Walking The Line: Personal Growth, Family, and Entrepreneurship

0:00And I think that's called life. And I think that's definitely called entrepreneurship. That's called investing. That's called all these things. And anybody who, you know, when you ask them like, oh, how's it going? If they're always like, great, you're probably not that close to them.

0:17One of the things that I've, two New Year's resolutions I had now we're, you know, about halfway into the year, right? One was to use more of the things I already have, be it a membership at a club or a musical instrument I'm not playing or something, an app on my phone that I paid for, to do that. And the second was to do more, to get more things in that are not work related, even though I really like work and enjoy it. I think that having non-work things that you're focusing on too can be really important. So not the topic of this thing, but definitely something that you asked me and I didn't give you the everything's going fine, Ryan.

1:05Answer, I gave you the real answer. Yeah, well, we never do, right? I mean, I feel like every time we ask that, you know, we try to answer it honestly, because there's times when things are absolutely amazing. And there's times when things could frankly be a hell of a lot better. And I think that's called life. And I think that's definitely called entrepreneurship. That's called investing. That's called all these things. And anybody who, you know, when you ask them like, oh, how's it going? If they're always like, great, you're probably not that close to them. Yeah, exactly. And if you're ever learning from somebody and everything is always amazing in their life, they're either lying or they're completely out of the game.

1:40I agree. Yeah. Out of the game, you know, now you've got different issues, but exactly. Like they might be bored and they might have some wisdom to apply, but how, um, how current it is, um, I would definitely question. Okay. So that said, I want to talk today. We, we just did an episode on, uh, summer slowdown or just how do you generally deal with cyclicality in your business and what are some of the specific strategies and tactics for dealing with that. The kind of similarly related topic, I think, is how much cash should you hold in reserve or how much should you have as reserve, even if it's not cash, but like truly as a reserve to weather the bad times and the unanticipated.

2:31And And there's a lot of different thinking on how to come up with that. And I specifically was asked by one of our portfolio companies to help establish that because they're doing really, really well. And they're going to have an eight-figure profit up from a six-figure profit a year ago. So it's like a big, big jump. And so everybody, all the owners and stakeholders are like, all right. You know, how about how about you throw some of that out to, you know, for the boys, you know, a little bit, a little bit, a little bit of, you know, a jingle in the jungle. Yeah. Yeah. And and so the CEO asked me, said, you know, hey, I'm all for that.

3:19Typically, we've done this, but things are just in a whole different strata right now. So how do we go about doing that? And so I wanted to chat a little bit about it and kind of brainstorm with you on it. What do you think are some of the best things to think about? So let's just kind of highlight some of the strategies that people do use. And then let's talk about what we like about them and what we don't. The first one is to keep three to six months of operating expenses. I think that's typically a personal financial advisor recommendation as well. You should have six months of expenses saved as cash just in case something happens.

4:03And I think that's a good one. But then you also get to, in a relative dollars or euros or pounds kind of mentality, if it's a lot and you aren't Apple or Warren Buffett, can you afford to have that? Like if you're running at$3 million a month of expenses, do you need to have$20 million in cash sitting around? I don't know. You know, let's think about that. What are your thoughts on that as a strategy? I think that at a bare minimum, every business should maintain at least one month of operating in an operating account. Beyond that. Just straight cash. You should have it there. Yeah. And that is in your standard operating account where money kind of goes in and out of, just so that you don't get in a situation where you're about to check or something like that, right?

5:00I'll give you a great thing that used to hit us when we first started doing stuff together and we didn't have a professional accounting team is that there are some months when there are three payrolls. Right. And those months absolutely suck because it's like, well, wait a minute, that's an extra 200 ,000 that I got to pay out this month that I'm not thinking about. So just even for something as simple as that, or the other thing that hits us very frequently is there's a holiday. And so we're prepaying the payroll four or five days ahead of when we would have normally, and we have to pull the payroll out of cashflow a few days before that to get it in the right account to be able to make the payroll.

5:48And so we may lose a week to eight days of, of, you know, of float, if you will. So I think just having a month is, is absolutely critical because there's stuff like that that happens all the time. I, I, I thought it would be interesting to talk about. I was, I noticed an article about Andy Jassy, who came in and replaced Jeff Bezos at Amazon. And I didn't really realize what was going on at Amazon at the time that he came in. And I thought that there were, as I kind of dug into all the things that he had done, I thought that it would be actually helpful for everybody, particularly in this environment that we're in right now where a lot of people are telling us that they're experiencing challenges in their business in terms of revenue and profits and valuation and things like that, which are the three pillars of our scalable program.

6:46And so I thought it was really interesting. And one of the investors even said, and they quoted them as, I'd rather have Jassy than Bezos. And it was one of the top Amazon investors. So I thought that was really interesting. and I'm just looking to see, let's see, so the shareholders were not happy. This was when he came in and he came in, I think around mid or end of 21. And so this was at an investor meeting in 22. It said the shareholders were not happy. Amazon had just become the first company to shed$1 trillion in market value, which is amazing that you can do that and stay in business and was on its way to a$2.7 billion annual loss.

7:28And so it talks about how he basically came in. He helped push the company's market cap above$2 trillion for the first time. And he's been there for three years. So it's kind of a short, like I like it because it's a short amount of time that he's really been there. and he's had some pretty significant wins. So that's kind of where I wanted to start and talk about some of the things that he did and share that with you guys and maybe us riff on it a little bit. So I basically distilled it down into a list of the major things that he did, which I'm scrambling to pull up on my iPad. And the first one was, and it's simple, but it makes sense.

8:20It's the power of a fresh perspective. And so he introduced a renewed focus on profitability. You get these CEOs like, you know, like Mark Zuckerberg saying, what was it? This is the year of efficiency and things like that. So he actually came in with a, with kind of a theme. And so I think people rally around themes. So a return to profitability and operational efficiency is kind of interesting. And it was counter to what had been going on before, which was Bezos growth at all costs, right? Which you can't fault him for. Look what he built. But I thought that was interesting. And so the stock price more than doubled.

8:57It's gotten up above$2 trillion. and the action step, like thinking about the, you know, what could people do here? I was thinking basically coming up with a theme for how are we going to go forward? What's the thing that we're going to rally around? And get obviously buy-in, but buy-in from the employees, the investors, you know, whoever the stakeholders in the business are. And then pick a specific target. like we're going to increase employee engagement by this much or leads by this or revenue or profits or whatever valuation. If you're, you know, if, if you're dealing with that kind of thing, but I think having a, a KPI that you're going to hit around a new theme is kind of an interesting thing just because it's hard when you're being beaten down a little bit to just say, well, we're going to get better with no, you know, like, what are we going to do different?

9:53What are your thoughts on that? Yeah, totally. You know, I love that. It's something we've done, did a talk on this at a Founders Board meeting, I don't know, a year and a half, two years ago now, but it's this idea of a keystone metric. And it's one of the things that we're very clear on every single quarter when we do our quarterly sprint planning, we're going to get clear on what are our North Star metrics. So these are the metrics that we're going to really focus on for this quarter? And those metrics need to align to a particular theme or a rallying cry. And I always like it, can the theme of rallying cry fit on a t-shirt?

10:27And there have been some quarters where it's been particularly like, we need to get people particularly inspired. So we actually did print out t-shirts that were for that thing. And it might've been like, ring the bell or stack the cash. And it's almost always something around, do we need to generate more top line sales, you know, or more bottom line profitability. Sometimes there's things around, you know, systemized to scale was one, but, but I do think that it's good to have a more subjective theme or rallying cry that, that people literally can remember. And if it's alliterative and if it fits on a t-shirt, that's great.

11:01But if it doesn't connect back to a metric that people can measure, then it's probably not going to last. You know, it's just going to be like another, you know, entrepreneurial arts and craft Eagle in flight poster. how do we know we're winning exactly yeah and so we've got the the north star metrics that are that are kind of those leading metrics that we want to make sure that we impact but then we'll also look at like what's us if we can and it's not every quarter that we can come up with like what's a clear keystone metric this one metric if we get this one right we believe it's going to prop up everything else and sometimes that's actually a laggy metric so some it might be something like we want to change from quarter to quarter or year to year.

11:42Amazon's on a much longer cycle than most of the companies we run are. There's a big difference between being an entrepreneur and being self-employed. If you're self-employed, you are not really creating anything new. You're another of the 100 ,000 electricians or 100 ,000 auto repair specialists or 50 ,000 or however many there are cardio, you know, cardio surgeons. I just think that like you have to be responsible for the allocation of your time. And it is very possible to be self-employed or to start a business from scratch and still have a family life. You will work differently than a nine to five typical job.

12:26I do believe that to be the case. It does take more than that. And so if you cannot have a family other than in the span of the hours that are outside of nine to five to work, then I guess you choose family and misery and unfulfillment and being a drone. Um, cause that's kind of what that person seemed to be saying. But if you block time for your family and you are any kind of time manager at all, then it is absolutely possible to do both. And maybe they're somebody that was a solopreneur that never figured out how to hire or build systems or teams or management structures or anything like that.

13:13In which case, take some of your time and learn how to do that and get yourself, you know, get yourself out of that. I think also that if you're starting something, like acquiring something, you go straight into it and you have an idea of what time is going to look like and you usually have professional management or you have a plan to get them and you're like, I'm going to work for this period of time to get this thing set up and then it'll be much less effort by me. or you're going to start up a business and you say, I've got this runway for this amount of time that I'm really going to focus on this.

13:47And it's going to take more time than normal. So let's carve out some family time that will hold sacrosanct. And then the rest of the time, I'm really got to dedicate to this. But in the end, within X, you know, one year, three years, I'm going to have done the thing I wanted to do. And we'll have more time to do family stuff. And we'll have this business that's a valuable asset. So I just, I think looking at it as a black, white, either, or is, is fairly immature. Yeah. To me, it reeks of scarcity, but it also just reeks of bad math. And that was the thing when I was really running the numbers, because I mean, I just, we know too many people who have done this and I get it.

14:27Like, let me be clear. If you're a single parent, right? If you're a single mom, if you're a single dad out there, you're a single parent, you have a full-time job and you also want to start a business. that's freaking hard. That is so incredibly hard, but it also is doable. I'm not saying it's easy, but it is absolutely doable. And I'd love to just kind of run, because I was like, I'm going to run the math. I'm going to run the numbers on this. So let's say that you've got a nine to five job. Now I get it. I get it. Most jobs are not perfectly like nine to five, you know, but let's say you have an eight hour, eight hour a day work week, five days a week.

15:03How about that. Yep. You got an eight hour day, you know, work week, you know, five, you know, five days a week. Let's give you some, some drive time on either side. So you're going to have dinner family time for like six to 9 PM. Right now I get it. Some people like I'm going to have to work a little later that, okay, maybe it's seven to nine. I get it. But like loosely speaking, you got it. If you got a typical nine to five, and if you don't, by the way, if you've got a job that is hyper demanding of your time, and you also want to start a business, do yourself a favor and get a job that pays similarly and is less demanding of your time.

15:34No joke, go work for the government or something like that. I mean, if you're not trying to rise through the ranks of this company because you want to go and do your own thing, then get a just boring nine to five. Just go be a drone somewhere and accept that that's what you're doing. No reason to be both entrepreneurial at a job and entrepreneurial in your entrepreneurial endeavor. That's kind of dumb. So we got our nine to five. Dinner family time, 6 to 9 p.m. Now, I can tell you if you've got young kids, you're not going till nine. You're going to kind of start to clock out at eight. Now it'll probably take until nine or 10 for them to actually go to bed.

16:08But six to nine, you got your family time. Now, business, when do you work on your thing from nine to 11? That's when you work on your thing. You also work on your thing from 6 a.m. to 8 a.m. So you're going to wake up at 6 a.m. You say, oh, but Ryan, I don't get to exercise. No, you don't. During this time, you're probably not going to be the healthiest. If you need to like work on me, cool. Then you're waking up at five, you know, Oh, but Ryan, if I'm going, if I'm working until 11, you know, to five, that's only six hours sleep. Yep. It's only six hours of sleep, right? If, if, if you're not exercising, then maybe you get a full seven.

16:44Is that enough? Maybe for some, maybe not for others. It doesn't matter. Like this is the sacrifice we're waiting, you know, we're making. So you're going to work from nine to 11 and then you're going to work from six to eight. So that is eight hours of work. Like we got our eight hour job. We got two hours of on either side of the work day for commute and buffer time. We got three hours of family time. We got seven hours of sleep and we got four hours to work on the business per day. That is your day. Eight hours of work, two hours of drive time, buffer time, three hours of family time, which that's all most people are getting anyway, because kids got to sleep.

17:23Seven hours of sleep, four hours of working in the business. And I haven't even talked about the weekends, right? I'd be putting in eight to 10 hours a day on Saturday and Sunday, you know, doing stuff while the kids napped when they generally don't need me. Add it up. You got 20 to 40 hours a week to work on the business while still getting ample family work and even rest time. Ever wonder how some people build real wealth through acquisitions while others just sit on the sidelines? Well, I'm here to tell you, it's not about luck. It's about having the right system, the right deals, and the right guidance.

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