common service level agreement. in this framework, it covers about five or six very specific decisions that your sales, marketing, channel partner and CS teams need to align around to ensure that the build of their lead management system and how they're qualifying those leads to become opportunities is sufficient enough to have some predictability. like you have some confidence that when you put a dollar out, 14:10 into a marketing campaign, it's going to convert into pipeline, really, right? And then ideally into bookings from there. And so that's the second decision. the first one, who do we target? ICP decision. The second, how do we turn those targets into opportunities? The SLA decision. Once you reach... 14:29 Once you have the confidence and some predictability flowing through, now you're ready to make a more strategic decision. And these last two decisions are really where the CEO not just champions, but takes an active role in the decision making. The next one is the contribution decision. So this is now that we know who we're going to target and we understand and have confidence that when we target those buyers, they are going to turn into customers. The next question is where do we invest? 14:57 to go get more of those targets. So who's going to contribute to our revenue number? How much are we going to put into channel partners? How much are we going to invest into marketing? How much are we investing into outbound? How much are we investing into PLG or a self-serve motion, right? How much is new? How much is expansion? And in this decision, we start to bring the CFO in to take more of a governance posture around commercial. So we give the CEO more context around 15:26 Some of the horse trading that typically happens in a silo between the teams. We now have those kinds of conversations around investment decisions and headcount and budgets all together in a room. I run this like a workshop, but all together in a room. And the book teaches the CFO and the CEO how to run this on their own. Excellent. for kind of the terminology that I would use and correct me if I'm wrong, it's kind of capital allocation. So a bit more rigor. 15:56 is brought in with this discipline of budgeting, right? You're talking about contribution decisions, So it's budgeting, capital allocation, and um bringing another uh kind of the controller of the purse strings, the CFO. That's right. Right? And jointly with the CEO are posturing and actually sprinkling it down to their direct reports, I suspect. 16:25 Right. Well, we so the way that I teach contribution modeling is everyone needs to be in the room. No one function, not the CFO, not the CEO, not the CRO can make these decisions for the entire commercial team who is actually going to need to. Yes, it is a budget allocation exercise, but actually that's the second step. The first step, it's a goal setting exercise. oh We break down. 16:53 Each of those pipeline sources has different stages, which we just got very deep on in our SLA decision. So we understand what those stages are called. We understand how long we expect somebody to stick in those stages. We understand what those conversion rates are through those stages. And now that we have some sense of those inputs, we basically enabled ourselves to sign up for a number. So now we can look at marketing and we can say, oh 17:22 If you're gonna sign up for a million dollars in pipeline this year, that means at this selling price, you're gonna drive this many deals, right? At this conversion rate, at this close rate, this means you need to have this many opportunities and that this conversion rate from lead to opportunity, you need to drive this many leads. Can you drive this many leads? And the marketing person's like, that's a lot of leads. I don't know if I can drive that many leads, right? 17:48 And if they hesitate and they say like, can't realistically get that many, we look around the room and we say, okay, who else can drive more leads? Let's look at channel partners. Now we do the same thing from referral to meetings booked to, know, et cetera, et cetera down the So it's very like, it's very precise in terms of setting goals at the funnel stages, but not to become that, like we're not expecting frankly, to get a bullseye out of this workshop. What we're doing is we're kind of snapping the chalk line to say, 18:17 Okay, this is what we think we can go do. And now we're gonna meet with the CFO leading, we're gonna meet every two weeks or every month, and we're gonna see how we're doing. Are we driving this many leads for marketing? Are we getting this many referrals from channel partners? Are we booking this many meetings through the BDRs? And if the answer is no, then we look around the room. Where else can we do it this month? So we have something we can react to in real time, and rather than showing up to the board meeting and saying like, yeah, it was kind of a miss, but I think we have some ideas for next quarter. 18:46 Like this puts everyone in a position now to become far more reactive to what's happening in real time uh as a group, as like a singular one team. And what about the fourth? Yeah, so the fourth decision. And again, this decision is fourth when you're going to 100 million. But if you were above 200 million or as you like progress to like four up to a billion, this actually can become sometimes the first decision. 19:14 when you kind of need to work your way to this point um for when you're going to 100 million, especially after the contribution decision, that contribution. Yeah. Cause that's going to surface a lot of ahas for teams. Like oftentimes you're like, Oh, actually we need to break into a new market. We're saturated or, my gosh, you know, like we need a, you know, too many, we need a ton more reps or actually we don't need more new sale reps. What we need is expansion reps and really need more there. So 19:43 Like in that contribution conversation, you really surface so many of your growth levers that you're prepared for the fourth decision. So the fourth decision is now that we know who we're going to target and we know with confidence how we're going to turn those targets into opportunities. And we understand where we're going to investigate more of those targets. Now we talk about how are we going to do this over the long term? So how are we going to do this not just this year, but for the hold period? So for five years. 20:10 And so this decision I high level as the OKRs, which is an industry term. I didn't come up with that, but it stands for objectives and key results. And it's essentially gives the CEO like almost like a project management framework for long-term planning. um And you really can't necessarily jump to number four if you're going up to that hundred day plan without having these first three decisions at least somewhat cemented or somewhat committed to. 20:39 um Otherwise, what ends up happening is your OKRs are, you know, have like 25 things you're going to try and go tackle. So you kind of like, kind of, you know, by just by um the effort of making these first three decisions, you've already like started to prioritize for your team where the important levers are that you're going to focus on. 21:01 Thank you. I wanted to ask you by publishing this book, are you putting yourself out of business? That's a good question. A grow-to-market advisor, The enterprise SaaS sector that's under a lot of pressure right now with the dinner to bay eye. So let's take the two questions. Let's take them apart. And I'm being a bit. It's a great question. I asked myself that question. Yeah. 21:29 Yeah, my publisher asked this too. Why put it out there? You're putting yourself out of business or no? Yeah. Well, you know, the way I, there's a couple of answers to this, a couple of dimensions to this. The first is, you know, a lot of the motivation to write this book was to get the word out. Like when I saw the consistency and how well the results sustain when companies run through this framework, I was like, Oh my. 21:56 Why aren't we telling all of the CEOs that there's a way to go do this? Like we know these activities, it's things like territory planning and quota setting and SLAs. like, know, people know that activities that need to happen, but the unlock here is the sequence, like it's important to do them in order and that they're done altogether, which is the role of the CEO, right? Is to ensure that the right people are in the room when you're making these decisions and everything's like. 22:24 That's the those are the connectors right is are the those are the interlocks are the decisions the activations happen You know within the function so I? Was passionate like we talk about purpose the reason I was excited to be on this podcast is because this is very purposeful for me It felt like holy cow Look what I discovered under the pyramid I got to tell the people like there's an easier way to do this We don't have to bang our head against the wall to try and figure this out the hard way so 22:53 In that way, it didn't really feel like an option to necessarily hide it. ah And then the other side of me thought about it in terms of like changing the oil in my car. Like, I know that I can change the oil in my car. It's not a difficult, complex process. Like, it's very straightforward. But do I want to do, do I want to like get in coveralls and crawl underneath my car, like find the little lackey thing? No, I don't want to do any of that. I would far rather just bring someone in. 23:22 take the guesswork out, have it done, have it done correctly the first time, and leverage someone else's expertise in case they find something that I wasn't expecting. ah So I feel like I'm still bring, like when people leverage me to run through this, I'm still bringing a lot of value that you're not gonna necessarily get out of the book. mean, people, CEOs and firms hire me because of the pattern recognition and because I've seen these things play out enough times across different industries. 23:51 uh But I don't want to be a holdup. Like, please, if you are able to do it, then I welcome, I encourage you please to go run these plays yourself. And I try to give a lot of, it's very structured. This book is, the structure of this book was really difficult to come up with. It probably took me the longest amount of time, honestly. But I wrote it in a way that a CEO could read it quickly, because I know they don't want to read too many things. They are very busy. um 24:18 And so like they could digest it quickly and they could hand it off because that's kind of their role is to say like, I'm going to now equip my leaders to go do this and do it successfully. And they still have a role to play. But again, they don't have to be like in the trenches. Right. And without um seeing the book right now, I sound and Kendall on audibles or Kendall, um are there like exercises? Are there, is it like a handbook or is it um I'm a CEO? I 24:48 read your book um and I want to contact you. Do I to come in and maybe do some seminars? How does that work? Because this is a marketing tool as well. Yeah, yes. mean, of course I this book can be just a step by step guide for CEOs and their teams if they want to take it that way. So I tried to write it dimensionally. So the first dimension is 25:13 It equips the CEOs to understand, like the first two chapters are really around what is the investor expecting of you? Basically it's like, here's a little bit of the behind the scenes. Yeah, that was intriguing for me when we first spoke of it. Yeah, you've been in that room. Yeah, like I've been in it. Yeah, exactly. like, you know, one of the things that, again, like a lot of things happened in this like two or three week time period when I was kind of coming to the conclusion that I was going to write this book. And one of them was I was in a board. 25:44 meeting and there was a CEO advisor also in this board meeting and I could see the CEO advisor was um giving great advice based on their singular experience but the truth is is their experience was so unique to them that it would be really difficult it'd be like saying like 26:07 Yeah, just, once you press post, it's gonna go viral. It's like, let's not over promise here, you know, what's realistic. And that really hit me to say like, oh, this is a unique perspective. Like I'm not necessarily an investor and I'm not a CEO. it's been years since I've like managed a commercial team or been a GM, but I have... 26:34 I've flown all of those altitudes and I've been an observer in all of those rooms so many times that like the patterns, you just can't deny the patterns. um So yeah, I'll stop there. I'll pause there. So you do the reveal, right? So for any CEOs of enterprise, um SAS companies, this is a must read, right? Because you're doing the real deal. What is actually happening in the boardrooms of those private equity? uh 27:05 partners right that are yes looking at their portfolio companies yes yes thank you yes so i start with like you need to equip yourself with understanding what is expected of you when you took this investment which isn't frankly always talked about like it's not always revealed to the CEO ah so that's the first step and then it is a step-by-step guide so like there are the four decisions and then within each decision 27:33 I show them the book is structured to show them, tell them what the decision is, give them some case studies of other companies who have solved it, give them some red flags that say like, look, this is a really helpful book if you just closed your investment and you need to run like a, they call it a hundred day plan of like, you're going to deploy a lot of that, those investment dollars very quickly in order to like try to get traction on growth. So this is, I wrote it in that framework just because it is naturally 28:00 predisposed to running in like a 90 day plan framework anyway. um But it's also one that oftentimes in a hold period, you're going to hit some kind of plateau, right? It's very rare to like knock a home run out of the park right out of the gate. And so I also, so like in that, in that first part, so like each part, each decision has a part. So there's like a part for, there's like a four chapters on ICP, four chapters on SLA, four chapters on contribution. 28:26 The first chapter tells you, like gives you the red flags to look for if this is an issue, tells you what the investor is expecting, tells you your role and how you can direct the team, tells you when you need to maybe outsource, like what's the things you should absolutely do and the things that are kind of like nice to haves. Then the next chapter goes into how do you make this decision? And each of these decisions, the way that my approach is, 28:53 Um, is I like to do like 50 % gut and like 50 % data. So I always start my engagements with like surfacing from your internal experts already. Like a lot of times your C-suite lieutenants. Yeah. They like, I get called in for audits. Like that's like oftentimes I'm brought in initially for an audit of some kind. And in that audit, it's like a 360 commercial audit. And in that audit, I have like a week that I just cap off and I talk to anyone that you'll let me talk to. 29:23 And they're telling me the problems. like, this is really like, we've known this is very rare for people to like, I have no idea. They know what they did to get here. And so we start with the gut. And so in this framework for the book, the gut is surfaced through workshops. I'm a huge advocate of workshops. think, you know, honestly, my time with Vista really beat this into me, like the importance and the value of workshops, because not only is it a great place to surface everyone altogether, but it's 29:52 early adoption. Like when your voice is heard and you could challenge something in the room, when the decision is being made, you're far more likely to adopt it when we get to the final output. So I'm a huge fan of workshops. So each of these has a workshop. And this is a lot by and large when I'm training, when I'm teaching the CEOs, it's like, this is what you need to get out of the workshop. This is agendas. You can, have all of my agendas are up for download. Like you can download the agenda. You can run through it yourself. And this is who needs to be. 30:21 Yeah, like I want this to be helpful. That's the whole point is like it's supposed to be taking the guesswork out for the CEOs. uh And then you need to there's a data validation. Like, yeah, everyone's got gut. But then we do need like we are going to make some commitments here. So exactly. Yeah. So we need to like in each of these have different places that you go and source that data to validate. uh 30:43 So that's how we make the decision. Then I go through how you execute the decision. And for CEOs, this is almost like the TLDR. It's like, give you like, look, these are the steps that they're go through. Then in each of these chapters, I go far more into detail. This is what you're gonna go tell, like this is what your management team is gonna go do. And this is what good is gonna look like. So you're not done with this step until you've seen these five things come out of this exercise, essentially. 31:07 And then finally, each of these parts, so we've got like, what is the decision? How do we execute the decision? I'm sorry, how do we make the decision? How do we execute the decision? And then how do we measure the decision? And this goes back to how your growth story. So a CEO's role is not just to understand, right, our long-term objectives that may be surfaced in our investment thesis, right? Those are the first two chapters. It's not just coordinating the execution and setting the priorities and resourcing your team, right? Those are the four decisions. 31:37 But you also need to tell that story and you need to tell it in a way that makes you show well, that makes your company show well, and that makes you more attractive, frankly, at your next round of investment. so, yeah, externally telling exactly. So as well as internally. that's right. So that was really long winded, but that's basically the structure. It goes pretty far into detail, but I do. 32:02 high level for CEOs, like you can skip this part, just give it to your zero. So, so the book is out and um you started as you went rogue yourself and said, I'm working for myself and yeah, that's right. And um what happened is you've got some of your clients that had seen your, your work in prior years and, have taken you on as their advisor. 32:31 Why are they taking you on? it around your, are you scalable or your purpose? I mean, you're wanting to give back. So yeah, tell me. And you shared a little bit when we were talking before the podcast about you got a call from a client that you had from many, many years ago. Yeah. Yeah. I, you know, when I was deciding to go out on my own, it was really scary, right? Because I had, I never really even, I, I had been motivated to write the book. 33:00 And that was almost as far as my thinking had gone. And then at that point, the book was supposed to come out. Originally, the book was supposed to come out in January and we could have a whole other podcast about writing a book. so originally it was kind of, I knew like internally, I was like, gosh, by October, I was like, I need to make a decision. Like, what am I going to do? Am I staying? Am I going? Am I doing something else? And so I reached out to every person that, that I, you know, had some sort of like respected conversation, like a respected relationship with. 33:29 over the course of my career. And I basically asked him like, what do I do? What would you do? And I'm really lucky because at this point, I had been an advisor for about seven years, you know, with really established firms and the folks that I had worked with, that knew me, knew what I could do, had since gone on to a million other firms. So like my network on the firm side was pretty large. 33:59 And in those conversations, there was just inevitably a conversation that ended with like, look, if you go, I'll give you your first client right now. And so I was like, well, there you go. Close the door, a window, let's go. That was how it went. Yeah, so you reached out to your network, which is super powerful. Yeah, it really was. And it was honestly, I had surfaced my network throughout kind of writing the book because 34:27 You know, one of the things I think that is unique about my situation versus some of the other authors who have written fantastic, and I'm an avid business book reader, Fantastic Frameworks, is that my perspective is from the operating partner's point of view. And I am, yeah, it's very like, and so I'm really lucky because I, as I mentioned, like a lot of the folks that I have worked with over the years are now at so many different firms. 34:57 And so as I was writing this book, I would send out surveys to people and just say, Hey, just like gut check, do you see this too? Are you seeing this? Like when I wrote a whole chapter on like the value creation plan and you know, the value creation plan is one of those things that people talk about. Like it's this like standardized formal process, but it's wildly different, like firm to firm, like it's so totally different. And I just wanted to uh get a better sense of how these different firms of these different sizes were actually running their value creation plans. 35:26 And that's just impossible for me to do by myself. Like I need my network for that. So this whole process has been really great. And just like also bringing together some of my work friends that I hadn't been able to really, or I hadn't like, you know, kept up with as well as I should have. And so now I feel like my network is just like really thriving and humming. And I feel so much closer to like these people now than I have in a long time. So it's been really beautiful in that way. 35:54 Thanks for sharing. know, I want to ask you how has, well, your frameworks be at all affected in your opinion by the generative AI and how it's taken quite a bit of value out of the stock market. So now it's back up, right? So let's, so was, are you isolated from that effect? Your, your, your, your, just your, your frameworks. 36:22 Yeah, you know it's funny I wrote this book so I've done a lot around writing best practices for AI for go-to-market teams so I was pretty what by the time I wrote this book I had a lot of already like pretty packed research and thinking around AI and what it could do and what it couldn't do. I of course how could I you know I wrote this book almost two years ago now like 36:46 has really changed the game and just some of the new models that have come out. We knew that they were gonna be pretty revolutionary, but it was hard to be very specific. But I did, in the book, I have a very specific point of view on how AI can ah make what you do more effective, more scalable, where can use what you are bringing to the table and... uh 37:12 The word is escaping me, which is ironic scale, basically what you could do. And so that's my approach to AI and it's still my approach to AI. So I don't see AI as a competitor. I see it as an accelerator, really. And so I'll take account scoring as a great example. So in this idea of 37:38 these four decisions, one of the activities that you inevitably will need to do, it's under the ICP decision. So once you have an understanding of who you're going to target, you want to then score the accounts that are in your database to say like, is this a tier one, is this a tier two, is this a tier three, is this a tier four, and we're not gonna like, they're actually gonna churn too fast for them to even be worth that selling to. And so you're building out this account scoring model. Now, there are platforms that can just do this for you. 38:06 and they're just like, look at your data and they're like, great, we're gonna do this for you. But those platforms don't know your growth plan. They don't understand like what your investment thesis is. They don't understand that you have a very concentrated point in time where you're going to make, you know, a 30 % CAGR, you know, you've got like big, big goals. You're not just trying to do status quo every year. And so it's in that same kind of vein, like the human still needs to drive and be the director of... 38:33 where the AI is going to execute. um But AI is a fantastic accelerator. I'm excited. I love partnering with AI. It's not perfect. I think of it as almost like an MBA intern, like whip smart, smarter than I will ever be. But you can't totally take your hands off the wheel. You're like, there's context. That's great analogy. Oh my goodness, that's hilarious. It is true. um 39:03 AI. particularly like the perplexity model because it's on top of all of them for uh writing and preparing some of the work I do with my clients. So it becomes my companion is what I call it. Right? Yeah. Oh yeah. Definitely. Excellent. Well, I'd like to give you an opportunity to share how my listeners can reach out to you. Oh, sure. They'll be in your notes. Vanessa. Carry on. Okay. Great. 39:32 So I have a website Vanessa ghouls be calm I'm also on LinkedIn both ways You know are pretty easy ways to just you can look at my calendar and schedule time if you're interested Often time like my most most of the ways that I get brought into engagements is There is some kind of trigger event where the CEO or the PE firm Says like we need we need some 39:59 things, some kind of audit, some kind of assessment, some kind of strategy, some kind of like, what are our growth levers, right, to get us to whatever the next thing is. It's generally a two to four week audit. em And as I mentioned earlier, it combines interviews with your team with I have like a list of artifacts that we start off with. It's, I don't want to say it's like diligence, because it's not like diligence. But it is a pretty thorough 40:25 uh So you get sales, marketing, customer success, channel partners, digital, all of that. uh And oftentimes CEOs will have like a specific need on top of that. you know, I've got one where I just did one where it was like, we want to see, you know, we know we just got our investment came through and we kind of need to set our hundred day plan. So where should we go? You know, what are the foundations we need to build and fortify for this next round? uh We have one. 40:53 One other trigger that's pretty common is on the back of maybe M &A, where you have like two go-to-market teams that need to integrate together. Yeah, they like will bring me into sales. How are we gonna do that? Yeah. Or they have done that and maybe they're still not quite hitting that like expansion number that was originally conceptualized. um And then, yeah. And then the third, which is, I mean, it's like the... 41:21 the least positive, but honestly, the most exciting for me is, you you're like an a mid hold plateau. You're like, gosh, you know, I had one just last month where it was like, they hit this $30 million ceiling and they for like three years have thrown every spaghetti they could at the wall and just could not get past this ceiling. And, um, and so like the audit can, it's very focused and like trying to get to whatever the objective is, but it's, it's holistic because my whole, my whole shtick, right. Is that like, 41:51 It's no one team. It's like all of the teams kind of have to interlock in a line together. Yeah. Yeah. Quite revealing. Excellent. Those are excellent use cases. Um, and we'll put this in the show notes as well as your website and Vanessa. Um, let's come back to the sandbox. I do like to do a round of just questions about three words and what is the meaning for you. Um, and each of my guests comes up with their own um interpretation, their own meaning. it's 42:19 So what does resilience mean to you, Vanessa? Yeah, think resilience means being internally motivated. There's a drive that is not necessarily anchored or reactive to anything that's happening externally. uh For some reason, you just can't let it go. 42:47 How about scalable? What's scalable? Oh, wow. I mean, spent so many years uh writing about being scalable. Yeah, you know, it's funny when I think about being scalable, you know, it actually initially comes to mind as like growing pains, like this idea of growing pains. uh And I'm just now kicking myself for not reading the prep questions closer. We're going to rip a little bit, but. 43:15 But yes, being scalable is having that resilience through the growing pains, knowing, right, having like some kind of faith that at the end it's gonna be bigger, better, probably bigger than you even really could even have imagined or maybe even in a direction that might not have been initially planned. Excellent, excellent. Yes, and I also wanna just, I think. 43:43 you know, we're back to the title of the episode, is, um, and which is building purpose, building reputation with purpose. And you were adamant about that. So what does purpose mean? And maybe you'll bring into, know, what, what is building reputation with purpose for you? know, I, um, 44:11 It's funny, I feel like it really goes back to this resilience question, but it's so much of it just comes down to acting with kind of like, like I work with companies that have like cultural values, right? And they're like, oh, or Patrick Lindsay only has a great one, like the heat, likes to say, you know, hire people that are hungry, humble and smart, right? So like, you have your like keywords, your brand words, your value words. And I think for me, 44:40 um over the years, my purpose has been to act with integrity and grace and curiosity. And, um and that's something that I don't think about logically, right in life. But I try to bring that kind of inspiration to the teams that I'm working with. And it's a lot of the reason why I wrote the book was to say like, 45:10 Look, there is a way. You don't have to follow every single thing that's in this book. But if you get stuck, isn't it helpful to have a guide, like a troubleshooting guide to say like, oh, let me just go to the index here. I'm a little stuck on territories. I'm going to get over it. And that's the spirit that I try to bring to everything that I do, which is, yeah, we can solve any problem. Like any problem is solvable. And guess what? Execution problems are the easiest thing to solve. So like, 45:40 Let's have some fun and we can, we can, there's a way to do it basically. Right. Excellent. Thank you. And last question, did you have fun in the sandbox today? I had so much fun. This was great. You know, honestly, I didn't really know how this, like I do enough of these podcasts now and it's so usually anchored on the framework and like, you know, the execution and like, you know, very tactical. 46:07 And so this was just a really, this was like a breath of fresh air because we got to talk a little bit about the human side of it, which I find really motivating. It is. And I do recall you were really set on building you and you it's your reputation. Do you have Vanessa Goldsby that has gotten to you, gotten you where you are today and by giving back and providing that, you know, writing that book and then, you know, serendipity, you decide, Oh my gosh, I'm going to go out on my own. So it's, your reputation. 46:35 that has been built with purpose. I want to thank you for joining me here in the Founders Sandbox. To my listeners, if you like this episode with Vanessa Goldsby, sign up for the month release of the Founders Sandbox where I have guests that are Founders, business owners, service providers like Vanessa, um and board directors who build with strong governance, resilient, scalable, and purpose-driven companies. 47:03 So signing off for this month. Thank you very much. Thank you, Brenda.

February 10, 2026Episode 555 min

Season 4, #5- Be Curiously Different

What happens when you're tasked with reinventing an economy—and later find yourself building investment systems in countries where the rulebook doesn't exist? That's the story of Thomas Nastas, this month's guest on the Founder's Sandbox. His journey from Michigan's automotive belt to the front lines of the former USSR is a masterclass in resilience, creativity, and leadership under pressure. In this episode, host Brenda McCabe interviews Thomas Nastas, a seasoned board director with over 30 years of experience in international markets. They discuss Thomas's journey from Michigan to various emerging markets, his innovative approaches, and the differences in governance roles between the U.S. and international markets. They also touch on the importance of scaling businesses through customer revenue, the concept of resilience in entrepreneurship, and the significance of purpose-driven enterprises. Transcript: 00:04 Welcome back to the Founder's Sandbox. I am Brenda McCabe, the host of this monthly podcast where we are now in our fourth season. And the podcast is really oriented towards 00:33 growth scale companies, board directors, and VCs that work in the typically the scaling um of companies and the ecosystem. And I am absolutely delighted to bring a guest in this to this month, these podcasts, Thomas Nastas, who has been serving in international boards of directors and US boards of directors. 01:02 for over 30 years. um His international background is quite um pioneering. And we're going to get into the material here, but we're going to learn about his experience out in Russia and Katastrofgan, um Africa. And Thomas and I met through um board prospects. We are both um 01:30 quite unusual candidates for boards of directors in the uh common way of recruiting board directors in the United States, prior CEOs. We do have an extensive background in international governance. And when I got to speak with Thomas um over the last couple of months and learning how he brought the board governance oh practices 01:59 from the United States to Emerging Marcus just fascinated me and I ask him to be a guest here. So Thomas, I want to thank you for joining me today in the Founder's Sandbox. Well, thank you. Appreciate the invitation. So um I briefly touched on you are uh a board director with uh lots of international experience. um 02:29 You also have a lot of em experience at emerging markets. um So Russia, Kazakhstan, Africa, and think it's East Africa, and some South American markets. um You've served on over, I want to say, is it 50? As companies, right? And em for my listeners, independent board directors is a term that we use here in the United States. 02:56 whereas in other markets, they're called non-executive directors. So, NED. So, Thomas has been in an NED role in over 50 companies. And we're gonna get into how that's kind of different em to what you have traditionally here in the United States. You are a midwesterner, just like me. My family. You're from Michigan, um big automobile industry. em 03:25 beachhead here in the United States. I'm from Ohio, so we've heard a lot of us, I think some of the experiences of being uh born and raised and educated in the Midwest, uh bringing in uh that Midwestern spirit, as I say, kindred spirits from the Midwest. And finally, um the em other area that Thomas is particularly experienced in, um and we share this 03:55 as well as you work in SMEs, small and medium-sized enterprises, but in the international markets, which is, again, it's fascinating. So we have a lot to unpack and unpeel today in today's podcast. So Thomas, could you just talk about your origin story? mean, what, you were really young, you were in Michigan. What made you pack up and actually go off to Russia? 04:24 Give us a little bit of your origin story. Well, I didn't go directly from Michigan to Russia. uh From Michigan to Canada, to Europe, to Africa, and then to Russia, and then to Kazakhstan. oh So it little bit, it was kind of like baby steps. A little bit of background on how I ever got involved in this is I'm a mechanical engineer. oh 04:52 by training, you know, I got an MBA and worked in, you know, Ford Motor Company and automotive suppliers. And, um, and then many decades ago, um, we had a new governor in Michigan and, um, he, like all other governors, even, even still now today said that, you know, the Michigan economy is dominated by the auto industry, you know, and 05:21 And it goes up and down and up and down and up and down. And we need to diversify the economy. Right? Right. So this governor, name was Bob Blanchard. He put together a program uh in the sort of the mid eighties on how to go about diversifying the Michigan economy. And he put together a bunch of blue ribbon boards of CEOs of, you know, Ford and GM and 05:51 Chrysler and you know, the major automotive suppliers and energy suppliers and utility companies, et cetera, et cetera. And I was part of a lesser like, um, I guess sort of like a sort of like foot soldiers of looking at what are the problems of companies of developing their second generation products. they're all established companies. Okay. They want to establish, they want to, you know, they want to create their 06:20 sort of like their second major, second generation product. And we started to look at it, what are the problems that these companies experience? And many of them were serving the auto industry and the auto industry historically has grown like two or 3 % per year. So if you're a traditional automotive supplier in that particular marketplace, that's what your growth is limited to. And if that's what your growth is, 06:49 It's difficult to raise outside capital. Got it. So we started looking at what are the problems of companies financing this particular area. And we, myself and I know there's probably half a dozen dozen other folks who were part of this, um, this sort of foot soldiers committee. We looked at the marketplace. We took sort of a market approach rather than a technical or engineering approach. What is, what's, what is. 07:18 What specifically is issue? And what we learned, and I'll sort of fast forward, is that there are a lot of medium growth companies at this time in Michigan, but also throughout the United States, that will never be big enough, fast enough ever to go public. Got it. And at that time, the epicenter of venture capital was in Route 128, which is in the Boston area, and Silicon Valley was developing, but it was small compared to what was going on in Boston. 07:48 So if you had that kind of a growth rate, you couldn't raise any capital, all right? Number one. Number two is there's a lot of family-held businesses that might be fast growth, but they don't want any outside. They don't want any non-family members involved in the business. And third is there's what we call sort of technology-rich companies that have a lot of IP. 08:17 So they're IP rich, but they're asset poor. So those companies in turn had difficulty of raising either equity capital because again, in the Midwest there was one venture fund in Michigan at that particular time. And it'd be difficult to be able to access debt financing because again, you don't have assets that you can collateralize. So we looked at saying, how could we solve these three particular problems? 08:47 Um, and we sort of stumbled upon the use and application of royalty based structures. Okay. Actually finance these companies because royalty based structures, which have been used for decades in the creative industries, being music, movies, uh, the book business, and to a large extent also in a pharmaceutical industry. um 09:15 Was potentially a solution because you could put money into a company. You're not, you don't have an equity position in a company. 09:24 If there, you've got a higher rate of return than debt. So you can get sort of equity like returns and you're generating cash flow, you're generating returns that you can distribute back to your investors pretty quick. eh So my, so another friend, another guy who was on this committee, we said we ought to create a fund to do this. And we created a royalty based fund, um, to, um 09:51 To do this, we raised $2 million in the state of Michigan, raised $2 million. At that time, there was no word of angel investing. was just rich, rich guys. Okay. And we started making investments in, family held businesses and companies that had raised some venture capital. Uh, but they wanted to embark on developing their second generation products. That was your thesis then, right? Yeah. 10:21 And also companies, again, that were sort of tied to the auto industry. So we started making investments and in some cases we were investing in a specific product. Yeah. Some cases, a line of products. In some cases, you know, we had royalties on the company's entire, you know, revenue. So it was just depend on situation, on situational. And we did this for a couple of years and we were making investments anywhere between a hundred K and up to 700 K, which was big. 10:50 for a $4 million fund. Yeah, yeah, quite big. And it was interesting that sometimes when you make investments, you sort of hit the bullseye. And what I mean by that is a couple of the companies that we invested in sort of hit the bullseye on their products and they started to grow exponentially. 11:19 And they said, Hey, look, we're sending you guys, you know, quite a bit of cash. We'd like to reinvest this cash back into the business. So we would like to do is we would like to buy out your role of the claim. And one point I want to make is when we were doing these transactions, we were investing in perpetuity. was no, you know, like you get too money back or turn it was in, it was in perpetuity because we wanted it to look like. 11:49 in some ways, equity, which is not limiting the upside. And if you, you know, if you say two times or three times, you're limiting, you're limiting your upside and you know, could have a whole mess of failures and you you accomplish not very much anyway. So we said, yeah, you guys could buy us out, but we don't cash. We want to sell you our royalty claim for equity. They went, oh, well, that's kind of interesting. 12:18 Or in these states, like kind of a warrant? Sorry? Like a warrant? Well, not really a Because again, none of this was pre-planned. was spontaneous. Serendipity. So, you know, we looked at potentially, you know, there's a number of different inputs into figuring out how much equity we were going to basically buy for a royalty claim. it went, again, different companies. It was different amounts. And so. 12:48 We were then on the cap table as an equity investor. And some of these investments either went public on NASDAQ or they were acquired by a much bigger entity. So we sort of learned that, ah, gee, know, this is not only a way to finance underserved and underfinance entrepreneurs that 13:17 the venture capital model can't serve, which it still doesn't do even now. Okay. uh It's also a way to sort of manage the risk return relationship because when you make an investment, you never know what's going to happen. So it was a way to sort of manage that risk return relationship. I start writing articles on this particular financing technique saying, here's a way to finance niches that the venture capital industry um 13:48 can't serve. wrote an article for the Canadian Venture Capital Journal, which at that time was part of a guy by the name of Stan Pratt, who had a company called Venture Economics in Boston. They published, you know, the U.S. Venture Capital Journal, the Canadian, the European, the Asian, the Latin American. I wrote it for the Canadian Venture Capital Journal. And then I got a call from the Devolk Bank of Canada. 14:17 which is based in Montreal. And, um, this is getting sort of how things go. And again, I'm coming from outside the industry. Okay. I'm going outside the venture capital industry. never had any, you know, I was not a finance major. You know, I was mechanical engineering at an MBA in marketing. So I was not a finance guy. You know, never had a finance background, never had a finance. 14:45 You know, upbringing never worked in finance and operations. And so the guys at the Devol and Baker of Jamaica and Devol and Baker of Canada said, Hey, look, you know, this sort of this niche that you're financing, um, we've got this niche too in Canada. And we have got probably even a bigger problem than you do in the States because the Canadian public markets. 15:13 are less efficient than they are in the United States. Meaning, if a company wants to go public, it's got to be bigger in terms of revenues and profits than in the States. And we think this might be a way to help bridge companies so they could get bigger faster. And the bank was actually called the Federal Business Development Bank of Canada. Now it's called just the Business Development Bank of Canada. 15:39 And they were doing venture capital, they were doing asset-based lending, were doing cashflow lending, they were doing leasing, they were doing every single vertical within sort of the finance chain, but they weren't doing this. So I went at the Montreal and I talked to them, the CEO and the people on the board of directors and operations people and blah, blah, blah. And it was interesting. this is part of what one question which you asked about resilience is that 16:08 They said to me, you know, this is quite interesting, but you know, you're from Michigan, you know, you're, you know, I mean, we're in Montreal. Okay. I mean, this was a big international city and you're from Detroit. Okay. And you're sort of like a little cowboy. Yeah, you're an outsider. And I said, well, yeah, I said, well, you know, maybe that's true. Maybe it isn't true. And I said, you know, how about if we just create a fund? And they said, well, no, we don't think so. And blah, blah, blah. 16:36 And I said, well, I tell you what, how about we do this? I said, how about we put together, I put together a, say a three or four day training program for your investment officers. Because typically an investment officer, he's he or she sees sort of a business plan, you know, where the growth is like, like this and not like this, they take it and they throw it in the trash can. Okay. 17:04 And they recognize that they said, yeah, our guys, they're women. just take it. throw in a trash can. So I said, how about put together a training program over, you know, like a three day period or five day period and go through, you know, how you go about doing diligence. Cause the due diligence is different. I organize structure, the investment, you know, how you, um, establish at least some measures of covenants and protection, et cetera, et cetera. 17:33 And they said, okay. So, you know, like six months later, I went up to Montreal, put together this three day program, stayed in Montreal. And after this, said, well, gee, we think you got half of a brain. And they said, yeah, we'd like to create a fund. do it. We created a hundred million dollar Canadian dollar, which at that time was 80 million bucks. Okay. Fun to do this. Okay. 18:02 And it was focused on mainly just, you know, sort of like factory automation, logistics companies and transportation companies. And again, this is sort of before. So, mean, there was, you know, computer software, there's computer peripherals, there was machine vision, but there wasn't really very much, you know, what we call sort of hard tech or deep tech that exists now. Okay. Right. And I see it in series A. 18:27 and be financing, right? Yeah, we would call that a little bit. actually didn't call it at that particular time. So I had an office in Detroit and I created, you know, three offices, one in Montreal, one in Toronto and one in Vancouver. And I'll fast forward and the guys in the Canadian venture capital journal said to their editors in the UK and then also to the ones in Asia and in Europe. 18:56 And they published it and the editor at the UK venture capital journal said, Hey, I think, know, this thing would really resonate because at that time in Europe, the financing structure was mainly management buyouts and management buy ins. There was a little bit of venture capital, but not very much. Okay. Yeah. And this is like in the eighties, the early eighties. This is in the eighties and nineties. Correct. So, um, you know, and I finance out of my own pocket. 19:26 You know, didn't know anybody in Europe or UK. went over there at my own pocket, talked to people, met a lot of variety of people and fast forward, created two funds in Europe. One, where the lead investor was a European commission, which is quite unusual for being an American fund manager. And two, with a French group called Financer Saint Dominique, which at that time was part of Canada Nationale. And now they, they were bought out. They are now part of what's called a bank called Bank Nexus. 19:55 And we created two funds, one for all one patent European fund, which at that time was just West Europe is for, you know, central and East Europe. And also one for France and Germany. And so I set up offices that are going to have teams of people that worked for me in Detroit, Montreal, Toronto, Vancouver, Paris, Luxembourg. And I lived in those two cities and, and, and it was good kick. And I kept on writing more more articles about this financing technique. 20:23 And I started to tailor them a little bit to the emerging world. Um, and, um, the folks at IFC, which is the international finance corporation, which is the investment arm of the world bank. Right about it. It contacted me. said, Hey, look, we think some of these things might work in Africa. And I said, well, you know, why do you think that? I said, well, you're right. That is as good for countries where. 20:51 They have the capital markets are less efficient than in the States. In Africa that time, there ain't no capital markets. So ultimately we created three funds in Africa, a $285 million fund for all sub-Saturn Africa. Uh, and then sort of move more in sort of traditional venture financing of fund to funds in East Africa, Uganda, Kenya, Tanzania. 21:18 And then a $30 million private equity fund uh in, South Africa. So I created offices, you know, hired people, trained people, learn to make investments in, you know, these African countries and offices in Nairobi, Kampala, which is a capital of Uganda, Cape Town and in, uh, Johannesburg and, uh, the South Africa, they're all interesting. South African was quite interesting because during the days of apartheid. 21:47 South African companies were basically shut off from the world markets. We couldn't invest their cashflow into, know, external to basically Africa. Okay. So they were buying companies like a beer company, SAB would buy up or create a line of pizza restaurants, for example, or, you know, you know, different kinds of restaurants or logistics companies or transportation companies or dry cleaners or other beverage companies, et cetera, et cetera. 22:16 Because they had this cash and they wanted to reinvest it. had to deploy. And then when apartheid ended and they could now start to export capital, they wanted to spin off all these sort of like these tangential businesses. So we created a fund, a $30 million fund in South Africa to buy these assets, number one. And two is I raised a $5 million TA fund from the World Bank to help 22:46 develop and groom sort of black middle managers so they could learn to run the business as a CEO or a CFO or a CMO or head of production, whatever, blah, blah, blah. And we sent them, you know, like the executive education programs, like for example, at NCAD or, you know, Stanford or at Wharton or at Harvard, et cetera, et cetera. And we put them through again, a training program. 23:15 And, you know, they did some internship at like PWC and KPMG and Ernst & Young and the accounting firms and also consulting firms like Bain, Valen, et cetera, et cetera. And that was really quite cool. then a lot of people don't know this, but after the Berlin Wall, you know, basically went down. And the 23:41 And the, know, the central European and later on Eastern European countries, um, you know, dissolved and then Yeltsin signed a decree in 92 or 91 to, to basically dissolve the, you know, the Soviet, you know, the Soviet Republic. The U S government passed what was called the enterprise CEDAC enterprise. Yeah. That enabled the U S government to set up funds in. 24:09 Central and East Europe. First one was the Polish American Enterprise Fund, $80 million right off the balance sheet of the US Treasury. Yes. Created the Slovak American Enterprise Fund. That was a $30 million fund. Then the Hungarian fund. that was, think, if I remember, was 50 or 60 million, the Romanian Enterprise Fund, Bulgaria, Albania, the Baltics. And that was about a $30 million fund. 24:38 And then when the Soviet Republics all went public, the U S government created the, you know, U S. Ukrainian fund. was a 80 million in fund. I remember that two falls in Russia and then one for central Asia. And they had a fund in the lower Volga region, which is the Volga grads, some are Saratov regions and Volga grad. It's sort of. 25:06 you know, claim to fame is that we used to call it Stalingrad where the Russians pushed back to Germans in World War II. And they had a fund oh in that particular region that was experiencing quite a bit of struggles. And they asked me if I could go and manage it. said, hey man, look, got offices. I got four offices in Africa, two in Europe, three in Canada, one in Michigan. 25:35 I'm pretty busy right now and I'm managing these teams and we had a staff of about 70, people. You had a 75 person organization and 18 international offices and managing funds up to like $500 million in managed assets. anyway, the long story is they kept on asking me to go and ultimately 26:01 I was able to find sort of like a two month window to go to Volgograd, Russia. Yes. And I've stayed in Russia for 15 years. And so they created several other funds in Russia. And I lived in Volgograd, Vladivostok, which is on the sea of Japan. And that's where met my wife. My wife is Russian and met her. 26:29 Uh, in the, early two thousands, but then lived in, Moscow and had offices, you know, like, you know, several multiple offices in Russia. And then my last fund was a $75 million deep tech fund in Kazakhstan and offices and in both Almaty and Astana. And so that's how I got involved in, in emerging markets. it wasn't planned. Can I just stop here for my listeners and put you on hold because what 26:58 What originated out of um your being a foot soldier, right? Foot soldier. As an engineer, mechanical engineer, oh MBA, um helping the governor at that time of Michigan diversify the ebbs and flows of the local economy to grow beyond the 3 % growth that the automotive industry was really capped at. And looking at 27:27 underserved and underfinanced companies that either were SMEs um that had a medium growth, oh technology rich, but asset poor, summarizing, right? Some family held SMEs too, that did kind of rejected having outsiders involved, right? And those that were domiciled in countries with capital markets that are less efficient. So 27:56 Your secret sauce was then to really start creating an alternative financing product, so royalty-based. And with that started writing articles on how to get finance for these SMEs. uh Canada uh asked you to create a similar type fund and from there, the collusion went off to many. 28:25 emerging markets. It's a fascinating story. Would you call it today, soft politics? Oh, define for me soft politics. Soft politics is the working with foreign countries with US money and US know-how because our markets are much more, right, liquid. Bringing that know-how to help other countries rise, right? 28:55 That's what I call soft politics. All the lead investors and all my funds were either a government, government agency, the US federal government or USAID. Because some of the money came from the Russia funds and the African funds. Some of the money came from both the balance sheet of the US government, US treasury, and also USAID. And also like government industries. 29:23 Or what we call DFI, Development for Institution, like IFC, like the World Bank, like European Bank for Reconstruction and Development. um You're correct. Now, one question that your viewers, your viewers listen may say is, well, gee, if you're doing all this stuff in Michigan and the United States, how come you didn't raise a fund in Michigan? Let's get into, um I think I asked you to what would be your tagline? And you said, be curiously different. 29:53 You've so, so you're, you're in rat, you're in a lot of stock and, and Volga. What brought you back to the United States? That's. Well, you're curiously different and there was something that brought you back here to create or you already had innovation, innovative ventures, Inc. Did you say? Yeah, I created a company back in like 1982. Yeah. Yeah. 30:20 And what brought me back is, again, you know, I've used this tagline is be curiously different because, uh, and I'll explain that in moments. in 2013, May of 2013, my wife, again, my wife is Russian. We're living in, in Moscow, which is, which was a cool place. And, um, the politics started to change. can start to feel politics was changing. 30:49 Politics was starting to get more heavily involved in the economy and even in small and medium sized enterprise where before that it was critically involved as one would expect in oil and gas and mining and minerals or real estate. And of course, you know, other sectors like the defense industry, et cetera, et cetera. But you can start to feel some, some fingers sort of going in. 31:19 to the small and medium sized sort of sector. And so the politics was changing. I didn't really need to be in Russia full time anymore. And plus my wife and I wanted to get basically her on the immigration path. So we moved to Michigan in May of 2013 to start that process, okay? And, um 31:49 I didn't know anybody in Michigan. I do really, I do. I really knew speed keep. knew my two brothers. Okay. And one, one guy that I met in about 2010 who worked for the venture creation unit at in tech transfer at the university of Michigan. And when I moved, when we moved in 2013 to Michigan, I'm originally from Michigan. Um, 32:19 And my last fund finished up in 2015. This was kind of interesting what the dog's insight was. He said, well, now that you're back in Michigan, know, what are you going to do? I said, well, our fund is finished up at 2015 and you know, I'm now flying to Kazakhstan, you know, four or five times a year for, you know, like a month or so, blah, blah. He said, well, look, and he moved from the University of Michigan to Michigan State in tech transfer, although he wasn't doing venture creation, he was managing. 32:48 grant program, um, in the agricultural space. And he said, look, Michigan state has just created an organization called Spartan innovations. That's the create startups for universe technology. said, um, I they're looking for people like you. think you ought to apply. And I said, well, wait a minute, know, tech trial, you know, I don't know about that. He said, look, Tom, you know, you're an entrepreneur. Although people, to your business, people. 33:18 People don't think of venture capitalists as entrepreneurs, but I was an entrepreneur, number one. He said, you you've scaled the organization from two people in Detroit, Michigan, to like 18 global offices, hundred people. You you navigated for racks and all these legal regimes and different economic regimes and cultural, and you train these different cultures and venture capital and blah, blah, blah. 33:47 You're making both, you know, sort of non-tech investments, but technology investments. I think you'd be great. I said, Oh, I never really thought about that. He had to said that. I don't know what would happen. So, um, he was quite instrumental. His name is uh Andrew McCallum. He's a very good friend of mine. Okay. He's the Ann Arbor area. And, um, so he introduced me to the guy who was running, you know, Sparkly innovations. 34:16 And lo and behold, they hired me and it is a part-time gig. It's like halftime is what it is, like 20 hours a week. So I could manage it in addition to the funded Kazakhstan. So I started doing that and for a little over almost six years did it at both Michigan State and Western Michigan and created four different companies, at Michigan State and two at Western Michigan. 34:46 in 3D printing, in materials, in orthopedics and in healthcare. it was a cool gig. Background, then I got involved in other activities of raising a $6 million fund with the managing director of Hard Tech Deep Tech Accelerator called Citroen at Lawrence Tech University, which is in Selfield, Michigan. Dan and I raised a $6 million seed fund. 35:16 that he's making royalty based investments in. And, original product. Yeah. And then I've done, you know, there's, there's a sort of like a five, one C three company called spark, which is in Ann Arbor, Michigan, whose focus is to drive forward more innovation investment and entrepreneurship, uh, in sort of the Ann Arbor and Southeast Michigan area. 35:45 And I'm an advisor, you know, to startups and helping them start up and scale up their business. then interestingly, in, in certainly January, February of 2024 through some contacts in Europe that I have, I was appointed as a transaction advisor to the European Innovation Council. A little bit of background. So the EU created 36:12 you know, long time ago in Europe, which is a hundred billion euro uh program to fund R &D and universities, institutes, know, small companies, big companies, you know, collaborative arrangements, et cetera, et cetera. And they created a number of years ago. remember like, but not that many years ago, the innovation, the European innovation. Kind of like our SBIR program here in the States. Well, different. Exactly. That's where we're going to go to the difference. 36:41 That's very, very different. And I'll show you what makes it so different. it sounds glamorous. I'm just evaluating deals. I'm doing due diligence. So it's not glamorous. But it's a way to make a contribution and also way to be able to understand what's happening in the tech sector in Europe. 37:07 And I was evaluating transactions of what we call the C3 space, clean tech, climate tech and... The C3 space, the clean tech, circular space and climate tech. And what makes it interesting is companies, these are startups, some are stores, they've got a legal entity, but they're still housed in an institute or university, but they're going to spin out into the private sector, in the commercial sector. Or they're scale-ups, the companies that have already got revenue. 37:36 But a company could get up to 2.5 million euro in grants, 15 million euro in equity. And here's what makes it so interesting that nobody else is doing it. They can make this money simultaneous. So they can use the grant money to advance themselves, say from TRL, technology, or essay level, from say three to six, which is basically development, prototyping, et cetera, et cetera. 38:04 simultaneously get money for TRL seven through nine, which is commercialization. My opinion is that this is a solution to financing the value of the death, which nobody is willing to figure it out. Royalty based financing does some of it, but this is the finance technique, which is really quite interesting. And nobody in the States that I know of does this. SBIR doesn't do this. 38:31 And the stuff doesn't. You have the phase ones and the phase B's that phase twos, but it's it's not, it's all non dilutive. There's nothing. It's all grand. There's eight governments that do this. None of the DFI's do this that I know. I don't think that there's an untold story that needs to be told on this. I love it. Yeah. We switch gears and go to the governance roles. you have a right. Because we talked about. 39:01 your entrepreneurial journey, m alternative uh financial uh financing for SMEs that had three characteristics. And then you oftentimes served on the board of directors or as a non-executive director. what would be the major differences between an independent director position and a corporate board in the United States, be it public or private versus what you experienced in the international markets? 39:31 There's a big difference. There's some very, very fundamental differences. And let me just clarify, the 50 companies, some of those were, was, you you're the investor and I was, you know, as an investor, have a, you know, you have a board seat. Okay. So some of were that, some of them were again, NEDs. Okay. But sort of the biggest difference, that's sort of like the big thing is, that in the States, and again, it's changing somewhat. 40:00 Okay. But sort of in the developed world, like in U S Canada, to some extent, probably even more so in Europe, the board, yeah, they had governance responsibilities and helping develop strategy. Um, but the boards were intended or desire not to be what we call supportive. 40:28 or had any fingers in operations or help support operations. Okay. And the emerging world, you know, founders, even, well, I wouldn't say state-owned enterprise, but founders of small companies, mid-sized companies, even companies that are doing like a hundred million dollars in revenue. Okay. They wanted board directors who were going to really make a contribution. 40:57 And we had KPIs. uh I don't think most boards have KPIs for their board members. Unless, unless maybe I'm not, maybe I'm mistaken. Okay. So for example, in several companies, you know, we established a board, established policies and procedures, you know, governance, requirements, you know, things that are sort of standard in boards. And then board members. 41:27 depending on what their expertise was, et cetera, et cetera, would be seconded to either the CFO, the chief operating officer, the chief sort of business development person in these companies to help them grow in some particular way. So let me give you two examples. So when I was on the board uh of a Russia bank. 41:57 Okay. For a long time, it had been a pocket bank of a construction company. And the founders of both the construction company and the bank, know, during sort of, you know, when, when sort of the Russian market opened up for, you know, like 20 years or so. Okay. Uh, there's tremendous growth. mean, the economy has grown like seven, eight, nine percent per year. I mean, 42:25 products were literally flying off the shelves. So the bank wanted to create an SME lending program. And so I worked with both the person who was appointed sort of like, you know, the head of SME lending, their business development person, their CFO, we created, you know, their whole SME lending program, you know, the policies and procedures. 42:54 risk management, know, auditing, you know, how we were going to go about attracting clients, you know, criteria to evaluate clients, blah, blah, blah. We put that together and we implemented it. Initially in, and this was a, it was based in Moscow. we're, we were implementing first initially in what we call sort of the Moscow Oblast or the Moscow region, which, you know, was a population of like about. 43:22 all 13 million people. And then we started expanding to, you know, nearby regions and then, then, you know, later on into, uh, you know, what we call Siberia and then sort of North and South parts of Russia. And, um, it was a big success. And, and, and my brief was, you know, we were working, myself, I was working like 60 days a year working with this company. Okay. You don't typically see that in US companies. 43:52 Very operational. Very social. Yeah. And another company was a beverage company in a tea and coffee business. They had been around for, I don't know, 10, 15, 20 years. What was interesting is they were selling predominantly to what we, the Russian word would be babushkas or dadushkas, which is grandfathers and grandmothers. Okay. Their product line was very, very sort of stale. 44:22 Okay. And I was appointed because the company wanted to grow and develop and they raised money from the European, the, the European bank for reconstruction and development, was set up by seven countries. Okay. Yep. And Tata global, Tata beverages, which is part of Tata, you know, the big Indian. That the global is based in London. 44:49 And they wanted an independent director in Cape because there were three directors on the Russian side, three directors on the Tata side, and they wanted independent in case there was any conflict or et cetera, blah, blah, blah. Okay. And, and so, you know, I was appointed as an NED, um, and, um, we looked at the product line and said, Hey, look, the economy is really growing. I mean, now there are, there are Starbucks clones in Russia. 45:19 They are attracting young guys and women to hang out and have coffee and tea and get acquainted and meet partners and have fun with their buddies and their girlfriends and blah, blah, blah. And we're not in the segment at all. We don't even serve these folks. Grandmothers and granddads. And all their coffee was all ground coffee. And their food was all sort of black 45:49 tea or green tea, new flavors. That was it. So we revamped the whole product line. All the packaging started developing. Again, we didn't really call it that time social media, but started to communicate through. Again, Russian clones of Facebook, the Russian clone of Google, other ones were propping up. are other things that are doing it. It started to appeal to them. Okay. 46:19 Not for our products in those outlets, those retail outlets, but in supermarkets, okay? And then, know, stores and stuff. oh my gosh, know, sales increased over about a three-year period from 45 million to over 80 million. Profits from like 2 million, 8 million, or distributed, you know, 20 million in dividends. 46:50 It was a cool gig. again, I was working with the, we call the commercial director. Now they would call me like the chief marketing officer, the, okay. Uh, the production people, we were having to buy, you know, beans from typically at that time, the beans were coming from, um, Africa and we diversified in terms of, know, getting beans from, you know, Southeast Asia and Latin America, but your own places. 47:19 to advertise with different flavor profiles. And it was a cool gig. I enjoyed it. But again, the brief for me as an independent director was, hey, Tom, we really want to help us develop some more robust product lines. And then the bang going back to that, not only in terms of developing the SME lending program, but again, the interface between 47:46 raising capital from international investors. And this is a Russian entity. And it was a Russian entity, but we also created up a, all the investments flowed an entity of Cyprus because there was a dual nation treaty between Russia and Cyprus. 48:08 So um let's go back to the sandbox. And I am passionate in my own work, um and that is to really uh scale companies. So what's scaling mean? And I like to ask my guests, what does that mean for you, particularly scaling? Yeah, I think scaling means where customers pay the bills increasingly, not investors. I love it. That's very unique definition. 48:36 Yeah, that's what I'm saying because the best source of money to financial company is customers. Absolutely. Right? Yeah. Yeah. Not investors. Investors are like a water faucet. They go hot and cold. That's right. And you got to pay those dividends and dilution is important. Yeah, exactly. Yeah. Right. Right. What about resilience? 49:02 Um, you clearly have been resilient and your own professional journey and how would you define resilience in today's world? Right? How I characterize it is, is the openness and confidence, um, just to keep going. Even when you don't see clarity. Um, you know, I told the story about, you know, this very experienced for a very large fund set. Oh, you were lucky with your fun. You just go. 49:30 just go get a job and flip hamburgers out of McDonald's. That's a true story. It's really true story. Okay. Keep going. ah And sometimes that requires the promoter, which is the entrepreneur or me or others, okay. To figure out how you're going to finance the activity to do what you want to do or what you believe in. And I think that's, that's the characteristic of resilience. That's my definition of how it characterizes it. um 49:59 and it served you very well. What about purpose driven? Purpose driven enterprises? it purpose driven is. 50:10 Um, to walk the talk, not just talk the talk. Yeah, you got to make money. Yes. You have to make profits. Okay. Either for your shareholders, your stakeholders. Um, but in, but if you're purpose driven, you've got to figure out a way to have those benefits flow into, um, 50:39 the community have impact on social side, the environmental side, uh, to make planet earth and its citizens, you know, try to make it up in your own particular way, even if it's a small, but, but, but meaningful contribution to make it make things better. Okay. Um, to look at the world and to say yes, rather than no. 51:07 Right. It'd be open then to, um, to, to, to, say no and, and, and, communicating that to your employees, how it flows through operations, know, customers, suppliers, and, uh, the community that the community of communities that it serves. Right. Well, um, last question, Thomas, um, did you have fun in the sandbox today? Yeah. Thank you for. 51:37 letting me speak it as spouse. Yeah, it was, I don't get many opportunities like that. Yes. And my listeners don't get many opportunities to listen to a pioneer um who went um to uh emerging markets and uh many, many, many years ago before the VC uh market is what it is today and developing uh a very valid uh proposition for financing of 52:07 small and medium-sized enterprises. Fascinating. uh So, you. me leave you and your viewers with two final comments, okay? Thank you. Two comments. One is um when my wife and I moved from Moscow to Michigan, ah people heard what I did and how I did it. Again, typically people go overseas. They work for Ford Motor Company. They got a salary. got a 52:37 support staff in a country, they got a driver, et cetera, said, I went no place. said, they looked at me like I was a man from Mars. Right. And, um, and that's really a true story. Okay. Uh, because it was just so different. And lastly, to pick up on your final comment is, that in, this was like in, um, probably in the late nineties, early 2000. 53:07 I was given a talk at a private equity conference in London. And there was a guy that I met years ago who moderated it. His name was Doug Miller. He worked as a placement agent for one of the big investment banks, US investment, but he was in their London office. He's from the states, Missouri or Kansas. don't know where he's from. 53:34 And he introduced me as this is the venture capitalist who goes where no other venture capitalists go. Sort of like the start, check out where a man never has been before. Okay. So I want to read those two final thoughts. I love it because had you not reached out to me through Board Prospects and then we, we are kind of kindred souls in the fact that we we've done a lot more in the international markets than we have in the United States. it's, this is done differently as well as raising money. It has made us a whole lot richer. 54:04 Uh-huh. Not financially. Uh-huh. Not financially. It's made us a whole lot richer in terms of our experience. Yeah, exactly. I might cut this out, but you're being considered a man from Mars, right? My neighbors, when I moved to, I'm in Los Angeles, they thought I was like a CIA agent because I have a lot of international, I speak languages and it's- 54:33 I said, I think you're a CIA agent. I said, no, it's just the United of Israelis, Greeks, Turks, Moroccans. it was, you know, because we've lived a very plentiful life, right? We did those relationships. So to my listeners, if you liked this episode with Thomas Nastas here in the Founder's Sandbox on early stage international venture, 55:03 in very interesting markets, please sign up for the Founder Sandbox. Again, we release an episode monthly and Thomas brought us some amazing insights on board governance in these markets and soft politics. So thank you and signing off for this month. Thank you. you. Bye bye.

November 13, 2025Episode 436 min

Season 4, #4 - Chris Daden Scaling for work 4.0

In this episode of The Founder's Sandbox, host Brenda McCabe sits down with Chris Daden, CTO of Criteria Corp, to explore what it takes to scale purpose-driven businesses in the era of Work 4.0. Chris shares his fascinating origin story—starting with a childhood shaped by tech-savvy parents and leading to multiple exits, international teams, and leadership at a global talent success platform. He breaks down how Criteria uses science and AI to remove bias from hiring, why soft skills matter more than ever, and how to future-proof your workforce in an AI-augmented world. Learn about his nonprofit, SoCal Tech Forum, and why building trust is essential for AI adoption at scale. transcript: 00:18 Welcome back to the Founder's Sandbox. The Founder's Sandbox is in its fourth season. I'm here, your host, Brenda McCabe, and I'm live this month's podcast is 00:31 from the Founders Space in Pasadena. And I'm joined with my guest, Chris Daden of Criteria Corp. um And a colleague of mine in the startup ecosystem. Welcome, Chris. Thanks for having me. I'm really excited to be here. So am I. So um I want to briefly give some background on the Founder Sandbox for those that are listening in today. um 00:56 Each episode features in-depth conversations with founders of small and mid-sized owner-operated companies and operators that support the ecosystem. And together, through storytelling, we explore how to build scalable, resilient, purpose-driven businesses with great corporate governance. And you're going to discover today with Chris, his origin story. I always like to start with how the person 01:24 that's a guest to my podcast, really started getting involved with the ecosystem of startups. And your story is quite fascinating. I'm gonna give a spoiler alert here. You and I met, I guess two years ago, at a Thai con event where you were on a panel. I was the MC em and we got to talking over dinner and just your origin story and the multiple exits you've had. 01:53 really um lit up a bulb in my mind. said, Chris, you have to be in my podcast. So it's two years later, and I'm so glad that we're making this happen. Lucky to be here. Thank you. forward to it. So this podcast, again, we're going to talk about a lot of things because Chris, not only are the CTO of Criteria Corp, a talent success company, where you help organizations meet objective evidence-based 02:23 talent decisions that both reduce the bias and drive better outcomes. But also, you're a two times 40 under 40. You've had multiple exits of prior companies. You're a speaker, a founder, a board member, and recently you started your own nonprofit in SoCal called the SoCal Tech Forum. 02:51 Oh, and I forgot you're a member of the Forbes Technology Council. we're going to have... Couldn't have said it better. Thank you, Brenda. So with that, again, my episodes on particularly Spotify, we have a title that's on each episode and we've chosen Scaling Work 4.0 for this month's podcast. Again, it's Chris Daden, CTO of Criteria. So let's start. What would you... 03:21 Call your tagline. Tell us about your origin here in Southern California. Sounds great. Well, just a little bit about myself personally. I've been in tech for ah quite a while now. It's really the only career I've ever had working in tech. So I started in my youth, frankly. My father was a member of the British Merchant Navy. you can imagine with that career involved, he traveled all around the world. uh 03:50 Also, of course, gave me lot of inspiration for the global companies that I run today and the teams that I've started around the world. So although my father wasn't directly in computer science, you know, that career of being in the merchant Navy definitely shaped my global perspective. when he stopped working in the merchant ship Navy as an officer, he started developing his own software for weather routing for large 04:21 merchant ships and container ships. So what was amazing about that was it was ran out of a spare bedroom in my parents' house just upstairs while I was growing up there. And uh we used to even have a rack of kind of four by four Dell just desktop computers that were stacked on top of each other with a switch to switch between them. And we're running the workload that my dad made with the software there on those computers. 04:51 It was very visible and evident in my childhood. My first kind of internship was maybe when I was 13 or so ah in the closet of that office. We pulled the doors off and put a desk in it and that was like my internship desk for the summer. started with programming in the dotnet ecosystem. So what year is that more or less? Yeah, it's probably like 2005, 2006. uh 05:21 So it uh was a great introductory language. Fun fact, there's a YouTube video online of me when I'm about that age doing a tutorial of how to make a calculator. So very few people have found that. I'll leave it to the public to find. But you can hear my very young 12-year-old voice in a YouTube video. it's still there. So anyway, that's part of my origin story for sure. That's what got me into computer science. 05:48 My first company, started my senior year of high school. I was aqua hired into an organization in Irvine. And then I got to join what I would call kind of a real company at that time. um One that had, you know, engineers around the globe working on solving problems and SAS for organizations of all kinds. So that's kind of where I kick started my career. I'm spending the next maybe eight to 10 years in Orange County building companies and 06:16 Now I find myself as the CTO of Criteria, which of course I'm not a founder of, but the energy that I like to bring to the team and the passion I have for what the next era of work has to offer gives me that founder-like energy. Yes. So um how long have you been with Criteria? Were you the first CTO? Were you an aqua hire? Tell us a little bit about that. Yeah, great question. So Criteria has a great history, almost 20 years of science and 06:46 um just developing a great core platform that's been used by thousands of customers around the world. I've been there as CTO for the last three and a half years. So when I joined, was right after acquisition of a couple companies in Australia that were great additions to our product portfolio. And one of my roles right away after joining was to help integrate those teams, finish retiring some of the technical debt that comes with acquisitions. um 07:15 really just all the excitement around building for the next chapter of criteria and making sure that I can contribute in my many ways to our success. So back to that tagline that due to your father's um origins in the Navy, m you have a wide global perspective. Tell me about those teams that you had in India before Criteria. 07:41 Yeah, look, I started doing business in India a little over 10 years ago. I was just reflecting on that last week. I had the luxury of visiting my team again. We also just created a new team for criteria. So I was able to go visit them. We all got together for the first time. It was a lot of fun. But about 10 years ago, I started in a city named Indore and that's in the state Madhya Pradesh. And when I started, it was a tier three city. And, you know, I really stumbled across 08:09 who is now my general manager for my last company. I stumbled across meeting him through like a development agency and we really hit it off and you know at the time I was 18 years old and you know was willing to take some risk I guess because I wanted to work with an engineer and had to build my product and company and you know what it's like being a scrappy founder and I just rolled the dice and said sure like 08:34 Why don't you come work for me full time? Let's find your friends as well and let's start a company together. And his name is Vikram. And to this day, he's still the general manager of my last company in automotive SaaS that I had recently exited in like 2021 timeframe. He's still operating that team. Company's going great. So that's been a lot of fun to see that success. But yeah, over a period of 10 years, it's become... 09:00 from a tier three to a tier two city. So things like basic infrastructure have been developed. So just so much fun and so much reflection there. I'm lucky to have, know, that's my, Criteria's new team is now my fourth India venture. So this is my fourth generation. Oh my goodness. It's a scaling work 4.0. So let's go back to Criteria. again, over dinner a couple years ago, 09:29 You started talking about how the science of finding talent is really the bedrock of criteria. And you've been there three and a half years. Talk to us about that, the talent and the science that is driving this company's technology and being used today in hiring across the world. Yeah, I think. 09:58 Hiring is one of those things that we don't always teach hiring managers or people in organizations. I think we were laughing about that. If you're, say, a great senior software engineer and you've been coding for 15 years or something, I think it's assumed that when you get promoted into, say, an engineering manager role, you're now going to be a great hiring manager. And I think hiring science is something that is often... 10:22 underappreciated in organizations, particularly startups and mid-market companies who may not have the resources, right? Because to be good at hiring science, you also have to invest resources in it, right? So really you don't see most really advanced hiring science or like, you know, psychology teams being involved in hiring until the enterprise level. for criteria, we're all about using technology to harness as many what we call talent signals as possible. So we have a 10:52 an assortment of assessment tests that can measure things like your cognitive ability, your adaptiveness, your personality fit to a job role. And we do that in rigorous and scientific ways. I think there are probably more ways to do hiring wrong than to do it correctly. And we take a lot of pride in making sure that our products are always designed to measure those talent signals and even compound them. So as you find 11:19 multiple talent signals across the life cycle of that pre-employment hiring engagement, you get a compounding, really almost like a talent blueprint of the person you're looking to hire, or maybe even like the candidate DNA of that person. And it gives you a depth of information and data about the likelihood they are to succeed for that specific job role you're hiring. And that's really, really valuable to us. And we can talk a bit about why 11:46 that matters more as we enter into this new era of work. Before we go there though, I'm fascinated. What types of talent can Criteria be used for in the hiring process? Is it across all verticals? mean, tell me a bit about that. Criteria is a pretty diverse company. So with 4,000 customers around the world, we are really present in maybe 20 different verticals. So that makes us pretty... 12:15 pretty broad in who can use us for hiring. So, you know, we joke around anything from, you know, hiring for truck drivers all the way to rocket scientists. Like there's customers across the whole spectrum in engineering, venture capital, uh you know, executive management, truck drivers for uh companies, uh frontline workers, all the way up to rocket scientists at companies. 12:45 So recently you were a keynote speaker in London and you provided your closing thoughts on AI in the workforce. So I'm going to steal your thunder right now because you gave this to me and set it up. So work 4.0 belongs to those who pair adaptive mindsets with distinctively, yeah, human skills. Workplace. 13:14 AI will be our most tireless colleague, but the future's real competitive edge is still human potential, continuously renewed. Wow, unpack that for my listeners. Because we're all getting a bit nervous about will we have job security, what do we need to do to retool, and is everybody suitable? Yeah, I think what's kind of amazing is 13:44 um You look at some reports from the World Economic Forum or other entities and they're saying things like by 2030, 39 % of skills related to kind of the current candidate applying in the workforce will be obsolete. Wow, that's a lot. That's a lot. It's almost half, right? And what's amazing about that is then what are we hiring for, right? Because the last few decades of us 14:12 hiring has been so focused on how many years of experience did you have, what degrees do you hold. And it doesn't mean for many people who, right, college is the best fit, getting a degree is the best fit for many people. But ah I think what it highlights is there's more to being workforce ready than only getting these static credentials. And for people like me, I've dropped out of college twice. Both times I had some... 14:41 transactional event with one of my businesses. And that was obviously the right choice for me, right? And I've reflected on that and I feel good about where I'm at and where I came from. But I think workforce readiness these days is going to continue to index on the more dynamic talent signals and the more dynamic credentials we have as opposed to static credentials. So what that means is my ability to think on my feet, critical thinking, adaptive reasoning. 15:11 Those are all things that we kind of measure, if at all, we measure them kind of secondarily in our current process. And these other core talents like digital fluency, AI literacy, self leadership, resilience, those are all things that are more of these dynamic credentials that we need to make sure we measure really, really well, because the reality is with the advent of AI in the work 15:40 place, hard skills are more immediately attainable. And what I mean by that is maybe if I'm hiring for an accountant role, I care more about is that accountant a strategic thinker? Do they understand the tax code to the right depth? Do they understand the strategy for valuation of the business? And then of course they have to click some buttons in QuickBooks or NetSuite or other systems. But I think AI is going to... 16:09 augment the hard skills of our workforce. And that's going to make us more index on the softer skills, emotional intelligence, the adaptability, right? Those dynamic credentials as opposed to how many years have you been clicking buttons in QuickBooks? And it will require, I guess, more critical thinking, right? True. Right? Because you will be your... uh 16:36 day-to-day job will be augmented by AI, leaving you time to upskill or to make those critical decisions, more, I don't know, avenues of strategic development in the company. that's right. Yeah, redeploy to higher value opportunities for sure. think if 30 to 40 % of your day is... 17:04 tasks that can be augmented with AI, then that 30 to 40 % of your human first excellence can be redeployed to other parts of the business. an example is at Criteria, we serve uh tens of millions of assessments, um about 10 to 12 million per year. And we have about five or six million candidates that come through that process. 17:31 when they need technical support or help with the software, they often reach out to our live chatbot. we at Criteria um want to make sure we prioritize a five-star candidate experience. So even though candidates aren't the ones paying for the service, our customers are, we know that our customer satisfaction is tightly linked to how satisfied our candidates are. Got it. uh 17:54 One of the things we had was thousands and thousands of tickets every month from those five million plus candidates coming into our support system. And what we were able to do was augment our support staff with uh AI chat bots that are trained on deep knowledge bases of criteria and past candidate issues and technical troubleshooting. we were able to achieve about a 94 % candidate ticket deflection, which is really, really massive. And it didn't mean that we 18:24 know, laid off half of our support team or something, it means that, you know, those support team members moved into other high value roles in the organization or were able to now redirect their energy to making long lasting materials like help docs and guides that can then further retrain the AI to make that even better. So that's just an example of augmentation of skill and then redeploying that human excellence to another part of the business to help you grow. So it has criteria use the same time. 18:54 methodology for their staff? For our staff, every single person at Criteria goes through our assessment products, of course. We drink our own champagne. I had to ask that question. I'm a little biased, but I think I didn't know about the category before joining Criteria. And again, with my origin story, I've hired hundreds of people around the world. And I will never run another team without using 19:22 a criteria talent success platform to hire those people. So I'm a firm believer and because I didn't know about it before and now I'm using it, it's a big gap in my knowledge. So I would say most of our market potential for criteria doesn't actually know that these tools exist. A lot of them have a retention challenge or they're having an issue hiring the right people and people like me before I joined criteria don't actually know that this tool set is available. part of my mission is to... 19:51 make sure that startups and founders and mid-market companies are aware that this is available because it solves a big problem for us building the best teams. so uh last plug for Criterion, then we're going to move on in the interview here. uh How do um customers experience Criterion? How do they uh get onboarded? mean, what is it, the HR department? Where does, where's the origin? Yeah, really great. So 20:19 We call ourselves a talent success platform because we help people pre-hire with our assessments and video interviewing products. And that's normally the HR talent acquisition leader. So someone who's in charge of recruitment for a company or essentially all the pre-employment functions. And then because we have this rich data set that comes from those pre-employment activities, we have a post-hire product that we call Develop by Criteria. And Develop is designed to use all of that psychometric data 20:48 weekly check-ins with your employees, uh frameworks for behavior to help grow those team members after they're hired using all of that data and science. So a lot of our customers experience criteria on the pre-employment side and then continue to follow through on the post-employment side with our develop product. Wow. Is there patent protection with all of the science that you have developed over the years? I think there's obviously copyright. 21:17 um of our assessment tests. think patents and software are inherently tricky, but we feel really good about the protection of our IP. Excellent, excellent. So let's switch gears. um I met you at the TICON. um You haven't been our keynote speaker yet, but you have moderated panels, and I've seen you in other events. Tell us about what do you enjoy, what do you like to talk about when you're keynote speaker? 21:47 For me, it's just such an honor to share my learnings as an entrepreneur, as an executive with the world. I still am in this phase where when I give a keynote or moderate a panel, it doesn't really feel like a real thing. It just feels like another discussion for me. That's just kind of my style. I just think that the world stays connected by sharing information like that. And for me, 22:16 I'm lucky to be at the convergence of 20 years of Criteria's product, helping people make hiring decisions and this once in a lifetime emergence of generative AI intersecting with our workforce skills. So I talk a lot about that. Of course, I'm building my own teams to build the Criteria software and platform. 22:42 So I'm also thinking about what is next for my team, how do I upscale and enable? And then of course I'm talking to our thousands of customers on a regular basis trying to make sure that we are leaders in the industry. those are areas I really love talking about. I'm an engineer at heart as well. So I tend to be quite good at bridging kind of the commercial and business side with like core engineering. So I have a deep background in 23:11 AI and ML um even more traditionally prior to the generative AI boom and now even more so post generative AI boom. We're applying generative AI in ways that um we are on the frontier fine tuning models for our uh really predictive models at criteria. So those are all areas I love to talk about and it's really an honor to be able to share that with people no matter the forum. Well maybe there'll be a podcast episode two with Chris on this. 23:41 What about, you you love to share, I don't know where you find the time. You've recently started a nonprofit, the SoCal Tech Forum. So share with my audience the types of activities, where's the venue, who is gathered, and what made you start a nonprofit, right? Yeah, it's a great question. I didn't know I would be starting a nonprofit either, but that tends to be how these things go. 24:11 It's been just a journey. ah We started off as a meetup group. my goal for the meetup group was in the Inland Empire specifically here in Southern California, we don't have many tech meetups. I'm of course networked well in Orange County and Los Angeles. And I think that particularly with these technologies that are 24:35 in our day-to-day life, it's very important that we build community around information and knowledge sharing so we can all learn and get up to speed on AI. A lot of business owners are going through transitions with their workforce, with their team that just were never really imagined. for us, we started this meetup group in the Inland Empire because there was definitely a market gap in getting together. I started off 25:02 paying for and hosting the events, breakfast, etc. And we had so much good interest. had sponsors that decided to volunteer to support, starting with a company called Clutch Coffee and Rancho Cucamonga, who has a deep history of roasting coffee and brewing technology in Rancho. And uh we've since got some other great partners to support us. And in just a little under two years, we've... 25:30 surpassed 750 members in the group. uh that was the reason once we started getting sponsors involved that it made sense to have a 501c3 nonprofit formed. And we have a leadership board now, which I'm really proud of. And we host an event at least once every month on the first Saturday of every month. And they're always technology or technology adjacent topics. They always involve. 25:56 technical and non-technical folks, business owners, entrepreneurs, startups. yeah, it's been really fun. Again, an opportunity to funnel and give back to the community and teach people about disruptive technologies. Well, you heard it here on the Founder's Sandbox, the SoCal Tech Forum. It will be in the show notes, all right, how to um get involved and perhaps attend one of those Saturday meetings. um I wanted to give you an opportunity. 26:25 to provide how people can best contact you, either for speaking opportunities, a CTO of Criteria, the nonprofit. How is it best to contact you, Chris? Yeah, I'd love to hear from you. So you can contact me on LinkedIn. So linkedin.com slash in slash Chris Dayden. All one word. And you can learn more about me as a speaker or CTO of Criteria at chrissdayden.com. excellent. 26:56 have that in the show notes. All right, I want to bring you back to the Founders Sandbox, all right, which is the platform and the podcast. I really get excited about um this part of the podcast. um I work with my clients on resiliency, um scalability, and purpose-driven, right? All with great corporate governance. I always like to ask my guests what... 27:24 the meaning of each of those three words has for them. And each of my guests has a different oh interpretation. And it's just a lot of fun to listen to what I resiliency, what's resiliency for you? I think it's appropriate that I answer that in light of kind of work 4.0. So for me, when it comes to resiliency in work 4.0, um it's about the art of constantly reinventing yourself. 27:53 but in faster cycles. And I think what's really important to everyone is that in Work 4.0, hard skills can become obsolete quicker than before. And that reinvention is critical to really being resilient in this new market. How about scalable? You've scaled a couple of companies, you've been an aqua hire. What does scalable mean to you, Chris? In Work 4.0, scalable will mean 28:22 adequately augmenting the talent you have in humans in your organization with the ability to harness the true power of AI and to do that without losing culture or trust. I think many organizations think of the first half of that. Very few of the organizations can execute on human plus agentic AI and also maintain trust. 28:51 and without losing culture. Have you seen any best practices? This is a little bit off script in terms of companies that have, or are scaling, right? Because this is just scaling pretty quickly in the last year or so. Sure. And are there any best practices out there in building that trust? Yeah, I think having a real holistic AI strategy is key. 29:18 One main component of a holistic AI strategy is how can you get tools to the fingertips of every staff member in your organization so that it's embedded in their workflow? Because a lot of the top-down AI strategy from organizations, like a CEO says, you must use AI and we must be 25 % more efficient, is really shallow when it comes to strategy. And it very rarely results in a culture 29:48 sustaining in a company for this AI growth and augmentation. So what I've been really impressed by is, you know, when I host things like AI monthly global office hours at Criteria, or I host one-on-one sessions with employees to learn about how they're using AI, because you're able to push those tools down to your team members and let them use it in a safe and comfortable area, it allows you to see what people creatively do with AI. And most of the time, 30:17 I could say there's probably 60 or 70 % of use cases that I would never have expected my staff to use AI for, and I would have been the bottleneck of creating if they were waiting for me to do it, and instead give them a safe experimentation zone. And I think that is key to a sustaining AI strategy for So your best practice is actually a criteria from what I'm hearing here. And it's very becoming because I'd like to talk about playfulness in the sandbox, right? 30:46 I read recently, was an EY um study, I think it was this last week, that about 40 % of employees that are forced to use AI tools give up after a month. They don't see the utility in their day-to-day tasks they're doing. So there is something to what you just said, building trust, but building it from the bottom up, right? Yeah, I resonate with that for sure. And I think the only way people break that barrier 31:16 is by seeing their colleagues successful with it. Very rarely is a demo from an executive leader going to be, I mean, it might be enough to begin a culture of AI. Like I had to do a lot of demos and show people kind of the art of the possible. And then as soon as I saw pockets of AI intelligence in the organization, the quicker you can elevate those people to lead and present their findings, the faster... 31:45 you build up kind of the natural human competition between your team and everybody all of a sudden will get more behind it. And that's really important. I think you've reached a point of success in your AI strategy when you were once leading the AI learning sessions and now you are not. How cool is that? You heard it here in the founder sandbox. All right. Purpose driven. What's a purpose driven enterprise for you? I think that 32:12 This is timely based on our discussion just now where organizations need to harness AI at the right times. think purpose for criteria, for example, means how do we measure talent signals that are able to give us the best candidate blueprint or the best candidate DNA possible? And for us, 32:40 every single day, regardless of the technology, what fuels us is having that purpose-driven statement of collecting talent signals around the world for any team. And you really do get lost in that sometimes, for good and for worse, when you're just trying to collect as many talent signals as you can. And being purpose-driven means always doing the right thing when it comes to that. 33:09 mission statement that you've set. And for us, it's collecting talent signals. I think that AI can do that well in a lot of areas, but AI can also be very dangerous in those areas. So when it comes to Work 4.0, having that purpose-driven enterprise statement is very, very important because it anchors us for our new product development. It anchors us for how we're using new technology to help people make the best teams. 33:39 Going back to that, to build the trust, we might clip this out, um does criteria maintain a group of scientists to actually peel back the layers and make meaning out of the signals that you are capturing to create new signals? That's one question. The second is, does criteria have an ethicist on board? 34:08 on call or how do you ensure there is guardrails around talent signals? Yeah, those are really great questions. think for criteria, when we say we're rooted in science, it wouldn't mean very much if it was just a bunch of engineers and product managers kind of deciding what science is, right? So for us, we take a lot of pride in our product IO psychology team. So a lot of them are 34:37 industrial organizational psychologists by trade that are working full time for criteria. And their role is assessment development, assessment validation. uh And particularly in the light of fine tuning AI models, they are very, very hands on in creation of those models, validating those models. There's a lot of legislation we have to comply with, not only the normal data privacy stuff like GDPR and CCPA, but also 35:07 industry specific laws like the New York bias laws and others that help protect uh candidates as they are applying for roles. So that is very, very near and dear to our heart. And also we conduct adverse impact studies and we do case studies with customers to make sure that the product is uh behaving the way that they intended to behave. 35:32 You know, we've got norms for all of our assessments and we adjust those norms based on massive populations of data. So all of that is how we ensure scientific signal. This is amazing. Last question. Did you have fun in the Founder Sandbox today, Chris? I had a lot of fun in the Founder Sandbox. Really a pleasure. Thank you for having me. Thank you, Chris. So to my listeners, if you like this episode with the CTO of Criteria, Chris Daden. 36:02 Sign up for the monthly release for more podcasts where I have business owners, professional service providers, and corporate board directors who are all working to build with strong governance, resilience, scalable, and purpose-driven companies. Thank you. Signing off.

October 23, 2025Episode 336 min

Season 4, #3 - Growth Gears for Scaling

On this episode of The Founder's Sandbox, Brenda McCabe sits down with Jen Apy, Area Managing Partner and Chief Marketing Officer at Chief Outsiders, to explore how scaling companies can unlock growth through fractional marketing leadership. Jen shares insights from her 30+ years of marketing experience—spanning Mattel, Adobe, Intuit, and now Chief Outsiders—and introduces listeners to the Growth Gears framework: a strategic methodology designed to help small and mid-sized companies grow efficiently and sustainably. Jen and Brenda also dive into key trends such as the rise of "flash teams," how AI is transforming the marketing playbook, and the importance of being a learning organization in a fast-moving world. You can find out more at https://www.chiefoutsiders.com on Linked in https://www.linkedin.com/in/jenapy/ or the chief outsiders leadership page https://www.chiefoutsiders.com/leadership-team and find the Growth Gears assessment here: https://s.chiefoutsiders.com/growth-gears-score?cf3=japy@chiefoutsiders.com transcript: 00:04 So welcome back to the Founder's Sandbox. I am Brenda McCabe, the host of this monthly podcast where I am joined by business owners, founders, and professional service providers that are scaling businesses. 00:34 with great corporate governance. This podcast is now in its fourth season and very excited to have Jen Apy as my guest today. For those that are subscribed to the Founder Sandbox, you always know that we have a story that's going to be told about the origins of the company and the founder and the professional's experience as the introduction here. And we will always come back to the... 01:02 the sandbox where we're talking about resilience, purpose-driven and scalable growth. And when Jen, who I've known now for several years, we work in the same ecosystem, spoke to me about the growth gears, that is kind of the overarching framework of chief outsiders. I was fascinated and wanted to offer the platform of the podcast to get the message out to business owners that are 01:30 scaling and have not yet thought about using fractional marketing services. So welcome, Jen, to this fourth season. um Absolutely delighted to have you here. Oh, I'm delighted to be here. Excellent. So we did choose a title. We're gonna you're gonna hear the word growth gears throughout this podcast. So the title for the podcast today is growth gears for scaling. And 01:56 Jen and I kind of share a similar background in the sense that we've been out there over three decades. I um had my own consulting business. I worked in the McKinsey & Company and reinvented myself uh around really bringing the expertise that I had at multinationals into the ecosystem of growth stage companies. Jen, tell me you are multifaceted marketing professional over three decades. 02:26 of experience contributing to marketing excellence. Tell us a bit about your origin and your currently, I think since five years ago, the area managing partner and chief marketing officer of Chief Outsiders. So share a bit how your role has evolved and what's it like to be with this company that was once a startup itself. Well, thank you so much for having me, Brenda. It's been a wild ride. 02:56 I feel like I was so lucky early in my career to work with fabulous marketers at Mattel and Intuit and Adobe. And now to have the opportunity to apply those skills to help small to mid-sized companies grow. It's really been a fantastic experience. I feel like this is my purpose. Oh, beautiful. To share these enterprise little marketing skills with smaller companies that 03:25 are hungry for growth. you when I, when I meet founders or I meet CEOs, I'm always really curious about, know, what's working, what's not working. You know, how do we create this flywheel that can help them grow in scale? It really is, is something I enjoy. You know, you found your purpose and then I guess your purpose found you working with chief outsiders because you were also a solopreneur for years. What would be your 03:54 tagline if if anybody were to just listen to five minutes of the founder sandbox, what would be. Jen appease tagline such a good question. I think it would be be something like committed to growth. I feel like that is my purpose. That's what I enjoy. And you know now it's part of outsiders. I I now have 125 colleagues who feel the same way. They've all been fortune 1000. 04:23 and larger company marketers from a variety of different industries. think collectively we've probably covered over 80 industries, over 5,000 engagements. I mean, it's just incredible that the people at Cheap Outsiders that I get to work with every day. And I do feel like commitment to growth is almost a shared purpose for all of us. That's why we're here, because we love to make an impact, to see that impact on smaller companies and be a part. 04:52 of their leadership team. We say that we're outsiders, but we're really embedded as insiders and therefore we can have that impact on companies and watch them grow in scale. It's very gratifying as a marketer. m I also work in the small and medium sized enterprise area. And last month I actually wrote a blog on enterprise, forms of enterprise and the like. 05:18 Did some research on actually SMEs. How many SMEs in your estimation actually reach or go beyond $10 million in revenues? SMEs are 47%, I believe, for the number of enterprises in the United States. But how many actually scale beyond the $10 million revenue? You know, it's a surprisingly small number, like maybe less than 1%. But you know, that's why we're here. 05:47 We want to increase the chances that those companies can scale, you know, 10 million, 50 million, 100 million. We believe that by really applying the market insights, customer insights, competitive insights into, you know, the strategies around positioning and offers and target marketing will lead to the cost of 06:14 efficient and cost effective strategies and execution that will help companies scale. that really is the heart of the growth gears methodology and approach. Well, that's a great segue. You and I met at the recurring revenue conference, I guess, in the seventh year. And as you walk me through the growth gears, you also have an assessment tool. Would you like to share? 06:42 overarching what is what are the gears, the growth gears, what are the key aspects that one can be surveyed about and then and how to engage with the chief outsiders, because I found it fascinating. And I actually used it with one or two of my clients to kind of get the wheels, no pun intended, right to to start moving, right? 07:12 Yes, so the assessment that we use asks companies and leaders questions about the business, about how much do they know about their customers, their competitors, the company, they looked at market trends? And then starts to ask about, do they know where their revenue comes from, where their growth is gonna come from? they understand what channels are most efficient and are they measuring uh the effectiveness of the marketing? 07:41 programs that they have in motion. And it's not every single question that we could ask, but just enough to get them thinking about where growth is gonna come from. And so we use this assessment, usually around this time actually, we're getting close to Q4. And we use it about this time in order to help them think ahead in terms of what are the priorities that are needed for the following year in order to stimulate. 08:08 enable or actualize growth. So if anyone's interested in doing this assessment with me, it's free. Just, you know, reach out to me on LinkedIn, happy to provide you with the link and then have a conversation about what the answers mean. Absolutely. Jen, we'll put those, the survey or the assessment, pardon me, in the show notes. All right. Great. In addition to other areas. So talk to me a little bit about Chief Outsiders. You did say it was a startup at one time. 08:37 How long has it been around? What's the organization look like? And what are the challenges that you particularly are dealing with with the advent of AI? That's a very little question. That's a great question, though. But Chief Outsiders has been around for over 10 years. I think we've been around before the term fractional executive or fractional marketer was even a term. think 09:01 Maybe early on we might've been discussed as strategic business consultants, right? Because we're helping companies grow in scale. But we've been around for over 10 years. We've been on the Fortune 5000 for quite a few years. I think definitely 10 or more. the way that we've grown is by really focusing on what marketing leadership needs to do. 09:30 for companies, which at the end of the day, it's about knowing who your customers are, where to find them, and then how to grow the company based on that focus on finding and retaining customers, whether it's increasing market penetration within a certain target segment or finding new markets or launching new products, whatever that growth strategy is, how to harness that and help 10:00 a company, um, scale over time and marketing has changed so much. I know over the years, mean, I've seen that with your companies is overwhelming. I pardon. I will get back to the question, but I, many, many years ago, McKinsey, was a marketing expert research. We didn't have all these amazing tools we have today to conjoin analysis, you know, with your Excel sheets, right. And focus groups. 10:29 Right. So the sophistication, channel, you know, growth explosion is, you know, I threw my talent a long time ago. Well, you know, it used to be, you know, direct mail and then websites, right. And then e-commerce and, and then it was about social media and content marketing and then SEO. I mean, it's just daunting. And now we have to be thinking about AI in all facets of the 10:59 the marketing toolkit, right? It's impacting every aspect of what we do as marketers. And we have to be thinking about AEO, like answer engine optimization in addition to SEO. So it really is rather overwhelming. So I think that over the years, Chief Outsiders has recognized that the marketing tactics and strategies are going to change and we need to change with it. But that the focus on 11:27 growth is going to come from really the growth gears, right? The approach to understanding the market, understanding how to go to market, understanding how to execute cost effectively. So recently in the advent of AI, knowing that it was going to impact so much of the marketing mix, we actually started to develop an AI platform for us to use. Yes, for us to use internally. What it does is confidentially, 11:57 takes all of the insights for all of the engagements that we've done with companies so that when we are working with clients, we can benefit from that collective knowledge and be able to deliver better, deeper, faster insights from day one for our clients. So deeper insights, proven strategies, best practice execution. There isn't a workstream for marketing sales that isn't going to be impacted by AI. 12:25 So we've definitely thought about that and made sure that we can leverage all this knowledge in order to help us be better marketers for our clients. That's fascinating. It's kind of scary, right? So you've basically like in the healthcare industry, you've anonymized, right? The plethora of data, right? Within the walls of 12:54 chief outsiders of the 10 years of experience and I don't know how many clients, right? To then really document and have your own, for lack of another word, I guess, is it? The knowledge base. The knowledge base, but it's kind of an ocean, right? Data ocean. Yeah. And, you know, and this is how the AI tools work. 13:19 We figured we might as well have something that we can use on a proprietary basis and that can help us not only create our deliverables and have better deliverables, but also to help us manage processes. Because as we talked about with marketing, there's just so much going on, so much to consider, so much to do. This AI platform also helps us to manage those processes. And one of the things we haven't talked about yet is fractional resources. 13:47 I believe really are the future of work. And that's one of the reasons why I'm so excited to be a part of Chief Outsiders because we believe that as well. And that's also part of the reason why we built this platform. Right. So one thing that I want to highlight just from the last discussion here is 14:08 AEO rather than SEO or in addition to SEO that I mean, heard it here on the founder sandbox. Not only do we have to be looking to have our SEO optimization, it's AEO optimization. Yes. So answer engine optimization. And that's coming of course, from the AI tools. You know, I think the stat is something like 70, 71 % of searchers, anyone searching. 14:37 They're now using the AI engines instead of, or sometimes in addition to regular search. But it's the reason why Google is losing traffic share, right? Because people are going to these AI engines sometimes exclusively for certain things. And so this has had an impact on marketing in a couple of ways. One is we need to now optimize our content for answer engines, which it's not that much different from SEO. We still have to adopt the same good. 15:06 SEO practices, you keywords, relevance, backlinks, things like that. But now we call it LL or large language model optimization in 2025. uh In order to be able to rank in those answer engines, we need to also consider brand strength and authority, oh citations, quality of content, sentiment. You know, we really 15:35 PR from authoritative sources is really going to become more important. And so we do a lot of testing ourselves in terms of how Chief Outsiders ranks in these engines. I was going to ask you, have you done that? Yes. And that's how we know that it's not just the SEO good practices that's helping to rank in answer engines. um 16:02 It's also these other things, brand strength and authority. The content needs to answer questions. these engines are understanding when content is authoritatively answering a question. And there's so many factors involved in figuring that out. There are a number of tools we use to see how we're ranking. There are a number of tools we use to figure out how we're 16:33 uh how we're able to, uh I guess, for lack of better words, out the competition, right? And score, right? In our content. And we use this knowledge of how it's working for us to help our clients as well. And we've been doing this from the beginning because we were very aware of all the changes. um So you have your own growth gears operating system. 17:00 It's a remote working AI enabled platform, right? That also enables remote and hybrid teams that come together. Speak to me a little bit about that. GrowthGear's operating system is effectively your LM? Yeah, that's the, well, that's the AI platform that we developed is called the GrowthGear's operating system. And so not only does it leverage the best content, the best tools, but because of the way that we're designing it and it's really to support us, right? And how we work. 17:29 we are really enabling fractional resources and remote and hybrid teams to work together effectively on the projects, the marketing, the growth plans that companies need to scale. this is kind of the way, I mean, if we believe that fractional resources are of economic benefit to both companies because they don't have to hire 17:56 A lot, you know, heavy talent, right for long term. They can hire just what they need when they need it. And also as they evolve and grow, they might need different resources, right? So they can they can cycle through the skill sets they need, but but also because there's economic value because workers, if they want to be more flexible, if they want to leverage a specific skill set and not necessarily be tied to one company gives them the freedom and flexibility to. So I think for for both reasons, there's there's a lot of. uh 18:26 momentum toward this style of working. the platform that we have, you know, it can enable these operational fractional resources, not only marketing, but any part of the organization in the future. Let's go. Let's take that idea or what you're observing in the market and actual client work a little bit further. So how would a potential client 18:54 engage with chief outsiders. They're at, you know, 3 million AR, they have not yet hired a marketing full time, right? How, what would would walk us through a typical, for lack of another word, engagement, or how do they engage with chief outsiders? And particularly, the second part of that is, if you're talking about 19:21 Flash teams, I think is the term that you and I discussed, right? Yeah, it's actually the title of a book being launched by a professor from Stanford, Melissa Valentine. She's coined this phrase flash teams, which essentially is what cheap outsiders does, right? We pull together the resources that a company needs at that moment in time in order to solve their growth problems. we're essentially a flash team enabled by 19:51 the growth gears operating system. Cool. So I'm not I'm the CEO. I've got to hit some revenue milestones. I've interviewed some candidates. I'm not yet sold for you know, bringing in full time, full time chief marketing officer. Jen gives me a call. How do I how do you how do I engage with you? Yeah, well, the first thing I want to understand is, is what what keeps you up at night? 20:21 Right? What, what are some of your growth challenges that, you're struggling with? Because the first thing I want to do is really understand, you know, what resources do you need at this moment in time in order to get you from A to B? so oftentimes we'll look at this and say, is this, is this going to be solved by a marketing led team or sales led team? Sometimes that's the first thing that we're thinking about. And then how much do we know already about the situation in terms of. 20:49 customers, competitors, market insights, customer buying journey, channels that are working and not working. We're wanna know all of that so that we can figure out the most efficient way to approach solving those growth challenges and what work streams are needed. So we'll bring in a fractional executive that's a good fit for that company and then orchestrate the resources that are required to get to the next step. And then when that engagement is through, 21:18 we'll figure out what the next level is. Maybe the next level is bringing in full-time permanent resources to help execute and to help scale where we paid ourselves out of the picture. Or maybe it's just dialing back to more of an advisory role and then bringing in fractional resources from different places in order to be able to test and scale and see what's going to work, what's going to land before we orchestrate on a more. 21:48 So we're very flexible with what a company needs at any point in time. And no two companies are alike. You when you're a $3 million company, you might have talent and skills and gaps that are different from the last client that we had. And we know that. We can recognize those situations just because we've had so much experience working with so many different companies. We can very quickly figure out what's needed for the next step and just give a company exactly what it needs. 22:16 to it. You do tap into your, your network of your 125 professionals with them, know, goodness, the years of experience that you all have obtained while at fortune 1000 companies. Amazing. Oftentimes, I've seen you with as keynote speaker, you do give conference speak and you speak at conferences. What one of the most recent 22:42 conferences. I'm not uncertain where it was, but you the topic you spoke to, Jen, was winning website traffic in the age of AI, what CEOs need to know? Can you without sending us to you know, that I don't know whether it's on online, we can put that in the show notes. But what's the top, you know, line messages from that conference where you spoke about winning website traffic? Yeah. 23:10 Well, I did it with a couple of my colleagues who are very experienced in digital transformation and now how to win traffic with the answer engines. And so we talked about some of the uh tactics that we're finding work nowadays and how that's going to change how companies need to think about orchestrating their marketing mix. So Mike. 23:36 Colin Angela gave an example of a very specific example of an article that had been written for SEO that now needs to be written for AEO just so that people could see the difference. But I think the main message that we were trying to send uh to companies is uh marketing is not static. Just because you've figured out your marketing mix doesn't mean it's going to work two years down the line. It's constantly evolving. And so you need leadership. 24:04 who can be thinking about how are customer behaviors changing? How do I reach them differently? And the fact that 71 % of searchers are going to answer engines, that's a huge shift and marketers need to be ready to address that. So if you're a smaller company and you just don't have the resources to keep retraining your staff. 24:29 every year or so and you need that expertise in the know how do I compete now today? How do I set myself up for success? That's where we as Fractional Resources can come in and help you be that learning organization, that resilient organization that's going to survive through the next sea of change. 24:51 That is fascinating. Yeah, it's it's a living beast, right? marketing and it's moving so rapidly, it would be hard. I'm to actually have the inside resources, the talent inside unless they're constantly being retooled. So it is an opportunity to use fractional resources, depth of expertise that you have. Yeah. And that's one thing that I value about the chief outsiders culture is the fact that I think what's made us 25:21 so resilient is the fact that we're really a learning and sharing organization. We've recognized that change happens rapidly. To be resilient, we need to change and constantly be learning and retooling ourselves. And that is something we highly value. But to be able to do that quickly, no one person can do all this on their own. It's nearly impossible and very overwhelming. You can't do it in a silo. So we have a culture of sharing where 25:50 If we learn something new, um we'll share with the rest of the organization. So that, that, uh, that webinar that we did was just as much for us and our executives as it was for the clients that we, that we serve in this culture of sharing really creates resiliency in the sense that if, a company brings in one of our fractional executives and let's say they encounter a market challenge or a sales challenge that that particular 26:19 executive hasn't seen before, they can turn to the other 125 marketers and say, hey, let's get together. Let's put our best brains on this business and determine what things we might be able to try or what things we should put in place in order to benefit this organization. And I think there's no individual fractional out there that has access to that much talent and expertise. 26:49 on a moment's notice as we do. And that's part of what's going to create the resiliency that we need as an organization to survive in the next decade, because everything is just going to start to move faster and companies are going to just need that much more speed. So, but we also believe that's a value that we can bring in addition to being interim and not being full-time and bringing in the expertise they need to write at that moment. We can also draw on the collective expertise of the tribe. So the brain trust. 27:19 Well, that's a good term. love that. Right. Brain trust. I love that brain trust. One technical question of the 125 professionals within chief outsiders and interim roles. Is it solely in the marketing area or do you also offer maybe in the sales? there other interim roles? That's a really good question. So we do focus on marketing and sales primarily, but sometimes we're actually brought in as fractional COOs. 27:49 as well or division heads. And it's because of our broad leadership expertise. And some of our executives have been CEOs of their own companies. They founded companies, they've sold companies. So they do have that broader business perspective, but primarily it's marketing and sales. Excellent. We're going to switch gears, to the standby. No pun intended. 28:17 That's right. That's here in the founder sandbox. I'm passionate about building resilience, scalable and purpose-driven companies. And I like to ask my guests briefly, what is the meaning of resilience? What does that mean to you? Or does he chief outsiders? It's a fascinating part of the podcast for me become that you have very different definitions. And that's the beauty of asking this. Yeah. Well, I think that resilience, at least for for me, for us, a chief outsiders means 28:46 being able to survive and move forward and grow in the face of massive change. Right. It's not, it's not bending to the will of the market. It's, it's, it's basically saying, you know what? We know how we can add value at this moment in time. And we have the tools to address this change and add value. that, you know, it is one of the reasons why we constantly are thinking about 29:15 how do we bring more to the table for our clients? So in addition to the growth years operating system that we created, we also have an ecosystem called team outsiders of fractional marketing execution resources that we can draw on at any point in time and create our own flash teams for our clients. So let's say we've gone through the strategy and we've determined that we really need an e-commerce expert 29:45 that can optimize Amazon or we really need somebody who can take charge of developing the content that's going to address not only SEO and or but also AEO and we'll draw from our pool of team outsiders resources and we'll put together that fractional team for the client at a moment's notice. So we believe that that is going to make us a lot more agile. 30:13 for our clients because sometimes they just need to get started, but they don't have time to go higher or they don't have time to go evaluate a new agency. We can bring somebody in. We can, we can set the stage. We can get things going and then let them have the time to decide really who they want on a longer term basis. So, you know, agile teams, flash teams, it comes from our ability to be able to, draw on this network of. 30:42 team outsiders and to be resilient. How about purpose? What's purpose mean to you? Purpose. You know, I think that when I look back on my career and also what I'm doing here at Chief Outsiders, I get the most satisfaction from seeing smaller companies grow from helping founders make their dreams come true. You know, there are so many great companies out there. 31:12 that just need a shot at the big time, right? And we can do that because we've seen it. We know how to get a company from one to a hundred. We've seen it. We know what a company at one or a company at zero, what they're faced with from the standpoint of challenges, time, resources, focus, right? And so we can adjust what we do in order to adapt to that environment. But we know what an organization is going to need 31:41 to be competitive and to need to grow at 30, 50, 100. And we can keep our sights on what that needs to be and advise the companies we're working with on how they're gonna get there. So yes, we're implementing this today, but it's gonna look like this tomorrow, but we're not ready for that yet. We're just gonna do this here today because you don't have the time or the bandwidth or the money to do that many things. But this is, we've done the analysis, we've done the research, we've done the testing. 32:11 This is what you need to scale for right now. So, you know, being able to do that and then see these companies grow from 10 to 30 to 50 million, it's a thrill. it is very, very rewarding. So I think that, you know, I found my purpose and this is the, in speaking with my colleagues, they're all, we're all here for the same reason. So we really do have that shared. 32:39 purpose and we really enjoy what we do. Fantastic last one and then we'll move to how to contact you scalable growth. I'm certain you're going to talk about those the growth gears, but what's scalable right? What's that mean to you? Scalable growth to me means we figured out what works and we can replicate it cost efficiently and cost effectively. So that is 33:07 our focus when we're working within the growth gears methodology, we're looking for the way to scale most cost-efficiently effectively. I know that one of the things that you are really big on with your companies, the companies you invest in is governance. Yes. You're really big on governance. And when I think about governance, I think about responsibility and accountability. And what that means to me as a marketer, 33:35 And as a revenue leader is making sure that the spend that we commit to in marketing and sales is going to drive revenue and growth cost effectively. so by making sure that we've done the analysis, that we figured out what's going to work, that we've tested before we scale is that responsible governance approach, right? To marketing and so 34:05 You know, I think that there are some companies that are in situations where they have to scale no matter what. They just throw money at it, you know, scale no matter what. And there are situations where that needs to happen. But we find with the companies that we work with that the more responsible, prudent, accountable, you know, organic growth is what the founders are looking for. And we know how to do that. 34:35 Replicable, right? Replicable, yes. Amazing. So Jen, um last question before we listen to how to contact you. you have fun today in the Founder's Sandbox? Oh, it's always a pleasure to talk with you, Brenda. I really enjoy our conversations. We're of like minds. That's true. That's true. Avid readers and bringing the best to our clients. So thank you. How can my listeners 35:04 find you and best reach chief outsiders. Yes. So they can find me on Jenna, but they can also find me on the chief outsiders website on the leadership tab. And from the chief outsiders website, you can also learn about all of the things that we do. can meet all of the 125 executives that we have. You can learn more about growth gears, OS and team outsiders. Excellent. And 35:32 In the show notes, will provide the assessment so that you listeners that are actually considering, you know, what do I need to do at this last quarter of the year, right? To plan my marketing resources, just download the assessment. It's a very interesting tool. So thank you. Well, to my listeners, if you enjoyed this episode with Jen Appie of 35:56 chief outsiders. I'd encourage you to subscribe to this monthly podcast where we have founders, business owners, corporate board directors and professional service providers that are really building scalable, purpose driven and resilient companies with great corporate governance. Signing off for this month. Thank you for joining us here on the Founder's Sandbox.

September 23, 2025Episode 232 min

Season 4, #2 - Sustainable Impact Through Family Play

On this episode of The Founder's Sandbox, Brenda speaks with Anbern R. Guarrine: a partner of The Guarrine Group (tGG), a global training company based in Illinois. tGG has facilitated team building, leadership, and organizational development workshops around the world for over 30 years. tGG partners with excellent facilitators who help groups have FUN, which is a hallmark of tGG Anbern R. Guarrine calls herself a "Facilitator of Family Play." By facilitating games, she helps participants gain insights about their strengths, their relationships with peers, and how they can use their skills to move forward in their professional and professional lives. As a partner in tGG, Anbern enjoys challenging herself by taking on uninteresting topics and developing them into fun, game-based learning modules. She is Gallup trained in Strengths Coaching and has received the Family Firm Institute (FFI) Certificate in Family Business Advising. She enjoys sharing best practices with professionals of various disciplines and continually grows her understanding of the consulting space. You can find out more at: https://www.theguarrinegroup.com/ Transcript: 00:04 Welcome back to the Founder's Sandbox. I am Brenda McCabe, your host, now in this fourth season of the Founder's Sandbox podcast. This monthly podcast reaches entrepreneurs, business owners who learn about 00:33 building resilient, purpose-driven, and scalable businesses with great corporate governance. My guests also share this mission and actually working with entrepreneurs and um business owners to also work on those aspects, each in their own manner. My guests are founders, professional service providers, who like me want to use the power of the enterprise, be it small, medium, or large. 01:02 to make change for a better world. Through storytelling with a guest on topics that's gonna touch on their, you know, why they do what they do today. And we are recreating a fun sandbox environment where we can equip one business owner at a time to build a better world. Today, I'm absolutely delighted to have as my guest, Anberne Guarrine. Guarrine? 01:31 Anberne Guarrine. Yes, Anberne Guarrine. um And she is, thank you, Anberne, for joining the podcast today as CEO and founder, the co-founder of the Guarine Group out of Illinois. As the founder sandbox host, Brenda McCabe and blogger, I often have guests who speak about playfulness and innovation. 01:59 And I write about the hidden value that playfulness brings to innovation and creativity in teams. When Anber was introduced to me by a fellow guest, um she truly brings uh the playfulness that is used in the business environment to a next level. As facilitator of family play, think listeners. We're team building. 02:27 rubber ducks and beach balls meet second and third generation family business owners. So I am absolutely delighted to have you here today. Thank you, Ann-Bern. Oh, thanks for having me. I'm so excited. Fantastic. So I would love you to share with uh my listeners the origin story. I mean, how did you use playfulness in the business environment in a very structured 02:56 manner now you're going on I believe 10 years with the Guarine group working with family owned businesses. What was the origin? What was that seed that you had in your mind? Thank you. Yeah, so when I was in college undergrad is psychology and I learned that I like working with groups. Okay. And so while I was 03:21 you know, doing my day job of whatever it was that I was doing, I knew that I always gravitated towards doing team buildings and leadership programs. And so at some point I said, you know what, I should start making this a business. And so the entrepreneurial spirit came in and I created a training company with a friend of mine. And so we were doing team buildings and leadership and communication programs. 03:51 We had corporate groups. We also had government contracts. And at some point, it was really all fun. I was doing what I wanted to do, but at some point there was just a tug in the heart, know, in my spirit. I was looking for something more. I was looking for sustainable impact because I was thinking as fun and as wonderful as our experience is with the groups that I was doing. 04:20 I just felt like there's gotta be something more. There's gotta be more sustainable impact. And around that time, my business partner's brother said, you know, I'm going into inheritance planning. I'm thinking maybe my clients need some team building. And you know, I know a whole lot about team building and groups. 04:46 I did not know a whole lot about families and especially families who own businesses together. That's a whole different dynamics. And so my, my business partner and I, you know, went through what resources can we get? And we found that there is a group that actually does this for a living. Yes. They do family business consulting. And so we both got our certificate for family business advising. 05:15 And then we hit the ground running. um But we cannot shake off our fun activities and our games. We can't shake it off. And so we took it with us in the family boardroom. And that's how I got started. And I still use rubber ducks and beach balls and whatnot. Right. And later on in the interview, you'll talk about what a typical engagement looks like, right, with the Guarani group. 05:45 in which uh you not only touch on the family use family play, right playfulness, but you also get into kind of the um Constitution of the family. So let's carry on. Let's carry on. You know, what have you found is unique about the family business experience? Unlike working for the corporates, right? What is that? I don't know secret sauce. 06:12 that are the uniqueness that you've had to kind of curate your business around? Yeah, so what I found out is that uh family businesses actually live in three ecosystems, okay, whether they're aware or not, there's the ecosystem of the family. There's the ecosystem of the business. And then there's the ecosystem of ownership. 06:41 And those three systems have different values. They protect those values differently and they have different goals. So let me explain this. If you think about your family, you think about your objective is to support the growth and development of everyone in the family. Your values are love, unconditional regard, you know, you want everybody to thrive. There's all of that social. 07:10 Connections. Yes. When you think about the business experience, you think about people, what are their contributions? How can they help this business grow? We're thinking of keeping the business for the long term. You know, you're making decisions for the long term. And so you're thinking of profit. You're thinking of growing the company. So those are the values and those are your mindsets, right? As an owner, oh 07:38 If you are investing in the business, you're thinking of what's my ROI? How can I get as much profit in a short period of time? And so those are the values and the objectives. Now, if you think of all these three circles as not just individual circles, but connected kind of like a Venn diagram. Yes, like a Venn diagram. A family business is right in the middle of it. 08:04 So you're making decisions, thinking about the family, thinking about ownership, thinking about the business. And whether you're aware of it or not, you're making the, you have different hats that you're wearing, right? And so what we do as family consultant or consultants to family businesses is we help you kind of untangle that and kind of understand this is my situation and these are my goals for the family, my goals for the business. 08:34 there could be some friction there, but there's also a unity there. And so just the awareness and the appreciation of your unique experience. So uh how do you, is it typically the CEO, the chairman? um Is it the general counsel? Again, because you're working on uh family wealth um creation, who is the typical 09:03 uh decision maker that would get engaged with a querying group? So sometimes the people, yeah, no, that's a great question. Sometimes the people that make the decision are actually not sometimes not always not the people that have the title. 09:26 So sometimes it is the people that are in the family ecosystem that are not necessarily part of the business or not necessarily owners, but they have a big say in terms of the family dynamics. Interesting. So a confidential mentor is it maybe general counsel, so an outside they're already an outside advisor to the family. It could be because sometimes when you're very close to the situation, you 09:54 don't know what you don't know, right? Right, right. Yes. um Sometimes on the rare occasion, there are family leaders who are very in tune to what their family needs and they're constantly looking out, right? But sometimes there have to be somebody else that is not currently involved in the day-to-day that says, hey, you might want to have a conversation with this person. Right. 10:24 That makes sense. Yeah. Particularly as some family companies evolved to bring in professional management, right? So there are probably many, many aspects or many entry points. All right, you're 10 years into uh the great chlorine group. uh I would love to ask, you know, what are some best practices, right, that you've identified without revealing the names of the businesses? But what have you found to be 10:55 best practices in, I guess, G2, G3, right? Yes. um Before I say anything, I want to preface it to say that you see one family business, you just see one family business, so they're not all the same. But there is a thread that is common. And I'd like to say three things. So first is, there is a clear 11:22 and conscious separation of the family ecosystem and the business ecosystem. And they have two separate government structures. Okay. So for the business, you have your board, have, you know, typically the board would have an independent non-family member that sits on the board. They have regular meetings that are prepared and scheduled. 11:50 And in the same manner, the family also has that type of family governance structure. So not as formal as the family board, but you do have what they call a family council. Yes. So it could be a council of cousins, a council of siblings, all branches are represented. And this is a way for the family to keep the business of being a family. Right. And so they talk about um 12:19 They talk about uh family gatherings. They talk about traditions. They talk about, you know, family fun, you know, what do we do, birthdays and all of that thing. um And so, yeah, so this is, so they're very conscious about keeping the two separate. Yes. So that's the first one. I think the next um best practice would be that they have a shared purpose. 12:50 They know why are we in business together? Or why are we hanging out together? What is our what is the legacy that we are leaving in the world? So they have they're very connected to that. And they're, they acknowledge it and they articulate it. And I think that's a great best practice that I've Yeah, I guess I would call that purpose, right? Purpose. Yes, driven. And it's shared purpose, or purpose. 13:18 And I think the third one would be that they have a sense of what their values are. Okay. guides them. And so where their purpose kind of helps them soar and go into the future, their values kind of keep them grounded. Oh, so that they don't just fly away where the wind blows. Does that make sense? It's it does. um I had never it doesn't the at the 13:48 I don't work with family businesses, right? So it's, I've seen this in very well run growth companies. They, right? um The shared practice or the leaving a legacy is typically the founding team, right? Whereas it's a family here. So I do see a lot of similarities. And I love your sharing that values, it keeps them grounded while the 14:17 shared purpose, right? Is kind of their long term vision soaring. Yes. Well, we'll get to meanings of purpose driven later. And I'm certain you'll come back to this. All right. Thank you for sharing that best practices. Now, what does a typical engagement look like? Are you playing all day long? Or how does play come into how right or more? um 14:47 Seriously, how would we've already talked about how you may be retained for an engagement, but what would be a typical engagement or typical engagements, right? Depending on the stage of uh evolution of that, family business. Thank you. Yeah. Yeah. So we start with finding out what the goals of the family is. So we talk to individual members. What is it that you want? What are you? 15:14 engaging us for? Are you engaging us for just one day of family fun, which is great? Are you trying to clarify your values or are you trying to go deeper dive and create a family constitution? Okay. And in all of those, I always lean on my experiential learning background where I take, you know, the the fun tools, the rubber ducks and the beach balls and the plastic balls. 15:43 sticks and we play and I get everybody to kind of break that ice and forget their hats, know, the CEO hat or the accounting hat or whatever hats you have to kind of shed that a little bit and be more human. And once we get to that level, then we can talk about, what are your goals? If your goal is trying to clarify your values, 16:13 what is it when you were playing earlier, how did your value show up? You know, or when we're talking about a family constitution, we talk about, you know, how do we pass on things from one generation to the next? So when you were passing on the beach ball, how what made it successful? Let's look at that. And are there ways that we can make sure that we do those similar things as we pass on the baton from one generation to the next? And, yeah, and so m 16:43 A typical engagement could be one day, we'll do fun and then we'll talk about why does that matter? Okay. Or it could be more deeper dive. And at the end of the day, we have a family constitution that everybody can sign and commit that we can then turn over to their legal counsel to make it more legally binding. Right, right. So it could be anywhere from three months to six. 17:11 to 12 months, right, depending on the level of engagement and the actual oh whether it's to G2 G3, right, the complexity. Yes. Oh, and these engagements by design are probably in person. Okay. Is that correct? They have to be right? Particularly? 17:38 Yeah, so we in the beginning, there's when we're trying to kind of get everybody on board, we could do it online, we could do zoom. But the actual engagement, it will have to be we all have to be breathing the same air. Right? Yes. Yeah, there's something to be said about sharing the space. There's something to be said about being in the same place. 18:06 being able to touch somebody, being able to hear their laughter real time in the same room. There's just something about that. Yes, that comes from a practitioner's experience and been worrying from the worrying group. And facilitating, I would say good governance and family businesses. 18:32 I just that just occurred to me while we're talking, right? I was so set on playfulness, but also it's really about achieving good corporate governance because you alluded to something here. Well, you know, what does a typical family constitution comprise? What is the comprised of family constitution? Yeah, that's a really good question. So, yeah, so we first off, we define what does family mean to everybody? 18:58 And then we talk about, you know, what are the family practices that we want to keep? So, um, so that's the, so again, when, when I was talking about the three ecosystems, the family constitution is meant to kind of set the stage for governance structures for each of the three ecosystems. Okay. So for the family, what are our values? What are the, what's our legacy? What is our history? 19:27 know, m what is our hopes and dreams for the family members? Do we have an educational program for, you know, understanding what our history is about? um If there are people that are coming in as married-ins or in-laws, how do we kind of educate them into our culture? And so that's the family piece. For the business piece, we talk about 19:54 What is our hiring process for family members? Do we hire straight out of college? Do they have to have so many years of experience? And then we talk about the tricky things like, okay, do they have job evaluation? Do they have an annual performance reviews? What happens if they don't quite meet the standard? um Can they work directly under their parents? 20:23 know, or their siblings, you know. So, one of these questions that are potential sticky spots, we talk about them ahead of time before you're actually in that situation and then all the emotions are wrapped up in both the brainstorming, trying to figure out the solution, and then you're also in the thick of it. 20:47 So I mentioned the family system, the business system, and then in the ownership system, we talk about things like, do you even have a shareholder's agreement? What happens if somebody wants to sell their shares? And how do we figure out what the value of the shares are? What's the process going to be like? How long will it take? we pay them immediately, or do we want to think about long term? 21:14 Do the other siblings or the other family members have the right of first refusal? Can they just share, you know, all these things. Right. So we talk about those things again, hopefully before you meet the situation, you already have systems in place that allows the family to say, Oh, you know what? We've talked about this. This is our process. This is what we're going to do. Or if we don't have a process. 21:39 then we say, this is our decision-making matrix. This is how we're going to come up with decisions. Because you can't potentially talk about everything. No. There are emotions involved. Yes. Possibly on a greater scale than in a private company, right? Yes. so we recognize that. And so we create systems. How do we make decisions together if we come up with or if we find ourselves in a situation that we haven't anticipated? 22:10 you know, preparing for your node. Yes, I wonder, you know, why do you continue to have the role of play in your toolkit? Right? Gosh, that's a wonderful question. I see it at the beginning, but do you use it throughout? Just? Yeah. Why is that part of your toolkit? Yes, because it's fun. And, and I, I now say fun, as in both 22:39 F-U-N and also F-U-N-N. So a friend and colleague of ours, the late Carl Runke, he is known, very well known and a key individual in creating adventure programming. He coined the term F-U-N-N, meaning functional understanding, not necessary. Sometimes we do fun things because we have to have fun. 23:09 know, we don't need that said, my husband in his career as an outdoor education um specialist and director, he took Carl's idea of FUNM and said, Okay, what if fun has an acronym? And he came up with fundamental universal need. Okay, and he said, it's very basic, as basic as food and water and shelter, the sense of I need to have fun. Like if you look at 23:39 children all over the world, you give them a stick and mud and they're clean, right? And so it's fundamental, it's universal and it's a need. And with neuro-psychology um and all these studies, we now know that FUN is actually a very good tool, not only for brain development for children, but also for neuroplasticity for grownups, right? So if we want to keep our brains fresh, m 24:09 we need to play and it's a need, right? Right, almost like biological. And we learn so much better and so much easier when we're in a state of play. So when we're talking about creating a family governance structure, if the family doesn't know what that is, if the family is not used to having a formal meeting talking about family matters, it's really hard to learn that unless you're in a state of 24:38 play. And so that's the reason why I use play because it brings down the boundaries. Take the hats off, you know, so you're not formal. You're engaged. You're engaged with your whole body, your whole mind and your soul. Okay, it's easier to learn about the other person and it's easier to learn new skills and new mindsets when you're in a state of play. So yeah, and uh 25:07 I like sharing this story. Einstein had said when he was, when he gets stuck in a problem, he steps away from it and he does something that's not related at all to the problem that he's doing. So sometimes he plays the violin or he tickers around and he says something about activating that different part of your brain. Helps him so that when he goes back, 25:36 and looks at the same problem that he was stuck in, it kind of changes his mindset and he finds different ways to solve that situation. And so if I'm thinking, you know what, if it works for Einstein, it should probably work for us, for ordinary people, right? You heard it here on the founder's sandbox. I love that. You know, I know that quite a few, like mathematicians, scientists, 26:05 even composers, Beethoven like walking, right? Being in nature is an area that foments their creativity. I hadn't thought of that or hadn't heard about the Einstein like stepping away, maybe playing violin, maybe just right doing another activity. Why not play? Why not plenty? Right? Yes. No shame adults. We can increase and improve our neuroplasticity. 26:35 Yes. Being playful. Yes. Thank you. Can I share with you a story? Yes. So one time I was doing, you know, the typical activities that I was doing. And one time a family member in the midst of all the laughter and the like really big shouts and all of that. And he just said, you know what? I don't remember the last time I played with my siblings. Oh. 27:03 And this was the time that they got to do that with their parents. Their parents were all in on the fun. it's like, that is such a gift. It is such a gift for them to have that experience, but it's a gift, a privilege that I got to see that. And so, yes, it is fun. Wow. Wow. I almost, okay. I got emotional. 27:33 Thank you. I would like you to have uh this opportunity to provide information on how to contact you, your group. This information will be in the show notes. So take it on that, please. Yeah. Yeah. So our website is the Guarrien group. That's G like George, U-A-R-R-I-N like Nancy. 28:02 Theguarriengroup.com and my email is Anbern, N like Nancy, B-E-R-N like Nancy at Theguarrienroup.com. That's the best way to get a hold of me. 28:19 But I like to bring my guests back to my sandbox so we can be playful. No, seriously, um I am passionate in my own work um with growth stage companies to provide uh good corporate governance practices while scaling, while finding or increasing the purpose, and um really 28:48 building that resiliency. And I like to ask each of my guests, you know, what does the term resilience mean to you and your own practice? Yeah. So to me, resilience is like, think of a river that's flowing. Okay. Even if you put a boulder in front of it, it's going to find its way. It's going to keep going to where it wants to go. Yeah. And to me, that's resilience. Wow. Beautiful. 29:19 and very visual, I can imagine a boulder and a river. How about purpose driven enterprise? What's purpose driven? ah Purpose driven, I feel like it's our ability to know that our time on this earth is limited. Okay, we have a role to play. And so what is my role? And that kind of gives me 29:48 a sense of direction. What am I in this world for? Wow. 29:59 And that goes for individuals, businesses, families, organizations. Yeah, I guess you could interchange role with legacy. Yes. Right. Oh, I like that. I like that. Well, you just said it here. And I'm just taking notes. uh And I listen. That's my gift is to my guests. Final. Well, second to last question, scalable growth. What's scalable? So how can you 30:28 scale those. I imagine you in your daily work, generation two, generation three, that's you think about this a lot. Yes. I think scalable is creating the right foundation. Okay. So that when as you grow, your if your foundation is strong, then you can build on top of it anyway, in any way, however big you want to build. So I feel like scalable growth has to be 30:58 on a good foundation. You know what you're about. You're rooted in your values. And so you can grow exponentially. Nice. Last question. Yes. Did you have fun in the sandbox today? Gosh, did talking with you savor or satisfy my fundamental universal need? Yes, it did. And we didn't have to revert to rubber ducks. 31:27 Right? No rubber ducks. No. Thank you. So to my listeners, if you like this episode with Anne-Bern Guarine, sign up for the monthly release where founders, professional service providers, and business owners share their experience on how to build with strong corporate governance, resilient, scalable, and purpose-driven companies to make profits for good. 31:55 Signing off for this month. Thank you again, Anne-Bern. It was a true pleasure to have you here. My gosh, I had so much fun. Thank you.

August 14, 2025Episode 139 min

Season 4, # 1. Purpose: Ethos in Employee Benefits

On this episode of "The Founder's Sandbox", Brenda speaks with Donovan Ryckis; CEO of Ethos Benefits, the nation's leading fiduciary benefits consultant in mid- -large market employers. Ethos Benefits was founded in 2016, after a chance request from a client of Donovan when he operated as a financial advisor--the client was faced with an increase in the companies' health insurance bill for the companies' employee plan that would have had a financial burden that threatened the sustainability of the company. 'Ethos' represents the guiding principle, character, or spirit of a person or organization. It's the 'why' that drives decision-making and fuel's purpose. Through Donovan's origin story we will have our eyes opened as business owners to the potential risks of employer sponsored healthcare plans and how to mitigate these risks. You can find out more about Donovan and Ethos at: www.linkedin.com/in/donovanryckis Upcoming master class on August 14th https://ethosbenefits.com/ https://businessofbenefitspodcast.com/ For a limited time only access the documentary: It's not personal, it's just healthcare. https://ethosbenefits.com/documentary/ Transcript: 00:04 Welcome back to the Founder's Sandbox. I am Brenda McCabe, your host on this monthly podcast. It reaches business owners and entrepreneurs who learn about building resilient, scalable, and 00:32 purpose-driven companies, all with great corporate governance. I am Brenda McCabe, and I am your host. And the guests that come to the podcast are not only those founders and business owners who are sharing their experiences, but also corporate directors, investors, and professional service providers who, like me, want to use the power of the private enterprise, small, medium, and large, to create change for a better world. 01:00 Through storytelling here and a recreated sandbox, my goal is to equip one startup founder or one business owner at a time to build a better world through great corporate governance. Today, my guest is Donovan Rikas. He is joining the podcast as CEO of Ethos Benefits, the nation's leading fiduciary benefits consultant in the mid to large market employer space. 01:29 So I'm absolutely delighted to bring in a professional service provider in the employer benefits area, which we're going to unpeel this sector today in the podcast. it's fascinating. So thank you, Donovan, for joining me today. Thank you, Brenda. Thanks for having me. Excellent. So the company you and Chelsea, your wife and president of Ethos Benefits, 01:59 was founded in 2016, which wasn't that long ago. But it happened serendipitously. You got a chance request because at that time, you were a financial advisor, right? Yes. When your client was faced with an increase in the company's health insurance bill for their employee plan, pardon me, that would have had such a financial burden, it would have threatened the sustainability of 02:27 the company and that's your client. So what did you do Donovan? What was the origin of Ethos Benefits? Thank you. Yeah, so that's exactly right. I started as a financial advisor. So Ethos Benefits was formerly a registered investment advisory, which was Jay Donovan Financial. And one of the interesting things that are a little bit different on the security side versus the insurance world is 02:56 the ability to license and designate yourself as a fiduciary advisor to your clients. So that's really important and that's kind of where we started as financial advisors. So that essentially means that you're not gonna be commission-based with variable commissions based on what you wanna sell and the client doesn't really understand, right? You're gonna be transparent with how you earn any compensation. 03:23 and you're not gonna have any conflicts of interest that might change the recommendations or advice that you're giving them. So it's gonna be flat fee and you get to work with them directly instead of working for the financial institutions and the insurance companies kind of in the background that are actually the ones incentivizing. Cause it's this odd relationship where it's like you think the financial advisor is working for you but they're actually incentivized by the institutions that they're representing. Very important clarification because we do have a question 03:53 further on, which is, you know, what, what, how does the 401k management, right about employers 401 plan, mirror that of healthcare benefits? Yeah, for sure. You'll start to see some of those. So that's how we're working as financial advisors. And that's an important distinction as we get into an explanation of 04:22 the whole healthcare industry and how that works. So you're exactly right. I was working as a financial advisor, working with business owners because they had more kind of complicated planning and tax structures and things that I could do to really make a difference. And what I realized is when most of them had commission-based advisors, they'd rush to sell a product, mutual funds with upfront loads and REITs that had proprietary commissions and all this kind of stuff. And then they would leave without worrying about any of the 04:52 tax consequences, you know, islets or trusts or even wills, right? Like all these extra things that business owners needed to set up their own personal wealth, but also their company, their 401k, maybe combining a defined benefit plan. So that was kind of the niche I chose. And it was incredibly lucrative. I loved it. Was doing exactly what I wanted to do until that client kind of asked me for that help, like you alluded to. 05:21 And it was 40 % increase on his health insurance. He said, my broker says, this is it. There is nothing else. Can you help? And I didn't know any idea. Like I had no idea about health insurance or what I do. But yeah, just- No, no. problem. 05:39 And certainly as a financial advisor, it kind of seemed like going backwards and beneath me. didn't really want to do it, but I was like, I could hear the panic in his voice. And I was like, yeah, absolutely. Just send me everything you have. And after about three weeks, basically making as many connections in the industry and learning as much as I could and trying different things, we basically mitigated that increase entirely. 06:05 And he actually came three points under where he was currently today before that increase. And we didn't take away any benefits from employees. We didn't put them in smaller HMO networks. We didn't increase deductibles or increase their premiums. None of the usual tricks. So this was a like for like solution. We actually improved the plan a bit and came in under. And it really made me realize in that moment, it wasn't my experience or my education or my smarts that 06:34 may be able to do this, it was a lack of conflicts in compensation and incentives, right? Because his broker does about $7 billion a year annually. I didn't come in with more market knowledge, leverage, or experience. I just didn't have conflicts of interest and compensation. That's what started me down this path. And back then, you hadn't yet created Ethos Benefits with that name. 07:03 So when I did a little bit of research, I couldn't have been more delighted that you actually reached out to to be featured on the founder sandbox because of two reasons, you the word fiduciary, right? It was in your basically your call to action, right? Or your or the definition of company. So, you know, you are the governance of a company goes way beyond making a profit for shareholders. 07:32 the duty of care, the duty of loyalty and the duty of obedience is really the underpinning elements of fiduciary duty. And on your website, you say our ethos is simple fiduciary first. So we're going to appeal that in here in a minute here. So act in the best interest of those we serve, no matter the cost. You also on the website, you you had a purpose ethos represents the guiding principle. 08:01 character or spirit of an organization or a person is the why that drives decision making and feels purpose. So I, I looked like I was reading what next act advisors may consult a firm is about is just really finding those purpose driven. So with that, I wanted to just, you know, ask you, what was that you had that first client that first aha moment, and 08:29 How long did it take you and did when did you realize that this could be a a career change for you, right? Rather than a financial advisor, you were actually actually a health care benefits advisor, right? Yeah, I mean, I think I think the first moment is, you know, being being a financial advisor was very lucrative. And I like the people I was working with. I liked working with entrepreneurs and business owners and and, you know, just 08:58 I found them inspiring and I was curious about the things they're doing. And I think that kind of lifts everybody up when you keep a circle like that, right? Like you push yourself harder, you learn, educate and do different things. So I love the clients I was working with. Like I said, maybe working on personal wealth for individuals though, isn't the most rewarding thing you could be doing. seeing that... 09:25 Don't get me wrong, I was paid well enough. It would have took me a long time to figure out that it wasn't very personally fulfilling. But seeing that first case, mean, the first thing I did when I got that successful proposal back, before I presented it to the clients is I was looking at the math of what does this cost? What difference does this make per paycheck to all the individuals in this planet? And then I'd look at somebody, my God, this person's got a wife and two kids. Look at the difference in premium there. 09:54 I was calculating my work in return to the average American worker and realizing like me putting myself aside to proactively, strategically go after this problem instead of making a decision for my own personal commission, looking at how much that impacted everybody. And that was powerful. 10:20 I'm going on 20 years in financial services and every aspect of it, I've seen people who prioritize commissions over, you know, a better product, a better outcome for an individual. But the idea that that could be done on scale to where you're now making that decision for yourself over 200, 500, 2000, 3000 employees, like that's pretty disgusting, right? So seeing that that kind of impact could be made. 10:49 I mean, it was it was really not a question after that I knew I was transitioning my business. Excellent. Excellent. So my own path after 25 years in Europe was quite an eye opening experience when I came back to the United States, I am a US citizen, but I had to get you know, I've been working for myself and I had to get self insured. So I got back this is like 11:18 12 years ago, I got the Affordable Care Act for dummies from my local library. I had not yet transferred my tax certification to the United States takes quite a few years when you've been gone so long. So you because you do have to sub venture tax returns and all that. And then I ran into I met Marshall Allen, the author of never pay the first bill and the other ways to fight the healthcare system and when 11:46 Marshall Allen actually spoke at a graduate or alumni event of University Chicago. And I was, you know, reading these books. And you know, eventually, I got my own broker to help me get onto the exchange. But it every year has been an experience. I'm fortunate to be part of a membership organization through which for small and medium sized businesses and I get PPO through 12:14 I won't mention names, but I was blessed because just and I'm 12 years in the United States, you have to knock on a lot of doors to actually get health care when you are a small business owner and really understand what you are paying for, not only your premiums of what are the services that are provided. So can you talk about the average 12:44 premium for a family of four and some of the numbers that you discovered and believe we as a country could actually improve on the outcomes, healthcare outcomes with the actual spend we have today, right? Yeah, we're getting the numbers are pretty wild. mean, I feel like we're really kind of getting to a breaking point with it. You know, 13:12 For what I work on, employer-sponsored healthcare, 186 million Americans are covered under employer-sponsored healthcare plan. These plans can average increases anywhere from seven to 10 % annually. We see a lot of reports that come out that kind of measure these things. Kaiser Family Foundation does one, Milliman Index is another one. So there's a lot of studies that kind of measure this annually and changes for employers across the board. 13:41 What we saw this year for 2025 was the average cost for a family of four under employer sponsored health care plan is $35,119, which is just an astonishing number. That is unaffordable for an employer. That's unaffordable for an employee. And it's unaffordable for them to split that cost as well, which is how these, yeah, that's how they're structured in some way or another. 14:11 And another number to know that kind of governs this is the ACA affordability percentage, which is essentially where employers have to contribute, they have to contribute enough to keep the premium under this amount, which is 9.02 % this year. So premium for one of your employees cannot exceed 9.02 % of their take-home pay. 14:39 And this is updated on an annual basis, correct? Correct. Yeah, it fluctuates a little bit, but it's always right at 9, 8.5, 9.2, it's balanced up and down. But that's a pretty astonishing number too. And I see a lot of companies that are basically designing their contribution just to stay under that. it's, obviously they'd love to do more, but with the way these costs increase annually, sooner or later, they get to that point. 15:07 where they're kind of designing it just to be under 9 % of the employee's income. Okay, that's astonishing. And I'm happy that you are working nationwide now with employer benefits with companies that, what's the size of the companies that you typically sell to? So we only work with large employers these days. And if we have somebody come in a little bit under, we have some associate agencies that we can kind of refer them to. 15:36 I'd say our minimum is usually like 250 eligible employees all the way up to 5000. Yeah, so anywhere in that mix. Excellent. So when again, I first met you was unaware because you've basically become nationwide in the last what two, three years, right? I'd say around COVID. Yeah, I took off right. So when I was speaking with you spent some time on the website. 16:06 I was trying to understand the sales alignment. So how you reach customers, those employees that have 250 between 250 and 5,000 employees, right? My first reaction was, OK, Donovan, go in with either of these benefits. You do a cost down, right? You've done, you basically work yourself out of the job. You corrected me. So for my audience, so how? 16:32 does ethos benefits work for a company, right? What is that? Is it is it an annual engagement talk walk me through the work you Yeah, I mean, things are happening on a daily like when we break down our scope of services, we'll actually show them like, these are daily, these are weekly tasks, these are monthly, quarterly and annual because there's so much happening. So we're talking about the employee benefit space. Yes, it's the 17:01 kind of designing consulting for the annual premium for a 12 month period. I think that's what people first consider. But there's also a ton of compliance factors that have to happen throughout the year that that company has to fill out, right? Could be anything from section 125s, 5,500s, wrap documents, all kinds of notices and disclosures that need to be done. Also, you know, we deal with benefits administration. So that's... 17:29 How are the employees making elections, seeing premiums? Is that integrating into payroll? So functions like that with eligibility in and out of the company adjusting that. But also we kind of discussed and talked about the fact that health care is incredibly complex. So all the same market influences, where the market's at, interest rates, inflation, all that kind of stuff affects health care rates just like any other company in the market. 17:58 but it also gets as granular as new medical procedures, new drugs, new generic drugs that are now an option. It can even go down, you know, locally or regionally to where we get a new CFO in a hospital group and that starts changing the reimbursement rates that they're requesting from the insurance. So we see that where kind of a CFO comes in and they start flexing, making life difficult in a particular region or with a hospital group. 18:28 So all these things are kind of coming together and changing every single day. Also the fact of the sheer amount of bills, claims that come through. So what we see on average, this is a pretty crazy number, but what we see on average is 18 claims per employee per year. Okay, that's a lot. That's a lot. So if we had just a hundred employees, that'd be 1800. 18:56 basically accounts payable into the company. And that's part of our job too, because as you might imagine, hospitals make tons of mistakes on the bills, about 80 % of the bills have mistakes. And then we also have to make sure that those are coming in at fair reimbursement rates to the company, because what hospitals bill is a spectrum for the exact same procedure. And the only difference is the payer. It's not the patient, it's not the complexity, it's not the physician, like it's literally 19:25 just the insurance card that can affect that difference in reimbursement rates. So all these things kind of come together where, yes, it very much is a daily task for me and my team on different things that we're working on. And- Are you an advocate in any way for the employees? Yes, very much. So, you know, it's two, there's two complicated ecosystems at the same time that we're trying to navigate. 19:52 One is certainly the healthcare finance, which is what we're working with the company. But healthcare delivery for employees and members is just as complicated and confusing as far as where do I go? What is this gonna cost? What's the next step? Can I get a second opinion? How would that work? Right? And also helping navigate them to their highest cost or their lowest cost, highest quality and understanding what that is and giving them options to seek care at. 20:21 at lower prices if that's available. Excellent. So your delivery platform, is it like a customer success team that is assigned solely to that client? How does it work? Yeah, so it's kind of different. every employer is starting at a different place. They also have different ideas of where their end place or where their goal is. 20:49 healthcare delivery, kind of working on some things like that, there might be a couple of different ways we handle it. One might be having a direct primary care provider. So the idea of a direct primary care provider is basically same day, next day appointments with your primary care physician and 30 to 60 minute visit times, not the average, which is seven minutes with a PCP, which is what most people get across the country. And with that DPC provider, you can also do things like 21:18 stitches, blood work, get generic meds. So we're talking about more of a comprehensive service when you actually need it, not the 14, 18 day primary care. So that might be one of the ways we help with healthcare delivery. It might be a nurse concierge where they have a nurse that they can help find providers, navigate them. That might be a part of it. So it kind of depends. then also a lot of the times are 21:47 Our team will basically act as a care coach, where if they have anything going on, they can just call us. We'll help them set appointments, navigate them towards care, help them with their ID problems. Fantastic. Anything else you'd like to share or shed some light on the service offering of ETHOS benefits? So we're going to jump into a legal question in a minute here. 22:13 Yeah, I mean, it always just depends on the employer. what I would say is generally they find everything we do to be more comprehensive. And I think that's just the nature of the fact that we're not seeking compensation from the insurance providers or working with the client, because it's my belief that we don't have a single thing to sell to an employer. Employers have a health care problem. And we're here to solve that and work through that in any 22:42 way that they need at that given time. So we're not, you know, pushing those solutions are having those conflicts. It's an excellent segue down into current lawsuits that are popping up with respect to, first of all 401k, lawyer, and now healthcare benefits. So before we jump into that some specific cases, you know, for my listeners, what does fiduciary mean? 23:12 in your business model, right? Please. Yeah. So fiduciary for us is certainly always acting in the best interest of those that you represent. It's the highest standard of care. So you mentioned a couple of things earlier, loyalty, obedience. I think the biggest thing where companies may think they're acting as a fiduciary and they're not, because while we carry that duty to our employers and our clients, 23:40 Employers have that duty to all of their employees. And that's something that are kind of educating them because a lot of them don't realize it. But I think the big duty that is left out or misunderstood is the duty of prudence. Okay. So did they go far enough in investigating solutions and understanding the problem and working through it and having a committee within the company to kind of help go through that? Because what I mean, in a compensation package, there is nothing more important 24:10 than the cost of health care and the options in health care, right? And how those decisions are being made. So I see the duty of prudence being the kind of most 24:23 I, the duty with the most opportunity, let's say, maybe, maybe the most misunderstood because the employer sometimes think, well, you know, the broker came in and he showed me one or two other options. This is the least worst option. Therefore that's what we're doing. And I think that's enough. Right. And that is not the case. And it's only until there's a 40 % increase due, right. It doesn't employer say my business is not sustainable. 24:51 So actually healthcare is what not the number two or number three expense in the company's PNL today. Correct. Right. So walk me through some of these recent lawsuits. Yeah, I think we have companies like J &J and JP Morgan. Speak to me about that. 25:14 Yeah, J. J. J. P. Morgan, Wells Fargo. A lot of them are almost they're copied and in some parts of the complaint, because it's very much the same thing. the first one we saw was Lewandowski versus Johnson and Johnson. And this is for their health care plan. You know, they're a Fortune 50 company. I think they somewhere around 160,000 employees. 25:42 and they have a benefits committee and a benefits team of 16 or 18 people. So a big team of people to help make these decisions, understand them and vet them. And the lawsuit is basically for their decision of pharmacy benefit manager. So a pharmacy benefit manager essentially sets the price for any drugs that employees could get within the plan. And it lays out 35 or so specific examples of drugs 26:12 but basically they agreed to pay up to 13,000 times the cost of the drug that's available, just cash pay. employee and employer funds are agreeing to pay that kind of multiple on a drug that's available without insurance, much, much cheaper. And the lawsuit is brought by the plaintiffs, who are they? 26:40 am Lewandowski. So she's she's the plaintiff. And then I believe as it's developed, other employees have kind of came on. So 13,000 was it do you know, I know that you're not directly involved in this case. Nor should you speak to it if that is the case. But is the transparency of the data? Can you get that data if you were an employee to then understand the 27:09 multiples that your employer plan has agreed to pay to the pharmacy benefit. I'm aghast. 13, I think the number is 13,226. So when this came out last January, the first thing I did is I read through the whole complaint. It was like 130 pages went through all these. So for all the drugs that were mentioned, I ran 27:40 J &J's prices, again, Fortune 50, 150, 160,000 employees. So you would assume they're getting leveraged prices, they're making great decisions, all those kinds of things. I ran those prices against what my clients were paying. And in the smallest, like I think our smallest in my book of business, like 100 insured employees somewhere around there, they were paying 94 % less. 28:06 for the same, for one fill of all the same drugs. So the math worked out to be like 135,000 for J &J for one fill of each of those. And my clients were like 3000 or 4000, don't know, it's all my LinkedIn. posted the public letter as soon as it came out. But I basically price referenced them. So it's not a question of leverage or buying power, know, all the ridiculous things you hear. 28:34 when you're talking to an insurance broker for these types of decisions, it's literally, it comes down to that question of prudence. Like, how did you vet these decisions? Do you know how the pharmacy benefit manager is getting paid? Do you know what these drug benchmarks are against the cash price? And that's where I think this lawsuit is gonna be a slam dunk. Like, there is no reason for a company that size with that big of a benefits committee to hire such a conflicted PBM, is what they call it. 29:04 You heard it here on the founder sandbox. So stay tuned for any other lawsuits that are worthy of mention. Do all of them? Are they all related to the pharmacy benefit manager conundrum? There's there's all kinds of lawsuits. I think the PBMs are the lowest hanging fruit because it's so easy to benchmark. But certainly the same arguments exist with hospital reimbursement rates. 29:33 And we're starting to see those as well. Excellent. Well, thank you for sharing a bit more details on the recent, I guess, health care benefits in the news, right? Lawsuits. Going to get a little bit technical here. 29:57 because you allowed me to. the framework of the CAA of 2020 and 2021, that's the minimum set of standards for activities to benchmark health care plans. And so what are they? Because it then leads into some of the common sense strategies that employers can deploy immediately. So can you walk? Because this is just as yesterday, it's actually during the pandemic. What's the CAA? 30:27 of 2020, 2021. Thank you. Yeah. So that's the interesting part of this. So the reason I said a decade ago, over a decade ago, I was waiting for these health care lawsuits to happen. It's because Arissa has always stated that employers have this fiduciary responsibility, just like they had with 401k. The problem has been, and the reason these lawsuits didn't come sooner, is that health insurance companies make this data hard to access. 30:56 different carriers were released different amounts. And there was no set of compliance standards for employers to understand this is how I go about making it, making these decisions and benchmarking these decisions, right? Like it was all just too vague, too opaque. The data was too gagged and withheld from the employers. So the starting point of how do I know I'm being prudent or not, that's kind of what wasn't known prior to the CAA of 2021. 31:27 So the CAA basically defined a set of minimum standards that you have to do to even pretend like you're being a prudent fiduciary for your healthcare plan. So there's four things, but there's three main things. I'll mention the fourth thing as well, because there's funny stuff about that. So the first one should be the most obvious, and it's kind of our founding story, which is understanding 31:53 your broker compensation before you enter into any arrangement or agreement for your upcoming plan. So that should not only be how much, it should be when, what type of bonus is there. If you're looking at carrier A, B, and C, really what it says is you should know what is their compensation for carrier A, B, and C before you make an arrangement, because they will be different. And that will change the recommendation, the advice, the conversation that you're having with that broker. 32:23 is critical. That is so critical. And in reading these transparency commission disclosures from brokers, it is wild, the stuff that they put in there and how conflicted their advice is. One of them that I looked at last week said, broker acknowledges that their parent company has equity in the insurance carriers that they're recommending. Oh my gosh. So they're essentially saying, 32:52 We are an insurance company that's going to bias our recommendations to the own companies we have equity in. It's like, that's no longer a party you should take advice from, right? 33:07 Okay, so that's part one. Yeah, no, this is this is and you know, I without it's gonna get too technical because the gag clause and the prescription DC reporting so that you know, basically CAA has provided the set of benchmarks, right, which you need to at least checkmark right before you actually do. 33:35 engage or decide on your employer benefit plan. Yeah. To be in compliance with your fiduciary duty, particularly that of prudence. Yeah. Yeah. And I think companies shouldn't look at as a checkmark. I think if they apply it with a good faith effort, they'll see like, oh, it's not compliance. This is a framework for making better decisions. Right. And that's what it's meant to do. It's meant to say, 34:05 Know your compensation, know your drug benchmarks, and eliminate any gag clauses to your data because you need your data to make decisions. So I think if companies make a faith effort, they'll automatically get better outcomes. That's the way here. Excellent. Well, thank you, Donovan. I want to give me this time to actually speak about how to contact you, your company. But more importantly, 34:34 There is you're hosting a webinar on August 14, which is right around the corner. Can you give us some more details? The details will be in the show notes, but speak to the event that ethos benefits is hosting on August 14 2025. Thanks. Yeah, thank you. Yeah. So on the 14th, we're doing a fiduciary workshop masterclass, which is basically understanding what your 35:03 what your duties are, how to get through them, how to navigate them, how to have this framework for decision making and document that process as well. And it's all geared towards just achieving those better outcomes for your company, eliminating any of these risks and really creating positive results for your people. Excellent. And any information with respect to how to reach out to you beyond the- Yeah, sorry. the registration is on a banner on the top of our 35:33 on our homepage. So ethos benefits.com. If you connect with me on LinkedIn, LinkedIn, Donovan, ragas, you can find it there as well. Great. Well, I'm coming to the part of my podcast, which brings us back to the sandbox. In my work, I'm all about working with purpose driven, scalable, and resilient companies. 36:00 And so I ask my guest, what is the meaning of each of those terms? What does purpose mean to you? 36:08 Purpose, what does it mean to you? That's such a big question that you can go a lot away from. You know, I feel like purpose should be almost like a hidden driver. It's almost not like a well-considered thing. It's just kind of driving you forward. I think our purpose is progress, right? Like if something can be done better, it should be and just kind of moving forward with that. 36:35 We're trying to move one company at a time, but also the industry and better outcomes for the country. 36:43 And that good feel factor when you get up in the morning and know that you're doing good, right? Yeah, absolutely. Let's just sleep well at night. Right? Yes. Amazing. How about resilience? You did share with me off camera that yeah, while you abandoned the financials, advisory role, it took almost five years, right to really find product market fit, right and build this because it's a very unknown right industry. 37:12 unknown service within a very, very complex industry, right? Yeah. So resilience for you, what does that mean? Yeah, I think you're right. You know, it took us a while because we were sharing such a wildly different message than what people were hearing from their brokers. And sometimes they look at you and be like, well, you're small, they're big, that must mean they're right, right. So I think resilience is being able to go from 37:42 failure to failure without any loss in energy, right? So when something doesn't go your way and you have an obstacle, an outcome that is less than desired, it's about being able to push on still without losing any of your optimism or energy. And that's all we do. So. Thank you for what you do. And scalable. What does scalable mean? 38:07 Scalable is certainly about having an actual documented process. I think when you're getting into something new as a company or a new system or procedure process, if it's not something that everybody in the company could repeat in the same way that I do, just inherently the way I do it because of my background and education, if it's not repeatable for everybody and everybody doesn't understand the purpose for those steps, 38:36 the outcomes from those steps, like the end result, it's definitely not gonna be scalable. Thank you. Final question. Did you have fun on the sandbox today? I did. Thank you so much for having me. Thank you, Donovan. So to my listeners, if you liked this episode with Donovan Rikas from Ethos Benefits, sign up for the monthly release of founders, business owners, corporate directors, and professional service providers that share their experiences. 39:06 and how to build with strong governance a resilient, scalable, and purpose-driven company to make profits for good. Signing off for this month, thank you very much. Have a great day.

July 10, 2025Episode 1435 min

Season 3, #14 - Scaling the Co-founder Relationship

Tim He checks many boxes as a guest on the Founders Sandbox- a 3x founder, now advisor, professor, creator, writer and coffee snob. Tim's newsletter, "Cherrytree", allowed him to keep teaching entrepreneurship while the pandemic closed the classroom. By providing a newsletter, Cherrytree now offers consulting and coaching to cofounders. In Tim's own words; "I want to actually change how people become cofounders. And then how they stay cofounders." It is a tough decision to "divorce a co founder" and we find on this episode with Tim He sound advice on getting the pre nuptials in place for just in case scenarios and preventatively preserving the co founding team dynamics. Listen to this month's episode "Choosing the right Cofounder" on The Founder's Sandbox with Tim He. You can find out more about Tim at: https://www.linkedin.com/in/timhe2000/ https://www.dumbfoundcoffee.com/. Transcript: 00:04 Good morning. Welcome back to the Founder's Sandbox. I am Brenda McCabe, your host on this monthly podcast now in its third season. The Founder's Sandbox is a podcast where my guests are 00:33 business owners, founders, professional service providers and corporate directors. And we all share a mission and we find ourselves speaking here on the Founder Sandbox. This mission is really to work through the power of the private enterprise, be it small, medium or large, to create change for a better world. And each of my guests tells a story, right? The origin story. 01:03 that touches on the topics that I'm so passionate about resilience, scalable, purpose-driven enterprise, all with good corporate governance. And we do this in a fun sandbox environment here in the Founder Sandbox. I am absolutely delighted to have as my guest today, Tim He. He is joining us from Dallas, Texas today. And Tim. 01:33 is he's going to be speaking to us. He checks a lot of boxes, but today he's going to be speaking from his experience as an advisor to pre-seed and seed companies. And we share a common kind of subject matter expertise. We work with a lot of founders that are seeking to find a co-founder or we're working with them to how to divorce a co-founder, which 02:01 Nobody likes to talk about this, but it happens more frequently than not. Matter of fact, Tim has chosen for this episode, the title of Scaling Your Co-Founder Relationship. So Tim, welcome to the Founder Sandbox and thank you for joining me today. Thanks for having me. This is gonna be a lot of fun because the thing with co-founder relationships is that when it's bad, 02:28 It's bad. You you think of divorce, arguments, sometimes even litigation, but when it's good, it's pretty magical. You build very valuable companies that change not just your lives, but the world. And it creates a type of team and culture and company that people want to root for. And when I get to see that, that's the best part of my job. And it's actually pretty magical. It's very fulfilling, isn't it? It is. 02:55 So you check a lot of boxes, but we're going to focus on that. You are a founder yourself, prior founder, advisor, creator, writer, and coffee snob. So we'll get to your love of coffee later in the podcast. When you reached out to me, it did kind of make me giggle because nobody likes to talk about divorce, right? Let alone your co-founder. 03:24 And you specifically reached out to me because the work you do and your platform at Cherry Tree is around co-founder, choosing the right co-founder and the like. I have experiences with my clients on making that tough decision to divorce a co-founder. And I read some of your blogs. 03:52 And you do provide sound advice on getting what I call the prenuptials in place. So kudos to you. And more in the podcast today. So I love what I do, right? And my consulting firm where I advise kind of scaling companies to work with them on purpose and resiliency. 04:21 advice to founders when working at Cherry Tree and finding the right co-founders, scaling it that, it doesn't crack under startup pressure. It's probably rot with your own origin story as founding a company. Can you share that with us here, Tim today? Of course. Yeah. I'd say almost 10 years ago now, I started a company with five other co-founders. So six of us in total. 04:51 which is pretty unconventional in the sort of software startup ecosystem, but it wasn't intentional on my part. I was in college at the time and I was thinking, you know, I want something to do other than homework. So I found a bunch of my friends and asked them if they wanted to start a company with me. And I didn't expect them all to say yes, but they all did. And so we were like, sure, let's just do something together. And that was sort of the beginning. 05:21 And you were six co founders. Yeah. And let's carry on. That's good. That's unconventional. It was a lot, but it was a lot of fun. You know, I was best friends with some of them. And then some of them were mutual friends or classmates that I met in school. And so they also had different relationships with each other. Not all of them knew each other in the beginning. All of them knew me. 05:49 but to varying degrees as well. And so I kind of got to see the entire spectrum of what a co-founder relationship can be. And at the same time, I was teaching entrepreneurship in Seattle and a lot of my students would ask me the same questions about co-founders. You know, the basics like how do you split equity? How do you choose titles and roles and responsibilities? How do you fight with each other productively? 06:18 All those things that me and my co-founders were going through at the same time. And so we made a decision to be very open and transparent about it. I shared with my class how I split equity with my team and the reasons behind it. And I shared with them what we debated about on the product side or the marketing side and how we came to a resolution. And so the students had a very behind the scenes look at what goes on with co-founders. 06:47 And then COVID hit. And so I started writing online for my students quite a bit. And then over time that became a book about co-founders. And then when I published the book, you know, more people started reaching out to me, but it wasn't just college students anymore. was people with venture backed companies, companies going through YC and all sorts of industries all over the world. And then somebody was like, Hey, I don't want to read a 200 page book. I want something quick. 07:16 something easy and actionable. And so that's how I got started with the Cherry Tree newsletter, which comes out every Monday and Friday. And it's nice and easy. It's very relatable and actionable. And then people started replying to the email asking for personalized advice because they said that, you know, 500 words is not enough to solve a tricky situation. And that's how I got started with co-founder coaching. And so now 07:46 the Cherry Tree Company as an umbrella, comprises of the newsletter, which is free. And for people who are maybe just starting out and want to build good habits, and then also the coaching component as well, for people who are either going through some high growth stage, like raising a fund or going through a major pivot, or they just want to talk about some concerns or curiosities they have about co-founder relationships. Let's go back to your 08:16 co-founder, your six co-founders. that company still exists today? What was the, so what was the outcome? Yeah. It was a software company in the real estate space. And so COVID kind of took us out, but it didn't take out the friendships. We are all still best friends and visit each other over the holidays. In fact, when I, when I move in a couple months, I'm moving to a city where two of them already live right now and 08:43 One of the things I looked for was an apartment that was close to them so we could all hang out together. COVID took out the company, but not the co-foundership. All right. You did speak about the newsletter. why did you choose that medium? And again, I think you said there are typically 500 words. I've read a few of them. I blog myself. And we shared a couple of our blogs back and forth. 09:12 reached out to me, said, oh, I've written about that, and how to split equity and the like. So what made you choose the medium of a newsletter? 09:25 Yeah, I mean, I've always liked writing. think it makes me, it forces me to think very hard and clearly about what I wanna articulate. Back when I was teaching, I found that I would have a topic or a concept in my head, but when I went to explain it to somebody, I couldn't quite articulate it the way that I felt, especially when they started asking very thought-provoking questions. I felt I was stumbling. I felt that I... 09:52 had an answer in my head, but I couldn't quite deliver it to them. But, you know, because we all went remote, I was writing for them and that was a forcing function to get everything crystal clear. And that became a really good habit for me. Plus I've always liked reading. I follow several other newsletters as a reader, as a customer of theirs. And so I've always been intrigued by it. 10:16 And then one of my friends who is at a private equity firm specifically focused on newsletters was telling me a little bit about the backend of newsletter businesses and the unit economics for it. And I realized it was a very viable and very scalable business opportunity. And so I thought I would do this practice because it's good for my own just thinking process. 10:42 And I get to update it every every week, twice a week with new information that I find. And so a newsletter kind of just made a lot of sense. Excellent. And then the show notes later, we'll put the the URL is it cherry tree dot v hi.com, right? We had to access your newsletter. So teaching 11:09 you're teaching in a university in Seattle, entrepreneurship, you're so young, it's amazing. How did you get into the teaching position? I got very lucky. on my first, sorry, on my second quarter of college, I was working retail in the mall selling glasses. And it was 11:38 at about 9 p.m. right before we were closing and a customer walks in and you know how it is. Nobody wants to deal with a customer two minutes before closing. I'm a new kid so the manager is like, you go talk to them, get your practice. So I go and I talk to the customer and we just make small talk. I'd tell him that I wanna get into business school. want to... 12:04 be a part of startups and all this exciting stuff. I was 18 or 19 at the time. And he was like, hey, you should talk to this professor. He teaches at the business school as an entrepreneurship professor. And I think you guys will really get along. So he wrote down this professor's phone number. that was it. He didn't buy any glasses. We closed the shop and I walked home. I didn't think much of it. I was trying to make a sale. 12:34 I had that note in my pocket and when I got home, this was maybe around 10 PM, I was changing out of my work clothes and I had that note and I thought, hey, maybe I should give this professor a call and his name is Alan. And so maybe I was naive or impulsive, but I called him at 10 PM with no forethought. I didn't think, hey, maybe I should email him or call him tomorrow morning. I just had the note in my hand and I was like, let me just call him and he picks up. 13:04 And we talked for about an hour and a half. Oh my goodness. About the, yeah, about the classes he's teaching, about how he became a professor and his alumni. And it was very clear to me that he loved teaching. He was in his late fifties, early sixties and independently wealthy from running his own companies. He had retired for a number of years and then come back to teach because he just loved teaching. And so. 13:34 I was like, hey, can I take your class? It sounds really cool. But the administration was not happy with that because I was a freshman and he only taught senior classes. And I was not only not in the business school, I had not taken any of the prerequisites and the class was already overbooked. Oh my gosh. So. We were all stacked against you. Exactly. But he said, just come to the classroom at this time and sit in the corner. 14:01 Like you might not get credits for the class, but just sit in the corner and pay attention. And so I did that and I started answering questions in class. Questions that some of the upperclassmen may not necessarily have been able to answer, which was very surprising to me because I had never done well in school. Throughout high school, I barely got into college. My parents were on me all the time, but this was the one class where I felt like I knew what I was talking about. 14:31 And so I went to all of his classes and eventually became his assistant. And that slowly changed. And I, was an assistant for about 30 courses and then later become a co-instructor at both campuses. And so I got really lucky. It was unconventional, but this, this mentor, Alan sort of gave me that opportunity. And I finally felt like I, I was doing something that I was good at. 14:59 Amazing. That's an amazing story, very unconventional, but I love that. You heard it here on the founder's sandbox. My guest, Tim He, got into teaching, and then eventually COVID hit. You started continuing to teach virtually and started providing your content through a newsletter and your regular postings two times a week. So bravo. 15:30 You also have time to run another business. I introduced you with many titles, but you are a coffee son of so what is it with the coffee, Tim? Yeah. All right. You taught up in Seattle, right? And we all know he's from Seattle. But what is it about the coffee and it's called dumbfound coffees? Yes, yes. It's a fun story. It's quirky. I 15:59 A couple of years ago, I helped this coffee founder a little bit with his business. was my friend and I helping this one man show. He was bagging the beans by himself, sealing it, weighing it, driving it in his truck to the post office, handwriting notes for everybody. And he also had a day job. So he was doing this on top of that. And he had a wife and four kids. And so he really needed some more extra hands. And so 16:29 We started with helping him literally just bag beans. And then we got to understand the coffee business and how to market coffee, how to optimize shipping and logistics to save on costs and sort of everything in between. It was really fun. And my friend and I always joked that we would start our own coffee company. And then right after working there, I went to work at a very large coffee chain, global chain, strategy team. 16:58 And that was very different because there are thousands of people at this company with billions of dollars in budget. And so I saw this industry from a completely different lens. Right. And it was very interesting because there are so many similarities between this, you know, global corporation and a one person coffee shop. And of course I love coffee. I've been drinking it for 17:25 as long as I can remember drinking a little bit, a little sip of my mom's coffee when I was a kid. I'm Canadian. So I grew up drinking Tim Hortons for those of you Canadians out there, know what it is. so I love Tim Hortons. It's so good. Tim Hortons. Yeah. And of course, you know, Tim and Tim, so I have to get it from them. 17:51 Uh, but yeah, fast forward, uh, three or four years now, my friend and I got in touch again and we said, Hey, let's start a coffee company. Uh, we've been wanting to do this for years. We've, we finally have the circumstances and sort of the, the, the personal financial, uh, privilege to do this now. Um, let's, let's get something up and running. And so we're thinking, how do we differentiate? There's a billion coffee companies out there. Um, there's coffee for, for veterans, for teachers, for 18:21 hippies for everybody, except for founders. And founders drink a lot of coffee. I'm a three time founder. My friend was also with founder and we drink a lot of coffee. My friends drink a lot of coffee. And there's something satisfying about having a cup of coffee and sitting down at your desk, getting ready to lock in and get a ton of work done. It's just a very satisfying feeling. And so I wanted to capture that feeling plus 18:51 just the fact that founders drink a lot of coffee, but also this idea that the best founders I've talked to take their work very, very seriously, but they don't take themselves seriously at all. And I think that's the one commonality between all the best founders that I've come across. And so the name dumbfound, you know, it starts with dumb, but it actually means amazed or in awe. And it's the founders journey. 19:21 Right? You start off dumb because you don't know what you're doing. Maybe you're taking a huge risk. are, you know, you're starting a company, you feel dumb a lot. And if you've been a founder, you know exactly what I'm talking about. But you keep grinding and you keep working at it. And little by little, it starts to become a really amazing journey. People looking on the outside, they're like, wow, how did you, like, how did you start a company? That's, that's amazing. That's crazy. And even more than that, you look at your progress. 19:50 Even though some days it feels like you're going backwards, it's really awe-inspiring. And so that's why I wanted to capture with Dumpfound. In the name of the company. Bravo. I will have to order some from you. You know, I use the term pre-naps. Tell me in your consulting practice now, because you are working full-time. This is your gig and the coffee. 20:19 What is it that you found the secret sauce to scaling a co founder relationship? Right? What is it? What's your secret sauce? Or what have you observed in high performing co founding teams? Yeah. Everybody asks me what they can do for their co-foundership so that it improves their company. That's the wrong question. That's backwards. 20:49 the best co-founderships I've seen all use the company as a means to improve their co-foundership. Tell me about that. that one more time. This is important for my listeners. Yeah. Instead of using your relationship as a means to improve your company, use your company as a means to improving your relationship. Okay. And I'll give you some examples. Back when I was teaching, I would, you know, make 21:18 groups of students and teams randomly. would draw stuff out of a hat randomly. And that didn't guarantee friendships. In fact, a lot of them ended up fighting with each other. And so I thought, okay, maybe they should pick their own teams. And that didn't guarantee friendships either. In fact, some of them ended up fighting even harder than randomly assigned teams. And then I thought, 21:47 Why is that? How can we create teams where everybody gets a pretty good experience out of the class? Because we all know group projects, our group projects, and there's always somebody who either pulls the team forward or drags it behind. And so I was looking at the best performing teams, the ones that blow my mind. And I found that all of them, regardless of whether they were friends before the class or they had met for the first time during the class, 22:18 they all saw the class, the course as an opportunity to hang out and have fun, joke around with each other, but also do something very interesting like building a company. And so that was always in the back of my head. And then when I talked to co-founders, I've talked to over, I believe like 300 co-founders already this year. The best ones, doesn't matter if they were friends before they started a company, but they use the company as a means. 22:46 to improve their friendship. So what does that look like? Well, it's easy for co-founders to silo and say, okay, you do the engineering, I do the marketing, and we come together and share progress. That works for clarity, but not so much for compatibility. The best co-founders kind of do everything together. Even if they're, you know, one person is not technical, they're still very involved in the product with... 23:13 talking to users or creating documentation or making wireframes or mock-ups. And for the non-technical co-founder, they're also very involved in the marketing and the sales and the pitching because a lot of people think, oh, it's not my strength. So I'm not gonna be involved in it. You're the expert on it. I'll let you handle it. But if you think about friendships, that's not really how we operate, is it? You don't divide responsibility so rigidly with your friends. 23:42 You do everything together because it's fun. Share responsibilities. Maybe somebody is better at it. Sure. But that's, that's part of the fun. And so when I realized that, and I, I communicated it to people who were asking me how to do the opposite, do it the wrong way. When I told them what I thought was the right way, all of them had a light bulb moment go off in their head. 24:10 And I would ask you how does friendship scale? If I'm going to pressure test your your your the, the, guess the empirical data, right? You've taught many, many classes, you've worked with co founders, you've worked with co founding teams, let's say. How do you scale that? 24:40 If you can imagine like a staircase model at each step of a co-foundership, there are different levels of sacrifices that you have to make. So for example, when you choose co-founders, you sacrifice the ability to become co-founders with anybody else. And then you start working on your product and you sacrifice maybe some nights and weekends. Maybe you're sacrificing some Netflix time. 25:09 And then you go up a step, maybe your company has some traction and you've got some users and you sacrifice having a day job or having a stable income, or maybe you sacrifice some sleep some nights. And so the sacrifices become more demanding. And if you translate that to a friendship, it's kind of the same. you become friends with someone, you're not necessarily eliminating all other friendships. 25:36 but you are eliminating some options for how you spend your time. Now let's say you have families or you move to different cities depending on your stage of life. The sacrifice is the effort that you need to stay in touch. Now, how many friends have we had in high school that we don't talk to anymore because we just never stayed in touch because we didn't make that sacrifice. And so back to the co-foundership, a lot of times the company might be progressing. 26:05 You have your product and then some users and then some funding and then some more users. one co-founder decides that the next level of sacrifice is not worth it. Maybe they cannot quit their day job. Maybe they have kids that they have to spend time with and want to spend time with. they have, you know, whatever the situation is, it might not be malicious. It might just be circumstantial, but for one reason or another. 26:32 they decide that the sacrifice to move to the next level is not worth it anymore. But that usually doesn't mean that they quit. That usually means that they stay at their current level of sacrifice and they keep doing that. And so the other co-founder or the other people are continuing to do that. And that's a case where it doesn't scale. And so to be able to scale, I'm not saying you have to sell your house and free a personal runway or never spend time with their kids. 27:01 The important thing is to understand where each co-founder is on which step and where the company is at which step and to recognize what are the milestones and the sort of achievements and the effort needed to unlock the next step. And so when you're very clear about that, it becomes very simple and apparent what you need to scale the co-founder show. Excellent. 27:30 And I'm certain that not not all relationships have happy endings. And that's when we get to splitting the equity, right. And hopefully, with your advice, there were there's been, you know, a stakeholder agreement, a priori, and there's cordial negotiations. And that's for another episode. So Tim, how 27:58 Can my listeners contact you? I'm pretty active on LinkedIn. You can find me by searching my name, Tim He. Yes. I also have the newsletter, the Cherry Tree newsletter. I read every reply to that myself. And it's really fun to see what people are saying. So if you want to email me or reach out on LinkedIn, I'm available on both. So that's Cherry Tree. And the coffee. 28:27 coffee company? What is it again? It's dumbfoundcoffee.com. Excellent. Excellent. Is it dark roast or you do that? Do you have several roasts? It's a so it's a medium roast from Costa Rica. Costa Rica. It's delicious. I've tested over a dozen different coffees for this. My girlfriend and I we were way over caffeinated many days to find perfect bean and I think we did. 28:55 All right. I'm more of Guatemala and darkerist than we have, but willing to try. Thank you. Thank you. You know, I do like to bring all my guests back to the sandbox to touch on the three cornerstones of the work that I do, which is around resilience, purpose driven, and scalable growth, and ask each of you to describe 29:25 what does the meaning what is the meaning of that word for you? And here's to you, Tim, what does resilience mean to you? That's a good question. I've been thinking about that a lot lately. And by default, you know, we all think of the get knocked down seven times, give back up eight, or keep going when it's hard. And those are really inspirational when you feel like being inspired. 29:54 but on the days that you don't feel like you're being inspired, on the days that you're knocked down and everything sucks, I think it can be frustrating to hear stuff like that, you know, because you're like, just go away, give me a minute and just leave me alone. And I think that's also a sign of resilience, just taking the time and the space you need. You don't need to be motivated every day. You don't need to grind every day, despite what startup culture tells you. 30:22 sometimes being resilient is just recharging. And I've been doing a lot of that lately myself, and it's been helping me stay on this path. 30:32 I'm an entrepreneur and working with entrepreneurs. I like it recharging. How about purpose driven enterprise? Yeah, very purposeful. I'm a bit unconventional, but purpose. I, I like this company, my company, because you're right, I am purposeful. There's, there's a magic that happens when I do my job, right? And co-founders have the relationship that they want. 31:02 and the company that they want to build. And I think if you do your job right, and you're genuinely happy because of a magical feeling, and I use the word magic because there's really no way to describe it. It's not the pay, it's not the hours, it's not the freedom, it's not any of that. It's a magical feeling. And if you have that, I think the purpose is good. And no other... 31:31 purpose-driven company that I've talked to denies the magic that happens when they do their work, right? I often, you describe it as magic, right? It's the flow, you're working with your clients and just seeing that your inputs valued, right? I call that joy, right? So when you discover or feel joyful, 31:59 in what you're doing with your clients that is resonated and purpose. Thank you. That's an amazing description of magic. What about scalable? The title of this episode that we chose together once I understood your practice is scaling your co-founder relationship. So what does scaling mean to you? 32:30 I mean, change is inevitable and scaling is just adapting to those changes. And in the startup world, we think of scale as growth, as more users, more money, more funding, more profit. And that is a type of scale when you're getting out more than you put in and it's leveraged and that's all great as a technical term. But I think scale doesn't have to be confined to that. It can be if that's the context in which 32:59 We want to look at it, but scale is just adapting to changes and hopefully that change is good because you can also scale down depending on your priorities. know a lot of founders who'd rather build a million dollar company than a billion dollar company. They're much happier that way. And so everybody is obsessed with growth for the sake of growth and scale gets a bad rep because of that. But if it's just changing and creating the circumstances that gives you purpose, then 33:28 It's, yeah, it's all good. Fantastic. Very refreshing perspective, Tim. Thank you. Last question. Did you have fun in the sandbox today? Yes, I did. Thank you for asking. And that's just where I find joy. Thank you for spending time here in the Founder's Sandbox. To my listeners, if you liked this episode with Tim Heat, sign up for the monthly release. 33:58 of the Founder's Sandbox, where business owners, corporate directors, professional service providers provide their stories so that you learn how to build your company with strong governance as a resilient, scalable, and purpose-driven company to make profits for good. Signing off for today, thank you for joining us. Thanks, Tim.

June 24, 2025Episode 1356 min

Season 3, #13- Scaling AI with Ruthless Compassion

On this episode of The Founder's Sandbox, Brenda speaks with David Hirschfeld, owner of 18 year old business Tekyz, that boasts a hyperexceptional development team building high "ticket" products in the B2B space. They speak about ways in which AI is a gamechanger, how Tekyz backs their work for clients with relentless pursuit of quality, and how Tekyz practices ruthless compassion,to protect the company and enable it to grow Having collaborated with over 90 startups, he developed the Launch 1st Method—a systematic approach that minimizes risks and accelerates software company success with reduced reliance on investor funding, after observing that many companies launch a product first and then fail at a later stage – With Tekyz approach of Launch 1st exceptional founders are in love with the problem not the product. David's expertise bridges cutting-edge AI technologies, workflow optimization, and startup ecosystem dynamics. When not transforming business strategies, he enjoys woodworking, golfing, and drawing leadership insights from his experience raising four successful sons. You can find out more about David and Tekyz at: https://sites.google.com/tekyz.com/david-hirschfeld?usp=sharing https://tekyz.podbean.com/ - Scaling Smarter Episodes. www.scalingsmarter.net - Schedule an interview https://www.linkedin.com/in/dhirschfeld/ https://x.com/tekyzinc https://www.linkedin.com/in/dhirschfeld/ https://www.facebook.com/dmhirschfeld transcription: 00:04 Welcome back to the Founders Sandbox. I am Brenda McCabe, the host here on this monthly podcast, now in its third season. This podcast reaches entrepreneurs, business owners that are scaling. 00:31 professional service providers that provide services to these entrepreneurs, and corporate board directors who, like me, are building resilient, purpose-driven, and scalable businesses with great corporate governance. My guests to this podcast are business owners themselves, professional service providers, and corporate directors who, like me, want to use the power of the private company to build a better 01:01 world through storytelling with each of my guests in the sandbox. My goal is to provide a fun sandbox environment where we can equip one founder at a time to build a better world through great corporate governance. So today I'm absolutely delighted to have as my guest, David Hirschfeld. David is the owner and CEO of Techies, 17 or 18 year old business now that boasts 01:29 a hyper exceptional development team that are building high ticket products in the B2B space. Welcome David to the Founder Sandbox. Hi Brenda and thanks for having me. Great. So I'm delighted that we actually did a dry run in February. We've known each other for some time and AI, we're going to be touching on AI. And I think that the world of AI 01:58 particularly in software development, has changed significantly since we last spoke in February. So we're going to be getting into some, I think, novel concepts for the listeners of the Founder Sandbox. So I wanted to, you I always talk about how I like to work with growth stage companies that typically are bootstrapped and 02:26 It's only at a later stage do they seek institutional investment by building great corporate governance and reducing the reliance on investor funding until such a time that they choose the right type of investors that can help them scale. So when I found out what you do at Techies with Launch First and the type of work you do in B2B businesses, I absolutely wanted to have you here on the founder sandbox. 02:56 So let's jump right in, right? I think I'm eager to learn more about how to scale your bespoke development at Techies, right? To scale my own business? Okay. So there's a lot of different aspects to scaling my business and I bootstrapped for the last 18 years. 03:25 I've never taken any investment with techies. And I've done that very specifically because it gives me a lot of freedom. I don't have a reporting structure that I have to worry about. That doesn't mean that I can be lazy with my team. To grow my team, I have a philosophy 03:52 that I only hire people that are smarter than I am. And the ones that are in a position to hire, they can only hire people that are smarter than them. And by really sticking to this philosophy, even though sometimes it makes us grow a little slower than we would like, it means that when we bring in people, those people contribute immediately and contribute in a way 04:21 that it's our job to get the impediments out of their way and to facilitate them so that they can contribute and help us grow the company. So I call it the ball rolls uphill here because my job is to support everybody that is above me, which is everybody. And then the people that I support directly, their job is to support the people that are above them. 04:51 Because if we're hiring correctly, then people that we bring in can contribute in the area that we're bringing them in way more than the person that's hiring them. Okay. Thank you for that. So before you launched Techies, you had a career in companies like, I believe, Computer Associates, right? Texas Experiments and TelaMotorola. 05:19 There was a period of time between your experience in these large corporations before your launch tech is where you actually had your own startup and you sold it in 2000, right? And I believe you also learned perhaps with the second startup about how hard it is to find product market fit. Can you talk to that for my listeners, please? 05:46 I don't know that it's that hard to find product market fit. It depends if that's your focus or not. If your focus is to nail down product market fit, then it's not that hard to determine whether you can achieve that or not fairly quickly. You can do that by selling your product to potential customers. That sounds strange. Of course, we all want to sell our products, but 06:14 What I'm suggesting is you start selling your product before you have a product, before you have a full product. And I don't mean an MVP, but a design prototype. You go out to the market and you start to sell it. If you have product market fit and you've identified the early adopter in your market and you know that they have a very high need from a perception perspective and there's a big cost to the problem that you're solving. 06:45 then you can offer them a big enough value upfront that they'll buy your product early and you can prove that there's a market for your product and they'll buy it in enough numbers that you can achieve a measurable metric, which I kind of call the golden ratio, which is three to one in terms of what is the lifetime value of a customer versus what does it cost to acquire that customer? And you can get to that three to one ratio. 07:13 in a prelaunch sale model before you ever started developing your product as a way of proving product market fit. Or you pivot quickly and cheaply because you're not having to rebuild a product that you've built in the wrong way. Or you fail fast and cheap. And every entrepreneur's first goal should be to fail fast and cheap. know that sounds backwards, but that should be your goal is that you can fail fast and cheap or if you 07:42 If you fail to fail fast and cheap, that means you've found a path to revenue and product market fit. And now you know you have a viable business. making the investment to build the product is a no brainer. And you came upon this methodology, right? Yes. because you did yourself when you had your first company, you did not understand the funding part, right? Can you talk? 08:12 a bit about your specific example and then how that's informed now 17 years of techies and over 90 projects with startups. Okay. So my first company was Bootstrap. Okay. And that one was successful and we grew it despite me, it was me and a partner. And despite ourselves, we grew it over eight years. 08:39 where he ended up with 800 customers in 22 countries and sold it to a publicly traded firm out of Toronto. That was in the product food, snack food distribution business because that was what our product was focused on. So I started another company about five years later, not realizing the things that I did the first time. 09:08 that made it so successful, which really fit the launch first model to a large degree. But the second time I built a product that would have been successful had I followed my first model, but I didn't. So I went the route of building an MVP and getting customers on a free version of it, and then going out and trying to raise money, which is the very classic approach that the SaaS products 09:38 take now. And the problem is with that approach is that you end up digging a really deep hole in terms of the investment that you make to build the product with enough functionality that you can convince people it's worth putting an investment in and you're not generating any revenue at the time. And I should have just started selling the product and generating subscription revenue right from the beginning. First of all, I would have been able to raise money much more easily. 10:08 Secondly, I would have not needed to raise money as much if I'd focused on sales. The problem with a lot of founders is they fall in love with their product. They believe that people will buy it at enough numbers and that investors will see the potential. they're afraid of sales. I've fallen into this trap before too. I've done it both ways. And I can tell you selling early 10:38 and staying focused on the customer and the problem are the way to be successful. So founders who I find are consistently successful, they are focused on the problem, they love the problem. The product is just the natural conclusion to solving the problem, not something to be in love with. They spend their time talking to customers about the problems. So how does a potential customer find you and work with you? 11:08 Oh, they can find me at Techies or they can find me at LaunchFirst, was spelled launch1st.com. And they can find me on LinkedIn. And then to work with me, it's just give me a call, send me an email, we'll set up a Zoom. I'll start to learn about what you're trying to accomplish and what your requirements are. And I'll typically spend quite a bit of time with any potential clients. 11:39 in one to usually multiple calls or Zooms, learning and creating estimates and doing a lot of work in advance with the idea that there'll be a natural conclusion at the end of this that they'll wanna start working with me in a paid fashion. So there's a lot of value that my clients get from me whether they end up contracting me or not. And how, again, back to, thank you for that and that. 12:08 how to contact you will be in the show notes. But what types of sectors do you work in? You know, in your introduction, I talk about high ticket B2B, right? who are the, so what founder that's has some idea today? What would be their call to action to find techies? And what would you, is it launch first before you go down? 12:35 No, it's not necessarily. It may be an existing company that is trying to implement AI or implement workflow automation, or they have a project and they don't have the IT team or capacity to handle it. We love those types of projects. It might be an existing startup that is struggling with their software development team and they're not 13:04 getting to the end goal that they're expecting and the product's buggy, it's taking too long, there's constant delays, they're way over budget and they need to get this thing done. And I call those recovery projects, they're probably my favorite because people recognize very quickly the difference that we bring. 13:33 and they really, really appreciate us. As far as what sectors, business sectors, healthcare, law enforcement, prop tech, real estate, finance, entertainment, I mean, we work in many, many different sectors over the last 18 years. So regardless in B2B, B2B2C, not so much e-commerce unless there's some 14:03 complex workflow associated with your particular e-commerce, but there's lots of really good solutions for e-commerce that don't require developers to be involved. But mobile, web, IoT, definitely everything is AI now. Absolutely. And in fact, when we last spoke, I'd like to say that you started to drink your own Kool-Aid at Techies. 14:33 you're starting to actually use AI automation for internal functions as well as projects at Techies. So can you walk my listeners through how you're using AI automation and what's the latest with agentic AI? So let's do the first. Yeah, okay. So there are a bunch of questions there. So let me start with 15:02 that we're building products internally at Techies to help us with our own workflows. These products though are applicable to almost any development company or any company with a development team. Some of them are, and some of them are applicable to companies that are, well, so one product is putting voice capability in front of project management tool. 15:32 and we use JIRA and JIRA is an incredibly technical tool for project managers and development teams to use to their projects, requirements, their track bugs, all of that. And so your relationship with what I call relationship with project management is very technical one. If you're a client, some clients are willing to go through the learning curve so that they can enter their own... 15:59 bugs and feature requests and things like that directly into JIRA. Most don't. They want to send us emails, which is fine, and just give us a list of what's going on and the problems that they're finding or the things that they need for a future version and the planning and the documentation, everything else. This is a real technical thing. We're going to make it a very natural personal relationship by adding voice in front of all this so that you can 16:29 be sharing your screen with your little voice app and say, just found a problem on the screen. And the voice app can see the screen. It knows your project. It knows your requirements. And it can identify problems on the screen that you may not have even noticed. And it can also prevent you from reporting bugs that have already been reported and tell you when they're planned to be built. And all of this just with a verbal discussion with the app. 16:58 that basically knows your project. Kind of like talking to a project manager in real time, but they don't have to write down notes and they can instantly look up anything about your project in terms of what's been reported in terms of bugs or feature requests and update them or create new ones for you or just report them to you and tell you when things are planned to be built and released or. 17:24 where they've already been released and maybe you need to clear your cache so you can see the change, whatever. Yeah. So it be like an avatar, but it's trained and it's specific to Jira in your case? In the first version, it's actually being built architected so that we'll be able to add other project management tools to it besides Jira in the future. to begin with, because we use Jira, it's going to work directly with Jira to start. 17:54 And this, by the way, you asked about agentic workflows, right? So we're building an agentic workflow in this tool where we have more different agents that work together to resolve these issues. so we have an agent that reads and writes documentation to JIRA. We have an agent that communicates with the user and the user might be the programmer 18:23 might be a person in QA, it might be a client for a lot of different things. And we have an analyst agent that when the person talks, the voice agent says to the analyst agent, here's what I understand. Here's the information I just got. Go do your work and come back and get me the answer. And it'll speak to the JIRA agent to get the information. It will also speak directly to us. 18:52 a vector database, which is a database where all the documentation from that project is ingested into our own separate AI model so that the context of all the communication is about their project and doesn't go off into other directions. And then can get back. So this is an agentic workflow. The idea of 19:20 agents is like everybody keeps talking about agents. Not everybody is really clear on what that even means. Can you define that? an agent is an AI model that you can interact with that is focused on one specific area of expertise. So if it's a travel agent, the word agent fits very well there, then their expertise would be on everything related to 19:49 travel and booking travel and looking up options and comparing prices. And that would be an AI travel agent. So that's very different from an AI project management agent, very different from an AI financial analyst agent. So each agent specializes in its own area of expertise and may draw from specific 20:18 repositories of information that are specific to that particular agent's area of expertise. And they actually look from the perspective of that type of person, if it was a person. So, and so they'll respond in a way that is consistent with how somebody who is a project manager would respond to you when you're talking to them, asking you questions about your requirements, knows what 20:46 information it needs to be able to assess it properly, things like that. wouldn't be very good about travel because that's not its area of expertise. Right. So is it common to have companies that are creating with their own large language model, right? Or their workflow processes internally to the company to create their own agent AI? 21:14 Or is there a marketplace now where you can say, want this type of agent to get in. This is a very basic question, but do build it? Right. Or do you buy it? Or is it something in between? It's something in between. So there are tools that allow you to basically collect agents out there. And there's a difference between an agent and a context. Cause you hear a lot about model context switching and things like, don't know. 21:44 if your audience knows these things. Or model context protocol. A context is not an agent, but it has some agent capabilities because it's kind of specializing your model in a certain area. But you would use this, but you're not, if it's a true agent, then it's probably tied to its own vector database. 22:12 that gets trained with specific information. It might be company's information. It might be information, let's say if I'm a security agent, then I'm going to be trained on the entire NIST system as well as all of my security architecture that's currently in place. And that so that it could monitor and 22:41 assess instantly whether there's security vulnerabilities, which you wouldn't ask Chet GPT to do that. No. Right? Because it couldn't. Because it doesn't know anything about your organization or environment. And it really also doesn't know how to prioritize what matters and what doesn't at any given moment. Whereas a security agent, that would be what it does. 23:10 I don't know if I answered that question. Oh, bad thing about building or buying. there are- Or something in between, Yeah. So there are tools that you can use to build workflows and bring in different agents that already exist. And you can use something like OpenAI or Claude and use it to create an agent and give it some intelligence and- 23:37 give it a specific, in this case, you're giving it a specific context. You could even tie a special machine learning database to it and make it even more agentic in that way. And then build these workflows where you're like, let's say a marketing workflow, where you're saying you first go out and research all the people who are your ideal customer profile. 24:07 I was going to say ICP, but I'm trying not to use acronyms because not everybody knows every acronym. Ideal customer profile. And then it finds all these people that fit your ideal customer profile. Then it says, well, which of these people are in the countries that I do business? And then it illuminates the ones that aren't. then which ones, and it may be using the same agent or different agents to do this. Then once it's nailed it down to the very discrete 24:37 set of customers. Now the next step in the workflow is, okay, now enrich their data of these people to find their email and other ways of contacting them as well as other information about them so that I have a really full picture of what kind of activity are they active socially? they speak? Do they post? What are they speaking about? What are they posting about? What events are they going to? Things like that. 25:07 So that would be the next step and that'd be an agent that's doing all the enriching. And then after that, the next step would be to call basically call a writing agent to go do, am I writing an email? Am I writing a LinkedIn connection post? Am I doing both? Set up a drip campaign and start reaching out to these people one at a time with very customized specific language, right? That is in your voice. 25:34 It doesn't sound like it's written by a typical AI outreach thing. All right, so these would be steps in a workflow that you could use with several different tools to build the workflows and then calling these different agents. 25:48 Let's go back to the launched first. What would be a typical engagement with a company? you know, they, um, the founders that have the greatest success in your experiences are the ones that love the problem space and not the product. All right. So walk my listeners through. 26:17 What a typical engagement. it's staff augmentation. it full out outsourcing? it tech? because it's very complex. I can touch so many. can touch high tech and high ticket B2B products, sector agnostic. what, put some legs on this for my listeners, please. Sure, sure. We're not. 26:46 so much a staff augmentation company, although we'll do that if asked to, but that's not the kind of business that we look for. We look for project type work. So a typical engagement for launch first would be somebody wants to launch a product, they're in the concept phase. We help refine the concept and we build out, help that we do the design and then we build a high fidelity prototype, which is a design prototype. 27:16 When I demo a design prototype to somebody, they think that they're looking at a finished product, but it's not. It doesn't actually do anything. It just looks like it does everything. So it's very animated set of mock-ups is another way to look at it. And it's important because you can build out the big vision of the product this way in a couple of months, whereas 27:46 it takes instead of, you so you're looking at the two year roadmap when we're done of the product. If we were to build an MVP, then you're going to see a very limited view of the product and it's going to cost a lot more to build that MVP than it takes to build this design prototype. Now we're in the process of doing this. We're also nailing down who that early adopter is. And there's a, there's a very, 28:14 metrics driven methodology for doing this. your launch first. Within launch first, right. Okay. All right. And then we'll help the client build a marketing funnel and help them start to generate sales. We're not doing the selling, they're doing the selling. And it's important that founders do the selling because they need to hear what customers are saying about the thing they're demoing, why they want it, why they don't. 28:43 So that if we need to pivot, which we can do easily and quickly with a design prototype, then we can pivot and then go and test the model again, two or three or four times in the space of a couple of months. And we'll either find a path to revenue or accept the fact that this probably isn't the right product for the right time. But in the process of doing this, you're learning a lot about the market and about the potential customer. 29:13 I want to be clear about something. Almost every founder that comes to that I meet with, they love the product, not the problem. They started out with a problem that they realized they had a good solution for and they forgot all about the problem at that point. And so I spend a lot of time with founders reminding them why the problem is all that matters and what that means and how to approach customers, potential customers so that 29:41 you're syncing with their problems, not telling them about this product that you're building because nobody cares about your product. All they care about is what they're struggling with. And if they believe that you really understand that, then they care about whether you can solve that problem for them or 30:01 And can I be audacious and ask you what a typical engagement duration is like? So this would be for launch first. Yes. If it's a, and our hope is that they'll find a path to revenue and start building the product and engage us for the development. Cause that's really our business is building the products. So, but it's not a requirement. And, and our typical engagement with our clients are several years. 30:32 Not all of them, but most of them, would say. Once they start working with us, they just continue to work with us until they decide to bring in their own in-house team or they fail eventually, which many of our clients do, which is why I created Launch First. Right. You often talk about your hyper exceptional team at Techies. What is it that's so highly exceptional? Talk to me about your team. Where are they? Yeah. 31:02 And if you go to my website, which is tekyz.com, you'll see at the very top of it in the header above the fold, it says hyper exceptional development team. And I don't expect people to believe me because I write that down or I tell them that I expect them to ask me, well, what does that mean? Do you have evidence? And that's the question I want to get because I do. Because when you work in an exceptional manner, 31:31 as a natural consequence of working that way, you produce certain artifacts that the typical development teams don't produce. And I'm not saying there aren't other exceptional teams, but they're really few and far between. And what makes a team exceptional is a constant need to improve their ability to deliver and the level of quality that they deliver as well and the speed at which they develop. It's all of these things. 31:59 So, and, you know, after 18 years, we've done a lot of improving and a lot of automation internally, because that allows our team to work in a really disciplined protocol manner without having to feel like they're under the strict discipline and protocol of, you know, a difficult environment to work in. And so we create automation everywhere we can. The voice... 32:27 tool is one of those automations. The way we do status reports, it's very clear at the level of detail that we provide every week to every client in terms of status reports where we're showing here's what we estimated, here's the actual, here's our percent variance on how much time we spent and how much it's costing. We want to always be within 10 % above or below. 32:56 Either being above or below is not, know, the fact that we're ahead of that doesn't necessarily mean that's a good thing, right? So we want to be accurate with our estimates. And we are typically within 10%. In fact, our largest customer last year, we did a retrospective and we were within six and a half percent of what our estimates were for the whole year. and that's a, we're pretty happy with that number. 33:24 I think most teams are looking at many, many times that in terms of variance. it's not that uncommon for teams to be double or triple what they're or even higher what the actual estimate was. So when we do invoicing, we invoice for each person at their rate. 33:50 based on their level of expertise, which is all part of our agreement upfront. So the client is very transparent every month for the hours that they work. And we attach the daily time sheets to every invoice. I'm the only company I know of right now that does that. I know there are others. I've seen monthly, but I've never seen daily. Yeah. Yeah. Because for me, if I could ask, well, 34:18 why did this person ask a work that many hours that last month? What did they do? I hate that feeling that I get when somebody asks that question. I know they're only asking because they have to justify it to somebody else or whatever the reason, but I don't like the way it feels because it feels like my integrity is being questioned. I don't get upset at people for asking me that. I just feel like I'm not giving them enough information if they have to ask me that question. So we started about eight years ago. 34:47 providing the daily time sheets because I don't like that question. And we never get questioned on our invoices ever anymore. I bet you it's informed you as well in future projects, maybe on including workflow automation in your own internal processes, right? When you see people's time sheets, right? And you've gone over budget. So it informs you internally. So it's not only for the client. 35:16 I suspect, right? No, it's not. Right. And we use it ourselves to also, because it also helps us looking at our overhead costs because not everything gets built to the client. And so we track all our own times, you know, what we're spending doing what. And we don't get to, it's not like a developer has to spend a lot of time or a QA person or whatever, putting in a lot of detail. We just need a couple of bullets, you know, every day in the time sheet with the, whatever they spend. 35:45 If they spent four hours on one thing and three on another, they'll just break it into two entries just to make it easy. And that's important for us, or they may be working on two different projects and each project. So when we do the timesheets also every month, we give our clients a breakdown by project. So if we're working on four different projects for a client or even one project, but it has four different really 36:15 functional elements that are very clearly different. Like let's say a mobile app and a web app and a particular client implementation. Each one of those gets assigned its own project and we break down summaries of the time spent on each of those every month and who spent the time on those, along with the daily time sheets, along with the invoice. And nobody else does that because it takes a lot of discipline and protocol and you have to have lot of systems in place 36:45 to do that without literally getting everybody to quit, right? That works for you. And nobody minds doing it because it's easy because of all the systems we put in place to do that. That's the whole point, right? Right. were not particularly happy of getting asked that question oftentimes. So eight years ago, you set out to provide the information on a daily basis, which is incredible. We started that with blended rates like a lot of companies do. 37:14 And then I didn't like that because at the end of a project when most of it's QA, people would start to get frustrated that they're still getting billed the same blended rate, even though for the more expensive period at the beginning of the project, I thought, okay, forget this. Well, just bill based on individual. And then I didn't get those questions anymore, but then I would get questions about individuals on the month. And that's when I started doing the time sheets. 37:43 And like I said, I'm sure there's other companies that do it, but I haven't run into one or somebody that works with one. So that's an exceptional thing that we do. But it also allows us to do really, really good reporting to the client on status on what we've spent our time on, what we're expecting to spend our time on next week, what we just spent our time on this week, where we are. 38:12 in terms of our plan for the month, things like that. So let's switch gears, David. Yeah. Back to actually the podcast and some of my guests and listeners are corporate board directors. So they're sitting on either advisory boards or fiduciary corporate boards. And with all the hype around AI. 38:39 it's not uncommon for them to be asking, what are we doing, right? For existing companies, right? And I'd like you to walk my listeners through while it's in the, you know, in the imaginary realm, what is it? I think any founder today that's actually scaling, right? Has to have some AI element. At least I've even heard you need to have it. 39:08 an AI officer in the company. So what's your take on that? What would you respond to either to your board of advisors, your advisory board, or your board of directors? So, and of course, a lot of it depends on the type of company you are. Absolutely. Right. If you're making alternative material I-beams, for example, for skyscraper construction, then 39:37 AI, other than maybe in the design process of these specialized materials, AI may not be as big a critical factor, although for invoice reconciliation and distribution and scheduling and all that, AI could be a huge value to you if you don't have super efficient systems already. For most everybody else though, if you have not embraced the need to 40:06 leverage AI and everything you're doing, then you're way behind already. That doesn't mean you have to be in a race to do this. just, because I'm of the belief that you have to slow down to speed up. But you do need to make it a priority. And in a lot of different ways. Number one is, 40:36 The most obvious is workflow automation. You should be probably tackling workflow automation as just a part of your constant improvement program to become more efficient, whether it's with AI or not. But AI is particularly good at workflow automation because it can tackle steps in that workflow that couldn't be tackled without AI. So the first thing 41:06 the companies should be doing if they're not doing it is documenting all of their processes, all of their tribal knowledge into playbooks. So when you have somebody who's an expert in something in your company and they're the person who's the only one that knows how to do it and so we can't live without them, that's a bottleneck for scaling. Because if you bring somebody else in to expand their capacity, they're going to... 41:32 put a big dependency on that person with all the expertise, which is going to cause problems. So anybody in a position like that should be documenting all of their procedures and protocols and especially all the nuances and all the edge cases into playbooks. And there should be some centralized playbook repository for the company. And this becomes part of your intellectual property and part of your value if you ever 42:02 you're trying to raise money or you're trying to sell your company. So it increases your value. So you do that, then AI, you start to look at automating those workflows because now they're documented. So now what can be automated in them from just a workflow automation perspective. And then how much can you implement AI in there? Because now AI can learn to make the same kinds of decisions that this person is making. 42:31 And this is like the low hanging fruit that I'm talking about right now. Right. Exactly. Right. Because the bigger stuff is if we implement AI in here, what workflows would we totally throw away and start from scratch? Because we can think of way more sophisticated ways of addressing this now that we have intelligence involved in all these steps. But that's later. 42:57 worry about that once you get your arms around implementing AI, automated workflows and then- So workflow automation. So playbooks, workflows and AI in your automated workflows. That's sort of the stepped wise process. Excellent. You heard it here on the founder sandbox. Thank you, David. And if you're not sure how to do all that, 43:25 ask AI, okay, here's my company. What should I be focusing on if I wanna implement playbooks, workflow automation and AI? And AI will help you figure this all out. Right. That's a jewel here. So what'd you do? Chat GBT, co-pilot, what's your complexity? Where would you go to? All right. Well, it just depends on the flavor of the day. Right now. 43:53 I was using chat GPT primarily for this stuff just because it was a first and I'm very comfortable with the apps. have them everywhere. And Claude's recently come out with a new version and it's in some ways I'm just finding the output way more organized and smarter. And so I've been using Claude more in the last couple of weeks, but that'll change in another week or two. Any one of them will do a pretty decent job. 44:21 I'm not using perplexity because it's built on top of the other ones. But perplexity is a great tool if you're newer with this because it makes some of the... It's a little bit more accessible for somebody who doesn't know how to use AI. Gemini is also really good, but that's more of a technical... And there's so many things you can do. 44:49 with AI that you wouldn't even think about. And I'll give you an example, more as a brain opening exercise for everybody than anything else. Because this is something I did about seven weeks ago. I, chat GPT had just come out a week or two before with their vision capability in the mobile app. And for those of you who don't know it, with chat GPT, there's a talk 45:19 button. It's not the microphone. It's the one that looks like a sound wave in the mobile app. You tap that, and now you have a voice conversation with chat, which I use this constantly. Even when I'm working with, I've got some contractors at my house whose English isn't very good, so I ask it to do real-time translation for me. And it does matter the language. And I start talking, and it translates to their language. And they respond 45:49 in their language and it translates to English and it's doing it perfectly. And so I can have a very natural conversation with anybody just holding my phone up in front of them now. Right? But it has this vision capability where when you go into that voice mode, you tap the camera next to it, and now it's looking out the front of your screen while you're talking to it. And so I'll give you a couple of examples where I've used it six weeks ago and again, like 46:18 weeks later and I now used it many times like this. I was in Lowe's, which is a store for home improvement. And for some project I was on, my wife calls me and says, I need fertilizer for a hibiscus. And I say, well, what do I get? She says, anything that says hibiscus on it, it'll be fine. I said, okay, fine. And if anybody that knows these big box stores, there's like hundreds of bags of fertilizer of different brands. 46:48 And I couldn't find one that said hibiscus. This is a typical thing with my wife. Oh, just look for this. And of course, there isn't that. So I asked Chess GPT, okay, I'm in Lowe's and I'm looking for a fertilizer for hibiscus. What would you suggest? And it said, oh, there's a number of brands that are high acid. And I said, we'll recommend a brand. Tonal is a really good brand. And I said, okay. So I'm looking and I can't find it. 47:18 So I walked 30 feet back and I'm talking, right? I'm having this, know, people are looking at me like, what the hell is he doing? And I walked 30 feet back because there's many, many shelves, you know, columns of shelves with fertilizer. I walked back and I turned on the vision and I say, okay, there's all the fertilizers. And I'm moving my phone across all these shelves. say, do you see tonal here? And it says, yes, look for the one in the red and white bag. 47:48 And I see it on the shelf. So I walk straight forward. see a red and white bag. That's not tonal. said, this isn't it. And she, cause it's a woman's voice that I have, she says, it's two shelves to the left, second from the top. I walk over there and it's right where she said it was. Crazy. And you're not a beta user. So this is available today. This is available. It's been available for a couple of months. And then 48:18 My daughter-in-law asked me to get something from the pharmacy, from CVS, another big box pharmacy store, right? And this is something I don't even know if I'm in the right aisle because it's something I've never bought. So I ask it, I say, I'm looking for this brand and I'm not sure if I'm in the right aisle or not, but I'm going to walk down the aisle and tell me if you see it. As I'm walking down the aisle, holding it straight forward so it can see both sides. And it says, well, 48:45 Yes, I'm familiar with the brand. You should look for it in a green and white box. then she goes like this. Oh, I see it. It's down there on the right on the bottom shelf. And I turn and I look and it's right by my right foot. 48:58 You heard it here. This is crazy. think it's a bit creepy. How many times have you been looking for something on a shelf? You know, and you're like, oh, how long, how many hours is this going to take me to spot it? Good internet connection and all that. So, oh my goodness. It's creepy and it's wonderful. So same time. the same time. Yeah. Yeah. For quality of life and even for, um, yeah. So 49:25 That's a mind opening thing is all the reason I bring that up. Excellent. Hey, let's go. Let's continue on in the founder sandbox. I'd like to ask each of my guests to share with me. I'm all about working with resilient, purpose driven and scalable companies in the growth phase. So what does resilience mean to you? You can either answer, you know, what's the first thing that comes out of your, you cannot use chat, GBT. I'm not fancy. No hands. 49:55 No hands, and I don't have the voice version going because you'd hear it. Podcast we could do it. And we are real. We're not. Yeah, we are real. We're not. So I think that's, I don't think that's a difficult question to answer. Resilience means opportunity. So no matter what happens, even if it seems terrible, what opportunity does that create? Excellent. If you ask that. 50:22 keep reframing everything from that perspective, it creates resilience. Right. Thank you. What about purpose-driven? Purpose-driven means having a clear long-term path and goal and asking yourself if the things you're doing keep you on purpose to that. 50:56 Scalable. What's scalable mean for you? Scalable for me means eliminating tribal knowledge or not eliminating it, but documenting tribal knowledge. First of all, figuring out how you generate revenue and then how you expand your ability to generate revenue, which means growing your 51:25 growing your team, growing your capacity and identifying the bottlenecks and focusing all your energy on the bottlenecks. And usually the bottlenecks have to do with tribal knowledge or with lack of workflow automation. Wow, you know, it's easier said than done though, that tribal knowledge, it is resistant, right? Oh yeah, because it's career, what's the word I'm trying to think of? 51:55 It keeps you in your job forever if you're the only one that knows how to do the thing. Absolutely. That's for another podcast, David. My final question today is, did you have fun in the Founder Sandbox? Oh, yes. I had a lot of fun. Thanks. That's a great question too. Thank you, Brenda. Did you have fun? 52:20 Did you? I had had fun. And particularly in this last part, right? Cause we're talking about some heavy duty, you know, uses of, um, agentic AI, right. And scalable, you know, LTV, CAC and all that. And then we get to hear these real life, you know, kind of creepy, um, uh, uses of, um, on our phones today with, um, with AI, which is, which is quite amazing. But I also know that in your world of techies, 52:50 your team, which is distributed, have a lot of fun events too. So you probably- have one more thing on the whole scalable thing. You have to be compassionately ruthless or ruthlessly compassionate, however you want to say it. Okay. So that the people, every, and the ruthless is anything that's going to get in the way of you growing your company, which benefits everybody in the company. 53:19 it needs to be addressed in a ruthless way. But if you build a culture of ruthlessly compassionate, then all the people that work for you feel that same level of ruthlessness to protect the company and make it grow. And you practice what you preach, I suspect, at Techies. Yes. Yes. It took me a while, but if we accidentally hire the wrong person, either because 53:45 we made a mistake in the process or they faked us out and we recognize they're not smart enough. Literally, that's usually the problem. They're not smart enough to carry their weight. We fire them immediately. We don't try to bring them along because you can't improve somebody's IQ. You can improve any other aspect, but their IQ is their IQ. And that will be a bottleneck forever. 54:13 in our team and it'll require other people to carry that person. And it sends the wrong message to the team that I don't value them enough to make sure that we only surround them with people that are going to inspire them and help them grow. Excellent. And I suspect they are not fungible by AI, your employees, not techies. I mean, we've gotten better and better. 54:40 at not making those mistakes over the years. So that doesn't typically happen. takes us, we're much more careful about how we hire. AI gives us the ability to recruit faster, more broadly, along with workflow automation. But what I mean by real, this is the compassionate. Once my team understood this, now they embody that and they will get rid of somebody if they made a mistake. I don't have to force the issue ever anymore because 55:10 they recognize how much, important it is to protect their teams. So to my listeners, if you liked this episode today with the CEO and founder of Techies, sign up for the monthly release of founders, business owners, corporate directors, and professional service providers who provide their examples of how they're building companies or consulting with companies to make them more resilient, scalable, and purpose-driven. 55:40 to make profits for good. Signing off for today. See you next month in the Founder Sandbox. Thank you.

May 15, 2025Episode 1239 min

Season 3, #12 - Purpose: Preserving Family Wealth

On this episode of The Founder's Sandbox, Brenda speaks with Alexa Steinberg – a corporate and transactional attorney for middle-market companies and entrepreneurs. Acting as outside general counsel, Alexa represents privately held companies in a wide range of general corporate and transactional matters, including entity formation, structuring, and commercial transactions. With a focus on mergers and acquisitions, she offers clients guidance on structuring deals and ensuring compliance with relevant laws and regulations. Brenda and Alexa discuss her journey from working at a small, all-female law firm to joining a full-service firm to better support her clients. Alexa shares how her parents—both deeply involved in business and community service—shaped her values around financial literacy, record-keeping, and the importance of building generational wealth. They speak about family-owned businesses and best practices in family governance, such as setting clear roles, regular meetings, and involving independent board members. Alexa also emphasizes the importance of building trust with clients and maintaining a purpose-driven, relational legal practice. Brenda and Alexa explore what "purpose-driven," "resilience," and "scalable" mean within the context of business and legal practice. You can find out more about Alexa at: https://www.greenbergglusker.com/alexa-steinberg/ episode transcript: 00:04 Hi, I'm pleased to announce something very special to me, a new subscription-based service through Next Act Advisors that allows members exclusive access to personal industry insights and bespoke 00:32 corporate governance knowledge. This comes in the form of blogs, personal book recommendations, and early access to the founder's sandbox podcast episodes before they released to the public. If you want more white glove information on building your startup with information like what was in today's episode, sign up with the link in the show notes to enjoy being a special member of Next Act Advisors. 01:01 As a thank you to Founders Sandbox listeners, you can use code SANDBOX25 at checkout to enjoy 25 % off your membership costs. Thank you. 01:18 Welcome back to the Founders Sandbox. I am Brenda McCabe, your host of this monthly podcast where I have guests that are either founders, professional service providers, corporate board directors that actually share a mission with me, which is bringing change to the world through great corporate governance, but building resilient, scalable and purpose-driven companies. On a monthly basis, my guests are going to tell their origin stories and kind of how I've met them. 01:48 through the work they do. And I've recreated a fun sandbox environment in which we do storytelling. And ultimately we will touch upon resilience, purpose-driven and scalable or sustainable growth in the businesses that they are working in or owners of. 02:17 l I'm absolutely delighted to have as my guest today, Alexa Steinberg, Alexa is counsel at Greenberg, Glasgow. And before that, she was actually practicing in a smaller law firm and where her story today is going to kind of have some some 02:47 lessons learned on why she chose to leave the firm and move into Greenberg, the Greenberg Lasker. But more importantly, you and I go back a couple years. are part of an informal group of women. We call ourselves Women and Wealth. We meet periodically to really refer business to each other for those women business owners that 03:16 are seeking perhaps an exit in the next three to five years. And through our skillset, some of us are CPAs, strategy advisors, yourself as counsel. A lot of these businesses are family owned. And so you and I and another, know, seven other ladies get to meet each other over lunch and discuss these opportunities. And we're all very passionate about helping women business owners. Aren't we, 03:44 We are Brenda, thank you so much for having me on the Founder's Sandbox. I am an avid listener, so I'm very excited that I get to be a guest. Thank you, thank you. you know, we've had many, conversations, obviously, but I wanted for my listeners to really dive into what you do today, right? Which is really purpose. 04:12 driven and it's preserving family wealth, right? And I know that you actually come from a background where your father owned his business. So tell us a bit, us down memory lane and that first story that you told me. Well, you know, growing up, I watched both of my parents. My mother was a career woman. My father, a financial planner. 04:38 running his own book. My mother, a buyer and then in fashion and then into real estate. I watched they were both very involved in the community. My mother sat on the Studio City Council, the Neighborhood Council. She was on many boards involved with the temple. My father as well sat on many boards involved with the 05:07 Boys and Girls Club, and involved with the Jewish Federation. So I watched as my parents really instilled the importance of being involved in community, being involved in family, being involved in the greater good and in purposeful and meaningful organizations. And I... 05:35 sort of learned a lot about that watching them both in their respective arenas being involved. And you know, they've, they've truly inspired me, not only in my career path, but in how I treat my clients in the arenas that I've become involved in. There's a specific story that I think I've shared with you, Brenda, about my father and how he sort of taught me 06:05 the value of wealth, the value of money, because as his career, that was what he did. He focused mainly on planning for retirement and financially setting yourself up and your family up to have generational wealth and what that looked like and how you could prepare for it when you were 10, 15, 20, 25 years old, preparing for family, preparing for children. 06:35 So when I turned 16, my father went into our QuickBooks. We had a family QuickBooks. Oh, wow. That was before it was actually. It was probably a hard disk, right? Not even on the internet. Oh, yeah. It was like a hard disk. had a full set up, massive computers, the whole thing, in our family office. And he went into his QuickBooks. And he took. 07:03 what he spent on me in a year. And he divided it by 12. And this included insurance. Mind you, I just turned 16. So my car insurance, my car lease, medical, entertainment, my tennis lessons, all of these things that were spent on me, what it cost for me to function. Children are expensive, you know. 07:32 I was very expensive because I will tell you that check was large that he cut me every month. And he laid out, these are the things that are monthly expenses for you that you need to pay with this money. And the rest you can use on entertainment, gifts, shopping, which I loved. But I had to learn to balance my checkbook and balance 08:01 this amount of money, because I wasn't able to get any more until the next month. And that really taught me how that money was never something that was readily expendable to me. even if I went to Starbucks and I bought a drink with my father's credit card, he'd ask me for the receipt. He'd want to know where the receipt was, always. 08:28 I was very meticulous in his record keeping which I am now very much meticulous in my record keeping and I enforce with my clients and make sure that record keeping is so important in your business as well. You know and so when I when I graduated high school my father said to me okay the checks are done. And you need to go get a job in college. 08:56 And what I will do is I will subsidize the paycheck that you bring home. So if you bring home $600, I will pay you 50 cents on the dollar for what you bring home, but only up to $300. So I could get a max of $300 every paycheck that he would subsidize. And then that was how I had money to live and to function. my parents, I was lucky enough that my parents would pay for my college. 09:24 in my housing, in my dorms, but it was still really teaching me the value of money. And my father required that a certain portion of those funds get put away in savings and invested. And he would tell me how to do that. And he would guide me. because my father was a financial planner, he would call me like a client and say, listen, 09:53 You're 70 % stocks, 30 % cash. I think you need to swap it. Let's talk about what that means. And of course, I'm like, you're my dad. Just do it. Why are we having this conversation? But it was so valuable because he wanted me to understand what he was doing and why he was doing it and how it really functioned. that I've also taken into how I guide and advise my clients. 10:22 I don't just do for them. understand, I want them to understand how we're doing it, why we're doing it, what the alternatives are and what it means if we do it this way or that way. You know, a lot of my discussions with my clients are about strategy and about structure and so they can make an informed decision. You know, I think that that's extremely important, especially in a family business. Working with your family is tough. So, 10:52 The way that you can make it that much easier is communication and understanding and knowledge. And I try to arm my clients with that. And that's something that my father really taught me. my mother as well, because my father managed our money and my mother would bring it home and hand my father a check and be like, here, I don't know what you do with it, but do something with it. 11:21 She also would, he would say, hold on a second. Like, I know you just sold a house and here's your commission check, but let me show you what we do with this and how we create generational wealth and how we invest it and what the best benefit for these funds are and how to use debt to our advantage. Um, you know, and that's all of these things were such a value add that I 11:51 I obtained understanding about and that I've now turned this value add to my clients and how they run their business. I'm not a financial advisor, I'm not a tax attorney. These are just really sort of general understandings and general guidance points for my clients to go out and have knowledgeable conversations with the appropriate 12:21 guidance, appropriate people, and the appropriate service providers that are going to help them accomplish those things. really, this is very loaded, but I really like the methods your father used. very, well, first of all, intentional and bespoke. And that's really, and he did communicate to your mother, right? To instill also in her an understanding 12:52 of although she's bringing the check home because many, many women business owners today oftentimes do not own a majority of their companies. Right. And that is a shocking statistic that I run into time and time again that women actually don't know how much equity they have in their own business. Right. So just the informing and, and you've translated that bespoke, you know, communicating 13:22 helping your clients understand, pardon me, and providing options as well as access to other professional service providers as your own bespoke offering to your clients. But it wasn't always like, yeah, go. That's sort of the benefit of the group that you and I met in and all of the networking opportunities that I've been involved in. Of course, networking is about building 13:51 um, your brand and your book and, um, but a majority of it and the real value there is meeting and learning and understanding, um, and really coming to know people that can help your clients where you can't, um, and having trustworthy referral sources to do that, because I'm not just going to tell my client, Oh, 14:18 this individual can help you with wealth management, call them without knowing how this person functions, without knowing how they run their clientele, how they do business. Those are really important things and to have trustworthy referral sources is really important. And that's sort of what our group is all about. That's right. And it wasn't always like this. 14:46 Right, you graduated from law school and started with a small, it was a, I think a female-led law firm. all female attorneys. Yeah, so what was your, this is right out of college, what were you doing and what then informed your decision at a very tender age to leave? So right out of law school, 15:17 had worked my way through law school. I worked in family law for about five or six years. during the day, I was at a law firm. And in the evening, I took classes from 5 to 10 PM, four days a week for four years. took me four years to get through law school. And when I graduated, unfortunately, I wasn't afforded 15:47 All of the opportunities in law school that most law students take advantage of, externships, fellowships, things like that, because I was working my way through. I had already been financially independent and I wanted to stay that way. So I didn't want to quit my job to go to school. I wanted to be able to do it all. 16:15 So as a result, I really didn't have the summer clerkships that turn into job offers. And I was a little lost because I had taken the bar exam and I was like, OK, I'm not an attorney yet. But in three months, if I pass the bar exam, I could be. Am I applying for law clerk positions? Am I applying for associate positions? Like, know, I was so lost. And I went on Craigslist. Oh my goodness. 16:44 And I found law firms that were hiring because I figured those people, you know, they're they're looking to hire somebody now, which is what I'm looking for. and hopefully those people, you know, will transition me into an associate role. If I pass the bar exam in a few months. And that was that was like my first sort of in. And I joined a very boutique law firm in West Hollywood. It was 17:13 By the time I left, we were three female attorneys. were all female for my entire tenure there. I was there for six and a half years. And it was in late 2019, early 2020 that I really decided I wanted more for my career and for my book of business. And I wanted to be able to provide my clients with a well-rounded 17:43 advice and guidance. I can't do it all, nor should I. I'm pretty sure my malpractice of insurance wouldn't like that. Not at all. But more and more, had clients that were asking me to help with litigation matters or employment matters. And those are arenas that I know just enough about to be dangerous. But I'm not going to run a full litigation. 18:13 I can't willfully and knowledgeably advise on employment matters. You know, especially to do justice by my client, do well by them. I'd like to be able to have somebody for them that they can speak to and trust and get the advice and counsel that they need. And that really stemmed my yearning to branch out. 18:42 and go to a firm where I had all of those resources at my fingertips. I wanted more for my career, but my biggest drive was I wanted more for my clients. I wanted really to be able to provide them with well-rounded, multidisciplinary counsel. And so I sought out full-service law firms. 19:11 I found my home at Greenberg Gloucester, which is a fantastic place to be. I'm very happy there and everybody is so fantastic and everybody is so good at what they do. We've got employment and tax and IP and litigation, environmental, entertainment, you name it. And it's been such a benefit not only to my career, 19:41 to my clients, but I've learned so much. And is it true? How would you characterize the typical clients without revealing, you know, confidential matters? Is it also a firm that's very oriented towards family owned businesses? Would you say that? Yeah, I would. You know, I'm a counsel in the corporate and tax department. 20:08 And you we don't have a ton of institutional clients. A lot of our clients are family owned businesses, mostly held entities, you know, which I love on a daily basis. I am working with two sisters that own a business together or a multi-generational company where, you know, senior is working with G2 and G3 or 20:37 were actually this morning I was working on assigning interests and reorganizing and restructuring a bunch of entities that own a bunch of real estate for clients. And that's also the kind of benefit that I get that I get to be pulled into real estate matters with my corporate expertise to help a family office restructure their ownership. 21:04 You know, and I love that stuff. We're extremely, the way that Greenberg provides advice and counsel is on a very personal level. The way that the firm and myself, especially, we're a lifestyle firm. You know, we understand that attorneys are people outside of 21:33 the walls of the office and that we all have lives. And we, you know, I translate that to my clients. My clients have lives. My clients have other things going on than their business. And especially when you deal with family offices and family businesses, there's a whole different dynamic of family interaction. Yes. You know, and, and I have now experienced that not only with my clients and sometimes I become 22:03 therapist in that regard, although I'm a very expensive therapist. I'm sure there people that are less per hour. But I'm experiencing it firsthand because my husband has his own business with his brother and I have become advice and counsel for them as well. And so I'm seeing it sort of from a different angle too, but I think that my clients truly appreciate 22:32 that when I talk to them, I talk to them as a person. It's not just as a business owner. It's not just as I'm guiding you with this legal advice. It has to make sense. And it has to be actually applicable. And sometimes what my advice and guidance would be in sort of this like legal box is not the best. 23:00 for my client and how their business is operating. And you've got to be sort of fluid with that. And bespoke. Yeah, so it's really beyond, it's not a transactional relationship. It is a trustworthy relationship based on the values of the family businesses that and their goals in preserving wealth or continuing to generate family wealth. Yeah, absolutely. This is a great segue because you know, I also 23:29 passionate and have often guests that are sitting on corporate boards. As counsel, have you observed any best practices and family governance structure? You talk about G1, G2, G3, Have you observed any best practices? We don't have to talk about bad practices, right? But any best practices that you would like to share here? Yeah, you know, I think that I've observed that 23:59 Some of the most effective family governance structures prioritize clear communication, well-defined roles, professionalized decision-making. I use this in a very loose sense of the word, but you could establish a family constitution. Creating a board of advisors is always really important. 24:28 having independent members in your board of advisors is so incredibly valuable to have a knowledgeable, independent person that can help through disputes. business disputes are one thing, but when you include a family dynamic in these disputes, emotions can get high and heated. And so having an independent third board 24:57 Third party board is extremely valuable. Somebody that can guide you, something that your family trusts. Those are some big things that I've seen as best practices. And I think that lastly, holding dedicated, regular meetings. 25:23 You'll talk about business, you know, at the dinner table or, you know, out and about you're at a kid, one of your niece's birthday parties and everyone's there and you're like, Hey, did you see that email from XYZ? We got to figure out how to handle that. But those are not the time and place and you're not going to have a productive conversation. And so you need to set aside and create boundaries between your family life and your business life and set aside regular times. 25:53 weekly, bi-weekly, to have an hour conversation about what's going on, any disputes that need to be discussed, any decisions that need to be made. And that's your time to solely be in your business mode. Because having these conversation piece meals, dinner on a Saturday night, or a family's birthday party, or a holiday party, 26:22 It's not effective for your business. And one of the biggest, best practices and the most, one of the most important goals is to preserve your family relationships. Beautiful. You heard it here on the founder's sandbox to preserve family. Absolutely. Cause if you don't have family, do you have? That's right. 26:52 Family first. really important. It's really important. And sometimes business can get in the middle of family relationships. And it hurts to see that. It hurts to see business tear between brothers, tear between father and son. And I've seen those things in it. There needs to be just a second to breathe. Yes. 27:21 and realize that there are bigger things than business and that they need to be resolved, but they can only be resolved if you have a good relationship with your business partner slash your family. They're your biggest support. 27:37 This has been immensely actionable in terms of governance, the best practice you've seen in family offices. So thank you. Thank you for that. It's not often that I do have a lawyer that works in this arena. Although family businesses just in the LA ecosystem is 28:05 It's very predominant. very, very, you know, third, actually third and fourth generation now. So very relevant to your business and mine. Let's switch gears. You are, I believe, sitting on the board of directors or one of the committees of the Association of Corporate Growth. Yes. And tell us a bit what why what is the Association of Corporate Growth and what committees do you serve on? 28:35 And how do you further your business there? Thank you. The Association of Corporate Growth or ACG is a national organization for professionals in the M &A sphere. So you've got members that are VCs, investment bankers, M &A attorneys, wealth managers, insurance specialists. You sort of name it. Anybody that's 29:03 has some sort of involvement in the purchase or sale of a business or just surround sort of just general business governance that either prepare for an exit. You know, those are the kind of people that are members of ACG. And I got involved a few years ago. And I think three years now, I've been sitting on the Women's Committee, which is a 29:31 Fantastic. We schedule and create women-focused programming within the confines of the ACG organization and really promote networking amongst women. More and more, I have had clients that have requested that they only work with women. 29:58 You know, and this sort of goes back to what I was talking about earlier about being able to provide trustworthy referrals. And I've met some incredible, incredible women in connection with ACJ. In fact, our group kind of came out of ACJ. This is how I met you, Brenda. And so it's been a fantastic, fantastic network to be a part of. You know, I love planning the programming, our programming. 30:28 ranges everywhere from talking about the state of the market to balancing family and career and what that looks like and mental health. I think I hate calling out a distinction that we are women in business because I think a 30:57 A business person is a business person. I don't think it needs to be defined as such, but there is something to be said about the fact that women have a different set of challenges in the workplace than men do. And a lot of those stem from family life. And that needs to be balanced. And so there's a lot of programming that the women's committee puts on that sort of 31:26 talks about that and gears us in that direction and gives us tools to be successful and to strive in the face of everything else that women just have to deal with and take care of. That's for another episode here. Yes, very much so. Very much so, yes, as we all have balanced our careers and family priorities, right? 31:56 Let's switch gears. How do my listeners contact you? How's the best way? Well, so I'm at again, I'm at Greenberg Gloucester. We're in Century City. They can email me. It's a Steinberg at gg firm.com. And on our Greenberg Gloucester website, if you search people, I've got my whole bio and all of my contact information as well. Excellent. 32:25 Well, that will appear in the show notes. All right. So we're coming into the final part of this podcast in which I actually enjoy asking my guests what the meaning is of certain terms that I actually practice with my clients. I'm working with purpose-driven companies, resilience. We work on resilience tactics and scalable business is sustainable. So I always love the opportunity to hear 32:55 firsthand from my guess. What does purpose-driven mean to you, Purpose-driven means a mission that goes beyond profit. It taps into creating meaningful value for your customers, for your employees, for the community that you operate in. It's sort of about building a company that 33:25 that stands for something. And I'm very pleased to say that we have seen so many more companies start out of a purpose-driven goal. There's a bunch of old companies and new companies. There's a lot of companies that have this sort of one-for-one model. You buy one, we donate one. 33:52 There are socks companies, there are eyeglass companies, there are shoe companies, there are cleaning product companies that sort of have this as their motto. And then you see additionally, know, products and companies that are committed to the environment or sustainability and cleanup efforts. You know, that's really what purpose-driven 34:21 means to me is that these companies have a goal. They want to accomplish something more than what they can show on their balance sheet. consumers of that product are helping them achieve that. Excellent. Excellent. You've touched on even other aspects like sustainable growth, right? Yeah. Right. What is resilience? You've been particularly resilient. 34:49 You having a father like your father, building life skills early. would resilience, what's the meaning to you? 35:00 Resilience is about navigating challenges with adaptability and with determination. It's about learning from your setbacks instead of being defined by them, having them be a fire to your growth and having them be the galvanization of your progress forward. 35:30 You know, and in business, it also can be about the ability to pivot while staying aligned with your long-term goals, about the ability to, you know, okay, there's a new regulatory, new regulation that's gonna affect the way we operate. Okay, how are we gonna pivot to continue doing what we do, but still can stay in compliance? You know, that's really, 35:59 what it's all beyond your toes. Excellent. And you're scalable. I'd like you to kind of share the meaning within the context of scaling the legal practice. What have you found to be particularly challenging or easy to do? Right. And scaling, right. Because it's a very bespoke practice. Is there any important, right? Scaling is absolutely important. Okay. 36:28 In my practice and in my business, number one goal and the biggest galvanization point of scaling my practice are my clients, my current clients. If you do a good job for them, they'll continue to come back. 36:59 and they'll continue to give you more business. Creating a network. I watched my parents in their, both of their practices. All of our family friends at this point have at one point or another been a client of my mother's or of my father's. They've swapped clients, referred to each other. And these individuals either started as friends and became clients. 37:29 or became friends because they were clients. And that is the way that both of my parents have built their practice and their brands. And that's how I want to do it too. It's a value add when, attorneys are scary to begin with. Nobody wants to talk to an attorney. It's expensive. Half the time you have no idea what they're talking about. It's language. 37:57 You know, but if you create this relationship of trust and of loyalty and friendship and when you feel like your attorney sees beyond just you as a dollar figure or you as a business, it goes such a long way. And that's my main value add to my clients. And in turn, they help me scale. 38:22 my business, clients continue to come back to me and I'm able to continue to grow that because I can satisfy all of their needs with the network that I'm creating through places like ACG. You know, so that's, that's what I see is as scalable in my industry. It's extremely important. And it goes to the heart of how I practice law and how, how I guide and advise my clients. Beautiful. 38:52 Thank you. heard it here on the Founder's Sandbox. Last question, Alexa. Did you have fun in the sandbox today? Oh, it was so fun. Brenda, thank you so much for having me. This was fantastic. Thank you. So to my listeners, if you've enjoyed this monthly episode with Alexa Steinberg, counsel at Greenberg, Greenberg Gloucester, right? Greenberg Gloucester. Yep. I encourage you to 39:22 sign up, subscribe either on Apple Podcasts or Spotify. I'm on all main podcasts streaming services where my guests talk about how they felt resilient, scalable and purpose driven practices informed by their origin stories. You can find it here on the founder sandbox. Thank you and signing off for this month. Thank you, Alexa. Thank you. This was fantastic.

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