Ep. 2 | From employee to entrepreneur and the challenges between - Rod Robertson

Rod is the author of numerous widely acclaimed books, many of which have been taught internationally at the top academies and universities, including the Harvard Business School and Babson College. His newest book, "The New World of Entrepreneurship," outlines the nuts and bolts of starting a business post covid. As the Managing Partner of Briggs Capital, Rod has focused on maximizing value for sellers through various innovative exit strategies around the globe. Rod has over 20 years of transaction experience and entrepreneurial accomplishments. During his prior career, Rod served as president and CEO of distribution, real estate, consumer products, and software companies. Over the last fifteen years, Rod has successfully represented over 60 companies seeking to sell or recapitalize their business, raise equity, or divest subsidiaries in transactions.

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Hello, everybody, and welcome to episode two of Shaking Hands. I'm your host, Jack Moran. You can find me on Instagram at Blue Collar Kid that is blue collar K-E-H-D We have today a very special guest. Rod Robertson. How are you, Rod? I'm doing just fine. Rod is a 30 year entrepreneur, has spent a lot of his time coaching and mentoring young entrepreneurs, has taught at the Harvard Business School. Many of the leading academies around the world and is the author of a book that I use quite often in my day to day life, Winning an Entrepreneurship. So how are you doing today, Rod? You know, I'm feeling strong. I'm glad to be with you, young Jack. Let's have some fun today. Yeah, I'm excited. So I just want to get right into it and just kind of talk about, you know, at this podcast, we talk a lot about, you know, the experience of different entrepreneurs and, you know, how their life experiences have gotten them to where they are today. So, you know, I kind of wanted to start with like, where did you make the switch to being an entrepreneur in your early life? Were you working jobs or did you jump right into it from high school? Where did you study? Like, you know, kind of describe to me a little bit what the early life look like. You know, my DNA was different. It was I think it now I look back at it and it was always a entrepreneur's DNA. You know, I could never settle down. I was pretty bright guy, restless, had a lot going on, a lot of interest. But I couldn't get focus. I got fired from every job I ever had. I wasn't part of the Thundering Herd, and I didn't fit in very well. So my twenties were a restless period of disappointments until I finally got it together. I got my shit together and in my late twenties and and I got on a roll. And when I realized I didn't want to check, I needed a check, but I was never going to get a W-2. I was always just going to be on the field. I was outside the walls of the citadel. Everyone was inside. I was in the force with the Barbarians from the very beginning. So what was that first venture? How did you enter the world of entrepreneurship? Well, you know, my my world started as straight commission salesperson in Boston in real estate. And then I jumped up to become a real estate developer. Did well at that. But then I got screwed over by the owners, and I didn't like Ted very much. I mean, I worked my ass off. I was in my early thirties. I was the president of a company, but I didn't look at the paperwork very closely. And some bad things happened. And before I knew it, I was in a battle with them and I took my chips off the table that I had. And I went out and I bought a bankrupt pet food company and and I struggled and rustled it up. And for five years I built it and structured it and resold it. And then I did two other companies, one after the other, bang, bang. So and one was good, one was bad. So it was the good, the bad and the ugly for me. And I ended up, you know, getting into this entrepreneurship game for good. I became a partner at Briggs Capital. Briggs Capital dot com. And what we do is we represent entrepreneurs in their gross cycle. We help fund them certain companies and then we represent them when they sell them. And what after they sell, we help them to position themselves. If they want another go at it to do even something bigger and better and stronger. So it's not always about the first time coming out of the chute and hitting a home run. You know, we really advocate that you go for a single or a double, and you know what? You know, you get like your jump badge. Like if it was the military, you know what the first thing you want to do is you want to get there and you want to be a winner and you want to be able to be in a company and to build it up and to sell it. And then you can sit back and you can go for the home run on the next one. So the first time out, we don't always advocate for just mention it. And, you know, like what you read about in the book and all the outlets and, you know, you just don't go for the fence right away. So what would be kind of the check points if you were trying to get a single double, single or double as an early entrepreneur? You know, Well, there's a couple different ways to go about it. And, you know, for the people like me when I started or everyone that, you know, so many of the people, 95% of the people that don't have wealth or cash behind them, when they start a business, you want to start out and in your twenties and join the management team of a company somehow or be an intricate part where you get equity in the company so there's no risk to you. You're not signing up personally with the bank, you're not borrowing it, begging money from friends, family and you know, it's not all on your back. You just stay in your lane if you're in the sales, if you're in tech, if you're in development, if you're in social media, you stay in your lane. But join a team, a small business, you know, get that slice of equity from 1 to 10% and you don't roll with the company for two to 3 to 4 years. And then when you know the owner, the principles owner exit the company, you get your slice. But just as important what I just said, you know, you'll get your jump badge and you can say, you know what, I helped start a business. We grew it. And I was in the management team and I was an equity holder and I did just great. Then after that, you'll be able to cycle through it. And then now armed with some more cash, some more experience and the victory on your track record, you can go after the big, bigger deal and take down your own company by yourself. And you know, that's that's the next step. So where does someone go, say someone, you know, hasn't entered this entrepreneurship game yet and they want to, you know, use the method that you said. How do they go about approaching a company and defining that skill set to enter into a deal like that? Well, first of all, you really have to sit back and, you know, and yet you have to arm yourself with knowledge before. Right. Yet trying to jump into something that you don't know anything about. You stay in your lane. If you have a great tech idea or you have some idea that you really like, find the accountant, find somebody that can cover your weaknesses. If there's four or five components of to make you or, you know, a man in full or a woman in full, you know, but you only have 30% of those skill set, you got to get covered on the other 70% and bring in people in those those other verticals so that you're, you know, heading into combat with a full team. So I want to backtrack a little bit. You talked about kind of your early career and jumping into some deals and getting messed with a little bit and, you know, having some some interesting deals that you you you entered that in your perception may not have been successful but might have been, you know, good learning experiences. What were those experiences like? What were you learning from them when you did enter into these deals And these guys, smarter guys, older guys were kind of messing with you. Yeah, the older guys didn't think they were messing with me. They were just using me like, you know, like a tool. And I was a tool. I was full of energy, you know, I ambition and but I ended up signing bank notes for, you know, ten, $20 million. And I wasn't in control of the game, but that got me ten, 15% of the equity in these companies because I was a guy ready to jump on the grenade because I was so hungry to to be an entrepreneur. So, you know, and then when it came, push came to shove and things went a little south, I was the sacrificial lamb climbing up on the crucifix. And but, you know, thankfully, with some adroit maneuvering and these men having developed a conscience in the end, after they plucked me like a chicken, they you know, I scuttled the way like a hermit crab. And with with my little victuals and but I had enough to start my own company. Right. So when you were entering into these deals, I think I see in a lot of new entrepreneurs, they have this fear of getting screwed over so they never end up entering the deal. Would you would you say that it was better off that you got into these deals and got messed with a little bit and got that experience? Then? Yes, I know where you're going with this. And it's it's true. You know, I didn't have a mentor. I didn't have a guide or an advisor. I was just thrown in the wolf pit and I was a wolf, but my teeth hadn't grown yet. And, you know, I just if you're going to do something, you've really got to find a strong, mostly older advisors that's been around the track once or twice. And you know what? The first couple of sessions with these people, you sit there and you're like, okay, they'll give you free advice. But after a while, if you're doing something, you know, you got to make it. You got to make it worth their while and you got to make it more comfortable saying, Look, let's come to an arrangement, you know, with what I'm doing, I'm going to try to do this. Let me give you five, 10% of the pie. And just for your advice, your coaching and I have an I'm really going to need you and I'm going to make you a lot of money that you're, you know, without having to take the risk like I am. So getting it lined up with the right advisors who can bring in management teams. And, you know, a lot of us don't like to study business, but, you know, learning the best course ever is, you know, and it's torture to say is accounting. You got to be able to understand the income statement and the balance sheet. You know, the income statement is like a body in motion. The balance sheet is a snapshot at the body like an x ray. You have to know these two things. And if you don't, you're at somebody else's mercy. And you can have just awful things happen to you and you can get blindsided. So no matter what, I think you should take it upon yourself to get out there, you know, And, you know, look at the best books that you can see on the marketplace. And, you know, devise the books like the book that I wrote. I've written three books and they all stayed to what the fundamental, you know, entrepreneur needs to know to guilt to go into battle and to be able to talk some turkey with it. So I see with a lot of people that are looking for mentors, they feel like they're imposing on the person that they want to, you know, have as a mentor. And they and I hear them say, I don't want to bother him. I want to take his time. I want to ask him questions. How do you feel as being someone who is a mentor to so many people? What aspects of a person, how they approach you, makes you want to help them out? Well, you know, that's a really good question because you don't from the mentors point of view, you don't want to take on something that is, you know, not going to happen or the guys or the gals totally out to lunch in their head and you can see it. They're going to they're blundering off the path already into the minefield. And it's, you know, if if we have a conscience and we want to save the world, you know, these people from the beginning, we should just coach them out of that. And the biggest thing I tell people to do is don't do it because 85% of the deals don't don't happen. Well, so and the deals that do happen well, again, don't don't go for the long balls to go for single or double. But you've really got to, you know, as a mentor, you know, after a while. I don't I don't mind doing it, you know, for whatever reason, because I admire people who are throwing their hat in the arena. And and it keeps me in touch with the, you know, the new age of America. But after a while, people do expect to, you know, to get reimbursed in one fashion, another through equity or future cash. Nobody likes to do everything for free. After a while, you know, you begin to feel like people are taking advantage of you. So when you're evaluating someone who approaches you, what are even evaluating an entrepreneur and new entrepreneur, what are kind of the characteristics that you look for in a person that determine your intuition? On whether they're going to be successful or not? That's another good question. I mean, I look at, you know, obviously what business to go in in the verticals, the sectors. There's this thing called I wrote into some of the books and I've had it published in articles. I call it the Mad Scientist syndrome, and I've seen it 30, 40, 50 times where people say, my God, my companies were $50 million and I'm going to give you 1% just for mentoring me. You'll you'll be into the money for $500,000. I say, my God, thank you so much. But the company's really worth nothing. And, you know, and to drive these people and to find out to separate the people who can get away from their sense of megalomania and their belief, you know, and drinking their own Kool-Aid tend and to getting them grounded into reality is really one of the main things. It's very amusing and it's very fun because but the best thing, a mentor can do is bring people to reality if they like it or not. And I would say 30 or 40% very promising companies that I told the truth to the people cut me right afterwards, which was fine because I didn't want to waste my time. And, you know, and I'd say out of that 30, 40%, most of them failed because the smart coaches and advisors didn't want to, you know, get paid in what we would call Confederate dollars that were worthless after a while. What would you say are the main reasons why a business will fail in your experience? First of all, it's cash. You know, in today's environment, look at the bank lending rates. It's brutal, you know, for small businesses that are that are getting started, you know, you still can go out there and get some nice loans from banks. But the banks are tight right now. So, you know, but that's okay because know, if most of the deals that are starting are technology or social media related like so many of them are, you don't need cash from a bank so that the failure is, you know, going through and, you know, do you have enough money and then you what is your timeline to marketplace? And then, you know, people, you know, no matter what, you got to show future investors or the marketplace that you know how to put together performers, you know, how do it how do you get your accountants lined up? How do you get, you know, your growth strategy lined up? And then you have a cap tables or capitalization tables which show who gets what for doing what. And, you know, you as the primary owner, you know, you don't mind giving up 25% of your business, 30% of your business to your team if they're going to drive the business. But you know, you want to ladle that out slowly over time. And there's a formula for everything. You know, when a company is growing, you know, the advisors, like mentors, can get anywhere from 1 to 5% of a business. You know, you have someone doing business development gets two and a half percent C and CFO two and one half percent. The president can get 5 to 7 to CEO, 7 to 10. There's there's just the matrix and then you have your formal board and you know, what do they do? People always talk about board of directors don't have a board of directors because they can tell you what to do after a while and they can take your company from you. What you want to have is a board of advisors who don't have any voting rights, don't don't let these people slick. Talking to the big COO, setting up a board of directors and all some before you know you'll be voted out. And I remember one time this really difficult guy that I did did work with this guy and I were hired by Playboy to open up casinos around the world. It was hysterical. I was having the time of my life. We were flying all around the world. And but he in the end, he got nasty and and Playboy How should we say, took advantage of him. And then he that flowed downhill to me. And, you know, there are just so many crazy stories out there and it's all so much fun. But, you know, you got to have everything in writing. This is another thing. Everyone does things on a handshake and I still do it. And I should be embarrassed how many times I've been buggered by friends and things. my God, there's a misunderstanding. Or you didn't produce or it didn't happen. Get things in writing ahead of time. If you're if you're putting money in, certainly. And if you're a dodo bird. If you don't. And then if you're if you're doing that, if you're spending over 20% of your time on a project and it's looked like it's going to be six months of your time, you deserve to have it in writing. And if they're not giving it to you in writing, there's something smells wrong. So what are the main things that you should cover in writing, like in a contract? Well, you know what? I see you, Jack. You're a little grand master of the the eye and poking around with all the contracts. You know, it's good. The air contracts are nice, but they have to be seen and they have to be cut and chopped and overlooked. Don't. But, you know, these lawyers are shit. Don't get caught up with the lawyers too early, man. They're just awful, you know? And they're pompous and they're bullies, and then they they they want their, you know, these four or $500 an hour. And before you know it, I'm dealing on a I'm vice chair of a company and overseas for Ukraine relief now. And we just got a lawyer built for $192,000. We're like was you know, we're trying to help the Ukraine people and we got smoked by this law firm and I'm not very happy about it. And the but it wasn't my end of the ship. I was an advisor. And the people that were supposed to be overseeing the lawyers times, they ran amok. And you know what? Now the lawyers are like squawking and they're going to put a lean on the company. So keep the lawyers away. Keep your contracts very simple. But, you know, until you grow, you know, but don't don't be quick to bring on the lawyers. So I'll say in my entrepreneurial experience, my short entrepreneurial experience thus far, I have had one of the most difficult things for me is when you're dealing with people who are older and smarter than you and you have boundaries that you want to set. But sometimes you feel like you're being disrespectful because you want to be respectful to these older people. How do you kind of set those boundaries? For instance, with a lawyer, you know, that's telling you to do one thing, one one way? You know, it's it's really interesting, Jack, because I've been watching your company develop and it's very promising and looking great. And I've already seen the turmoil that you've gone through when when you're out pitching people that, you know, you get your your youthful vigor and your brain is far advanced. But what we're looking at is these these people that are a little moronic are in a position because their brain has been, I don't know, calcified over the years of the younger people can't be as bright. But you know what? These people, you got to milk them, you got to use them and you got to move them and they and they got to milk and use you. It's a two way street. But, you know, the the the older people don't trust the younger and the younger people don't trust the older. And that's why you need advisors and mentors to bridge that gap. So for somebody who's looking to make this leap into entrepreneurship, maybe they don't have the business acumen and the the fundamentals of business, but they have a good idea. They've made the commitment that they want to make the swap and they have the drive. Where do they start? I know when I came to you with my first idea, you know, you kind of started me with building a financial model to project out the business and see if it works on paper. Is that where you would recommend for a new entrepreneur looking to enter into the game with a new business? How you don't. You don't have to go to a lawyer. You don't have to go to an accountant. When you're beginning, you just have to find a savvy business person that's worked in a small business that can extrapolate, you know, sit you down and just grill you and pull out of your cerebral them all the information and drop it into, you know, the mechanics of cash flow. And you're sitting there saying, we could do this, we can we're going to grow by 20%. But then what are your cost of goods? And this goes back to that dreaded accounting course, but it shouldn't be dreaded at all because it's abstract when you're you know, you're looking at this, that these boring freaking books, but also when it's your life, it's like, holy shit, this all makes sense. And what does this mean over here of my cost of goods and what is bad debt? If my customer screws me out of 30% of my money? You know, there's so many things that you have to learn. So I just really counsel you to get out there and find some good books and self educate yourself on the growth. So you've obviously had a long career, an entrepreneur shape. What would Rod now tell 25, 26 year old Rod if there is one or two pieces of advice that you could give yourself? You know, when I the average age at the the top MBA schools in the country is 29.1 years old. And, you know, I've had the good fortune to teach and guest lecture over at the Harvard Business School. That's an MBA program, which is one of the hottest programs in the country. And I don't know, 17 different schools I've taught. And, you know, they put the give me the MBA classes and I sit there and I just tell them, you know what, this is not a exercise, and I'd like to teach Crash and Burns. I'd like to tell the the gory stories of people committing suicide and families getting crushed in and smart ass MBAs making working for a big company that says, let's just cut this branch and main down. And also 100 families are out of work. It's not a theoretical exercise, it's blood and guts. You got to get out there. And, you know, for the young entrepreneurs, you know, the world is even better now. You know, all these older people, you know, the generational wealth is going to be slipping toward the all the younger generations in the age from 22 to 40 right now, man, the money's going to flow because it's a lot of people the stock markets, the stock market, but people have made bundles. And you know what? If you have the right offering, you know, looking for 50000 to $100000, you should be able to get those chunks of cash. So if you're looking for$1,000,000, you know what? You try to get one lead investor for 250 or 500 and then you fill it out with other people. But then there's smart money and there's stupid money. And the smart money is the people that where you're going into the sector believe what you're doing and become a spokesman for you. And then there's not, you know, the passive money, which is just from people that have no idea. But just like the idea and it sounds good to them, they're amateurs. They're not really going to help you. So you really want to hunt for smart money. So you say you like to to teach the crash and burn stories. What is a crash and burn story that you like to tell that you think is a good. there's so many and I could go on. It's more colorful and interesting than anything you're watching on television. I'm telling it because it's real life, you know, greed, avarice, lust, power, money, wealth, riches. You know, you've seen it all. So, you know, sometime we'll go well, we'll go out for a beer. You can get me back on the show and I'll have a couple beers while I'm talking, and I'll have a list of three or four maybe on my next show, and I'll torture everyone with, you know, these weird scenarios that unfold that are more interesting than just about anything else in life. When I was young, I thought business was so freaking boring. I was like, my God, I'll blow my brains out if I'm going to be a businessman. I tried to get in the CIA like you did, and I tried this and that. I did everything I could to avoid being a businessman. But then once I found out it's just not about the numbers, It's a huge adventure in a life and death struggle, especially in the world of entrepreneurship. It's the road less traveled. But I'm Tonya. It's a rock on sarcasm, a life or death game that isn't for the week. So, Rod, we've had a lot of, you know, conversations outside the mike. And I know that you've done a lot of deals and business with the military. You've talked to me a little bit about your Navy SEALs, 80% real. Can you talk a little bit about that? Yeah, You know, we all get to do you know, I run this mergers and acquisition firms. So we've done over 270 transactions and we've you know, it's just been a long, crazy game. But I've always enjoyed, you know, the military. I was always into military history, this and that. So why not get involved in the military? And one of the rules they had that I think applies directly to entrepreneurs ship is the it's like the 8024 special forces where you know, you never can have everything buttoned up as an entrepreneur. You can't sit there and you know that everything's moving too fast. And most of the military, when they're doing something, they get to the 80% surety level that it's going to work and they pull the trigger and they go for it. If you wait to 90 or 95, then everything on the ground or everything shifts around and it's not what it is. The water was like three weeks before. So once you, you know, you have to take a plunge at some time. So you're size it up, you get to that, that, that brinkmanship of 80% that a lot of people use and then you pull the trigger because you're never going to get to 100%. So get there, get a consensus or a majority consensus if there's five smart people in your management team or whatever, and you get three or even four of them, then you go. So you advocate for the 7034 rule of entrepreneurship. Can you talk about that a little bit? You know, the the 7030 rule is one of the best rules that, you know, I've sort of developed and I talk to people about, you know, when you're at 70%, you know, do you go and work as a young person and, you know, do something like accounting or something that you don't want to do sales, you're just grinding up because you got to make a living. You want to, you know, make 50 grand and you want to make 100. Then you want to make two, then you want to make three and then you want to save out of the three. You want to say 200 and get your freedom. So there's two ways of looking at this entrepreneurship thing is you can work your ass off, be part of the machine, the thundering herd for the 70%, or you can go out in the field of battle where you're just a hardcore entrepreneur. But you know what? In the 70% of life and working and doing 30% side hustles are side gigs where you're enjoying it, making auxiliary income, or in my case, you know, traveling. You know, I've been over to 66 countries now doing business and education around the world. You know, 70% of my work life is is drudgery. 30% is where the action said. And out of that 30%, most of my fund as I'm getting from overseas where I'm just, you know, and besides having business, I'm you know, the clash of cultures and everything else like we're working on where we just got sucked into a a $1 billion raise down in Guatemala where I'm hitting on Tuesday with to raise money for a railroad line, the Panama Canal waters going down. They have to have an alternate route. So they're going to build a railway from Guatemala up through Mexico into the United States where they can the ships from Asia can unload there. I mean, how much fun is this? I can't believe that I have the honored that they've put us in ahead of a project like this. And, you know, then after a while on that 30%, I get to do this, I get to go to Ukraine, I get to go and, you know, chase my dreams. I probably don't make a lot of money doing these things. I'm grinding for 70, but 30% of my time is spent, you know, in the whirlwind of and I don't remember so much everything else, but I do remember my 30%. Do you think that putting quality of life over income is important as an entrepreneur? You know, when most entrepreneurs get too deep into the business, there's there's they call it this the balance of work, love and play. When I was young, I was like, This was for me. But as I get older, I circle back to it quite a bit and I'm really a proponent of it. It's, you know, having, you know, like the three, the three nozzles, you know, work. We all know love is, you know, is family, children, whatever, you know, that is. And then play is what you do to entertain yourself and stay healthy. And you try to keep a balance between these three. But for entrepreneurs, this is their 70% work. You know, the family and home usually suffers and they manage to play a little bit. But to try to keep that balance, you always have to regulate yourself because it's always a sprint as an entrepreneur. But you know what? It really isn't. It's it's it's a marathon. So but you can get burnt out. So, you know, looking at what you want to do as an entrepreneur, you look at it as like a major League baseball, football, basketball. You do it 3 to 5 years, you know, And if you're looking at it, if you're looking at a whole lifetime of work, when I talk to my my three kids and all their, you know, huge amount of friends that I get to interact with, they're all like kind of horrified that they got 40 years of work ahead of them. But I say, you know what? If you want to take this road less traveled, you'll work for 3 to 5 years and then you take a break. Then you go to Panama and squirrel around, have some fun, you buy some land, you do some good things there. You go. You know, you indulge yourself, you work it, you crush it, and then you relax and entertain it. And then you know what? And then you get your next next gig for another 3 to 5 and see how you do with that. It's a hectic, helter skelter world. But I'm telling you, you're going to live a full life. And I said, Now what? People my age and they're all got the bad hips and are retiring and I listen to them talk. I never really fought on occasion. My gut, my company needed me and I'm looking at the guy in the chair and Jesus, I'm like, Wow, man, I'm glad I wasn't you, you know? And but they probably look at me and say, I'm glad I was you so you talked before about the Navy SEAL, 80% rule and working with the military, you've obviously done some deals internationally. How does international business compare to business in the US? You know, for all of us that have the wanderlust of travel, you know, and we look at these foreign lands and there's such, you know, opportunity, I mean, it's like 90% failure. It's really difficult to do business overseas. They think differently than we do. You know, as much as I am a man of the world, I'm very glad America has oceans on either side of us. It keeps us out of the fray. You look all the way from Mexico down to Argentina. The whole place is in the doldrums. You look in Europe, what's happening now? China is changing. It's it's a quagmire. And most gringos or of us American based people who are really put our best foot forward to be good, straightforward business people. The other people, you know, most of a lot of them are serpents. And, you know, it's life or death for them. For us, it's a thrust into business. And but we all manage to make a good living. And in the end, we all have a good life. We don't miss a meal overseas. The piranhas and sharks. But if you are going to venture into deals overseas, you have to get a partner in that country and be at his mercy. You know, there's and the four or five deals that I'm involved with where I have ownership and overseas, I really enjoy my partners and they're well trusted. They're well tested. But but then I've had a couple where people absconded with the funds, too. So, you know, look at overseas, don't make it the primary thrust of your business or, you know, the numbers are going to show you that nothing good is going to come of it. So you started Briggs Capital. You're the president of Briggs Capital. How did you start that business and how'd you get into M&A? You know, to me, as I as I told you before, I had the good, the bad and the ugly of my three deals, and then I had enough of owning entre, you know, running businesses. But I'd loved the game so much that I joined the mergers and acquisition worlds where, you know, I can be a sponsor, copilot, mentor, I can put the deals together, we can raise the cash. You know, I'm in the game. But, you know, frankly, as an advisor, you know, my group, you know, it's it's really metamorphosis over the years. And it's just been a wonderful life of examining different opportunities every day from different areas. And it's a big puzzle. It's like a big chess game. There's I'm playing right now like 16 different chess games at once. And for me, that's that's a thrill. And it's it's not even about business. So you you talked before about, you know, entrepreneurs kind of drinking the Kool-Aid and thinking their company is worth 40, $50 million. And I know I've been in that situation where I don't really know how to evaluate my company. And I just think, you know, it is worth $100 million in my head. But realistically, there is a process for evaluating a company. How do you determine how much a company's worth? You know, this is really one of the most painful exercises for an entrepreneur or a family business or somebody that's inherited their business from their parents. And they're running it, their friends. And the world whispers to them, My God, you're sitting on a gold mined, and if only we can reach this level and we can just claw up the mountain a little further, you know, we're going to be rich. But no, it's not true. You know, it's very rarely true. And that's just the hardship of the game. But there's nothing wrong with making millions instead of tens of millions. And for those of you that get to the tens of millions, you know what? You're you're like the lucky sperm cell. I'm telling you, it's it's a harsh game out there to make. If anyone can start from nothing with zero, you know, and sit there and stroke and check 3 to 5 years later in their twenties to get ten to 20 to 30 million bucks, they are should be saluted by their communities because it's a rarity. But who's to say you don't get your slice of it? And who's to say you don't land several million bucks and then rest? Look at the playing field. And then on the next deal, you take 2 million a pop and into the next one, and that's where you put your 2 million in. It turns into 20 million. And that's you know what? Then you're 40 and you're all set. It's the promised land. Yes. So I know I'm kind of jumping around here, but you mentioned that deal you're doing down in Guatemala. And I apologize that I'm jumping around. It's just as it's coming in my train of thought. What are some of the variables that you're looking at in the deal? Like, what are you trying to manage to keep the deal in your control so that it goes as planned? Well, nothing goes as planned overseas because, you know, we're just outriders and advisors, so on that deal, you know, we're raising an enormous amount of money, but from it's a railroad deal. So we go to railroad businesses and there's people that fund railroads and there's international banks and funds. And, you know, it's just a fascinating matrix of building as quickly as we can. The the the revenue, you know, and who can invest in that. And of course, you could imagine the financial models and these things are something that really it's like out of Tesla or something. But, you know, that deal is a little bit different, you know, and the other international deals that I work on, they are, you know, much smaller, more scalable, again, toward the privately held family owned businesses. And we're the Latin deals, you know, we're involved in like seven of them now, and none of them are going, well, everyone they talk and they they pinch each other and they spend money. But the Latins, I'm finding very over the last 20 years, it's very hard to conclude businesses with them. But, you know, but then think about it. Who? They're the Europeans. my God. The French are, you know, the the Germans. They're they're you know, they're they're okay. But, you know, we could go around and it would. Jack, I wonder if you have me back. We can break down each country and I could go through all the characteristics that dealing with these different countries. But, you know, it's an interesting country. Is Canada okay? They're our neighbor to the north. Third, you know, 1/10 our size, 1/10 of everything. But they are an untapped market for so much of America. And again, I don't mean to generalize, but they are not jerks like us on the whole. You know, they're they're more they're more socially responsible. They're more worried about to saying the correct things. And they're more you know, and they're always saying, I'm sorry, so sorry. I'm like, Why are you sorry? I said, I'm not sorry. I want to make everybody money here. Let's let's make money. So, you know, the Canadians are very interests. I've done some great deals and there's you know, there's powerful people there, obviously. But there are different animal than us, too, and maybe even a better animal than we are because we're we kind of we're we're aggressive people. So it's interesting that you're kind of judging these businesses based on the types of people do you think that the the variable of the person itself has more influence on whether the deal is successful, how a person acts or you you analyze that more than you're even analyzing the business model itself. I've found that, you know, humans are wild cards and like if I don't match up with the people, I can judge pretty quickly whether or not the deal is going to work out based on the people from even the very first meeting. Yeah, well, you're in a very interesting business. You're dealing with well-grounded people who are finite thinkers, who are dealing with earth erosion, movement of money and goods. I mean, the technology people are the wild cards, you know, because most of them aren't sound financially, and they're the rip roaring with their numbers and they're the mad scientist club. They're the they're all the president of my mad scientist club, the tech people. And, you know, so there's like a businesses and industries. There's like 17 classified sectors of business and each sector has its own valuation matrix and each sector has its own genre of people that do very well in their business. And if you did a psychological profile of these 17 different people and brought these 17 different people with the same amount of success into a room for a drink, I think it would be like a bunch of aliens looking at each other. What your favorite business models? Well, the tech is great because it's it's go big or go home. You know, it's where the big money is and it's the big play. And, you know, you don't have to create something new. You want to be the shovel and the pick. You want to be something in an axillary product that can be a bell in a whistle. You don't need to be the main thrust or the breakthrough technology. You know, you you want to be something that is some company will say, we got to have them. We're going to ladle them into our whole distribution network. We're going to run them through our channels and with our 17 channel partners will be able take that product, you know, and get a77 percent margin on it, which is $3 million to us. And if you take 4 million and you multiply by ten, the company could be worth 30 million. So, you know, you can do the math really quick. It's it's cycle through very quickly. But the tech, I think, is the most dangerous. But most rewarding. But I like, you know, then you have your manufacturing section, which is, man, I hate manufacturing. I know I don't you know, it's hard and it's usually handed down from family to family. You can't just start with jump in. You can do outsourced manufacturing. We did the steel, these two guys, great guys. We end up selling this company for over $100 million. They made the tiles that you when you go to buy the railroad station the yellow tiles with the bumps. These guys went out, high school guys, buddies. They went out and they built it and they built this thing up and they didn't even have own factories. They shifted it off to all these companies that were hurting because Detroit wasn't doing it. They made those things. They built a distribution model and they sold for over a hundred million. And all those guys were awesome. Well, yeah, and it's funny because you talk about not having to be first to the race and our last gasp I was a gold nerd talked about on the episode that he only likes to enter deals when he's first to the race and when he's come up with it. How do you kind of differentiate those two methods? Well, these gentlemen were older, So, you know, we're talking for entrepreneurs from, you know, 20 to 35 or 40. You know, I'd say, you know, you go for the single or doubled. These boys had already done it once and they had the money to start this company. And it was like, you know, four or 5 million bucks. And they were in their fifties and sixties. They were they were in their prime and they worked it for a long time. And but, you know, when we were talking about manufacturing, outsource manufacturing, if you got something, there's somebody that's going to do. It used to be in China and now they're swinging over to Vietnam and these other countries and now they're before was offshore. Now it's onshore. What's going to be built in the Americas? Mexico is just now passed China for the first time in 20 years before the rise of China. Now the decline of China. Now Mexico is importing and doing more goods and manufacturing more than anyone else, shipping it to the United States. Mexico is a great place to do business. So I now that I've been an entrepreneur for a couple of years, I find that a lot of my friends and, you know, people solicit me their ideas kind of to run it by me as a sounding board. And I find that a lot of these ideas are like products that require manufacturing. What is kind of the process to do You think that's even a good business to enter is that they're setting themselves up for doom. You know, if they do start that process, should they, you know, offshore to China or like kind of, you know, talk about that a little bit. Yeah, I'm following you on that. You know what? Again, it seems like in technology, you're not going to or medicine, you're not going to be the breakthrough person. Most likely it's going to be done in the lab or a think tank or it's going to be done over at MIT or something. You want to do something that somebody else has already done, and you're just taken a slight different variation of the theme rebranding and remarketing it and reselling it and streaming along you don't want to be the first. You want to be the ice breaker, you know, going against all the negative friction, trying to introduce something new to a marketplace. You want to take something that's already successful and do it one step better or one step different. And with the the social media and selling and the quick to market strategies and the visibility of scalable I.T. Now you want to just jump, jump, jump, jump. And you know what again that companies make in a billion, your company makes 20 million. That's just fine for you. So how do you as a an early entrepreneur with very little credibility or experience, how do you get that momentum going for, you know, something that you're trying to do? I always talk about and live by, I kind of fake it till you make it. I don't know if that's the best method. It's worked for me in the past, but how do you kind of get that credibility to start getting some momentum with your your projects? But it's interesting, Jack, that you said fake it to you, Make it. You know what? You already had made it, you know, but you thought you were faking it. You know, you had you have the right product, the right game. And that's why your company's been so successful, you know, for other people. You know, what you just got. Again, it's it's blocking and tackling a business, stalling your numbers, getting some advisors, getting people in, splitting the if you got something good going on, cut the cake up. Don't agonize that you're given five or 10% away to somebody that my God don't give a do you realize I'm giving you$7 million? No. You know, I would give them a slice of the cake. What about partnerships? Do you think it's a good method or do you think that's setting yourself up for failure? taxes. That's a whole nother beast. You know, partnerships. And, you know, 5050 partnerships are tough because if it comes to a battle, you know, you grind each other into dust and the company's gone. Somebody should have one leg up over the other person. But, you know, and, you know, 5149 never really it's kind of a strange thing. You know, 6047 30 is usually better, but having a 5050 partner, you got it. Then you may need somebody that's can be a tie breaker because usually two partners do two different thing. One one guy does manufacturing and distribution, the other one does finance and money and h.r. They're two different animals and they're going to disagree. And one could be conservative and one could be aggressive. And there's going to be a beef. So 5050 partnerships, there's got to be a way for a tie breaker. What are the most valued employees or, you know, maybe they're not an employee. Maybe you're hiring them through equity, but what are the most valued positions to have in an early startup? Well, you know, it's like a football team. You know, who's the quarterback, who's the the running back, the running backs in the wide receivers. Those are the salespeople. Who's grinding it in the interior? You know, the the unsung heroes of the business. You know, you just got to sit back and venture or any people that are going to invest are going to want to see a traditional management team built out with each spot covered like a bingo card. So, you know, you want to sit there and you're going to say, here's our business development, here's our VP of sales. Even if it's bullshit, you got to lay it out that way because that's what people want to see. Is it better to have kind of the person at the helm being more of that abstract visionary, or to be the more pragmatic operational person? Have you found the person at the helm should if it's not a tech based company and if it's not IP based, that person at the helm should be the person that's driving the revenue, you know, the person. They don't have to be the salesperson all the time, but they're the ones that landed the first three or four big accounts or strategic partnerships. If you're not if there's no revenue, there's no company. So, you know, you got to be, you know, companies under 5 million and certainly less than that, the the owner founder has to deliver usually 50% of the revenue. And we're getting pretty close to the end here. But you've seen with with my company, we're trying to kind of incubate entrepreneurs. And I like to start these guys out making cold calls because I found that when I did the door to door job, that was such a big learning experience for me. If you can make it in straight commission sales, you really can make it in anything. But I find that a lot of people want to enter into entrepreneurship but want to avoid doing sales. Is there any way to avoid doing sales if you're a founder and CEO? Well, if you're going to avoid it, you better have something that other people covet that it's going to sell itself, right? And then if you're not going to do the sales and the marketing, then, you know, you got to attract somebody to doing it. You know, what with your company, one of the things that you did great right out of the chute is you're giving the salespeople, which is unusual, such chunks of equity. I think it's it was awesome. It was almost too much for me to to devote on to approve. But now I can see the wisdom of it because of different sales cycles and everything else. So, you know, giving, you know, cutting the cake. And then, you know, if there's two types of cut in the cake and give an equity, there's, you know, giving them actual percentages in the business, then you can give them options, which is better because they're not in the cap tables and you don't have to say, well, this guy owns 3%, he owns two discounts, five discount, six. You can say I own 100% of the company, but I've given away 20% of the value of the company in an option pool. And those people are not on the balance sheet, but they have a right to the equity when the company is sold. When you give stock to somebody, if you have a $5 million company and you give 10% of the stock to somebody at a at zero founder's price, that person has just landed a $500,000 tax liability and he's got to pay 200,000 in taxes. He doesn't want to do that. And what happens if the company, that person could suffer and take that stock and pay the 200,000 and then the company doesn't well go well, the government makes out. And this person, besides not making any money, will have paid taxes by using options and an option pool. The people only get paid when the company is sold and there's a liquidity event and that way is much safer for everybody. That's super interesting and kind of what you were talking about before, just to make it clear to the audience, you know, how I in the beginning of the company needing to raise people to help expand sales, it was difficult having low cash flow, being a startup. And when you hire people and you pay them a salary, it's immediately a risk for the company. And so kind of how we alleviated risk was by creating that big asset incentive at the end of the pie by, you know, the revenue that you generate for the company buying you equity and large commission shares. But it so we are giving up more value, but we were alleviating some risk by we were alleviating some risk because the only way that we're giving up that value is if we were successful. So we wanted to raise$10 million in revenue, which is why we piece together that model to alleviate that risk but guarantee the success if we were going to give away that money. Yes, I thought it was a risky play in the beginning, but it looks like it's going to pay off. And besides, you know, the direct owners, I think other people could walk away with some very, very nice money on their first step to becoming an entrepreneur. And so from the people that have entered the deal, they it can be difficult. And I've been in that position where you're straight commission and you don't know how your next where your next check is going to come from, if it's going to ever work out, because it is kind of a pie in the sky and you have to have that confidence to get to that, you know, light at the end of the tunnel. How have you dealt with in your career kind of those the chaos and the stress of the unknown of entrepreneurship? You know what? I haven't done with it very well. I ended up in two or three emergency rooms thinking I was having a heart attack, and now it's very amusing. I if we ever had a drink, I'll have you in stitches about me one time. They were they were they were ripping my shirt off thinking I had a heart attack. I was very healthy, athletic, 35 year old guy. And the doctor looked down at me, goes, right at your back. The guy in the emergency room is getting the paddles out. He's like, Jesus, you got to sit up. You're fine. Just have a tough not a bad week or your kid. And, you know, and I was, am I okay? And I was a little sheepish, but he's fine. It should just get a better, easier job. And I never did. But I've learned to deal with stress, you know, And that's a whole nother subject to to talk stress, because stress is a killer and how to harness stress and make it work for you. This is really something that it's because every night when you're not making money and you're hoping on the come that you're going to you're on something that's going to be big. Or if it's not looking good, there's another subject. One day you cut bait and get out. And how do you protect yourself if you signed up on bank notes or your old people money? You know, there's that. This is what I enjoyed talking about with the crash and burns because it's one thing. It's a happy story for everyone to make money. But I think everyone who enters the arena has to understand and what the down stroke is. And you want to live to fight for another day. Yeah. And I think that, you know, what I've done in my own personal experiences, I have always tried to focus or not focus on the money as much as I have focused on the knowledge from the experiences. I've found that if my biggest priority is learning, then I'm not really as afraid of the risk because at the end of the day, that knowledge is what's going to generate the income for me and having those skills. So I've never been afraid to enter a deal or go into business with a person or try something out, because at the end of the day, if it led to me not having money, that would have been the expense of getting that experience and that knowledge. That's true. As long as not signing any bank loans or if the the crash and burn you had is just a mild one and it's just no harm, no foul. And we did our best and let's fold up shop and we learned we're going to jump into something else. But if the banks after you, you're ruining your credit. If you know you're there, all those things you really have to protect yourself that that if you decide to walk away from the game, that you're just walking away from the game and there'll be another game for you. But you don't want the dogs of the the finance world, you know, chirping at you and coming after you. And so you could never, you know, pursue an orderly life and your next adventure. So we're hitting the hour mark here, so I'll wrap it up. But you're a very well-read guy. Is there any books that you would recommend to anyone listening that you find are useful or beneficial? You know, from for me, I do business so much that I don't like to read business books. I find business books to be horribly boring. I don't I just, you know, I'd rather read about Napoleon or, you know, what's going on now in Ukraine and you know what's happening with the Chinese economy. I think, you know, as you're dealing with older people to be well versed in what's happening in the world, not just in politics, but, you know, for people should understand what's happening in China right now, that they're taking a huge step back. Their exports are tumbling, their their economies imploding. The people in the from 20 to 35 are it's it's a real issue. One last thing that I think is fascinating about the world is the United States has 76 million people from the age of 18 to 34. China has 330 million people from 18 to 34. India has 880 million people. Two thirds of their population are young. No, everyone's got to watch India. They're going to be the big player coming up. They've already surpassed China in population, but China's population is getting really old. You know, with all the immigration issues. United States have these immigrants that are coming in, maybe 30% of them are no good, but 70% are going to be the future of America and they're going to be good workers. And when everything settles down with this immigration stuff, we're going to be glad that a lot of these people came to us. That's a really interesting point. Just to kind of wrap it up here, do you have any last remarks for anyone listening to this podcast? It just, you know, as an I say, go for it. You always can go get a job. You know what? The people that I've seen over the decades that always wanted to do it, never did it. They feel unfulfilled. A little bit at the end. And you know what? At one time in your life, you know, it's not like before where you went to Kodak and you worked for 40 years and got the golden watch. Everything's a 3 to 5 year gig. And if you don't just jump to the next one, you know, if you jump three times, one of the three should hit. And if you do it correctly and getting with the right people, you know that if you're one of the three that hits the next time, you could double and triple down and on your go to a magnificent life. All right, Rod, I really appreciate you taking the time out of your busy day to talk to us and we'll end it there. Hey, I enjoyed it. You got me going. And you know what? I look forward to talking to everyone again. All right. We'll definitely have you back. Well, that concludes episode two of Shaking Hands podcast. I'm your host, Jack Moran. You can find me on Instagram at Blue Collar Kid. That's blue collar K-E-H-D. If you have any questions, suggestions or feedback, please do not hesitate to reach out. If you like the show, please subscribe. And with that being said, stay tuned. We're going to have a lot more interesting guests and conversations. So see you next time.