Navigating Growth: Upgrading Your Team for Success

0:00If you decide that you want to do something out of the kindness of your heart or just to say thank you. that's cool. But then you have to ask yourself the question is, am I going to let my guilt or my generosity damage the ability of the company to grow? How much more successful would you be if you had lunch once a week with insanely successful entrepreneurs who shared their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:37Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website, and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com. And you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:12Okay, we are here for Business Lunch. I'm going to pull up my notes so I can remember what Ryan and I were going to talk about today. And I want to welcome you guys. My name is Roland Frazier. This is Business Lunch. I think we have another person on here. You want to introduce yourself? My name is Ryan Dice, better known as Roland Frazier's business partner. I love it. So we had a couple of things we wanted to talk about today. We're doing an upgrade industry-wide. We're doing an industry-wide upgrade. We're doing a portfolio-wide upgrade of the people that we are in business with, the people that we're doing business with, the people that are on the teams we have.

1:55We have a lot of A players, but not everybody was a perfect fit. Not saying that they're not good people, just that in our world, they didn't fit as an A player. And so we've kind of in just one of the divisions, for example, we've added about about$100 ,000 a month in spend on people. here in this time of being replaced with AI and all these other things, we actually hired real life people. And it's already starting to make a difference. We're about 30 days into this, but basically we just identified who were that we said, we want to take this thing to the next level in that company. And we said, okay, so we've got good traction.

2:39We've got good cashflow. We have the money to do it. Let's upgrade everything. And so I just wanted to talk a little bit about, is it time? And if so, what are the advantages and disadvantages for you to consider going all A players? And Ryan, I want you to share some of your thoughts on this. This is tough, man, because I think what it requires you to acknowledge as an entrepreneur, as a CEO, is that there were people who were perfectly who you needed in a particular moment in time. And that was good. And we thank them and we appreciate them, but they're not necessarily the people that are going to, you know, be able to, to get you to the next level.

3:25And so a lot of times, you know, the, the question that you, that you would always ask is if I had the opportunity to hire this person again, you know, would I, and very often for these people, you're like, heck yeah, but you're, you're overlaying where your business was, you know, based on where I was when I hired him, heck yeah. And I think the first thing that you have to acknowledge that with some people, it was the right decision before. It wouldn't be the right decision to rehire them now. And that doesn't mean that you were wrong then. It doesn't mean that they're bad. It just means that you're no longer, you know, it just means that you're no longer aligned.

3:55And those can just be, I think it's just important first and foremost to do business with that, without reality and say like, what does that mean? Does that mean I'm a bad person? It doesn't mean that I didn't do enough to train them to get them to go to the next level. it just has a lot of issues, especially early on in startups. Some of these people become really, really good friends of yours. And so, you know, does this mean that the friendship's going to end? It's tough. It's really, really, really tough. And so that's kind of just the first thing I would throw out there is just, if you feel that, that's right.

4:27Yeah. Yeah. I think it's tough for us because the friend versus employee thing can be an issue. If you have somebody that kind of came in at the beginning and they were an employee and they were fully compensated, are they a founder or are they a friend? Because like, would they have done it just because they were friends or did you not know them at the time? And then they came in and you became friendly. but does that qualify as a friend or did it evolve and, and pass over the threshold of employer employee? But how do you ever know when you're paying somebody effectively for their services? How do you know if that's a friend or not a friend?

5:12And then one thing I've experienced when I worked with people who were friends, then we worked together and then we didn't work together anymore. Nothing changed, nothing bad as a result of that. But we found that we drifted completely apart because we weren't working together anymore. And not that we weren't friends, but we definitely weren't in touch anymore. And so it's kind of hard to say, like, how do I, how do I deal with these people that I've got? And Ryan, I want you to share some of the points that you and I talked about the other day in walking through a conversation with somebody about this.

5:47But before we do that, I just want to say, like, if you're going to get to where you want to go, you've got to have the people that can take you there. And it's not going to be something you can brute force on your own. There's a level at which the sheer brute force, I'm going to outwork everybody else is going to either kill you, destroy all your relationships, or ultimately cause you to run out of steam. And that's going to be bad for you. So none of those are good outcomes. You've got to have people that are able to support you along the way. So then you say, well, who are the people that can best support me?

6:24And I remember having a conversation with Clayton Mask, who founded Infusionsoft, which is now Keep, about that along the way, there are thresholds of ones and threes. And at the ones and threes, that's when things start changing. So like at 100 ,000, 300 ,000, 1 million, 3 million, 10 million, 30 million, 100 million, 300 million, a billion, et cetera. And that you really find that you're a lot of times your key people in a growth environment like that cannot sustain and perform and suffer from huge imposter syndrome and, um, and ultimately incompetence, not in a bad way. They just don't know how to do this next thing because they haven't been there.

7:08They haven't seen it. They haven't lived it. And if you've got somebody that you hired at 100, they can probably get you to 300 and they can probably get to a million, but they might have a hard time getting you to 3 million because your business is completely different at 3 million than it was at 100. And so his theory was you can go through a couple of these ones and threes, and then you're going to exhaust the skill set of the people in those positions. And so this is something we find ourselves in pretty frequently as we deal with, we like to acquire businesses that are 1 million to 10 million in EBITDA, sometimes more, but that's, that's a pretty average range.

7:49change and that means that there's a lot of change going on that people in the company are going to have to deal with and if as the company grows a lot of times they get kind of out over their skis a little bit so the first thing I guess to explore is how do you go about identifying when it's time so Ryan I'd like to get your opinion on that and then let's talk about how do you find the right people for the job and how do you deal with that transition? So as long as the company is continuing to scale seemingly without any natural impediment, then that probably means you have the right team. And so it becomes obvious that maybe you don't when things start to slow down and when things start to flatline.

8:38Because even if you're going to say, well, it's an external force, there's the economy or there's season or there's this, Right. That's all fine. But if you can look around at any other company in your space that is growing in spite of that, then that usually means it's because they have people that know how to do that. And so that's always the first thing that we've got to look at is, you know, we've got to acknowledge at some point that we're not growing as fast as we could or we should. So what does that mean? You know, it's got to be a people issue just every single time. I mean, every single problem, every single challenge in business is going to be ultimately a failure in leadership.

9:13Even if, you know, you could say, well, it's because I made that bad hire. It's right because you decided to make that bad hire. Or you didn't, you know, this thing happened that we couldn't have expected. It's like, yeah, but maybe a different leader would have seen it coming. Or even if they didn't, would have responded faster. So that's a blanket statement that just I still think is a good place to start from. So let's operate from this idea that, okay, we perhaps have a leadership issue somewhere, you know, somewhere within the company. for you as the CEO, as the founder, if you are the leader, then you could say, well, it's all my fault.

9:48And therefore I'm going to, you know, to quit and fire myself. And I've done that before. That's not where I would start. You can always go there. But if you think about it from a team perspective, right, you're not going to immediately be like, oh, well, the team's failing. So I guess I'll sell the team. No, you're going to say, well, hey, head coach, what's going on? And the head coach is going to look down at their next assistant coaches. Be like, oh, we need some out there. They're going to look at their players. And so you're generally going to look and see which of these as we look at the company, where are we missing?

10:21Now, when you start asking those questions, that's where all those emotional swirling that we went through before are going to pop up. And if you ever try to find an emotional solution to what is ultimately a business problem, you're not going to win. You're just going to frustrate yourself. So the first question I always ask myself is what is right? Right. So that's the first question. What is right? And the follow-up to that is, well, by whose standards? Right. So what is right by the individual employee standards? Well, that's a different answer perhaps than if you say, well, what's right by, you know, my standards as the owner of this company, what's right by the company standards with respect to all the stakeholders.

11:03And so what I would ultimately come back to is as a CEO, as the founders, the leader of this company, I need to make decisions based on what is right for the company and its stakeholders, right? Just let's remove a lot of the emotions. Who defines what right is? It's a business. What's best for the business is what's best for the business, right? So that's, you just got to go there and you got to say, okay, what's best for the business. Now you can say, okay, but what's fair. And oftentimes these are two different questions, right? What is fair? And this is where you get into this thing where, especially in early stage companies, I've dealt with this.

11:44We know people who've gone with this as recently as just now. They'll want to say, but this person has been here all along. They've been hear from the beginning, don't they deserve to continue to have, you know, this, this opportunity to, you know, to be at the company and aren't they the founder too, really? Well, it's kind of, don't they deserve the opportunity to stay with it? And if not, do they maybe deserve to like have some equity in this thing, they, in this thing that they started. So it's like, okay, let's look at fair. Did you ask them to essentially work for free during the process?

12:20At some point in the process, did you ever say, you know, hey, can't really afford to pay you, but I still need help. Are you cool working for free? If yes, and if they agreed to do that, then, yeah, they might be owed some type of compensation, whether it's in the form of equity or, you know, back pay with, you know, with interest for the time that they didn't get. But nine times out of ten, when we're talking to people, these folks that they want to, quote unquote, protect were there all along, but they were getting paid all along. oftentimes they were getting paid above market rate. So you could say, were they treated fairly along the way?

12:54Yes, they were. And so as long as they were willing to do the job, they were paid to do the job. If they can't do the job, it would be unfair to the company to pay them to do a job that they can't do. So is it right? Is it fair? That still can make it difficult about, okay, then yeah, I guess, you know, they're, they're not, it's not right to keep them here for the company and it wouldn't be fair to the company really, or even to them. So we need to make a move. That still can be difficult, but you know, but that's ultimately the thought process that I, you know, that I go through. Yeah. I, I, I like that a lot.

13:33I think that that really helps me, I guess with the guilt and the truly understanding that if, if you've compensated somebody fairly at market value the whole time, then they really aren't entitled to anything else. If you decide that you want to do something out of the kindness of your heart or just to say thank you, that's cool. But then you have to ask yourself the question is, am I going to let my guilt or my generosity damage the ability of the company to grow and therefore not only damage me and my family because of our stake in this, but all of the other people who are getting opportunity from this, our customers who we're serving, our suppliers who we are working with to provide the things that help us provide the things to our ultimate customer.

14:24And I think the answer there has to be, no, we need to fairly assess where things stand. And if we find ourselves coming into a stall, and like Ryan said, you might say, well, it's not the people, it's the product or it's the product market fit, or it's our current inability to access capital, or it's the need for things that we don't have, or it's the offer, or it's our sales channels, or it's our constraint of we don't have enough salespeople, or we don't have enough finance people, or we don't have enough customer service people. All those are things that good leaders should be thinking about, that good leaders have to solve for.

15:02And so if the people in your company can't solve for those things, you got the wrong people. And I think that those things are all symptomatic of not having the right people, because the right people can fix that. And so if you think about that, then you can say, okay, how do I assess now that things seem like they're going askew a little bit, like they're a little bit off track, then how do I determine that it is the people here? I think that then what you and I have talked about, Ryan, is kind of going through an audit of the people and saying, let's write the job description for this position in the company from the perspective of where the company is now.

15:44What does the role require? What are the skills? What's the experience? And then after we write that job description, let's see if the people who are in those roles would actually be hired again today. And if they would - Would they even qualify for an interview? right yeah exactly you know would they qualify for an interview and then let's say we interview them you know but look at like just would they be capable based on that objective assessment of this is what the experiences that they've got this is the skills that they've got these are connections that they've got can they fill the role that we've defined objectively and if they can't then what do you do ryan what do you think i mean then then i think what you have is a really difficult conversation on your hands.

16:31And it's not a fun conversation. It's not one that I envy. It's a conversation I've had to have a number of times. And it's never fun. But this is your job, right? When you think about what does it take to get the company to the next level, it means everybody has to perform in the role as is required today. And your role as a founder CEO is to perform in this capacity of making sure that you're building the best possible team. And what I would simply say is early stage company founders, you achieve success because you had all the answers, right? You ask the questions and you figured stuff out.

17:09But as the company scales, this is so important to keep in mind. I absolve you of the need to have all of the answers. Your job is to ask the questions and to build a team of people who have the answers. And so if you find that you're asking good questions and the people around you don't have the answers to those questions, you either have to say like, well, I guess I'm asking completely unanswerable questions, which again, is anybody else doing it the same or better than you are? Nope. You're asking good questions. It simply means that you don't have the people on your team who have the ability to answer the questions that you're asking.

17:43That is when you know ultimately that this is not the person for the role. And it doesn't mean that they're bad. It doesn't mean we don't thank them for where they were. But when you're building the job description, if this person were to leave tomorrow and you were to write up a job description of the person that you would hire, I guarantee you, you would hire somebody who had the ability to answer the questions that you're asking. And if they couldn't answer those questions, you wouldn't hire them. And if you did hire them and found that they couldn't, you'd fire them pretty quickly because you wouldn't have the emotional baggage.

18:08And so once you find that there are so many questions that we have, and unfortunately, you don't have the answers. when I've had those conversations, it goes something like that. It literally goes, hey, I want to talk about something. I mean, obviously we're not doing great in this particular area. And there are lots of challenges that we're facing. And I'm here to help and I'm rooting for you, but I'm asking questions and you don't seem to know how to make it better. And I understand, like, I don't either, but this is your specific role. Like your job is to take these things. This is why we're big on scorecards.

18:44Take these things that are currently in the red or in the yellow and make them green. And if you're saying you don't know how to make the metrics that are red or yellow green, then can we both agree that we've got a problem here? And even if you're saying like, oh, but it's impossible. Okay, then you should probably find a place where you can succeed. But obviously, you know, you don't want to work for a company that's asking you to do the impossible. and it when it when you can get it out of the emotional and into the what we need right now is the ability to go from a to b x to y whatever you don't know how and i don't know how to help you so it's my job to get somebody in here who does yeah those are difficult conversations and and the sometimes you can have a conversation where you say we're gonna need to bring somebody in over you.

19:38You know, we're going to need to bring somebody in over you. And sometimes people struggle with that because they don't, they don't like to be capped. It's why handing out job titles is really important. Don't, if you're a three person company and one of them is a marketer, you know, who's kind of like running some ads and stuff, don't make that person your CMO. Come on, right? Always make the title align with the actual role of that company. Same with pay, because it's a lot easier to cap somebody with someone if their title and if their job description show what it is. And you're basically saying, I need somebody who could do this and you don't know how to do that.

20:17So I got to bring somebody in over you. That's fine. Where it gets tough is when you can't afford to bring that person in because you're paying the person you got essentially the equivalent salary to what the person you need is. Or they've been in charge the whole time and now they have to answer to somebody else. They don't want to relinquish. Yeah. Yeah. So they don't want to know. That's the other thing about not using those titles too soon is that then perhaps you can still have a head of marketing and have a CMO and they have different roles or the roles evolve. And then the person doesn't have to be demoted that.

20:51But but it seems like more often than not, it just ultimately they've done what they can do in the company and then it's time for the next opportunity. Would you agree with that? Either because of ego or because they're unable or unwilling to take a pay cut. Yeah. And that's where this has happened a number of times. And I found when I approached it that way, we need somebody who can do this. If you have ideas and you're just not telling me, then please, let's figure it out. If there's ways I can support you that I haven't done so, let me know. Yeah. But it seems like we've been trying for a while and it just isn't working out.

21:25So we got to talk about what does it mean to hopefully part as friends and to figure something out so I can get somebody in here who can do this. And sometimes that conversation goes well and the other person is mature and understands. And they're excited to take on a similar role in another company. And sometimes it doesn't. But I think you just got to go back to what's right for the company, what's fair for the person, all the other people involved. And if you've acted fairly and they're going to make it personal and emotional, it's hard, but you just can't own that. Like you don't like you they're going to try to give you that guilt.

22:01You don't have to take it. It's not the way professional organizations run. So let's take a break right now and and then we'll come back and we've got a couple of other fun things to talk about. But if you're going through this right now and you've got some feedback or thoughts on it, definitely hit us up at businesslaunchpodcast.com. Let us know what's going on. Feel free to ask questions. I believe you can ask questions. There's a place there for you to record your questions by audio, and we'll talk about them on a later show. We'll be back in just a second. Okay. So moving on from the difficult subject of how do you know when people are maybe not continuing to be a good fit for the company and how do you get those A players in?

22:45I'd like to chat about rebrands. Recently, Elon Musk rebranded Twitter and it's Bluebird and tweeting into X with a jet black background and posts instead of tweets. The bird is gone. The X is here. Similarly, Overstock.com acquired the assets, at least the branding assets of Bed Bath & Beyond and has rebranded itself as Bed Bath & Beyond. I'd like to know what do you think of those two rebrands and then let's talk a little bit about when is the right time to think about and what is the best way to go about doing a rebrand to me those are two totally different functions of rebrand yeah um because i think a rebrand can be appropriate when you're adding new um when when you're basically adding a new value proposition so i don't like the rebrand of twitter to x like i i and this is one of those like rare times i think elon is generally you know a brilliant entrepreneur right along more times right way more often than he's wrong i think he missed on this one yeah um and the reason i think that he missed on it is because to me i get what he wants to do with x he wants it to be kind of this everything app but he did the rebrand before he added any new features uh-huh and so what you basically have is just it's just this thing that you always have, we're now going to call it something different.

24:22All that does is create friction and you take a valuable brand that you bought and you kind of crumple it up and throw it out the window. I don't understand that at all. So for me to rebrand, because what you are now is something fundamentally different, I get it. And so had they been adding all these other features and then we're going to bring them all under one everything app that we're calling X. Okay, cool. I get it. Rebranding Twitter to X before you've added anything, I don't get it at all. Now, contrast that with Overstock and Bed Bath & Beyond. I don't know enough about Overstock and what they were doing, but to the extent that most of their stuff was in home goods, I think that Bed Bath & Beyond is a better brand than Overstock.com.

25:08So I think one reason that you would rebrand is because you're now doing something fundamentally different and you want to reflect that. The other reason to rebrand is because you acknowledge that your previous brand wasn't that great. And you've got the ability to pivot to something that will be more compelling or acquire an existing brand that does have some brand equity that you can kind of combine with yours and you get the best of both worlds. So I'm generally bullish on the Overstock rebrand to Bed Bath & Beyond. Although personally, I don't think you need to rebrand. I would just soon keep those as two separate brands.

25:43But if we're going to say we're going to rebrand, I'm more bullish on that one than the Twitter to X. I'm not saying that X can't still be successful, but it just seemed like he wanted to do something to mix it up, and I think it was premature. What do you think? I agree with what you said. I imagine if I'm him, because the press has just been relentless in beating him up. They all want to see him fail. with this acquisition, which is bizarre to me. But I think that it's possible that he just wants to say all that stuff that was before, this is not Twitter. This is not Twitter. So I'm drawing a line in the sand and I'm saying that the lazy meetings, the lack of innovation, the months to get a feature through all of that, the bloat of people and management, it's all gone.

26:40This is not Twitter. We're not running Twitter's business model. We're running a new version of it with the 380 million MAUs that we've got, and it's going to be better and we're paying out creators. And so I think that, I think it actually is a good rebrand in, I don't like X. I don't like seeing X on my screen and X on my, you know, on my, um, app, uh, list. It's just seems like a boring name. Uh, and of course the Twitter bird was cute and everything, but I do think that he, he accomplishes saying, look, you can criticize me all you want, but I bought Twitter to put a different vision of a different company in place with the infrastructure and mostly with the users that Twitter had.