382 - What Is A Doofus Test?

0:00One of the most valuable lessons I learned over 30 years ago from my mentor Dan Pena for business acquisition was called the doofus test. And we kind of all know what doofuses are, but in this case, let's talk about maybe the pillars that would be evaluated in the doofus test. And those are dependability, integrity, qualifications, intelligence, and stability. And these are not abstract concepts. These are observable behaviors. Doofus tests are not about catching people. They are about revealing who someone already is. and whether you're talking about board prospects, banks, law firms, accounting firms, or acquisition candidates, people will tell you exactly who they are if you know what to look for.

0:50So let's talk about that. For example, set a meeting at an inconvenient time, early in the morning, late in the evening, short notice, birthdays, holidays, anniversaries. Do they show up? Do they reschedule? Do they complain? That tells you something about dependability and commitment. And watch for punctuality. People who are late early will be late later. Chronic lateness is not a scheduling issue. It's a character signal. I do a lot of Zoom calls, and the people who show up late always show up late. Listen for compensation and equity questions too early in the conversation. This is especially true for board prospects.

1:37You want people who don't ask those questions. Those are red flags. And most of the time, if you've got the right people on the board, your deal is not going to significantly change their wealth. You want someone who aligns with what you're doing. So when someone leads with equity and compensation questions and what's in it for them before understanding the mission, that is not curiosity. That is misalignment. Another doofus test is follow-through. If someone says they will send you something and they do not without an explanation, that is the test failing it. You did not fail. They did. Here is the most important part.

2:19When someone fails a doofus test, you do not fix them. You do not coach them. You do not rationalize it, which a lot of people do. You move on. Most deals and bad partnerships do not fail later. They fail early and people ignore the signals. I shoot pool and I have a pool coach. Then we do Zoom meetings where we review that. And if we're doing a run of balls, which is a series of balls where you shoot things in order, he'll frequently say, you know, the problem with that is it broke down early and then you were trying to have to do something special to fix it. Same is true here. Those relationships break down early and they don't get better.

3:03Those are the honeymoon periods in the beginning. And you're not being rude by disengaging. You're being disciplined. Your job as an acquirer is not to convince people. It's to qualify people and it's to qualify motivated people. You are not trying to convince someone to sell the business. You are looking for people who are motivated to sell, and then, yes, you're convincing them that you are the best company person to sell their business to. And the faster you disqualify the wrong ones, the faster you get to the right ones, and they appear. I had a mentee in the UK, and she had not yet acquired a business, and she was nervous as she had meetings.

3:47And then she came across, and she came across this. I didn't suggest it. well, I'm going to think like I have 60 of these already. How would I act? How would I behave? Would I take a bad deal or would I just say next? That's a pretty valuable way to think about the interactions that you have. So do Fist Test protect your time, your capital, and your future headaches. So pay attention, trust the signals, and never build with people who cannot do what they say they're going to do. All of those are important. If you are strict on your criteria, whether that is the doofus test requirements, the board prospect requirements, law firm, accounting firm, financial, and prospects for acquisition, if you stick to that criteria and pass, so essentially those are go-no-go checks, you will do much, much better.

4:47And your success rate typically will be much better as well. So I hope that helps. I hope you employ doofus tests. And I'd love to hear your feedback, if you are, about people who failed and what it uncovered and how it saved you time, money, capital, et cetera.