The Journey to $100M with Warren Patterson

0:28Who's ready to rock today, Fire Nation? journey. We'll talk about how every journey starts with an idea and a belief to see it through. We'll talk about being lucky, having a high tolerance for pain, who makes the biggest difference in success, and oh, so much more. And a big thank you for sponsoring today's episode goes to Warren and our sponsors. Over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP, bringing accounting, financial management, inventory, and HR into one platform. Download the CFO's Guide to AI and Machine Learning for free at netsuite.com slash fire.

1:05Warren, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. Well, thanks, John. Thanks for having me on. I think that most people disagree with relates to how much hard work you have to put in. I think that there's a lot of kind of get rich quick ideas out there. I've not seen them. I've just seen me and the teams that I've always worked with just work incredibly hard to reach success. So I don't think that takes a huge amount of brainpower in a lot of cases. I don't think it takes a lot of luck. To me, it takes a lot of grit and determination.

1:45I love that. Hard work, Fire Nation, get down, nose to the grindstone, put in the reps. But I will say you do believe in lucky breaks, which we're going to get to in a little bit. Not quite yet, though, because you have had quite the journey, Warren. And you've looked back and experienced your journey, of course, through memory and other journeys that you've helped just progress and have success and struggle and failure and success and everything in between. and you've come to the belief that every journey starts with an idea and the belief that that idea can be seen through. So tell us more about that.

2:24Share what you believe when it comes to that comment. Well, I think it's a belief in yourself. You have to believe in yourself. You have to have faith that the idea that you're going to chase is going to turn into something successful. We know it's not going to happen overnight, right? And it's not going to happen alone. A lot of times it takes other smart people, hardworking people, very driven people to be a part of the journey with you. But if you don't believe in yourself, you end up being the entrepreneur and not the entrepreneur. You've always got an idea, but not have any ability to execute on it.

3:02And one of the things I found, which is really interesting, is that it's easier to be an entrepreneur when you're young. And if you delay and delay and delay, by the time you've got a house and a mortgage and children, the ability to take a risk and believe in yourself gets harder and harder. And so that starting point has to be, look, I'm going to give this thing a shot. If I fail, it's okay. It's not the end of the world. I'll try something else. But the belief in yourself is where that all starts. And that's so key, Fire Nation. And I love talking to the young entrepreneur specifically because of what Warren just shared.

3:34because if you just kind of take a step back and you say, what really do you have to lose, Mr. 23-year-old, Mrs. 27-year-old? Listen, we realize that nobody wants to fail and nobody wants to struggle. But one thing you learn as you go through your journey is that those struggles and failures actually are so beneficial to things going forward when you try that next thing. So, the lessons learned are critical. But also, what's the worst thing that can happen? I mean, you can have your monthly expenses at a couple thousand bucks a month. I mean, I remember when I moved to San Diego, I knew nobody.

4:05I had no job. But guess what? I got a$900 a month apartment and I didn't go out to eat. I didn't party. I just kept my expenses under$2 ,000 a month. And so I can make$3 ,000,$4 ,000 a month and I could live and I could make things happen. I could take risks. But then like you said, Warren, when you start having a mortgage and kids and all these expenses are cropping up, now you're like, wow, my monthly is$5 ,000,$8 ,000,$12 ,000 a month. I've got it just to break even. That's scary. And if I don't, then what do I do? When you're younger and you're 20s, hey, maybe you do move home. Maybe you do figure something else out.

4:42Maybe you get a couple of roommates. But man, when you've got a house and kids, it changes. So it's not like don't try when you're in that situation. But it's really a shout out and a call out to the young entrepreneurs. Like take risks when you believe in yourself and you believe it. Take it now because man, it's time. And you did say something about luck earlier that I want to circle back on because you actually have made the comment that you believe that lucky breaks do exist. And you've had a few in your life for sure. So how are you lucky? Tell us that story. Well, first of all, I was lucky to start the business at the exact right time that I started it.

5:18That was a stroke of luck in terms of had it been five years previous or five years later, I wouldn't have had the advantage that I did. You've heard the saying, pioneers get slaughtered and settlers prosper. Yes. You know, if you've got a great idea, but the world's just not ready for it, that can be an unlucky break. If you've got a great idea and the world is ready for it, it's luck. But luck, you know, people talk about this concept of luck in this framework all the time. So it's nothing new to your listeners, I'm sure. But, you know, luck doesn't happen. Luck is created. and if you're finding yourself in a situation where you're able to take advantage of the luck that's being created, that in itself is amazing.

6:03I've seen plenty of times where people have had a lucky break but not been able to utilize it and not even been able to recognize it and so that's the other part of the component of how luck fits into the whole equation. It's created, right? And I do love this quote that I think resonates with what you're saying which is, luck is where effort meets opportunity. And this honestly goes back to something that you shared right at the beginning, which was like, hey, it's hard work. You get up every day and you put in the work. And guess what? If you get up every day, Fire Nation, and you put in the work and you put in the reps and you're grinding it out, you're giving yourself hundreds and then thousands and then 10 ,000 of bats.

6:44That's the problem. Some people just give themselves one at bat, two at bats and then they strike out and then they walk away. They're like, well, that didn't work. It's the people that show up every day and take a swing, take 10 swings, take 100 swings, and then get the next thing, do the same thing. At some point, you connect and you hit a home run and now you're off to the races. I mean, my first few swings in entrepreneurship were big whiffs. But then guess what? I hit something and I've been doing it now for 13 years. That is how it can happen. That's not how it's going to happen all the time.

7:13That's how it can happen because you get up, you put in the work, the effort was there, the opportunity arises, and then everybody's like, quote unquote, you were so lucky. Now, Warren, businesses spend most of their time in a state of failure. Let's just be honest. It's just a reality. So you believe that we need a high tolerance for pain. Tell us more about that. The state of failure is a great way to reference it because I think a business lives in a state of failure for more than half of its life, right? Um, the, it's got everything going against it. Uh, unless you're, you know, backed by, uh, you know, a private equity or a financial institution that's, that's allowing you the working capital to get the business running.

7:57That's a bit of a different story. And that's not my, that's not how I built the business. Um, and I don't think most people do. Most people actually have to self-run these things. And so you're always, you're always fighting against cashflow crunches. You're always fighting against outside, um, forces like competition or utility costs or, in our case, computer infrastructure challenges, really building technology around what we were doing. And so it stays in this kind of precarious position for a large amount of time, and you just have to fight. You just have to fight every challenge that comes at this business.

8:36You've got to stand up to it, and you've got to fight it. And then the good news is it does move out of that position. It surely can dip back in at times, but it moves out of a position I remember distinctly for us at Summit when we were able to start using money to solve our problems because the business was strong enough and producing enough capital. And so you didn't have to fight everything with such creative ways. You could actually kind of stand back and let the business do the fighting for itself. And that's a very rewarding place for any entrepreneur to get to. Yeah. Fire Nation, just know that when you're waking up and you're like, man, this is a struggle.

9:14Man, this is a challenge. Man, I feel like I'm failing. That's running a business because like Warren said, businesses spend most of their time in a state of failure and then you figure things out. That's why you need that high tolerance for pain. Now we have a lot more to talk about when we get back from thanking our sponsors. It would be really nice if we could predict what the future holds for our business. Talk about saving a lot of time and frustration, but predictions are just that, predictions. Rates will rise or fall, inflation's up or down. Can someone please invent a crystal ball? Until we can actually see into the future, over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP, bringing accounting, financial management, inventory, and HR into one fluid platform.

10:00NetSuite gives you one source of truth so you can have the visibility and control you need to make quick decisions. And with real-time insights and forecasting, you can see into the future with actionable data. If our businesses needed this type of software, I'd use NetSuite in a heartbeat because whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com slash fire. The guide is free to you at netsuite.com slash fire.

10:33netsuite.com slash fire. Warren, we're back. And something that you've experienced throughout your career, and you've had a lot of successes, you've gone through the obstacles and the challenges. This is, again, the journey to$100 million. You've recognized that employees make the biggest difference. Tell us more about that. The common saying, right, starting stuff with people that are smarter than you, That is very, very sage advice. So when the business is little, of course, you're doing the bookkeeping. You're doing the sales. You're picking up the phone calls. You're doing the tech support.

11:08You're doing everything, right? And then as you get bigger, you get to hire people to do the parts that shouldn't be your focus. But if you're mindful about your hiring, you're not just hiring somebody to be a bookkeeper. You're not just hiring somebody off the streets to let me do my books. you're hiring a great person to come and do the books way better than you could do them. And then also now advise you on how to run the business better against the PNL or the balance sheet. So now you've just upped your game because you've got somebody else stronger than you in the company doing that one part.

11:43And then you can just extrapolate across that. Your marketing person, your sales leaders, you know, if you're hiring people that are A plus individuals and A plus contributors. You have that precarious place where the business lives now shared by a great team of people and it moves the business so much faster than you could do it if you were to kind of constantly remain small and try to do everything yourself. Then secondly, if you're hiring and not hiring the right people, that's going to take a lot longer. So again, I've been a huge proponent of bringing in great people into the organization and then structuring the organization so that it's an environment that they thrive in.

12:27In the case of an entrepreneur, you kind of thrive in a certain amount of chaos because chaos means that you're growing. When you're growing, you're adding customers, you're adding employees, you're adding all the time, and you're also adding problems all the time. And so when you've got employees that thrive in that environment, You do everything you can to make sure you retain them and give them a great working environment for that. So we've always done unlimited PTO and we never manage to the lowest common denominator. We don't allow any micromanaging and we just treat people like adults and expect really great work from them.

13:05And that's been instrumental in the success of the business. So talk about retaining employees, the no micromanaging, forcing somebody in a way to take full responsibility for what happens with their specific role. Because when someone's being micromanaged, they can always just say to both themselves and to the world, they can say, well, I'm being micromanaged. I'm being told what to do. I'm doing it. So if it's a failure, it's not my failure. It's the failure of the person that's telling me what to do. But the reality is if you say, hey, this is what we would like you to do. Figure it out. It's on you.

13:38You're smart enough to do this. Then they take responsibility. It's prideful now. It's like they want to succeed based off of that trust that you've given them. So I love that so much. Now, you did mention hiring a little bit. And this is a thing that I think a lot of our listeners struggle with is hiring the right people. Because man, hiring can be so tough because churn will kill a business. When you hire the wrong person and you spend time and money to train them and then they're doing not a good job at that job, then you have to go through the process of firing them. And then you're hiring someone.

14:09That churn, it's a killer. So what are some specific things that you look for during the hiring process that you found have led to better hires more often than not? Let's kind of break that down for a little bit. Because I think this is for the benefit of the listeners. Not all businesses are the same, right? So I can really talk about it from the perspective of building a remote, results-orientated tech firm that grew to the$100 million. dollars. Now, in that case, we are looking for our ideal candidate is someone who's quite entrepreneurial, someone who manages their own time, doesn't need to be told what to do.

14:49The idea here is that as a company, we're saying, hey, this is the direction we're going in, and you've got the right people surrounding you that are following that vision. They know how to get from point A to point B, so you don't really worry how they get from point A to point B. You're just really more concerned and focused on getting to point B. If you've got to tell someone how to get from point A to point B, then they're unlikely the right person for the job. And so those are the things I look for when hiring. And believe me, I did it wrong for many years. I mean, we had some disaster stories of getting wrong individuals into the organization.

15:21And so Stan and I actually went and took a course to learn how to do interview properly, because what we found out is we were so good at selling the business to anybody that would listen, And we were found ourselves doing that in the interviews as well. And we were kind of compelling people to come work for us. But when we stopped that behavior and started asking open-ended questions, instead of answering the question for them in the interview process, that was a big change for us. And then we held on to the hiring practice for probably a little bit longer than we should have, and then kind of eventually started to trust other leaders in the organization to do hiring and do the final interview checks and whatnot.

16:01but overwhelmingly that sense of entrepreneurialism was always what we looked for. And I would say to people, and I always do, look, work ethic is impossible to interview for. So if you don't have a good work ethic, don't come work here because you won't survive in this organization because it's a high work ethic environment. And that was usually a good tell where the people would be like, okay, look, I can't fake this. They're going to figure this out in 30 days, so maybe I shouldn't take the job. and that's always helped as well, kind of deterring some of the negative behaviors that you don't want, just being upfront about them, saying, look, these are not going to work in this organization.

16:40They might work somewhere else and that's fine, but they won't work in this environment. And putting that responsibility back on the interviewer or interviewee to make the decision as well, whether that's the right organization for them to join or not. I remember something that Tony Robbins said that really made sense to me with clients. And I actually kind of wonder, Warren, if you ever did this or maybe if your organization was too big. You can't do this in really big organizations, but on the smaller ones, maybe 5 to 15 to even 30 to 50 employees, Tony said that he would go to each individual employee.

17:10He would say, what's the one thing that would make this the best job in the world for you specifically and uniquely? Because a lot of times people just say, oh, well, we're just going to give that person a raise. Well, it's not always about money for people. Like for some people, like his example was, hey, Tony, if I could just come into work at 10 a.m. instead of 9 a.m. every day, that gives me time with my kids in the morning. It makes me just my me time. I can exercise. And then I'll say an hour later, of course. But I mean like that 10 a.m. start and not having to be locked to 9 a.m., like that would change everything.

17:45And then for somebody else, it was like, if I can just have Fridays off, meaning that I'm working 10 hours Monday, Tuesday, Wednesday, Thursday and get Fridays off. I know that you're a nine-to-five, like five-day-a-week company, but I love to travel on the weekends. And I will get so much more done in my four days because I'll be so excited and efficient. But if I have that Friday off, I can do some amazing things. So he gave them their individual unique thing. And what that did was, because these were, of course, for the great employees. And what that did was, now they said to themselves, well, I could leave.

18:21and maybe I could go make more money someplace else, maybe a little bit, maybe 5 % more, maybe 10 % more, but I won't have this. I won't have this one thing that I told Tony that is the most important thing to me. And that's something interesting to think about as well. Again, especially if you're a smaller company, you can do that with the employees. So something to think about. And Warren, what I want to ask you next is, what happens next? I mean, we talked a little bit in the pre-interview, board roles, investments, mentoring CEOs. I mean, you're at this stage now where you could come down to Puerto Rico, buy a house next to me on the Caribbean and kind of be sipping some Mai Tais all day in a hammock.

18:56Not that I do that, but I am down here in Puerto Rico and life is good. I'm still working hard, but why don't you do that? Why are you continuing to do these things and what are you doing? First of all, I've got young children. I've got an eight-year-old tenure and 12-year-old. So they're in school. So the ideas of couching down on an island sounds great. Hey, Puerto Rico, in the community that I live in, We have, it's an amazing community. We have a K through 12 academy, a golf cart ride away in the community. So don't use education as a reason. I need something better than that. Yeah, sure. Okay.

19:30Well, I do live on an island. I live in Seabrook Island, just outside of Charleston. Oh, that's a beautiful area. Yeah, so I've got that. But for me, yes. So board roles are particularly interesting, both nonprofit and for-profit companies. What I learned as a private equity backed founder CEO is that not all CEOs are the same. If you're talking about a publicly traded company, CEO is very, very different from a private equity CEO, very, very different from a founder CEO. And the private equity CEOs, I think of them as like Mako sharks. They're not the great white sharks like the publicly traded companies.

20:16But as a private equity CEO, at least in my world, you have got to have, again, a high tolerance for growth and for pain and high tolerance for change and great communication skills and really strong leadership and really, really clear vision. And so I'm keen on helping some of the younger CEOs navigate that, guys that have never sat in a boardroom, never put together a deck, never really had to, you know, kind of share their vision with other experienced business people. And so there's a drive for me to help guide some of these younger CEOs, just not make some of the same mistakes I made. As simple as that, right?

21:01Even though the mistakes are where you do all your learning. And then from the board roles, you know, I'm not a passive investor or a passive manager. I believe in really actively managing. And so from a board position, if there's a role or a company that I'm interested in and can actually benefit from my skill sets, I'm always interested in looking at those opportunities. Amazing. And investing alongside private equity as well. Amazing stuff, Warren. And I want you to kind of think about what we talked about today for a second, because I want to hand the mic over to you for the biggest takeaway that you really want to make sure our listeners get?

21:37Like if Fire Nation, our audience was to be asked by somebody on the street like, hey, you listened to the show today? Yeah. Oh, what was the biggest takeaway that you had? What would you want that takeaway to be? For me, being an entrepreneur is such a gift and such a blessing. And for everybody to remember that, yeah, it's hard. It sucks sometimes. But But you're in control of your own destiny and that is worth gold. And if you can, if you can remember to, to pause for a minute and be proud of what you've created, if you can remember to have fun and enjoy what you're doing and enjoy the people around you.

22:15I mean, for some reason, there's, there's this desire for business to be really serious all the time. And it doesn't, there's tons of laughter that should be had in the boardrooms. There's tons of laughter that should be had in your marketing and sales calls and enjoy, enjoy what you're doing um and so my biggest takeaway would be is that a you're incredibly lucky to find yourself in this position to be able to be an entrepreneur and second of all don't squander it by making it not fun enjoy the process enjoy the the pain enjoy the suffering enjoy the fun times uh and and you know don't lose your family uh to the business don't lose your children to the business nothing's more important than than the time that you get and so so just try to enjoy to all as much as possible.

22:59Fire Nation, we have been speaking with Warren Patterson today, and you're the average of the five people you spend the most time with. And you've been hanging out with WP and JLD, so keep up that heat. For links to everything we talked about, visit eofire.com, type Warren in the search bar, and the show notes page will pop right up. And Warren, last thing, if our listeners want to connect with you, want to learn more, do you have a call to action for our listeners today? I would say the best way to get hold of me is through LinkedIn. Warren, thank you for sharing your truth, your knowledge, your value with Fire Nation today.

23:33For that, we salute you and we'll catch you on the flip side. Thanks, John. Hey, Fire Nation, a huge thank you to our sponsors and Warren for sponsoring today's episode. And Fire Nation, are you an entrepreneur on fire who is looking to share your amazing message with the world? If yes, we are now accepting applications for Entrepreneurs on Fire. To learn more about this show, Entrepreneurs on Fire, and becoming a guest, visit eofire.com slash guest, and I'll catch you there, or on the flip side. Over 41 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one cloud ERP, bringing accounting, financial management, inventory, and HR into one platform.

24:16Download the CFO's Guide to AI and Machine Learning for free at netsuite.com slash fire. Thank you.