Scale or Stagnate? Diary of a CFO Profit Strategies w/ Scale Architect Scott Ritzheimer

But one thing that comes into very sharp focus is that there is a story. And that really surprised me at first, because like just about every entrepreneur out there, I felt like our situation was completely unique, right? And I mean, we've helped 20,000 people. And just about every one of them came to us and said, I have a completely unique idea in every single way. And then they just described what the person before them said. You know what I mean? It was like, yes, there are individual differences and nuances to every founder and every business and every nonprofit. But the reality of it is when you zoom out just a little bit and you watch the journey unfold, it turns into just one big story that we're all taking part of, right? It turns into one path that we all follow. And if you stay on the path, you achieve success. If you deviate from the path, it gets really challenging really quick. Welcome to the King Dems podcast, where we share the stories of extraordinary people and dissect hot, relevant topics that shape our world. From visionary leaders to trailblazing creatives, we uncover the mindset, strategy, and grit behind greatness. Whether it's business, culture, or personal growth, we ask the real questions. This isn't just conversation, it's transformation. The King Dems Podcast. Your next breakthrough starts here. Music licensing reimagined. We are live, ladies and gentlemen, you are once again, welcome to the Kingdames Podcast. And I have with me today, a European brother on another side of the pond, a German machine called Scott Ritzheimer. How are you Scott or Ritz? I am doing fantastic. Yeah, doing fantastic. So excited about this episode, the conversation we're going to get to have. wow wow you know it's really great you know the way we we connect and interestingly we were meant to produce this i think about a week ago but many thanks to my wonderful network broadband network providers talk talk but you know interestingly they have been relegated you know to second place so now we have three network doing doing a great job very nice i'm telling you i'm telling you i I wasn't happy that they did not make it happen, but it does happen. But interestingly, right, when I saw your profile and I saw something relating to architecture, but it is not the architecture that we all know. Skill architect, you know, let's start with what you do. Who is a skill architect? Yeah. Well, you've got architects who design buildings, right? You've got systems architects who design software. What scale architects do is design scalable organizations. So we work with founders, leaders, CEOs, interestingly, both in the for-profit and non-profit space who have big dreams. And they've had some success in the past. These are not unsuccessful folks, but they've been bumping into this wall that's prevented them from scaling. There's some kind of ceiling there that they keep smacking into, some much more painfully than others. And the longer you're there, the more painful it gets. And basically what we do as scale architects is help them not only through coaching and understanding their role as founders, which we'll unpack throughout this episode. But ultimately, as a founder at this stage, you can't do it alone. You can't do it by yourself. You can't just hustle and grit and determination your way to scalability. scalability. You have to do it through others. And to do that takes some intentionality. It takes some design. It takes great organizational architecture. And that's really how we unlock scale for our clients. And like the thing that people are looking for is like, what about revenue? What about profits? Yes to all those things. It's fascinating. When you actually build the right organization, right? When you design the right machine, it works really, really well. And so So depending on the specific challenge that a client's facing, it's not uncommon for them to either double their revenue or triple their profitability through the course of an engagement over a year or two. So just on a lighter note, if an architect steps on a weight scale, does that make him a scale architect? I think so. I think so. Maybe if an architect designs a scale, it would be so as well. But for you, growing up, you are a millennial, right? As millennials growing up, we're more into, or would I say our parents wanted us to take on professions like being a doctor, being an engineer, being a lawyer, those mainstream professions. But how did you get into becoming a skilled architect? What was that aha moment that made you realize that your pathway to achieving purpose and impact is becoming a skilled architect and eventually mapping out the founder's evolution? Yeah. I don't know that there was a moment, but there were lots of moments. So I actually accidentally dropped out of high school, which was maybe a story we'll get into, but accidentally dropped out of high school. And because of that, I was really drifting for a bit and actually landed at a ministry school of all places and was training to be a pastor here in the U.S. and moved down to Atlanta, Georgia, where I live now, just after I got married to my amazing wife, Hilda Marie, to actually take part in a ministry down here. That was the grand plan. There's no real other thought behind it other than to just kind of come along and help out for a little bit. And in doing so, you realize pretty quickly that that's not going to pay the bills, not the way we were doing it. So we decided we really did want to do ministry, but we didn't want to ask people for money to do it. So we decided to finance it ourself through jobs. And as luck would have it, I bumped into a gentleman who ended up becoming my co-founder And I went to work for him at an earlier version of the company that we ended up launching together. And in a very short, very painful period where I watched him sell the company, watch the company collapse and watched everyone be beat up by it in some kind of like pseudo masochistic way, I fell in love with what business? Not with that. Like that was one of the most painful experiences of my life. But in seeing what it could be, right, I fell in love with what the organization could be. I fell in love with what we could create. Potential over credential. Yeah, yeah, yeah. And so I accidentally ended up, as that whole thing fell apart, I accidentally kind of ended up in a spot where I helped him co-launch it again. So we had to build it back up from nothing. And we ran that together for almost 15 years. And so I really didn't set out to be an entrepreneur. In fact, I don't know that I've really ever considered myself an entrepreneur, which is crazy because it's exactly what I do. I do and I've helped start more organizations than just about anyone in the world, but I got into it by mistake. And so there's really big chunks to the story here, but I want to get to the most poignant one was a season where I was the CEO of our company. And it was going great from like a numbers perspective, at least from the outside. We were growing at over a million dollars a year in revenue growth. We were hiring people like crazy. We were helping start some of the fastest growing businesses and nonprofits in the country. Like it was amazing. I'm in my, you know, mid late 20s at the time. Kind of everything you would hope to ask for, right? Multi-million dollar business, the whole nine yards. And, you know, I felt like I was dying inside, quite honestly. Like it felt like like all that stuff was going on. And so if you talk to anyone, like there's no room to complain because they're like, why are you complaining? You have everything going for you. Right. So there was no real like connection that I could make with others around some of the real challenges I was facing. I couldn't do it with my team because they were a big part of the problem. Right. I couldn't do it outside because folks just didn't really get it. And I felt massively isolated, just massively isolated. I had reached out to a couple of different coaches. We'd hired some, paid them lots of money, made really big decisions based on their advice, and then lost like a million dollars in making those decisions. And so when all these different external sources of help start failing me just systematically across the board, I found myself just kind of sitting there thinking, is this it? like we fought for all those years all that blood sweat and tears literally to building this business to have this right to have a multi-million dollar business that's just sucking the life like i would have quit if i wasn't known the place you know what i mean like it was just that and we started to have on top of that some problems with profitability very very common for businesses at this stage where we figured out how to grow revenue but every year despite growing by over a million dollars a year in revenue, we were keeping less and less of that revenue every year. And so our profit margins went from the high 20% to the low 20% to the teens. And at its worst, it was all the way down to 7% in a year with no real good reason for why that was other than my leadership. And when you try and turn something like that around, right, it wasn't like it dropped from, you know, 28 to 21. And we're like, oh, that's fine. It would drop from 28 to 21. Like, that's a problem. We have to fix it. We had a plan to fix it. We tried to execute that plan to fix it. And the next year, instead of going back up, it went down again. Like that, whether you want it to or not, that says something about your leadership. Right. And so like all of this is swirling together and where I used to think like, hey, we could take hell with a water pistol, like we could do anything that we wanted. Now I was wondering if we would be here in three years. And when you have all those different challenges happening at all the same time, let me tell you, there's nothing you can Google to get out. Right. Like like there's nothing like what do you do with that? You know, I tried the coaches. I tried counselors. I tried all of these things. They weren't working. And it was about that time that I came across someone actually from your neck of the woods, from where you you just told me I need to go travel. But from Northern Ireland, his name's Les McEwen, and he's now a dear friend of mine. Oh, you see, you have to go there. You have to go there. This is a giant cost way. The giant cost way. Yes. I have to go there. It's a great place. So anyway, Les has this book. It's called Predictable Success. It's phenomenal. Anyone listening should just stop this and check it out because it really is phenomenal. I call Les the Morpheus of the business world because it's like once you read his work, it's like you see the code of the matrix on how businesses succeed and fail. What's the title of the book? It's called Predictable Success. And basically what it does is it highlights the fact that success in business is not some static set of strategies. It's not like one size fits all. Every organization at any given point in time all need to do this one thing and they will succeed, right? There's this kind of silver bullet that we're all looking for like that. And as founders, every time we find something that works, we hang on to it as if it will work forever. And the point of his book is it won't, right? Marshall Goldsmith wrote the book, What Got You Here Won't Get You There. And what Les put together is a very, very specific set of, here are the things that will bring you success in each stage of the journey as a business, as a nonprofit, as an organization. And in that book, I actually heard it on a podcast. That's why I love doing podcasts like this, because one actually totally changed my life. I'm sitting in my truck, driving to work, listening to this guy with a funny Irish accent. and I think it was the accent that kept me long enough because the idea of business life cycle stages would have bored me to tears at the time. But I hung in there and he goes through a couple stages and was like, yeah, I remember that. Like, I remember when, you know, one's early struggle and we were working in the basement and someone took out our entire phone network with their toes once. You know, like I remember the craziness of those early days. And then he starts talking about this second stage called fun and yes, like, We had a ton of fun. You know, we just, we grew the thing like crazy. We figured out the recipe. It was just an amazing run. And at this point, I start wondering, like, when's he going to get to the stage I'm in? What stage am I in? You know, and he hits me square between the eyes with the next one in this stage called Whitewater. And he starts describing the pain that you feel in Whitewater, the chaos, the complexity, the people problems, the inability to at some point even dream anymore, right? Because there's just no room for it. the constant firefighting, the lack of profitability, the existential threat to your reputation because you're screwing up at just about everything, it seems. And I could have sworn he had a camera in my office or he'd been reading my emails. You know, it's like he just got it. And it's the first ever that I felt like my business was actually on a map. It was the first time I felt like we weren't actually just heading off into the unknown, that there was a map. We were on the map. And because of that, the next step wasn't into unknown territory. It was to just follow the next step on the map. And he does a masterful job at simplifying that process and lays out the steps on what to do. And we went through that process. And like many of our clients today, we tripled our bottom line in 13 months. Wow. And it was at that point, and this is the exceptionally long answer to your very short question. This was really the most defining moment in terms of my pursuit of becoming a scale architect was when I realized the power of what it could be I realized what the actual nature of that problem was how to overcome the complexity at this stage And I thought to myself if I could help other founders to avoid this pain or get out of this stage, I would die a happy man. And that's really what started the journey of not only becoming a scale architect, but launching the company and training other scale architects and deploying them around the country internationally know as well, was I don't want people to get stuck where I was stuck. I don't want them to feel the loneliness that I felt. I don't want them to feel the discouragement and the disillusionment that I felt. And while there's a necessary stage there that must be passed through, there's no necessity in getting stuck there. And so that's ultimately what drove me to do it. And I've had a blast doing it. We've helped some really, really remarkable people do really remarkable things. You know, it actually feels surreal when you are able to get a resource to consult, especially in business. And that resource feels like a scan of your actual challenges in the business that you've run. It's always a good thing. And like you said earlier about consulting different coaches, different consultants. I did have my own fair share of our experience with the big four accounting firms, auditing different organizations. And for me, I always try to apply myself to understand the business environments, the business ecosystems of these various clients that we serve. And I did observe, you know, some colleagues were just more about getting the job done, right? So I can understand when you consult these consultants and they probably give you textbook approaches that do not meet or solve your pain points, right? but you have these other guys on the other end of the spectrum who have that high business argument who are business savvy you could go to have a business school but they don't teach you how to be street wise in order to succeed in business you need two things you need to be boot smart and be street wise unfortunately you get led being street wise on what would i say in the school of hard knocks. I think so. There's no replacement for experience. And the really cool kind of redeeming thing about all of this is that later in your career, you realize the reason for those experiences. It's real, real hard to see in the moment. Yeah, real hard. It doesn't ever make sense in the moment. No, but the return on those lessons will serve you indefinitely as long as you learn the right ones. Right. So here's here's the big problem, because you can be street smart. You can be book smart. You can hire a great consultant. But if you don't understand which challenge you need to be focusing on right now, you can get the right answers to the wrong questions. And that's actually the biggest problem that I see when folks hire coaches and consultants. It's certainly the one that I did is we don't know how to actually find the right question to ask for help with in the first place. Right. So here's an example for folks to just kind of illustrate this. Let's say we've got a problem with profitability and we go out and say, hey, we need help with our profitability. And they come back and say, OK, you know, the best companies in the world have processes for how they bring in clients, how they serve the clients and how they do. You need you need processes. And so they come up with this brilliant world class playbook of processes that you need to use. The problem is you haven't sold anything yet, right? So like if you haven't sold anything, then there's no processes to run them through. Like that might be great to have, but it doesn't solve your profit problem because your profit problem is you've not sold enough yet. And so you can have the exact same problem, a problem with profitability that a much larger organization would have, right? Like we did in Whitewater. But the solution to that problem is fundamentally different. in the early stage, right? If you're having a problem with it, it's generally because you don't have enough revenue to support yourself, right? You're not, you don't have the same ruthless, you don't have a ruthless focus on cashflow and you're not managing it properly. That's it. That's all. It's not processes. It's not leadership. It's not optimizations. It's that you got to go sell more and then you got to be careful with your cash. That's, that's all it is. And so if you are a consultant and you feel like you need to make it fancier than that so that you can charge your premium fees, you're doing a disservice to the person who's asking the question. Now, on the flip side of this, so that we don't just think that everything's a revenue problem. Whenever we were having our profitability problem at my company, we had tons of revenue. We could get more revenue. We just couldn't keep it. And so the problem there was that we didn't have the right systems and processes. So if we had gone like we did to someone to say, hey, we're having trouble with our revenue, we need to bring in new people, new profitable customers, and they teach us how to increase our sales, it solves the problem that we're not having, right? And so the biggest thing that just about everyone misses, unless they just happen to get it by chance, broken clock is right twice a day, right? The biggest problem that we have is as coaches and consultants, we don't help our clients to figure out which question they should be asking us in the first place. That's quite, you know, sport on. And I think pretty much in the big four, they used to tell us ensure to ask probing questions. ensure to ask open-ended questions because asking your clients public questions typically would make them talk about pain points that they never realized are challenges and the owner sees you as a consultant right as a seasoned consultant to to to read in between the lines and also observe, you know, the body language, observe the pulse within the business ecosystem. So some, you know, consultants get it wrong in that regard. And something I'd like for us to touch on is financial ratios. You know, a lot of businesses do not monitor their relevant financial ratios. Interestingly, I'm starting up my company here in the UK. It's a company that will be offering fractional CFO services. You know, we want to start helping startups and SMEs to get their businesses right, you know, giving them that strategic focus that they are unable to afford. You know, a lot of small businesses cannot afford, you know, high-level experts that have that high-level business acumen. That is also a gap, right? But working with a fractional CFO is a very, very efficient way of getting the same level of expertise that, you know, the big organizations have access to. So I think that is, you know, something I would like to cheapen. But let's talk about ratios. ratios. A lot of organizations make the mistake of messing up with their liquidity ratios and that comes by way of the wrong credit control measures, the wrong credit control policies, right? Your liquidity is different from your solvency. Your liquidity is your ability to meet up with financial obligations in the short run and your solvency is the ability to meet up with the obligations in the long run, but some organizations focus more on the solvency than on the liquidity. And if your liquidity is failing, you'll be having problems in the short run, right? And of course, your working capital will be distorted. We look at this from a stage perspective. There are certain stages where that distinction is much more meaningful, right? Particularly in the very first stage, which we call early struggle and in the third stage, which we call Whitewater. So early on, you see a lot of folks, particularly early in their journey as an entrepreneur, as a founder, they're very, very optimistic about what their business is, right? You ask them what their business is right now and they tell you what it will be later, right? That they are not just financially, but strategically and philosophically thinking about their business in terms of solvency. And because of that, they actually missed that the primary problem in that first stage is liquidity. Liquidity. Perspective, right? You're just on borrowed time. You have to manage cash ruthlessly early on inside of an organization. You just don't have any other choice. But it's painful. It's really painful. It's actually not necessarily painful in the dollars and numbers. It's painful in the emotions that those dollars and numbers make you feel. And so one of the biggest reasons why so many startups fail is because they aren't willing to pay the emotional toll to wrestle the cash dragon to the ground, right? And so it shows up in really strange ways. So a very book smart, we'll put it that way, founder will have cash flow projections. and you look at those and they're like, man, you look like you're in great shape, but they're not real. They're like, this is what I want to make in each of these months. A cashflow projection is not what you want to make in future months. It's what you are contracted to make. Yeah, and so we look at it and we start making decisions like it's gonna be okay. And the reality of it is you can't bank on that, right? You have to look at your cashflow So in terms of what cash am I actually at least contractually obligated to get? And then from there, depending on the industry that you're in, you may not even be able to rely on that. So you have to have a ruthless focus on cash. And again, comes back to this liquidity problem. So the challenge with this, though, is that even if you understand all of that, it's not enough to get you out of the stage. It's just enough to keep you alive or your business alive. We don't want to be too morbid here. So you have to manage liquidity. But the solvency piece does come in in the sense that the only way to fundamentally change any of it, right, no matter how well you understand it, the only way to change it is through revenue. And so you have this dual focus, right, with very limited resources, which is very hard to do, of we have to stay solvent long enough to find a profitable, sustainable market, right? We have to stay liquid. Sorry, I'm misspeaking there within the context of this conversation. You have to stay liquid long enough to find a profitable, sustainable market. And so one of the things that tends to happen in a lot of the work we do, it's surprisingly, even though we've talked about profit a lot, it's surprisingly unrelated to the P&L or the finances of the organization. Because at the end of the day, the P&L and all of the finances of the organization are fundamentally nothing more than a reflection of the decisions made by the leadership team. And so generally what I've found is that the vast majority of how you solve for financial problems happens not in the finances, but how you make decisions, right? And so what we tend to do with our clients alongside CFO services, which are, and I love the fractional model, by the way, alongside them, what we look at, particularly as scale architects, is what are the decisions that we're making that will ultimately end up as positive or negatives on our P&L? So for you, you have done these rings and repeats. And there's something I always say that repetition is key to mastery. So you've helped to launch nearly 20,000 businesses and nonprofits. Highly incredible. But is there any one story that deeply moved you or changed your view on growth and leadership? Yeah. There's lots of individual stories. I think the thing that stood out to me the most is when you do something that many times, it does get harder and harder to remember the individual stories. But one thing that comes into very sharp focus is that there is a story. And that really surprised me at first because like just about every entrepreneur out there, I felt like our situation was completely unique, right? And I mean, we've helped 20,000 people and just about every one of them came to us and said, I have a completely unique idea in every single way. And then they just described what the person before them said. You know what I mean? It was like, yes, there are individual differences and nuances to every founder and every business and every nonprofit. But the reality of it is when you zoom out just a little bit and you watch the journey unfold, it turns into just one big story that we're all taking part of, right? It turns into one path that we all follow. And if you stay on the path, you achieve success. If you deviate from the path it gets really challenging really quick And so the biggest story that I would share is that we all share one story And that what ultimately led to the book The Founder's Evolution, was I had to get that story onto paper, right? I had to get it out of just the pattern recognition that I had and into a frame that folks can really connect with and use in their own life. And like my experience with Les's book, which does something similar for organizations, my goal with the book was that folks could read through it and recognize this is where I am right now. These are the specific challenges that I'm facing that are solvable and need to be solved for the stage that I'm in. And in doing so, it'll help them to say, hey, here's where I am. Here's where I want to go. And here are the very, very specific things I need to work on between here and there. So they say curiosity killed the cut, but I hope curiosity doesn't kill me because I'm quite curious about, you know, what exactly the founders evolution is about and why is it the, the, the map, so to speak, that every entrepreneur should have before they are able to scale. Yeah. So I use a, in the book I opened, since I'm an American, it's just kind of the obligatory football reference, which is American football here on the, on this side of the pond. And the reason that I use this story, and we'll share a soccer version of it. I won't go so far as to call it football. We're going to call it soccer here. So we're just going to, we'll offend everyone equally. That's what we're going for. But, The reason why I use and extend this sport metaphor throughout the whole book is because for founders, one of the challenges that we face relative to other occupations, other domains, is that the journey that a founder goes through, these different stages are not visible. There's actually no external validation that you have changed from one stage to the other unless you know what those are already, right? It's not like you pass a road sign and says, here it is. Now, the book does that. That's why the roadmap analogy is so appropriate because it's like passing through and it says, you are now in the city of, you know, you are now in the stage of. Well, if that sign wasn't there, here in the US, if you cross over state lines, there's nothing really to tell you that it's changed. Many of the state lines are just completely, you know, like made up lines. The line between Florida and Georgia, for example, is a straight line. Well, there's no straight lines that exist in nature. It doesn't map to a river or an ocean or anything like that. And so if you were to just go from one state to the other without any road signs, you'd have no idea that you crossed from Georgia to Florida. And the same thing happens for founders. Each one of those state lines, if you will, those stage lines is invisible. And a quick explanation, then we'll get to the story here in a second. But to just illustrate what this looks like in another environment so you can understand what these types of changes might mean. If you take the journey that an employee faces, it's actually the same story, same stages. But the advantage that an employee has working inside of another enterprise is that when they navigate from one stage to the other, there's usually a promotion and a title that come with it. Right. So, for example, one of the most common ones is the move from being a star player on the field, you know, being a solo contributor, right, an individual contributor, being a solopreneur in the founder's world, and moving from being an individual contributor to being like a team lead or a shift supervisor or whatever the nomenclature is inside your business. That's actually a really hard shift to make. If you go from just being responsible for you and you realize you can control you and you take control of you, you can crush it as an individual contributor. But being in control of you is a necessary prerequisite for being a great team leader, but it's not enough to be a great team leader. Because if you just take control of yourself, but you don't know how to inspire that same control in others, you're going to fall flat. You're not going to succeed as a team leader. It doesn't matter how skilled an individual contributor you are. It's not enough. And so there are coaches, there are books, there are podcasts. there's this whole industry that's dedicated to helping employees to become better managers and better leaders, right? Tons and tons of resource. And it's all validated by the fact that they have changed positions, right? And so it makes sense that they would have to embrace a new skill set, that they need to bring in some new help, that they'd have to learn something new. But my question for you and everyone listening is, what is that line for a founder? At what point Does a founder have to move from being a star player to being a manager? And let me ask you this, which founder, tell me one founder, I've worked with 20,000 of them, but maybe you know one. Which founder do you know that started their business or nonprofit so that they could be a manager? No way. None, none, right? Not a single one. Because let's be frank, there are way easier ways of becoming a manager, right? Than going and starting your own enterprise. And so there's this point at which we have to pivot from primarily being a solopreneur, solo contributor to being a manager. And we're not really wired to be managers. And so we just default to going back to I'll just do it myself mode. And we get stuck as founders bumping into this wall because we didn't know that the stage changed and we certainly don't know how to succeed in the next stage. So it's an invisible path. It's an invisible journey. And so in the book, we use different analogies to make that clear. Say there are seven stages, right? There are. On the growth pathway for entrepreneurs. So are you able to do a quick breakdown of the seven stages and what they entail? We've got three hours, right? No, I'm just kidding. No, just a brief summary because we need people to get the book. And how can people get the book, by the way? Yeah, they can go to, if you just go to scalearchitects.com forward slash founders, you'll get a copy of it there for free, actually. So we've made a digital version available free for everyone. It goes through all stages. You said I could pay for bucks? It's a PDF that you can download immediately. You don't have to wait for shipping and you can read through it. It's all right there. So scalearchitects.com forward slash founders, get a free copy of it there. You also have an opportunity to take the assessment. If you're like, hey, I don't know what stage I'm in. You don't have to guess. You can find out in 10 questions. It's awesome. Interesting. So, ascalearchitects.com, forward slash founders. Now, what are these stages? Okay, so they run from pre-launch to post-exit. So it's the entire journey that a founder faces, okay? And it's important that we start pre-launch because stage one is called the dissatisfied employee. It's that stage where you're at university, you're working for somebody else, and you're thinking, isn't there a better way? Like, there should be a better way than whatever this is. And that's a fundamentally different question for founders than for just people who are dissatisfied, right? People who are dissatisfied but aren't really founders are just thinking, how can I have a better experience? It's a much more internal, much more kind of problem-centric focus, whereas founders, they're frustrated even when things are good, right? They're dissatisfied even when they get a new boss or they get someone out of their hair or don't have to deal with a slow teammate. There's this brewing frustration. And what happens is all too often we try and skip this stage. We try and skip straight to, hey, I just want to be my own boss. And in doing so, we jump into a game that we know nothing about. Just nothing about it, right? If you're a consultant working for a Big Ten company and you think you're going to go start your own consulting agency, you know nothing about starting a consulting agency. All you know is how to consult. And so we make this mistake all the time that we think we know more about the business than we do. We jump in too soon and then you have to figure it out on your own dime. Right. That's the scary part. You're going to make a bunch of mistakes. If you can recognize, hey, I'm going to use this stage pre-launch to make those mistakes, to learn the ropes of what it is, not to just do what I do, but to start a business doing what I do, then you'll find you can learn those mistakes on someone else's dime. You don't have to worry about cash flow because you've got your payroll covered through your employer. So that's stage one, dissatisfied employee. We believe there's a better way and you want to use that opportunity for as long as you can to figure out the ropes of the game before jumping into stage two. So what's stage two? Stage two is when we actually jump in the game. It's glorious and wonderful and terrible and awful and amazing and everything in between. There are higher highs than you could have imagined, and there are lower lows than you ever thought possible. And they happen in the same day. It's just a roller coaster of emotion and success and failure. And stage two is what we call the startup entrepreneur. Big mystery there, not a profound idea, except that being a startup entrepreneur is a very specific stage with very specific strategies. And in this stage, we basically have to set out, and we talked about this a little bit before, but you have to survive the stage long enough to find a profitable, sustainable market. And for founders, folks who have not started their own company don't understand how intensely personal the journey is. Because in this stage, you'll face as much rejection that someone else would in two lifetimes, and you'll do it in about two years, right? If you're doing it right, and if you're lucky. And so it's just, you have to get up and do it again. You have to get up and do it again. You'll hear a lot of no's. You'll have a lot of people ghost you. You'll have a lot of setbacks and frustrations and failures and things that don't work and ideas that don't pan out and models that are broken. That's normal. It's just completely normal. It's okay, but you have to figure it out and you have to keep your feet moving. And so unfortunately, the defining question of this stage is like, what have I gotten myself into? But if you keep yourself centered, You keep a focus, ruthless focus on what we talked about earlier, preserving cash and finding your profitable, sustainable market, a.k.a. sales, right? Marketing and sales. You have to market. You have to sell. You have to get your name out there. You have to bring clients in. You have to attract the right clients. And for the folks who figure that out, who crack the code, even in a small way, one of the things that happens is you find yourself outselling what you can actually do yourself. And so you realize it too late and you don't have a whole lot of time. So you just go out and hire whatever warm body you can find, right? We hire by pulse and proximity. So we're looking for the closest person who's still breathing. And we're like, hey, come to work for me. That's about the extent of our hiring. And it's fun. They're usually folks that we know and are related to us in some way, shape or form, friends or otherwise. And we bring them in. We hand off a couple of things to them, right? And then we go out and we sell again. And we wake up after this has gone on for a little while. It's usually on a Monday morning where you've worked all weekend to clean up a mistake that one of them made, right? And so you start the week behind because you were supposed to work the weekend anyway, but you were supposed to do it on some new proposals you wanted to get out the door to some of your big prospects. So instead of doing proposals, you're solving someone else's problem. You wake up just exhausted on Monday morning and you're thinking to yourself, what's wrong with these people? What is wrong with these people? They don't think like me. They don't solve problems like I do. They don't take ownership like I do. They don't work the hours that I do. They don't show up with the same intentions that I do. That's just, what's wrong with these people? And unfortunately, there's two answers to that question and they're both your fault, right? So the first one is you've probably hired some of the wrong people. So it's not what's wrong with them. It's that they are the wrong people for your role. And that means something specific. We talk about it in the book. People can read that. So the first thing is you have to solve for hiring the right type of people. And again, that means something very specific. They're called operators as a hint. The other part of it is they aren't going to be like you because if they were at this point, they might as well just be your competitor, right? If they're going to take all the risks that you take, then they might as well get all the rewards that you're going to get. So the folks who are going to come work with us are just definitionally not exactly like us. They have different needs. They have different skills, and that's exactly why you need them. And so the second part of the problem here, once we've solved for hiring the right type of people, is that you have to learn to manage them the right way. Unfortunately, the name of this stage is the reluctant manager, because we're used to having the wrong people and then trying to figure out how to manage them. And even if we manage them the right way, because they're the wrong people, it doesn't work and we get frustrated and we start spinning our wheels. So reluctant manager stage is principally about how do you find the right type of people to get them on your team? And what are the few skills that you need to manage them well? That's it. That's all that it takes at this stage. There are so many other questions I get asked at this stage and none of them matter anywhere near as much as do you have the right people on your team? And are you giving them the right minimal structures that they need to succeed? And so that's the real problem in stage three, and nobody's asking that. Nobody even knows to ask that. And a lot of folks get stuck in that stage because of it, and they fail to ever reach stage four. So what is stage four? All right, stage four. If you have a stage like the reluctant manager you know stage four it seems like you got a pretty good shot at it being a lot better than this whatever this is right And so a lot of folks will come they be in stage three they don exactly know what wrong they don know what coming next and they just know, I need to get to the next level, right? I don't know if you've ever heard that, but I hear it all the time. I got to get to the next level. And they're basically saying, they're saying two things, they don't realize it. Either they want to get to doing more of what they do already and they just want to do it better, right? That's actually most of the time. Some people genuinely want to get to the next level, but they don't know what the next level is because they probably wouldn't want it if they did. Unfortunately, level four, stage four, is the disillusioned leader. So we have to unpack this for a second and I'll tell a story that's particularly meaningful, made up story, but for why this disillusionment happens. So here's my soccer analogy that you've so far skillfully avoided. So imagine that it's Champions League, right? It's the final round. We're tied 3-3 going through stoppage time. Stoppage time ends. It's going to Liverpool versus AC Milan. There you go. We're going down to penalty kicks. So you send out your best all-star striker, nails it in the back of the net. Amazing. They send out their all-star striker, same thing happens. You send out your next guy and he wobbles a little bit and the goalie stops it. And so you're like, okay, we need a save. And your goalie comes up big, makes the save. And this goes back and forth and we're down to the last guy. And basically, if you make it, you know, we'll live to fight another day. If you don't make it, you lose. That's the point that we've come down to. And you've been through a couple of your best players. So now you're kind of like, is it Jerry over there or Ned standing next to him? You know, it's kind of that kind of a decision. And you're not super confident in either of them, but you send Jerry out. He runs out on the pitch and lines up to take the shot. Goalies on the line awaiting the kick. And without really thinking this through, right before the referee blows the whistle to take the kick, you take off. Right? Just faster than you have ever run. You've played soccer all your life until you started coaching, but you never ran this fast, right? And they're going to study the physics on this for years because nobody else knows how you ran that fast either. But somehow you go from your place on the sideline, across the touchline, all the way onto the pitch, run in. And just before your guy can make contact with a ball, you slide in and make this like slide diving, you know, tackle on your own player to kick the ball. And the goalie doesn't even move because it's like, what is happening right now? Ball goes rocketing into the back of the net. And you think, as you watch it fly past the goalie who's stunned, you think victory. I've done it, right? The crowning accomplishment of my career. We've won the Champions League. But you stop for a moment and you notice you don't hear a sound. It's crickets. You could hear a pin drop. 100,000 people in the stands and not a single noise. The only thing that's happening is the rest of the referees are all now running toward you as well as the head referee. And what would have been the crowning accomplishment of your career is now an utter catastrophe. It's you are now the laughingstock, not only of your team, not only of your city, not only of your country, but like the sport around the world. Right. Well, now, like the headline of everything will be this ridiculous behavior of the coach that's entirely inappropriate and loses you the game. You've broken every rule. And so the reality of all this starts to set in. You're laying there on the ground, paying the price for that sprint across the field, right? You've probably pulled about three muscles. So you're aching there, laying on the ground, didn't mention before it's raining, but the heavens have opened and it's pouring down rain. You're soaking wet. You're feeling awful. Physically, you ruined it for your team. You lost it for your country. And you're wondering, is this it? Like, why do I work so hard? Now, that's crazy, right? Like that would never, ever in the history of Champions League or any other league, right, professionally around the world has that happened. And the big is a question, why? Well, because there's a white line on the side of the field that separates where the coaches are and how where they do their job and where the players are and how they do their job. But let me ask you this. What's that white line inside of your business that you started? who's the referee that's going to tell you you've broken five rules when you tried to come in and save the day which one of your team members is going to tell you no let me take the shot it's not going to happen and so while this would never happen in professional sports i can tell you it happens every single day for founders and the organizations they lead they cross the line they jump in they try and save the day they're exhausting themselves in the process they're frustrating, especially the best players on their team, and they're setting themselves up for failure. And they have this moment where they're, you know, metaphorically lying there, beat up and bruised from doing it all themselves, wondering why no one else can get anything done. And they wonder, is this it? Is this really as good as it gets? Is this really why I've built this whole business to date? And what happens is we get into this stage, stage four of the Founders Evolution called the disillusioned leader. Our company needs a leader. It doesn't need another doer. Our organization needs someone who can show us the way. And we're so busy trying to be the way that we don't show them the way. We haven't learned how to lead and create success through others. And so we keep trying to save the day ourself and we keep stifling our growth in the process. And it's at this stage that a lot of founders really start to question whether or not this is what they're cut out for, right? This is where we start to get the conversation. Can a founder scale their business, right? Or do they need to hire a professional CEO? This is where a lot of folks will sell to bigger, more established companies. This is where a lot of folks will say, hey, forget this. I remember when, you know, I could go and just, you know, all I was doing was making coffee, selling coffee and talking to fun people all day. I'm going to go back to doing that. I don't need a chain of coffee shops. I'm just going to run my coffee shop. And they go back. They actually go all the way back to stage two of the process, maybe stage three. I'm curious, what does it take you to elevate to level five? That's exactly right. And so what do we have to do? It's because they don't understand what it takes. And what it takes is very, very simple. You have to go from being the guy who makes the decisions, from being the magical decision maker to building a decision making team. You have to go to move from founder to CEO, chief executive officer. Now to do that, if you're going to be the chief executive, what does that require? Other executives, right? And so you have to level up your team. Sometimes you'll have folks on the team who can become executives. Many times there are several who can't. And so through a combination of coaching, training, and elevating your existing team members and going out and bringing in some executives from the outside world, you can step out of that founder role to becoming CEO. And that's what stage five is, the chief executive. And it's terrifying for a lot of folks before they've been there. But I can tell you just about every visionary who's made it to stage five will tell you it's one of the most remarkable transformations they've ever made. It's so rewarding. It's so fun. It's so, you know, any moniker you can give it, like it's just that good. And just to quickly go through these last couple here and then move on. when you get to stage five, you can then start to set your sights for how you're going to exit. What does succession planning look like? What does exit look like? And you can take your time at the stage because stage five is a great place to be. And set your sights on stage six, which is the business owner, where you can actually own and not run your business. Magical, magical transformation into stage six. And then last but not least, you realize that this whole story wasn't actually about you, right? And it wasn't about what you can accomplish in your lifetime. It's what you can accomplish for lifetimes to come. And the very, very few people make it this far, but you can go from stage six, where it's about you and your investments and what you've done to stage seven, which is about what you can do and build in others. There's this Greek proverb that says, society grows great when old men plant trees under whose shade they'll never sit. And that's what stage seven is about, where we can give and create and pour into and build up people, systems, structures, knowledge, books, resources, training, relationships that we won't benefit from personally, but we know that those who come in our footsteps will. I think it very much aligns with something that I always say. There is no success without a successor. And, you know, we are almost getting to the end of the podcast. It's always hard to say goodbye any time. You know, it's a really deep, thought-provoking and resourceful conversation. But I'll end this with a quick fire round. Just five questions. Just give quick answers. So morning routine or productivity hack that has changed your life, what would that be? Yeah, so my morning routine, it all fits together, but prayer and meditation for 30 minutes to an hour and then exercise for 30 minutes to an hour every morning has made a massive difference in my world. I love that body, mind and spirit connection. So one book every founder should read besides the founder's evolution. We've mentioned it before, but Predictable Success by Les McKeown is fantastic. Okay. So what's one foreign or surprising thing people wouldn't guess from your LinkedIn profile? What's one surprising thing? I mentioned this earlier, but it's still pretty funny, is that in all of the things that I did, I dropped out of high school. So I never graduated high school here in the US. Oh, wow. Why is it that a lot of great founders drop out? Bill Gates, Steve Jobs, yourself. Well, you know, I need to find something to drop out of so that I can be great too. Okay, so a business leader or mentor you deeply admire and why? So we've talked a lot about Les on the show. He would certainly be the answer to that question. I would have to give a shout out to a dear friend and mentor of mine here in Atlanta. His name is Robert Mallon. Massive, massive influence in my life in a really, really difficult season. Oh, wow. What is it with the robots and business? Success, Robert Kiyosaki, there's so many great robots. So I think the last question would be success is what to you? Success to me, there's a couple of ways answering that question. Success for me is to restore the nobility of work. I think that work is not something to be avoided. I think it's something that creates value. I think it is how we solve any problem that we face together as humanity is through work. And so the nobility of work is not to find yourself in some dead end job, but to recognize no matter how medial or menial the job is, it's a critical part of our shared enterprises as humanity. I very much appreciate that perspective. So before you leave, do you have any final word of advice to our people out there, potential founders, current founders, people looking to scale up and scale up? What is your advice as a big brother? Here's the biggest tragedy that I've seen come about in large part because of my work, actually. And that is when folks know what the roadmap looks like, we get destination-itis, right? Where it's like, I understand why it's so hard. Well, I'll be okay when I get to stage five and can actually be CEO or I'll be okay when. And we put our happiness and our joy on hold, right? As if it's going to somehow appear to us in some later stage for some reason. And the reality of it is, in every stage of this journey, the best way to succeed in that stage, the only way to enjoy the journey is to enjoy every stage of the journey. And so for folks that are listening, joy doesn't come from the destination. It comes in the journey itself. and to make that a little bit more meaningful and certainly a lot more practical. One of the things that I do in the book is to outline the very specific joy that is available at every stage. One of the things that happens is you get to stage five and you'll find yourself thinking, man, I wish I was back in. And so I've had lots of conversations with lots of founders on all those ones that they say, man, I wish I could have that again. We've listed those out in the book so that you can actually enjoy them when you're in them. Well, you are a man of faith and you have just reminded me of one Bible passage. That's a verse from Psalm 30 verse 5. Weeping may endure for a night, but joy cometh in the morning. So joy is coming. Thank you very, very much for your time. I always say that an attitude of gratitude is good attitude. And when somebody shares their time with you, they share their life with you. The S you need for measuring life is a time. So from me to you, it's love and respect. And of course, to our audience, love and respect to you. Please support us, like, share, comment, you know, distribute this to everybody within your network. And of course, I'll keep working tirelessly to bring in tremendously fantastic individuals like Scott Reitz coming in with a lot of stees. So from me to you, it's look after yourselves. And of course, see you next time on The Pod. God bless you guys.