How to Make a Billion episode 4: Simon Sinek

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0:41We look forward to seeing you there. Tell me the last product that Apple made that everybody else wanted to copy. Their Vision Pro was a complete disaster. $3 ,000 product that nobody wants. Siri is an embarrassment. I've been asked every question. I've been mocked. I've been heckled. I believe in it as much today as I did back then. You ask me, you know, would I change anything? I wouldn't change a single thing. Hello and welcome to How to Make a Billion in Nine Steps, where we discuss how to build successful businesses. I'm Graeme Ruddick, and I'm delighted to be joined for this episode by Richard Harpin and by Simon Sinek.

1:14Simon is the best-selling author of the books Start With Why and Leaders Eat Last, as well as an inspirational speaker on leadership. He's also the host of his own podcast, A Bit of Optimism. Simon, thank you so much for joining us. Thanks for having me. It's more than 15 years since Start With Why was published. It just made me feel old. I was fascinated to ask you, how have your views changed since then? Have they changed at all? Or is everything that you said in that TED Talk still what you think today? What people don't realize is that I had been giving that talk and trying to refine the idea for three years before there was a book.

1:54Three years before there was a TED Talk. And so I always approached it like it was a scientific experiment. A good scientific method, you develop a theory and you test the theory. And if the theory fails, you change the theory and you test it again. I never thought I was right. I just thought I had an idea. And for those three years, I would go to places, and I was very, very honest with people. I would approach an industry or a company that I'd never done before. And I said, can I try it out on you? And people would come to me and say, will this work in politics? And I'd always say, I don't know, let's try.

2:26I was very, very honest about it. And it just kept working. And so how different was it, Simon, from the beginning, the start of that three years to the end of the three-year testing period when you put pen to paper? Well, I mean, as I said, I'd been asked every question. I'd been mocked. I'd been, you know, heckled. You know, I'd gone through all of it. And so I can say with absolute certainty that the idea is solid. Like, I believe in it as much today as I did back then. and you asked me, you know, would I change anything? I wouldn't change a single thing. What I've done is built upon it, which is what the books that I wrote subsequently, you know, every idea is building upon the previous idea.

3:04It doesn't mean that they're sequels, but in my mind, it's a continuation of the work that I left off. And, you know, those three years, I mean, it was such a great, it takes a long time to become an overnight success, as you know, you know, it's, it's, and so those three years, you know, So I was out in the market tons trying to figure out how to work it, what it was. I mean, it really was a piece of clay that I was trying to mold. And so it got batted around a lot and it kept surviving. And you talk about quite a lot of examples of American companies that do start with Y. And you're over here in the UK for part of the summer.

3:42Which are the best examples of British companies do you think that are very good at starting with Y? Yeah, it's funny. People would always criticize me when I would travel. they're like, please don't talk about American companies. And I mean, it's nothing, it was nothing personal. It's that where I, that's where I lived, you know? So we, you know, the companies that you do business with on a daily basis, that's what I was around. It's not like I was trying to exclude everybody that that's what was around me. So that's what I focused on. But it's the, it's the brands that we love to work with. You know, it's the brands that command an unusual amount of influence and sticking power.

4:17I mean, you can't ignore the Virgin companies, you know, and Branson definitely started with why. The challenge for any company where the founder leader is sort of still alive and still around, whether they're involved or not, is there or is still there. The real challenge for any of these organizations is can they survive their founder leaders? And on that standard, things become quite difficult. I've seen it done a thousand times where you have this inspiring founder leader. Usually they started the business when they were young and inexperienced. And it was their vision that we bought into because they had no experience.

4:56They had no track record. And when they decide to leave, they often replace themselves with the wrong person. I've seen it done a hundred times. You know, for some twisted reason, we have this concept in Western business that the number one, quote unquote, number one job is the CEO and the quote unquote number two job is the CFO or COO, which is complete nonsense. Like, why is that number two? Like, why are those two positions number two? Right? And so most CFOs or COOs see themselves in line for the big job. And that's usually what happens, whether it's Steve Jobs, Michael Dell, Howard Schultz, you know, all of these Bill Gates, all of these inspiring founder leaders, they all replace themselves with their CFO or COO.

5:44And the business really struggled and suffered. It's because you're taking a visionary and replacing them with an operator. But is Apple a rare example, do you think, that Tim Cook took over? And if we cast our minds back to 2012 and Steve unfortunately dying, and everybody said, oh, we're worried about Apple, it's worth$300 billion, and there's not going to be a revolutionary new product, and actually there wasn't. But AirPods, Apple Watches, we know that Apple's now worth$3 trillion, and it worked under Tim or not? I would say, so he, thank goodness, came from the world of jobs and at least had the jobsian point of view.

6:27But, and by the way, the reason visionary CEOs replace themselves with CFOs or CEOs is if you ask them, why did you choose that person? They say, well, that person understands the business better than I do. True. Couldn't have done it without them. True. They know the details better than I do. True. The problem is they have the wrong skill set. Where visionaries look up and out, operators and CFOs generally look down and in. And so you're replacing somebody who should be looking up and out with somebody who's looking down and in. So I challenge that whole notion that CFOs and CEOs should automatically become the CEO.

7:03In the case of Tim Cook, I would argue that, yes, so that's one metric that the company got bigger. Is that because they're innovative and visionary and inspiring? Or is that because they figured out supply chain and because, you know, everybody wants an iPhone and they make more money on iPhones than anything else? And if we think about the difference between an iPhone 16, 15, 14, 13, what's the difference? Nothing, really. Maybe it's a little more memory, but nothing. And tell me the last product that Apple made that everybody else wanted to copy. I would argue it's the opposite. Apple's now doing things that they're copying everybody else.

7:40Their Vision Pro is a complete disaster. $3 ,000 product that nobody wants. Their AI product is a complete disaster. Siri is an embarrassment if you look at the world of AI. And so, you know, Apple didn't make necessarily all the best products. You could make a factual argument that their products weren't necessarily better, but they were one step ahead in terms of not just the products, but the way that they built the markets. Remember, Apple invented iTunes. That completely revolutionized music. It invented the App Store, completely revolutionized our smartphones. The business model for the iPhone is the real innovation.

8:20It's not the flat screen. Somebody would have done that eventually. It's that when they came out with it, the way that cell phone markets would work is it was the cell phone, it was the service provider, T-Mobile or whoever you use, that told the phone manufacturer, Motorola, LG, what the phone will do. When Apple came out with their phone, they said, no, we're going to tell you what to do and you're going to do it. And the only reason AT &T got an exclusive contract is because they were the only ones that said yes, everyone was offered it. And they completely changed the way the market worked to make that the cell phone market is much more customer focused.

8:55So these are the things that Apple pioneered and Steve Jobs pioneered and everybody else followed. I can't name a single – and I'm a fan. And I cannot name a single Apple product that they've come out with in the past 10 years that everybody's clamoring to copy. What about if we take another example then where it was a chief exec joining the business and it's Microsoft. Would we both agree that Bill Gates got that wrong in Steve Ballmer? 100%. It wasn't until Satya Nadella joined in 2014 that the business re-found its why. 100%. 100%. Ballmer is a very, very talented executive. There's no question about it when he's working alongside a visionary.

9:40But when he was in charge of Microsoft, the company became much more shareholder focused. It became much more obsessed with short-term results. They could no longer attract or retain the top talent. Nobody wanted to work there and not innovative at all. So did they make some money? I'm sure. You know, was it an inspiring place built for the long term? No. And people think, you know, rich companies are big and rich. That doesn't mean they're stable or strong. It just means they're rich. That's all it means. And when you have a bunch of money in the bank, it allows you to weather bad leaders because you can afford to stay in business, right?

10:18Small and medium-sized businesses don't have that luxury. They don't have that kind of runway because they don't have that kind of cash. And so Microsoft was rich enough to survive Balmer, but Satya has done quite remarkable things since Balmer left. What about the learning, Simon, for entrepreneurs that are thinking about hiring their replacement? How do they get it right? So you're saying bring in a chief exec. It's probably not the COO, CFO that you're promoting. I mean, it could be, but rare are the COOs and CFOs that have the strength of ego to say the thing that I've been doing for 20 years that got me to where I am.

10:50I have to stop doing that. Are they students of leadership? Do they have the capacity? You know, strategic thinkers and tactical thinkers are very, very different. And every tactical thinker thinks they're strategic and every strategic thinker knows they're not tactical. Every visionary knows they need an operator. Most operators think they are visionary. And even when Tim Cook was promoted, the press release said an ability to see problems where nobody else can see them. I don't want somebody seeing problems. I want somebody seeing opportunities. You know, anybody who describes a talent for detail shouldn't be the CEO.

11:29So part of the problem, and I know I'm sort of circumnavigating your question here, part of the problem is the title, believe it or not, right? Which is we know that if you are a CFO, you have finance in your title. So if you can't read a balance sheet, I don't even have to meet you. I know you're not going to be in that job. Same with COO, CMO, CTO. We know what the job is. It's in the damn title. What exactly is an executive officer? It tells us nothing. I think we should throw away that title and replace it with a chief vision officer, someone who is responsible for setting and advancing the vision and ensuring that all of those other mechanisms, tech, operations, marketing, finance, are cohesively working towards the vision.

12:17So to answer your question, a good CVO is somebody with the capacity for the ethereal because that's what vision is. It doesn't exist. Idealism. But if the entrepreneur... CMOs could make good CEOs. Lou Gerstner from IBM, who revolutionized that company, he was the CMO. People forget that. Yeah, but it could be the entrepreneur stays in the business as the CVO with the vision, but needs somebody that can run the day-to-day and do it a lot better than them. 100%. 100%. You know, I'm not suggesting that the CVO be the talented operator. Going back to the hierarchy, I actually don't believe in the CEO one, CFO, COO two.

13:06I actually believe in one and A, that they're actually partners. It's mom and dad. We're partners in this raising of this child. We're partners in the raising of this company. We have complementary skill sets. One of those skill sets is not good enough. There's so many brilliantly talented visionary entrepreneurs whose businesses will fail because they're visionary and they have no operations capacity. They don't know how to build structure. Operators are actually more likely to build a successful business. Now, they're not going to change the world or revolutionize a market, but they understand the basics of structure.

13:36But when you pair those two together, somebody with a vision of the world that doesn't exist, and somebody who's inspired by that vision and knows how to build it, that is the unstoppable pair. And if the product or the brand or the service is so strong, maybe you talk about Walmart or maybe Coke, can that sort of survive a rubbish CVO or CEO that comes in and loses the why? Yeah, of course. Size and money give you runway. Everybody knows that. If you're a small to medium sized business, funding VC is what gives you runway. So you can invest, bumble and fumble, figure it out, try and get to revenues, try and get to profitability.

14:18And if you run out of runway, you close the doors. If you have a lot of cash in the bank from running a multi-billion dollar, you know, multinational corporation, you just have runway. But remember, the average lifespan of a company in the 50s and 60s was something like 60 years. Now it's something like 17 or 18 years. So though these companies are large and they have massive market share, there's no foregone conclusion that they're just going to magically survive forever. They have to be looked after they have to be nursed yeah be cared for in the original ted talk you spoke about one of the examples you gave was tivo and listening to it having it the golden circle all around and going back and listening to that i couldn't help but think and currently if you think this is wrong but the ai companies today have got it the wrong way around as well that it's a lot about the what and the how and not about the why yeah i mean that's what happens when engineers run companies That's not unique to TiVo.

15:10It's not unique to AI because engineers are enamored by the engineering. Most of us don't really care about the engineering. We want to know what's in it for me. I don't care how the electricity gets to my house. I just want all the lights to go on.

15:29So, like everything, it's the one that gets the messaging right that will probably have the leg up. Do you think any of them have or still? I don't know. It's the Wild West right now. You know, it's the Wild West. Going back to money, you know, OpenAI has got tons of cash and incredibly well-funded. They're moving incredibly fast. You know, regulations are falling by the wayside, so they can kind of do whatever they want.

15:57Anthropic is, you know, it's a... Here's the funny thing about tech that is unlike every other market in the world, right? In every other market in the world, and I don't care what it is, cars, airplanes, consulting, law firms, it doesn't matter. You can just pick an industry. Multiple companies can be very, very successful simultaneously. You can have multiple players, and they can all do very well. In tech, weirdly, there actually are winners and losers. Google was the winner of search. Yahoo kind of disappeared. MSN kind of disappeared. Right. And if you if you just sort of go through sort of all the big tech companies, they actually are basically monopolies.

16:38Amazon. I mean, there could be other multi-form, you know, online retailers, but their ability to compete with Amazon is impossible. And so, you know, one could make a very strong argument that, you know, we capitalists, we like competition because it's good for the customer. are these companies good for the customer anymore? And maybe they should be broken up

17:03because you shouldn't have winners and losers in capitalism. We are actually against it. And we know how they abuse their power. We know the lawsuits against Apple. We know the lawsuits against Google. We know the lawsuits against Microsoft. We know what happens. It's too tempting when you can control a marketplace. And so it seems like in AI, they're all competing to be, quote unquote, the winner. But why can't you have multiple players playing simultaneously and they offer different benefits and they have different visions, right? And you buy into not necessarily the product, but you buy into the vision, right?

17:38I, you know, do you like anthropic better than you like AI? Go read their vision statements. Go listen to their executives. Do you believe their executives? Do you trust their executives? Do you like their codes of ethics? Do they follow their codes of ethics? Go make a decision based on who you are. The products are basically parity. One might be a little better for one thing and one might be a little better for something else, but they're basically very similar. So who do you like? And who says there can't be two or three or four or ten? And parity products. If we go back to the very beginning of a business and startups, and I'm a great believer in copying is good in business.

18:16Yep, amen. Can you copy and still have a unique purpose, do you think? Yeah, because the answer is 100%. Vision is what you're trying to advance towards. You had a vision of empowerment. It wasn't about home improvement. You'd happen to stumble into that. It would have been something else if that was where you went. But you had a vision of what you were trying to give to people. And you were trying to figure out all the ways to get there. And so the reason to beg, borrow, and steal is because you're finding ways to advance towards your vision. If somebody else has figured out a piece of it, you steal it.

18:51I'll give you from one of my favorite, favorite, favorite examples on the planet, which is back in the early days of Apple. So you have to remember, Apple, people don't realize how special this company was, which is Apple was one of the, if not the first unicorns, right? It reached a billion dollars in revenues, not the way we define unicorn today, which is market cap, which I think is a lower standard. There's many more of those because you make that up, right? Valuations are basically made up, not market cap, valuations. There's lots of billion dollar valuations. But if you have a billion dollars in revenues, and Apple's one of the very first companies to reach a billion dollars in revenues in like two years.

19:36That's insane, right? Like$900 million. No, it was like five or six years, sorry. But it was like insane amount of money in a very short period of time. Anyway, they'd had success from the Apple I. They'd had success from the Apple II. You have to remember what Steve Jobs' vision was, which is to bring computing to the everyman. Prior to Apple, you had to learn DOS. You had to learn a computer programming language, and you had to be a nerd to enjoy computers. And his vision was that if we can bring computing to the average person, it would revolutionize their lives in the world. Great. Apple 1, Apple 2.

20:07They were working on their next product, and Jobs and a bunch of his executives went on a tour of Xerox PARC, which was Xerox's R &D division, and Xerox showed them that something they had invented called the Graphic User Interface, right, which allowed people to use a mouse to click on icons to make the computer work. Now Jobs sees this technology and says, oh my God, this is a leapfrog from whatever we're doing. We have to do this. It's a great example of copying. Great example of copying. So he literally said to his executives, we have to do this graphic user interface thing. And one of his executives, and I know this actually happened because I know somebody who was there.

20:51One of his executives said, Steve, we can't. If we do, we've already invested countless hours and countless money in this other strategic direction. We can't just suddenly change strategic directions. If we do, we'll blow up our own company. And Jobs actually said, better we should blow it up than someone else. That change became the Macintosh, which profoundly changed computing. And the entire software of Windows is designed to act like a Macintosh. But there, Jobs stole the graphic user interface because he saw it as a better tactic, a better way to advance his vision. You should absolutely steal pieces of what other people are doing if it helps you advance your vision.

21:30Now, if you're just playing Me Too and copying because they're making a ton of money and you're like, oh, my God, and you have FOMO and you're copying people willy-nilly because they're making money, that is stupid, right? Because you've got to have a USP on top. It's rudderless. Something that's better. It's rudderless is what it is. That's just lunging at anything that somebody's good at trying to jump on and play Me Too. The reason to steal and the time to steal is if the way somebody else is doing something helps you advance towards your vision. what about um evolving the the why the purpose and how easy is it to do that do you need to do it i'm a great believer in constant evolution but not revolution yeah but does that mean your why has to change uh the simple answer is no you have one why you are who you are i would hate yeah if the core of who you are changed because in the the friend i made wouldn't be the friend in five years it's like i don't know who you are anymore i couldn't be friends with you anymore if you keep changing your values, right?

22:26So no, a why is fixed and constant. You only have one why. It's functionally an origin story, whether it's a person or a company. It is where you come from. It is objective and comes from the past. What is changeable is the manner in which you bring it to life. What is changeable are the what's. What is changeable is the product. What is changeable is the strategy. You have to adapt for the marketplace. But the why remains fixed. The question is, How do we bring it to life in this modern day? But yeah, only one why, but you absolutely have to evolve the strategy and the tactics to advance it. Today, purpose obviously has become the core of many businesses, marketing strategies, their messages.

23:05How can you as an employee or someone senior in the business work out if the business is genuine about its why or it's for show? It's really funny. I take it as a metric of success for this movement that I think all three of us are a part of. When I first started, you couldn't use the word purpose at work. I mean, they thought you were some sort of hippie. Now it's so commonplace that nearly every company has a purpose statement on their website. To answer your question, do they follow it? Do they follow it? and on that standard the answer is woefully very few do right we put customers first let's let's check out the decision making right one of the best ones is the story of cvs which is a chain of chemists predominantly in the states sorry to use an american company but they have on their website a purpose statement that says you know something to the effect of to protect the health and of our customers, right?

24:12It was very health-oriented. It should be. It's a chemist. And they kept finding themselves having very uncomfortable conversations with hospitals or doctor's offices they were trying to do business with when the doctors at the end of the meeting would say, don't you sell cigarettes? And they did, and it was worth billions of dollars. And so the executives got together and said we're absolute hypocrites. And so they just made a decision to pull every cigarette off the shelf. Wall Street went nuts. All the analysts went nuts. How would you take away billions of dollars of revenue just willy-nilly?

24:44And they were punished in their stock price. But it turns out, though Wall Street hated the decision, the customers loved it. The employees loved it. and what ended up happening is any place where CVS had a significant footprint in the market, it's not that the business went other places, which is what Wall Street said would happen, it's that people stopped smoking. The other chemists didn't follow suit, you know, they didn't because they're full of shit and all of their purpose statements were all about health and nonsense, but they were too addicted to the money and not caring about. So CVS stood up for what it believed.

25:25And by the way, the stock price was restored, the EBITDA was restored, and the average sale price went up and they ended up making even more money. And the loyalty and love that their employees gave them, you couldn't pay for. You couldn't buy that. And they were proud to work for a company that stood for its values. But most companies, when they put statements, I think people misunderstand what businesses do and what their purpose is. And this comes from 40 years of Jack Welch and, you know, Milton Friedman and, you know, influenced nonsense where we think shareholders come first. The purpose of a business is not to make money.

26:00Making money is a result, right? Money is fuel. Necessary, important, but not the purpose. I always make the equation of a business is like a car, right? Nobody buys a car simply to buy petrol. You buy a car to go somewhere. That's the reason to have a car, right? And you absolutely better make money because that's the fuel that makes the car go. And so you want the CEO not to be staring at the petrol gauge the whole time. You want the CEO to be looking out the front window and saying, this is where we're going. And you want to fill the car with people who want to go in the same direction. And the question is, is what's out the front window?

26:38And every company should exist to give us something, whether it's to make our lives easier, solve a problem, entertain us, whatever it is, a company should exist to give something to the people that aims to serve, to the people it aims to sell some sort of product or service to. And you damn well better make money because otherwise you're not going to help many people with whatever you're trying to give us, right? But when we confuse the two and think that we're in business only to make money and the lucky strike extra is if we can make a good product or service, that's only so we can make more money.

27:08No, money makes the car go, not the other way around. And a lot of entrepreneurs get that wrong, unfortunately. And a bigger risk with public companies that are focused on that short-term profit-driven goals. Is that fair? I mean, there's an irony to that, I think, which is I think if you go back a bunch of years, that statement would be 100 % true, which is it was always believed that public company was the worst because the pressure from Wall Street to do the wrong thing and being private was the best because you could do whatever you wanted, right, without the pressure from the investor classes.

27:44And everybody with a public company knows It's a big open secret. You know this. It's a big open secret that you will be forced to make decisions that you know are bad for your company. Now, the problem is the rise of VC and private equity. There's so much venture capital and so much private equity in private companies that there's an entire new set of investor classes that are putting equal or worse pressure on companies to make decisions that are bad for the companies so that the investor classes can get their monies out in three, five, seven years because that's their business model. They have to.

28:17So I would argue that if you have any kind of investor, whether it's public or private, that has a controlling interest in your company, you're going to have real problems. And I tell this to any young entrepreneur, which is if you need money, of course. Remember, taking investment from a venture capitalist is one way to raise money. You have friends and family. That's another way. You can take a bank loan. That's another way. You can scrimp and save and do it organically. It's slower, but it's another way. I don't know why everybody's obsessed with hyper growth. You know, that, you know, what's your objective growth that only comes from an investor class.

28:51No, no, no, no, no responsible entrepreneur believes that growth at any cost is actually a good way to build a business. That comes from the pressure from an from an investor class or from an entrepreneur who's trying to cash out and get rich. And so I would argue that to young entrepreneurs, which is absolutely take investment from anywhere you want, if you can get it, but maintain a controlling interest. I was giving a talk once to a bunch of entrepreneurs and a guy raised his hand and he wanted some advice. And this is what he said. He says, I have an investor who's putting overwhelming pressure on me to make the decisions that I know are wrong for the company.

29:26I know are wrong for the customer. What do I do? And my answer was very cynical, which is you took the money, right? Which is you took the money from the more famous investor. You took the bigger money from somebody versus the smaller money from somebody who actually believed in you. And now this is what you've created for yourself. So I got no answer for you. This is your problem that you made. Like sometimes taking the highest bidder is not always the best option. And everybody I know says my investors are different. They all believe in my long-term vision. Talk to me in five to seven years.

30:00All of a sudden that changes. The pressure starts to show up. So I would argue that I don't think being private is the great freedom that it used to be unless you have a controlling interest in your own company. And in getting an investor, then the lesson is find one that buys into your why and your purpose, not one that's just providing the money. And how do you get to the – they'll all say they will, but how do you get to the bottom of finding an investor that really is buying into the why? I would look – I mean, look, the simple answer is I don't know. But like anything, you've got to sort of do your due diligence.

30:37and, um, but the controlling interest is the thing because if they have 10 % of the company, they can put all the pressure on you. They want, it's not going to do anything and they can, you know, stomp their feet and be angry. But if you don't want to go public and you don't want to sell, then they're going to have to wait to get their money back. Or you can buy their shares back from them, right? Give them a profit, give them a good profit. They can be great investors and there's other ways to get the money out. You can buy it back. If the company's wildly successful, you can buy it back. But I would go look and talk to some of their previous investments.

31:16Go talk to some of the companies. Just do your due diligence like they're doing it on you. And then going back to the public company bit, I guess that's about making sure Or that as a chief exec, you under-promise and over-deliver and give yourself enough headroom. At Amazon, they were famous for not giving any targets and saying we're not going to make money. And Steve Jobs never paid dividends. To be able to stand up to Wall Street and say, I don't care what you think. Invest in us if you want to invest in us. Don't invest in us if you don't want to. That takes a lot of confidence. Remember, a lot of investors are just gamblers.

31:57and they're not in it for the long term. There are some really good institutional long-term investors and you should be partners with them and you should have a good working relationship with them. One of my favorite quotes is from Gary Ridge who was the CEO of WD-40, the lubricant company, for many, many years, nearly 20 years I think he was the CEO. And he was on an investor call and one of the analysts said, Gary, I see you missed your numbers. And Gary said, no, I missed your numbers. My numbers are just fine. If you are looking to grow your business, whether with an investor or a controlling investor, how do you try and protect the why that's made your business special?

32:34Because you've said scale breaks things. That's true. The military keeps their team small. So for someone who is looking to scale up their business, how can they try and protect? Scale is not a bad thing. It just comes with unique problems. You know, when a company gets bigger than about 150, 200 people, you're going to start to have cultural problems that you never thought you'd ever have. And the reason is really simple. If you go back to the case study of Gore-Tex, I've forgotten his first name, Mr. Gore.

33:05He noticed, you know, as his company was starting to grow, that he would come to work and he didn't recognize everybody who worked for him. And they worked for him. And that freaked him out. And so he was building a factory to make Gore-Tex product. And he was so worried. He understood that it's important for everybody to know each other and recognize each other because the communication is better, right? And so he was building a factory and he hadn't maxed the efficiencies of the factory yet. And he built a new factory in the car park. And it was this number, about 150, 200. Once he got to that number, he'd build another factory and then another factory.

33:41And his efficiencies were actually more than made up for the fact that he hadn't completely level loaded the factories. And that's because of communication. We forget that what makes companies work is the people. It's not just the infrastructure and it's not just the machinery. It's not just the algorithm. It's the human beings. And if they don't trust each other, they don't talk to each other, they don't know how to disagree with each other. Things will break. And so any company that reaches about 150, 200 people will start to have cultural problems that they did not expect. So ideally, you want to work on that culture before you reach that number.

34:16But I meet many, many companies that hit that number, and now they have to do it backwards. But yeah, you've got to nurse the culture. You've got to take care of it. How often should a company then reset and say, well, we've developed the model. It's now pretty complicated. We've evolved in several ways. Let's have a sort of look at what we've got and stop doing something or sell off a bit and refocus. I mean, the answer is always, right? It's like, when should we work on ourselves? Only after a failed relationship? No, the answer is always. After every fight, after every disagreement, after every little bout of insecurity, the answer is always.

34:56And sometimes you make a tweak and sometimes you make a dramatic shift. I've had to make dramatic shifts in my business model because the world changed around me. Standing on a stage and preaching a model, an idea, was the way to do it pre-social media. It's not – that plays a lesser role these days. So I walk away from it. I don't do as much speaking as I used to because strategically it doesn't work the same way and I don't have the same access to numbers. You know, the internet, social media, TikTok, Instagram, you got to change the business with the times. So sometimes, again, those tweaks are just small because you screwed something up and you need to fix it.

35:39And sometimes they're pretty significant because you need a new strategic direction. The why doesn't change, but the way you do it. So the answer is constantly. A business is like a romantic relationship. You should constantly be working on it. It never, ever stops. And the minute it stops is the day your relationship starts to go sideways. You've got millions of followers and somebody listening and saying, how do I build my social media following and how important is that relative to building the brand that I'm or the company that I'm running? how do you get the balance between the two what's your advice simon um well it should be such a hackneyed word unfortunately and i hate using it but it should be authentic and what authenticity means is the things you say and the things you do you actually believe don't put something on there that you don't believe don't put something on there that makes your skin crawl don't do something because you saw somebody else do it don't do something because there's pressure on you to do it.

36:44Do something and say things that you believe. Talk about, tell stories. People don't care about you. They care about themselves. So tell stories, have fun, you know, put your own personality in there. If you like science, then talk about science. If you like comedy, then talk about comedy. Like it should be real. You can absolutely have social media people, but you know, if you're the founder leader, you got to make sure that the messages your team is putting out represent represent you we've made mistakes i mean we've gone off the rails where i opened up my own social media and be like oh my god i would never say half those things or do half those things um and so like you scale it back and and the great thing about social media which is unlike print and unlike television is you can tweak it constantly like you can post something and literally go edit the copy immediately and that is that test and Yeah, test, test, test, test.

37:39And this is one of the great benefits of a digital world, which is even if you're royally screwed up, you change it tomorrow. Take it down, replace it, don't do it again. We've posted things that are totally cringeworthy, and we won't post things like that again. Now, if you're in print and television, that's months' worth of work that you can't just walk away from. But this is the great thing about the internet. Test, test, test. Try things out. But go back and look at all the things that worked really well. Two tests. A, is it of us? Is it authentic? And B, did the numbers do well? And then repeat.

38:14You know, change the words, change the fonts. We're constantly tweaking. We're constantly looking at people who are better than us. And sometimes we like what they do and we copy them. And sometimes even when they're really good at it, we'll be like, yeah, but we don't want to do that. So, you know, you've got to be obsessed with going back to the infinite game. You have to have worthy rivals, which is people you study who do things better than you. Go learn from them. They figured something else. This idea that you have to come up with every idea and every idea has to be original is stupid. I've had maybe one idea in my whole career.

38:52What's that? What was that? What was the idea? Start with why is pretty good. Start with why is pretty good. But here we're talking about the numbers and that moves beyond the why into the what. Yes. exactly um and you can tweak the what's forever so you gotta have both and you've gotta have the the how yeah you gotta have why how what you gotta have all three uh it's i you know i made a career out of talking about why but i don't think the why is more important than the other pieces it's just the piece in the piece that's always forgotten which is why i talk about it just as an aside because it's funny one of the complaints i get is you forgot who no i didn't the sum total when you have why, how, and what completely in balance is who you are.

39:37And if one of those things is missing, then I don't know who you are. So if you have all those things in balance, that is the who. I saw you talking in a recent podcast interview about how you've almost re-found your why by going into founder mode with your own team. What do you think about that whole founder mode v manager mode? Oh my God, I love it. So I was inspired by a conversation I had with Brian Chesky, who's the CEO of Airbnb, who openly talked about how his company was not doing the things he wanted it to do. And he went into founder mode, which is took really took control back of the company.

40:12And I realized I was going through the same thing in that in that conversation with him. We talked about it on my podcast, it was really profound, like within weeks, I sort of made an announcement to the company that I was taking over the company again, and I was going to be, and I changed the org structure so that all the senior leaders would report to me now. And, um, and it was magical. It was magical for me. I had more energy than I'd had in a long time. Uh, my team was loving it. Morale skyrocketed, productivity skyrocketed, creativity skyrocketed. And it wasn't just that I was the founder.

40:45It's that my leadership style is I want them to experiment and I don't care if it's something doesn't work. Let's try and try again. right i love it you know and i and i promised them that i would say yes to things that i didn't like but as long as it was unbrand and ethical i'd be like okay and i would say i'm like i don't like it let's try it you know i don't think it's going to work but let's try it you know and because there's and this is where i was inspired by astro teller i um again my podcast is like a cheat right my podcast is just the way i sort of get mentored by these people are way smarter than me and so i had a conversation with astro teller who's the ceo uh and co-founder of google x which is google's uh uh innovation lab and he was talking about how he as ceo could kill any idea but he doesn't and he says one of the problems in big companies or any company the one of the problems in companies is we allow one or two people to control the flow of innovation to control the flow of creativity I don't like it.

41:44I mean, literally, we're guessing, you know? And so the concept of allowing people to have the accountability for the success or failure of their ideas is really fun. And the quality of the ideas gets better because they're accountable, not you. And so the team was having more fun because they got to be creative and try things out. And if something didn't work, we all went, oh, that didn't work. Let's try again, you know? And that is another thing I wanted, which is I wanted work to be more fun. unless you're working in the A &E or you're looking for the cure for cancer like there's nothing that most of us are doing that should be you know this stressful How long are you going to stay in founder mode for and then what comes after that Couldn't tell you I mean I'm loving it right now I can't see a time when I'm going to stop I mean it'll have to at some point but I don't know I don't know So there's a lot of big bets we're taking.

42:42We are completely changing our business model where we used to sell a la carte products and now we sell everything inside a subscription library, which I'm really proud of. So quite expensive a la carte products. You can have included one place, one price, which I love. We're experimenting with an AI, Simon, to be your coach and be your sparring partner. That's all inside there. We're experimenting like crazy. By the end of this year, hopefully, if we're on time, the whole product will look different feel different sound different we're taking we're making huge investments and you know hopefully they'll work so i need to stick around the lease long enough to see if the new business model works which is and when will other when will other founders know that it's time to end that phase and move on and hire their replacement or evolve the model do you think you know they they the good founder knows their strengths and weaknesses and has a strength of ego to say i can't do this or i need help you know ben francis who we all know quite well, you know, the founder of Gymshark, when he started it from the get go, he's like, I have no clue how to do this.

43:44I know what I started. I know what I did. And I have a vision, but I don't have a skillset to build this thing. And he hired a CEO to build a company for him with him, you know, and they were great partners. And he learned, he studied from this guy. And then it came to a time he's like, you know what, I think I want to do it now. I think I've learned it. And so he had a wonderful, I think maybe even his CEO approached him and said, I think it's your time now. And Ben took over and he's equipped. And at some point, it'll get to a point where he's ill-equipped and he'll move aside again. He has that strength of ego.

44:15Branson was the same. Branson knew that he couldn't read a P &L, so he had to surround himself with people who could. And no CEO can do it all. And the ones who think they have to are in for a shock. And this is one of the challenges of being a founder leader, which is you do not have to have all the answers and you do not have to pretend you do. The biggest lesson I learned as an entrepreneur that profoundly changed the trajectory of my own business was learning to say, I don't know and I need help. That was profound. And the more willing I was to say it to my team, the more I realized my team was willing to step up and help me.

44:52And I was surrounded by people who cared. But because I was lying, hiding, and faking and pretending that I had all the answers or that my credibility came from having all the answers, that's when I struggled the most and that's when my stress was the highest. And not just from your team, but talk a little bit about outside mentors or coaches that you've had and how important that is. I mean, when you have kids, you read books about parenting, you watch talks about parenting, you subscribe to blogs about parenting, you talk to your parents and be like, how did you fix this? All your friends are now friends with people, with kids of similar age, and all they talk about, I would go to my sister's house and my sister and brother-in-law would sit with their friends and I was bored out of my skull because all they're talking about is things, strategies of raising their kids.

45:36I'm like, I can't, I can't get me out of here. Right. And because what you're doing is learning, learning, learning, learning, learning, right. It's why, if, if, if we know that inherently that that's the case for a child, why would you think it's any different for a business? You know, when I started my business, I just started calling people I'd met once people who I knew well, you know, people would introduce me to people. And all I wanted to do was be really honest at the table going, I have a vision. Don't know how to do this. Don't know how to do that. You've done it. What do you think? The mistake we make is, and I've made this mistake too often to count, which is I just followed somebody's advice because they're smarter than me and more successful than me.

46:14No, take the advice, put it through your filter of your own values. If the advice is good, take it. If the advice is not good or doesn't work for you, put it aside. Don't fight with them at the table. I know when I sit down and give advice to people and they're fighting with me. I'm like, look, so don't follow the advice. You know, what are you doing? You know, like I'm doing you the favor. Fight it down and think about it, but then decide whether you're going to do it or not. Because ultimately you're accountable. Be grateful for the advice you get, question them, understand it, but don't fight with somebody that their advice is wrong.

46:46Take the advice, but get tons of advice. Mentors are essential. Now, here's one of the problems with mentors, right? You can't go up to a stranger. I know this happens to you constantly. You get an email that says, will you be my mentor? Well, the answer is no. For the same reason, you can't send me an email and say, will you be my friend? I'm like, I don't even know who you are, right? Mentorships evolve. They become like friendship. One of my greatest mentors, a guy named Ron Bruder, what an amazing human being. We were introduced to each other. Somebody said you guys should meet. He met me.

47:20I met him because we were told by somebody we trust that we should meet. Great. And he was wonderful and kind and generous. And then I left and I called him a few weeks later to ask his advice on something. And he took my call. And then I called him a few weeks after that to ask him advice. And he took my call. And then we went out for lunch and a mentorship relationship evolved like a friendship. So it's a power of networking, isn't it? And getting those introductions. Yeah. Finding the right advice. And I remember going to his house and he was my friend now he's my mentor and i remember going to his advice his house and i was leaving and i i put my arm around him as i was saying goodbye and i said the m word for the first time i said you know i'm really glad you're my mentor and he said something i didn't expect he said and i'm really glad you're mine and a good mentor relationship is that mentor is learning as much from you as you are from them and he was learning the ideas of a much younger person doing something very, very different.

48:17He loved it. He loved spending time with me. And for me, the definition of a mentor is someone who always makes time for you. It doesn't mean that they're necessarily older. It doesn't mean necessarily they're wiser. It doesn't necessarily even mean that they're more successful. But it's somebody who's got a point of view that you think is valuable to you, and they always have time for you. Ron always had time for me. He had no reason to have time for me. He was wildly successful, wildly busy. I was a pisher nobody. And yet he, for some unknown twisted reason, I don't know, he took a liking to me and always had time for me.

48:49And so those are the best mentors. And I think mentors are different than champions, right? A champion is somebody inside your industry, sometimes inside your company. And you kind of have an expectation that they'll put in a good word for you to help you out and make a connection for you. Champions are important too, but we often confuse the two. Mentors generally are completely outside your industry, completely outside your company. There's nothing they can do to help you. All they care about is you. Those are the best mentors. You've said recently your favorite interview question is that you don't like surprises, so could you tell me something that would go wrong now?

49:25So I wanted to follow that up by asking, what are some of the answers you get to that question? How definitive has it been for you as you've been recruiting people? Well, let's tell people what we're talking about, right? It's an interview question. And I, you know, it's my favorite question when I'm interviewing somebody for a job. and you know it's like what's your biggest weakness you know oh I'm a perfectionist you know so what I ask what I say is I say I hate surprises I say I don't want to hire somebody and be surprised by something later on I'd rather know now so help me tell me something that could happen that I want to know about now and they tell me the craziest things so somebody once told me that they're super sensitive and sometimes they take criticism really personally and sometimes they get really emotional when they get direct criticism.

50:23And it doesn't disqualify them from the job at all, but my God, that's helpful, right? To know that up front. So people, basically, it's a better way of asking what's your biggest weakness. Did you hire that person? In that particular case, I did, yeah. And it was great knowing going in that that was the case and you adjust for whatever they told you. It's really, really amazing. A business leader is about helping UK entrepreneurs to scale their businesses. You were born here in the UK, but then grew up in America. Yes. Why are Americans much better at scaling businesses than us? So the UK, like its geography, is somewhere between Europe and America, culturally.

51:08So that Europe is worse, America's better, and UK somewhere in the middle. And I think the reason is culturally about how we view failure. You know, in Europe, and I know this is a true story, I knew this Spanish entrepreneur who built a hugely successful company, and then pumped, piled it into the ground. It went bankrupt. And he takes full accountability. He said it was my mistake. And he tells a story of how he had all these friends who loved him. And he remembers going after the company went bankrupt, he walked into a restaurant and people who he knew sort of turned the other direction and pretended they didn't know him.

51:42Because failure is shame, right, in Europe. And in the US, it's the total opposite. You know, people put on their CVs when they're applying for a job. Yeah, I started a business and it didn't work out. And everybody's like, cool, cool, excellent, right? And America loves the try. America loves the effort. And there is absolutely zero shame attached to trying something that didn't work. In fact, we see it as a badge of honor that you were the one who tried where everybody else was a coward. So I think that's a huge part of it, which is just culturally, and I think that's one of the reasons you see so much innovation come out of One Nation.

52:21You know, the internet was invented there and the telephone and the light bulb and, you know, all this AI and, you know, all this crazy stuff, you know, all the intense innovation that comes out of the US is because people just keep trying. And sometimes it doesn't work. And everybody's like, all right, whatever. I think that's a huge reason. How do we change our British business culture to make us more successful? Well, it starts in the businesses themselves, right? I think if the businesses do it, eventually the culture of the nation will change. So it's really about the quality of leaders in the businesses.

52:57so for any entrepreneur and it's great to do it in a small and medium-sized business because you have much more control over the culture than with these massive conglomerates right where it's just so difficult it's like a battleship it takes forever for the thing to turn but if you're in a reasonably sized business where pivoting is something that you can do reasonably quickly start letting people try start letting young people try that doesn't mean you have to give them the keys to the kingdom but like let them try on a product and let them fail and and it's okay to lose a little bit of money in the short term, especially as we talked about the digital world, where not everything has to go well.

53:31And encouraging people to try and sort of, if it doesn't work, try again. I'll give you a great example. So in the US military, and I learned this from the Air Force, there's this magical concept of you want everybody to help you make your work get better. So let's say in the private sector, somebody's working on a PowerPoint presentation, and they spend two weeks working on it, and they have a big meeting, and they present whatever their strategy is or whatever it is. And at the end of the presentation, they go, eh? Pretty good, right? Pretty good. And you want people to tell you, good job, right?

54:02That's sort of the goal. In the US military, it's the total opposite. Somebody will spend two weeks working on their big presentation. And when they present at the end of the presentation, they'll look to the audience and they'll say, spears? Spears? They're asking the audience to throw spears at the work to make it better. And so we've adopted that in our company. We say, I've got a spear or we literally now say here's my idea spears and what it does is it makes it's not like I worked hard give me a prize you know what we're saying is I worked hard now let's make it even better together and the camaraderie and the esprit de corps and the teamwork that comes from that means that we understand that nothing is perfect no one is perfect and uh and we are all in this together.

54:49And so when I encourage somebody on my team to try something, I do not expect them to go into a hole, make all the decisions themselves, and figure it out themselves, and then try. That's a very bad idea. Well, you told me to experiment. I'm like, no, I told you to ask for help. I told you to ask your colleagues. I told you to, you know, if you got stuck to come see me, we can bounce ideas. You know, like, it's still a team. You can't ignore that. And this is one of the single biggest mistakes that people make when they try this, which is they go off and make decisions thinking they have total accountability and total authority, which they don't.

55:23It's us. We're all in it together. But as the leader, I work really hard to say yes, even if I don't like the idea, but there's nothing illegal, unethical, or off-brand about it. I'll say that. I'll be like, it's legal. It's ethical. It's totally something we would do. I don't like it. Give it a try. At the same time, I say, try this this is my idea and let me know if it works or doesn't and so they'll come back and be like it doesn't work i'm like ah all right stop doing it you know like i don't think i've got a lock on all the ideas either so the more you make it about a team and you you experiment and you create a culture of experimentation i think the culture of the entire uk absolutely could change absolutely there's no reason why not one final question for me and that is what book or podcast series are you most recommending to people at the moment?

56:16I'm the wrong person to ask, because the stuff I listen to is nothing to do with business. No, that's perfect. I'm interested in things that have nothing to do with my work. Because if I listen to podcasts about my own work, leadership and culture, I'll either just agree with it, so what's the point? I'll disagree with it, with everything, and think they're idiots, so what's the point or I'll get one thing. I'm like, oh, I spent an hour to learn one thing. So I read things that have nothing to do with anything because I'm curious. So lately I've been reading about and listening to podcasts about the Tudors.

56:50Henry VII, Henry VIII, Queen Elizabeth. Wow, were they amazing. Holy cow. It's brilliant. So I've just gotten down a deep Tudor rabbit hole. So there's some BBC, I've forgotten what it's called, but it's some wonderful BBC podcast about history where they take a historian and they match them with a comedian. And it's just a fun way to learn history. So that's what I'm listening to right now. Simon, thank you very much for joining us. Thanks for having me. That was a wonderful place to end it. Thank you so much. Thanks very much. Thank you. You've been listening to How to Make a Billion in Nine Steps with Richard Harpin.

57:26Our producer is Lucy McPhee. To find out more about Richard's nine steps and how to build a successful business, you can find his book How to Make a Billion in Nine Steps, online, at Amazon, or any good bookshop, now. The Business Leader Summit 2026 is set to be bigger, bolder, and more ambitious than ever. Don't just watch Britain's growth story unfold, be part of it. Secure your ticket today by visiting the events section of the Business Leader website and using the code BLPODCAST, all uppercase. It's your chance to join the leaders who are shaping the future of business.