TSP079 | David Dotlich – Transcription

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John Livesay:

Hi, and welcome to The Successful Pitch podcast. Today’s guest is David Dotlich, who is the author of 12 best-selling books all about leadership. His latest one is Transitions at the Top. He talks about the importance of being a leader is when you delegate, dealt, dictate. He actually tells a story about going on a tour at Africa for four months, and the stress of living together is what inspired him to get into leadership. He has great insights into emotional intelligence that requires self-regulation, impulse control, empathy, and delayed gratification in order to be a good leader, and that’s what’s required to inspire a team to follow you and get investors like David, to invest in you. He has great insights into what he looks for, when he hears a pitch. Be sure to find out what those are.
The interview begins in 45 seconds right after this information on how you can get funded fast.
Are you a founder struggling with your investor pitch? Do you need warm introductions to the right investors to get your startup funded? Do you need a funding road map to get you there fast? All of this and more can be found in Crack the Funding Code. Join host, John Livesay, and Judy Robinett, bestselling author of How to Be a Power Connector and board member of Illuminate Ventures, on their free Crack the Funding Code webinar. Simply go to judyrobinett – that’s J-U-D-Y-R-O-B-I-N-E-T-T dot com – and click on the webinar tab to see how to tap into their network of investors from around the world. There’s a link in the show notes as well. You’re only one click away from getting funded fast.

Welcome to The Successful Pitch podcast. Today I’m honored to have David Dotlich, who is an author of Transitions at the Top, and he’s the founder and chairman of Pivot, one of the world’s largest providers of customized executive learning for senior leaders of Fortune 500 companies. He’s the former executive VP of Honeywell, and the former founder president of Oliver Wyman, a delta executive learning center. He has written many other best-selling books besides Transitions at the Top, they all have a theme about leadership. We’re going to do a deep dive into that, and as if that’s not enough, David’s also an angel investor. David welcome to the show.

David:

Thanks John. I’m glad to be here.

John:

I always like to ask my guest, how did you get involved in leadership? In your particular case, what was your first — the idea to write a book about this and how did you decide you’re going to teach people to become leaders?

David:

Well, I started out taking people across Africa. Believe it or not, leading tours and guides, driving from Johannesburg to London for four months across Africa. I was kind of a head of the group and of buddy of mine were running the company. We found the stress of travelling across Africa was not nearly as much — nearly as difficult as the stress of living together. Fifteen people for four months. In that experience, I learned that it’s really all about leadership, that getting people to work together and work as a team requires leading, leading effectively. So from there, I went back to school and then joined a big company. In every situation, I could see there was really leadership that made the difference. Even in company performance, when I look at how well a company performs, usually it can be attributed to effective leadership.

I’m always amaze John, that analyst don’t have much of a clue of how you analyze and understand and evaluate what’s good leadership inside a company today. But to me, it’s leadership that makes the difference.

John:

Well, how do you define what a good leader is? Do you have any tips for that?

David:

Well, obviously you’ve got to have the willingness of people to follow you. Without any followership or willingness to follow, you’re probably not leading. To me a good leader is one who can get the follower’s thinking that they’re doing it themselves, that they’re the ones that — . That idea was first talked about by Aida Nour who said, “The mark of a good leader is that at the end of the day, people say we did it ourselves.” So not only his followership, but it’s actually people thinking they’re doing it, and then obviously it’s towards the goal, achieving your goal. In the study of leadership, there are many ways to do it. There is no one way to be a leader, there’s a lot of ways to do it.

John:

Well, you’ve worked with companies like Nike and Johnson & Johnson, and PG&E, these huge companies that — you coached them on how to be better leaders and become smarter with your strategy, have you noticed a consistency across all these different industries?

David:

Yeah, I think there’s a real effort to find for each company what kind of leaders they have, given where the business, they think the business is going — what kind of leadership or leaders they will need. Frankly, in all of those companies you mentioned, the definition of what is good leadership keeps shifting and changing. If you think about the diversity or you think about being more global, or you think about working in a matrix, I mean these were things that weren’t important 20 or 30 years ago that are now top of mind in these companies. So thinking about what is good leadership, and you can do this in your own company no matter how big or small, what do we got and what do we need. To me, that’s what talent strategy today is all about.

John:

I love that. What do we got and what do we need, we’re going to tweet that out. It’s great. So analyzing what are your current assets and what do we need to get to this goal, right?

David:

Exactly, from a talent standpoint and from a people standpoint. I’m an entrepreneur, I’ve started and sold two big companies and I’ve learned that you have to be very honest with yourself about the talent that you have, and then be even more honest about what do you think you need to get where you want to go. Then the hard part is, taking the steps necessary to get there, whether it’s feedback, coaching, confronting people, firing them, all those things, take guts.

John:

It does.

David:

That’s what it takes.

John:

One of the things that all the investors that I talk to, tell me is it’s so important who is on the team, even more that the idea. In other words, we invest in the jockey not the horse. I’m guessing you have some thoughts on that as well.

David:

Definitely agree with that. When somebody shows me a business plan, the first question I ask them and myself is, “Am I willing to invest in this person?” Did they really get it in terms of how important talent and people really are, or do they think it’s all about the product or the technology.

John:

So let’s say we have some listeners, which I’m sure we do today, that want to recruit the best people for their team, whether it’s a CTO or just salespeople, what is it that you think makes somebody tell a compelling story that makes top talent want to work for that particular leader versus another option they probably have if they’re on top?

David:

Well, I think it’s about fit. A lot of times there are many talented people out there that may not fit the culture you’re trying to create, and so it’s very important to ask yourself what kind of culture do I want and am I striving to build, and then how do I find the right people to fit that culture. Some cultures can be very autocratic and hierarchical, and very successful. Some cultures can be very supportive and team oriented. So one of the things we’ve learned is that there’s not necessarily one way to be successful in business today, there’s a lot of different ways to do it. But I think if you’re an entrepreneur, you’ve got to ask yourself what is the culture I’m trying to create, and then how do I find the right people that will fit that culture? Obviously, they have to be talented around skills and have the ability to contribute, rise exemplary.

John:

But if you’re someone that doesn’t like structure and doesn’t like hierarchy and that’s the culture of the company, whether it’s big or small, you’re going to be miserable, right?

David:

You are. You are. You’re going to be miserable.

John:

But if you’re somebody who really likes being able to throw out ideas and brainstorm, and not have to be judge if you come up with something that doesn’t necessarily fly, that it’s a safe place to share your ideas without being judge, and fear of being thrown out on the bus by your coworkers, then that’s a whole different kind of culture that attracts a different kind of person I would assume.

David:

Absolutely. It’s definitely true. In working with entrepreneurs, one of the things that I see a lot, is that entrepreneurs who really feel the stress of the business and end up being very directive. They like to make decisions, they feel the pressure of needing to perform, and so they take charge, and yet what they say is that they want people to take responsibility for the business. They want people who held accountability, they want people who they don’t have to tell what to do, but then they end up telling them anyway. So that’s what I mean about being very honest with yourself, about what kind of culture you’re trying to build, and then finding people that fit that culture, and don’t fool yourself.

John:

Well, l like what you just said there David. This whole concept of, if you get stressed out as a leader, then you’re realizing you’re under pressure to hit certain goals or whatever the pressure is, and then instead of trusting your team to be proactive and help you solve it, you start dictating instead of delegating.

David:

Exactly, and I say John, having been an entrepreneur for 20 years, that is the hardest thing to do, it’s to carry the responsibility for the PNL personally. But yet, be willing to empower and delegate and trust others.

John:

For real. We have another little tweet there, “Delegate, don’t dictate.”

David:

Exactly. That’s right.

John:

And the other one that you gave us, thank you for that. So let’s talk about Transitions at the Top. This is your 12th book? Is that right?

David:

Yeah, right.

John:

Congratulations. You’re really prolific. What made you want to write this one, and who is this written for?

David:

Well, I work with a lot of companies John, and what we see is a very common pattern which is, we’ve got to change as a company. So let’s go higher, person A, because that’s exactly the kind of person that we need to change the company. So companies do this all the time, they go out to decide and say, “We need to be more entrepreneurial. Let’s go higher in entrepreneur.” Then they bring that person in, and systematically, the culture begins to extinguish the very thing that they wanted to go higher and change the company for. This is something that happens over and over and over. We need to hire somebody who’s going to change us and then we end up changing them. So we were asking the question, “Why do so many of these particularly large companies hire very expensive people to come in and join companies, and then after six months or a year they depart?” Sometimes it’s really expensive, and often it’s a sense of failure on the part of the company and the person that they hired to join. So that’s what the book is all about.

John:

I think a classic example of that is when Michael Eisner was running Disney and hire Michael that’s…

David:

Yeah, exactly.

John:

That didn’t work out.

David:

That’s the textbook case. It’s probably example A, Nike did the same thing. Many companies bring in external CEOs, feeling that they need change and the CEO make it happen, but then the culture takes over. What we found in doing the research on the book is that there are a few myths that people operate under. Once we’ve hired this person, our job is done. All we have to do is get them to say yes, or another myth is this person is really — we’re paying them a lot of money, he’s been successful in a lot of places, she really knows what she’s doing so she’ll be successful here, so we don’t have to worry about it. Or the third one is why do we really need to help them, if they need help they’ll ask for it. What ends up happening, particularly when you bring somebody in, and this can be true on small companies as well, is that period of adjustment, that sink or swim time, is pretty critical and can be pretty expensive.

John:

Well, let’s address each of those because I love it so much. This concept that you’re going to hire somebody to bring and change and then you try to make them change to fit your culture then nothing’s going to change. It’s almost like dating somebody and marrying them and say, “Well now that you’re married, you have to change who you are, even though the thing that I was attracted to in you, I don’t want you to do that anymore.”

David:

Exactly.

John:

That’s heading to successful life. This myth about — just because you’ve been successful on the past means you’re going to be successful in this situation. It’s almost like those warnings they give you when you invest in a mutual fund, right?

David:

Right. Exactly.

John:

Previous success doesn’t mean future.

David:

If I were paying this person a lot of money, so he should know what to do.

John:

That they’re so smart they don’t need any help, and that this whole on-boarding process, I believe you’re probably a real expert on that from this learning center, aren’t you?

David:

Yeah, we are, because a lot of times you got to get a conversation started about, not the person but who are we. What is this person forcing us to think differently about, and do different. I was working with a big company in Europe that really wanted to hire a head of human resources to come in and bring together all the human resource functions in the business, which were highly decentralized. So large company, male executive committee, they went out and hire the female, head of human resources to come in and she began in a very systematic way to bring all the functions together. Well, lo and behold within three months, each of the business units were saying, “Wait a minute, we have our own human resources. Why is she trying to put this all together?” On and on and on, and then pretty soon the issue became her, not the strategy. This is pretty much how usually the script runs, is that the person that is brought in from the outside, after a while, ends up getting blamed for trying to make change.

John:

Wow, it’s the very thing we hire you to do, we don’t like what you’re doing, and therefore you’re not a fit.

David:

Yeah, and we thought we wanted it, but now that you’re doing it, we realize that’s not exactly what we wanted at all. So anyway, the book is about what can companies do to help people in this process of change, and some of it is having the right conversations. Some of it is the senior leader or the CEO really getting involved in this process of understanding how people are transitioning in and out, it’s asking them how they’re doing, it’s having team conversations about the very issues that sometimes are most difficult to talk about. So that’s what the book is all about.

John:

I love it. Well, most people are afraid of change, aren’t they? Certainly, if somebody new comes in, they’re afraid they’re going to lose their job. Then they’re afraid the excuse that nobody wants to hear is we’ve always done it this way, so why do we need to fix it if it’s not broken? So how do you help people with that?

David:

Well, I don’t think people are afraid of change actually.

John:

Oh, alright.

David:

I do think people really do like to learn by and large, people embrace change. If they understand the context and what it’s all about, and what we’re trying to accomplish, I mean you really have to work to make change successful. You can’t just assume that people understand, particularly if you think about it. But in my experience, people don’t like change done to them, but they’re really open to change. They really are.

John:

Oh, there you go. That’s a great distinction. I’m open to change but don’t try to change who I am, is that what you’re saying?

David:

Yeah, or I’m open to change but include me in the change. I have my own ideas and thoughts as well. Everybody I need and almost every single company wants to make the company better. They want to do a good job, I mean this is what drives us as people. So harnessing that energy is what leadership is all about.

John:

You were the founder and chairman of Pivot which recently sold to Korn Ferry, so you have first-hand experience about how you stay running your company, a lot of the founders fear that — well, if investors come in, they’re going to want to replace me after I grow the company to a certain dollar amount because maybe they think I don’t have the skills to take it to the next level. Do you have any tips for how do you stay running the company that you started and sold?

David:

It’s a different skillset John, entirely. The skillset you need to build and drive a company, and take responsibility for it in the end. You breathe, sleep your company all the time, because you feel that emotional responsibility for it. It’s different than the skillset that you need to survive inside the big system. The first time I sold a company, I didn’t know that. I thought my job was to protect my baby, to make sure they didn’t carve it up, to tell them where they were wrong, and how they needed to improve, and I thought my job was to really change the big system because we knew everything and we were doing everything right in our little company, and when they bought it, I refused to drink any Kool-Aid, anything that look like the Kool-Aid. I wanted to change the big system, and that’s how that story ended.

John:

We are like David and Goliath a little bit there, right?

David:

Yeah, exactly. Over time, this is what I mean by the skillset, the idea of working successfully in a large system requires a different set of skills. Getting along, negotiation, the long hue, understanding where you have to compromise, working well with others, sharing responsibility for the business with others, all those things.

John:

Let’s talk about that a little bit, because to me that’s what a really good leader does, is they don’t need to take all the credit all the time, whether that’s a startup and attracting the right team. Don’t you think that if you have someone that’s willing to share the credit, and acknowledge your contribution that that’s how you create loyalty?

David:

I do. I do. I think you’re absolutely right. I think people suss out when a leader is really sincerely willing to share credit or just looking like they want to, because our motives are pretty transparent to other people. So you have to ask yourself, do I genuinely want others to get the credit or do I think it’s all about me? If you don’t answer that question honestly, then people will know. It’s really what you think, it’s really all about you.

John:

Right. Now, since you’ve done this twice, you’re so successful and have written so many books on this, you’ve now become an angel investor yourself. Do you invest strictly by yourself or you’re part of an angel group?

David:

Pretty much by myself. I’ve been asked to join a couple of angel groups but I’m pretty much going on my own at the moment.

John:

What kinds of things do you look for when you hear a pitch from someone?

David:

I’m really interested in a lot of things, obviously. I think having a solid business plan and being realistic about the prospects of the business are kind of baseline. Having a realistic understanding of the competition in the market, and the funding requirements is all baseline. I really look at if the person have their ego under control, have they really managed themselves in such a way that they can handle kind of the challenges that are going to come from growing a business? Do they really have a pretty good level of emotional intelligence that can work to attract people and grow the business and work well with others. Do they have a pretty good understanding of the fact that it really is about talent, not necessarily about product. Is it more than just lip service? So typically, I invest, as I said, more in leadership than almost anything else.

John:

Let’s do a deep dive into emotional intelligence, this EQ factor that not only makes you want to fit that particular culture, but also attracts the right people. Can you give us your sort of definition of emotional intelligence, and how have you developed such strong EQ yourself?

David:

The assumption that I have good EQ is something I challenge myself on a lot, because I have, like all of us, everybody has impulses. Sometimes it just feels good to speak out and say something, even though it doesn’t move the ball down the field. So this self-regulation, I think is very important, a very important part of emotional intelligence. I can sit in a meeting and get bored, and then all of a sudden I decide I’ll just throw something in the middle of the meeting that kind of stir it up. I’m thinking more interesting and exciting for me. That is an emotional intelligence that — so the self-regulation and impulse control is really important, I like to say. I work with with CEOs a lot and I used to have a teenager, he’s now 20. It’s all about impulse control, this ability to manage your impulses in situations or you want to just act out is what is a big component of emotional intelligence. Self-regulation. Then this ability to read other people and understand what it is that they want and need. Not necessarily in a sales way of trying to just sell them so that you can meet their needs no matter what, but, it’s this capacity to intuit what is important to other people and be willing to focus and understand it and deal with it or address it, is a big part of emotional intelligence.

The studies on emotional intelligence has been very clear that if you wanted to develop it in your children or yourself, delayed gratification is really the key. This ability to not act immediately, but to think about the long-term. What are we trying to do or what are we trying to build? I think that’s true in a business or in a team, it’s thinking about what’s the bigger picture, the longer term, the delayed gratification. That’s the big part of emotional intelligence as well.

John:

So there’s really three elements: Impulse control, empathy, and delayed gratification.

David:

And self-regulation. Yeah, self-regulation.

John:

Okay, got it.

David:

Then if you go back to the research on emotional intelligence, it’s knowing yourself. Knowing your own motivation, and being honest about what that’s all about, not diluting yourself.

John:

And maybe not making decisions when you’re stressed out or tired or jet-lagged or hungry, and any that stuff, right?

David:

Exactly. Exactly.

John:

It’s like, I need to take care of myself so that I can have some self-regulation. This delayed gratification stuff, we will get a reward when we do our homework, or we will get rewarded when we hit a certain sales goal if you’re leading a company, right?

David:

Yeah, or I want my way now, or I want this done instantly, whatever. Some of that, in times of crisis is important, but in general, it’s really managing yourself to think about what is the long-term, as well the short-term.

John:

Now, are you geographically agnostic or do you only like to invest in companies and founders that are near where you live?

David:

I’m geographically agnostic. I live on both coasts, so it doesn’t really matter to me because I’m all over the place.

John:

How long do you typically know someone, and what kind of due diligence do you, as an individual put your founders to before you invest?

David:

Typically three months, six months. I really like to get to know people and I like to be involved personally as well in the business, as an adviser.

John:

Yeah, you typically contribute more than just your money and your contacts, your strategy, your insights, because when you get leadership right, the growth takes off. That’s the big real takeaway, right?

David:

Exactly, yeah.

John:

Yeah, I’m a good leader, but so what? It’s like, well, that’s everything because that’s the talent, that’s the team and when you have a motivated team that’s in sync, I mean there’s such a huge cost of turnovers, isn’t there David?

David:

Oh absolutely. It’s just like the turnover customer, it’s so much easier to keep the customer than find a new one, and so the same thing is true of people. If you can really develop and keep your people and grow them, that’s the ideal state. But I would also say John, I think one of the hardest things about leadership too, is dealing with performers who are averaged and well-intentioned, and really willing to work hard but yet you know getting into the next level is going to require a different level of talent. Sometimes that’s very hard for leaders to face into.

John:

Well, let’s talk about that, because I have a lot of clients that have that very same challenge specifically with salespeople not hitting their numbers. They’re trying and I really like them. They’ve been successful in the past but they’re not consistent, and I don’t know what to do to fix it. Do you have any advice for that?

David:

Well, I think you got to step back and ask yourself what’s going on here? I mean, is it the context? Sometimes salespeople have a bad year for a lot of good reasons. Is it the person? I mean sometimes people are really functioning beyond their level of capability, that’s true, and you have to honestly say this person’s capability to grow to another level of performance is we’re not going to get there. So honestly, that’s the big part of what you have to address, and the other thing is you have to ask yourself, “Is it me as the leader? What am I doing to create the environment where this person is not performing?” Ask yourself that. So I think you have to step back and think about it realistically. My default is to try to develop and grow the person. Is there something I can do to help this person grow, and experience, or is there a coach, a program, a challenge I can give them? Is there feedback? All these things can help grow a person and help them develop, but at the end of the day, you have to cut your losses too. As an entrepreneur, you learn that. If I’m thinking about the good of the business and I’ve tried everything else, I got to cut my losses. In my experience, it’s often been not soon enough. I’ve often waited too long to take that step.

John:

That’s great advice. Normally, I ask my guest to recommend books for the listeners, besides obviously, Transitions at the Top. You have 11 other books, so I’m not going to even ask you to recommend anybody else’s books. Can you pick one or two of your other books besides Transitions at the Top that we could put in the show notes, that you can recommend to our listeners about running a small business and getting funded?

David:

Yeah, there’s one book that is sold — probably the best-seller of all the books I’ve written. It’s called Why CEO’s Fail. What this book discusses are the dark side of our personality. All of us, we have a dark side of our personality. Things we’re not proud of that we do when we’re stressed out or when we’re overworked or tired, it might come out in terms of being impatient or being melodramatic, or sometimes being detail-focused. So this book describes these things and talks about what you can do as a leader, to manage your — what we call your derailers or your shadow side. The point is, when you know you get to be the CEO, you’re shadow cast a wide, kind of dark space over everybody. I used to work for the CEO of a company and we would ask his secretary, “What’s the weather report today?” She say, “Oh, it’s sunny. It’s raining. It’s cloudy,” because we knew as the CEO, he was sometimes his — what we call his derailers which is take over. So why CEO’s fail talks about what you can do to manage those parts of your personality, that can affect your business and your performance of your whole company, and what you can do about it.

John:

That’s great. I would ask you, is there one particular thing — is it rest and is it a lot of these emotional intelligence that we talked about earlier as one of the ways to deal with it?

David:

I think it’s asking people and staying open to the feedback that they give you.

John:

Great.

David:

In other words, what do you do that makes it challenging for other people to perform? One of the things I often tell my clients is get them together and ask them, “What are two or three things I can do to be a better leader?” and then leave the room.

John:

Oh nice.

David:

And let them work on it for 20 minutes, and then come back and start a conversation about what are you doing that keeps them from being as productive as any to be, and how could you be more effective? Sometimes you get information you don’t normally have and you find out what’s in your shadow side.

John:

It all goes to that culture you’re talking about which is creating a safe space to let people do that, right?

David:

Exactly. That’s exactly right. What I tell CEO’s is the higher you go, your jokes get funnier, your insights get brighter, your ideas get smarter, it just happens magically. So overcoming that, you got to get people permission to tell you here’s what I really think.

John:

Great. That’s a great one. Why CEO’s Fail, in addition to Transitions at the Top, and what’s the other one you want to share?

David:

The other one I would say is the book called Head, Heart and Guts.

John:

Great title.

David:

Yeah, what this means is as a leader, you’ve got to be smart, you got to have a strategy, and a good sense of direction. You’ve got to have heart, which is what we’ve talked about, is the emotional intelligence or this ability to connect with people and read them and relate to them, and empathize, and then you have to have the guts to take the tough calls, to act with integrity, on yielding integrity sometimes, that takes guts and you have to have all three. If you think John, about the leaders you know, usually you can say they’re one of those three. They lead primarily with one of those three, and good leadership is having all three.

John:

Yes. Well, and the guts to say no to bad clients, even though you might need the money. I mean that’s the a tough decision in addition to letting go of somebody who’s not working out is…

David:

Oh yeah, or the guts to let somebody go who’s really performing but doesn’t live the values that you’re trying to create in your business.

John:

Right, because then that sends a message to everybody else which is where that you can be a jerk if you bring in the numbers and everybody else gets it that totally changes the culture.

David:

Or they ask to not take business, it doesn’t fit your strategy. You know that’s —

John:

There you go. Yeah, we don’t that, that’s not our specialty, and they’ll just be miserable if you take the wrong client even if the money is good.

David:

Yeah, or we need the revenue, let’s do it, but it’s not going to take us where we want to go as a company.

John:

The long-term vision, I love it. David, this has been great. How can people follow you? What is your Twitter handle and all that good stuff?

David:

It’s just @daviddotlich. I’m on Twitter. So yeah.

John:

That’s easy, and you obviously have a great profile and that they can find you that way. It’s been a pleasure having you on the show. I love your insights about what makes a good leader, emotional intelligence, and most of all, what you look for when you listen to a pitch is how much does a person focus on talent instead of the product. Thanks again.

David:

Thank you John. It’s been fun. Take care.

Thanks for listening to The Successful Pitch Podcast. If you liked the show, please go to iTunes and write a review, and encourage your friends to write reviews too. It really helps get the word out.

You know, people say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest but when it comes time to write the check, they don’t do it. So, how do you get people to say yes and then follow through? Visualize yourself on the left side of a riverbank and you have to cross the river and on the other side of the river is where the funding happens.

So, first, you make up your idea and then you make it real and then you make it reoccur. Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own with a lot less frustration than you will get when you hear a bunch of no’s and you don’t know why. So, if you want some help getting funded faster with less frustration, go to my free funding webinar, sellingsecretsforfunding.com/webinar and sign up and get in-depth information on how you can get funded fast. Thanks.

TSP078 | Kurt Theobald – Transcription

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John Livesay:

Hi and welcome to The Successful Pitch podcast. Today’s guest is Kurt Theobald, the CEO of both Classy Llama and Nucleus Commerce. Kurt has been featured in both Forbes and on the Huffington Post where they did an article on the three points of wisdom from a $5 million entrepreneur. So I wanted to find out what those three points of wisdom where in a much more detailed than just a story. The first one is be willing to do uncool things, in other words, it may not be sexy but it actually solves the problem and it allows people to be successful. The second is: What is the journey of entrepreneurship? What do you learn about yourself that allows you to be successful? Because if you have the concept and the mindset and the container, he says, for being successful, that’s what holds us success. Otherwise, it just leaks right out.

He also talks about be careful who you accept wisdom from as well as money. Make sure that it’s the kind of person that you want to become. If you’re going to be taking information from someone, you need to make sure that these people are someone you want to work with. His big takeaway is “Success happens when it’s ready.” You just got to keep moving. Enjoy the episode.

The interview begins in 45 seconds right after this information on how you can get funded fast.

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Hi and welcome to The Successful Pitch podcast. Today’s guest is Kurt Theobald. Kurt is the CEO and co-founder of Classy Llama, an Inc 5000 eCommerce agency that has already done $5 million in revenue. I found out about him from a wonderful blog he did on the three points of wisdom, and he said, “Entrepreneurs should create shiny new things, the edgier the better. Well, reality disagrees,” and Kurt is going to tell us all about that. Kurt, welcome to the show.

Kurt:

Thanks a lot John. I’m glad to be here.

John:

So tell me about what you’ve learned about valuable work often lies hidden, that you have to dig deeper. You said you’ve cut your teeth on ten previous business, all of which died, and you said you went too far. What do you mean by that? What happen that you’ve learned from ten things not working that’s made — now you are so successful?

Kurt:

I think there is a culture in the — Entrepreneurship circle sources culture that drives towards you’ve got to do the next big thing. I tried to do the next big thing so many times and I realized that sometimes, doing something that’s not cool but it’s in a niche where there is a real need, sometimes that can work a lot better and a lot faster than pursuing the next big thing. So that’s where I found — I got my traction is — I’m just going to do something that’s not as cool. I’m going to do it really really well, and that works out pretty well because a lot of people that don’t do things really really well in those uncool niches. So that’s worked really well for us.

John:

So talk about what’s considered a cool thing versus an uncool thing?

Kurt:

The cool things are the things that will publicly change the way that people do things. A lot of times it’s going to be consumer facing. So there’s this whole market where you’re serving businesses that people don’t really see, and that’s just not cool because nobody hears or knows about it. But when you’re doing something that’s going to change the behavior of the consumer, it’s going to reshape the world in some way, be for the big things that people want to do. They want to change the nature of energy, or the way that people buy things, or the way that people — a big new way to play video games. Virtual reality, how to apply that? There’s all these big things that are being developed that honestly, probably has lots to do with how much they hit the news, honestly. The more they hit the news, the cooler they are.

John:

Well, your willingness to do quote “the uncool things” sometimes require some sacrifices, right? Tell us about what you and your partner, Erik had to do as far as just the office space? You have to be almost like MacGyver sometimes, right?

Kurt:

Well that is true, and it’s probably true about the cool and uncool things. It may just be a common part of successful entrepreneurship, but it’s the willingness to go through difficult circumstances. Things like you hear a lot of entrepreneurs started in a garage, we started in a garage. It’s a common thing. I remember in the early days with our business, we had a two-car garage in my house that we were using as an office, and in the winters, we have this thin — like 6 mil plastic hanging up by the garage door to try to create some barrier for heat. I had a woodfired stove in the adjacent room, and that was all we have for heat. So it got really cold in the winter like we’re trying to — the guy had tried a coat and our hands are shaking because it’s so cold. Then in the summers, we took a panel out of the two-car garage door and put three quarters of that panel, we put in a particle board and then put an AC unit in there to try to keep it cool enough which also didn’t worked very well. So we we’re too hot in summers, too cold in the winters. I guess it’s part of being an entrepreneur and cutting your costs to the quick, and you just kind of bear through it because you believe in what you’re doing.

John:

You really have to have tenacity and grit and passion to survive those kinds of things, otherwise you’re like, it’s not worth it, right? You have to believe in what you’re doing and that you really want to work for yourself and have a big why of why you’re doing this. Even if it’s quote “uncool” right? So I just think that’s so valuable and congratulations on exceeding $5 million, so few startups ever get to $1 million, let alone 5. What is it that you could share as sort of the motivation factor beyond just making money that makes you so successful that makes your clients at Classy Llama want to keep working with you?

Kurt:

Well, I think that from the very beginning, like you mentioned that very important why, I actually started a professional journal back in 2004 towards the end of the year. That’s now about 12 years ago or 11 and a half years ago, and at the very beginning of that journal, I expressed that who I am as an entrepreneur, it’s part of my DNA, and so to do anything other than be an entrepreneur or to — when I sail, when I fall down, to not get back up and keep going is to betray who I am, and that I will not do. So that kind of powerful why in that foundation, it really makes it to work. As a friend of mine says, “a diffision.” A diffision means like incision is to cut like an incision as to cut into, diffision is to cut away, so you’re cutting away all other options and you have one path, and you have to stay in that path.

John:

Ooh, I love that.

Kurt:

So I made a diffision according to who I am and I have to stay on that path because I’ve cut away all other options. We’re kind of like scuttling the ship from the — I think it was carcasa, whatever, that scuttled the boats. And now they only have one way to go. They can’t go back, they had to go forward. That’s so important because there’s so much pain involved with entrepreneurship that you kind of have to cut away all the other options so that you really only do have one path to keep going, because you never would have done this if you knew how difficult it was going to be. So it’s just important to have that frame in mind. This is the only way to go.

John:

It’s so valuable. I know — what you said there, if you don’t come back from failure, you’re portraying who you really are. So failure might be something that happens but it doesn’t define you and it certainly doesn’t stop you from trying again, right?

Kurt:

Yeah, and I think it’s very important to clarify that who I am isn’t necessarily who’s someone else is, so my walking in that was appropriate where someone else who — they’re more of a supporter or they come alongside, they’re more consultative, whatever it is, different people have different strengths. So if you put someone who’s not an entrepreneur and they go, “I want to be the American entrepreneur because of what other people have said about me, rather than who I really am, ” it can really get them in a mess.

John:

Well, this whole thing you talked about is, the journey of entrepreneurship is really a journey of self discovery, which I think is so important because whether you’re pitching yourself to a client or an investor, they’re buying you much more so than the idea or your skills, don’t you think?

Kurt:

Especially like in an early stage of a business, they’re investing in you not this idea because the difficult thing about business is not getting a good idea. There’s lots of people that have good ideas. The difficult thing is executing that idea and bring it to fruition and making the smart choices and being able to receive good feedback, and not be too proud to receive the wisdom from others and have the fortitude to endure through the pain that is going to be required to get to the finish line because it almost always takes longer than you expect it will for it to be successful. You hear about these huge successes that happened overnight. Usually there’s a long story before those successes. Secondly, those are super rare even if they do happen. You got to invest in people that are going to be able to endure, going to have humility to receive quality feedback and have the wisdom installed to be able to guide an idea to quality fruition

John:

Their willingness to be coachable and not think you have all the answers and not even ask for help is so important to realize that you don’t have to know everything and you can get — here’s your resources and your network to get insights and give you a different perspective because we can become so myopic on thinking. We only see one way out of this and we always have other moves, right? But let’s talk about your big point about be careful who you accept wisdom from and how you choose your mentors and advisers. Not just by how successful they’ve been but are they a cultural fit with your philosophies. Can you speak to that?

Kurt:

Yeah, for sure. Something that I’ve learned is I just interacted with different people and there’s a lot of successful people out there according to the world standards of what success is. A lot of people with a lot of money out there, but that doesn’t necessarily mean you want to learn from them how to become wealthy. A lot of people say that’s the objective of entrepreneurship is I want a lot of money. The challenge is the way you get that money in the end will determine the quality of your life in all other aspects. So if you’re learning from someone who has a bunch of money, has been divorced three times, works 80 hours a week and has for the past 30 years, is that the way your life wants to look, you like to look? Is that what kind of money you want to have? Because money can own you or you can own money. If you take wisdom from those who have learned how to become the slave to money and they have a lot of it but they’re still a slave to it, that’s no life to live. So just look to the advisers that have a life that looks like the kind of life that you actually want to have, not just in the sum of money that they have or the make and model of their car but look at his family, look at their relationships, look for the deeper things in their life because those are the things that really has staying power.

John:

I love that. That’s so important because otherwise you’ll burn out right? If you don’t have a balance going on and a reason to have some other life outside of what your business is, people think “Oh, I’ll just put that all in the back burner and they’ll still be there when I finally become rich and successful and then I’ll be happy.” You have to figure out a way to be happy during this whole process right?

Kurt:

Yeah. I think what ends up happening is they say, well once I’m rich then I can take a view on things. I think what happens is that other parts of them atrophy. So by the time they actually get rich, that’s the slavery, that’s all they have. It’s not suddenly their lives are about building and growing. As Dr. Seuss says, the biggering and biggering and biggering, that’s what it’s all about at that point and they’ve lost the context, they’ve lost the sensitivity to the other things that are so much richer in life.

John:

Then how do you — as you get more and more successful in this success that you now have, how do you find the right people to join your team that have this mindset?

Kurt:

It kind of adds a third variable in any interaction where I’m evaluating people for the team. They have to have the right experience, they have to have the right soft skills but the third thing they have to have is the right cultural alignment. That’s really difficult to find all three things.

John:

Let’s take a little deep diving into each one. Obviously, the experience is pretty obvious. You need somebody to be a creative director where no technical stuff about ecommerce since that’s what you do for people and you want them to prove that they know how to do that right? But tell us what you mean by soft skills, is that emotional intelligence?

Kurt:

Yeah, by soft skills, I mean things like their ability to communicate effectively. To write things down in a way that’s coherent, and maybe this extends somewhat from a culture but just to be able to like be generally responsible for showing up on time, and showing up in meetings when they say they’re going to, and scheduling their time and just some fundamentals life skills, time management, communication, those kinds of things that you don’t go to necessarily a class to learn them. There’s things that you learn through osmosis and through relationship and whatever the culture that’s around you, you learn those soft skills.

John:

Let’s talk a little side note, side road there because I think what you said is so interesting, just about the basics of being on time. I had another guest who wrote a book about managing millennials, and that’s anywhere between 16 and 36 at the moment, and some of the baby boomers are having so much trouble managing millennials because they have a different mindset of what they think about work. I said, “If you don’t tell someone what your expectations are that they show up on time, then they’re going to think it’s loosy goosy right? Then you can’t get mad at them if you haven’t been very clear at the beginning that this is what we need from you. Do you have any insights as to how important it is to set the tone and expectations right from the get- go or even before you hire someone to make sure that’s a fit?

Kurt:

Yeah, that’s actually really important. I feel like when you’re in the interview process, you’re not just evaluating whether they are right for the team, but you’re actually setting context. You’re setting the table for what and that the foundation for what it will be like provided they actually do get selected and join the team. So setting those early expectations around “we expected you to be personally responsible” that’s like tying your shoes in our organization. It’s a fundamental. You got to tie your shoes before you run the race. So just being able to manage your own time, to communicate effectively, these are tying the shoe thing in our organization.

John:

I love that. You have to tie your own shoes before you run the race. We’re going to tweet that out. That’s great. Now, let’s talk about your culture alignment. How much time did you spend defining what the culture was so that you could decide what you wanted to have and what makes your culture unique?

Kurt:

The culture, my understanding of the culture and what I want to design and create into the culture has been an evolution over a number of years. Early on, I really felt like I have this vision for what I want the culture to look like. I’ve had a lot of jobs and I get to experience a lot of different cultures. I didn’t like any of them but I experienced a lot of things I didn’t like. So I had this thing I wanted to create so I built out a presentation and I built out a vision for it, and there’s a lot of good to that. I was able to articulate it and express it. It attracted people. However, what I learned through experience is that you can’t just write down the culture you want to have but if the people in your organization that make the culture what it actually is. So you can write it down and that’s what it theoretically is but what your culture actually is, is a product of the sum of the interweaving of the thread of all the people in an organization and what they make it so.

You can still design a culture. This is the culture I want, but then what you have to do is you have to go out and you got to find people that don’t just look at the cultural state and go, “I like that. That’s great.” But rather, you find out, are these the kinds of people that are going to contribute into this kind of culture. Are they going to create — do they bring this culture to the organization because that is the only way to really make it happen. You can guide a little bit here and there but ultimately, the people you bring together have to make the culture what it is. So it’s really all about that culture alignment, making sure you don’t just like the culture, but you align with it. You’re going to be a contributor to the culture. I tell people, I maybe in a position where I’m the last line of defense for the culture, but all of us, all of us need to be culture bastions. We are the propagators of the culture, everyone of us.

John:

That’s really walking your talk, isn’t it? Giving a people a sense that the tapestry need all of the threads to make it work.

Kurt:

That’s right.

John:

And that when you make people feel like they’re part of something, acknowledged and needed, then you get their passion to work in all kinds of situations right? Because they love that. That’s what people are looking for much more than just a paycheck. It’s the sense of acknowledgement, appreciation, and contributing and making a difference. I think if you can create a culture where that is the kind of thing that people want to come to work for, it gives them a reason to get up in the morning, gives them personal sense of pursuance, you’ve really done something well. I think — my suspicion is that’s the reason you’ve been so successful now, been able to achieve the revenue you have.

Kurt:

Yeah, I agree. Revenue and all, I think these are reflections. They’re by-products of what really matters. To speak to what you’re saying, all that I have done is I really try to be careful to honor each person that I’ve interviewed, to evaluate is this going to be good for them to come into this environment? Are they going to be able to contribute to this environment and how are they going to thrive in this environment? Because I want each person that comes into the organization to be able to be fully themselves, to not have to check part of themselves out of the door when they come in. Speaking of millennials, I think this is so important to capturing the hearts of millennials. There’s a lot of things — I look at the millennial generation and there are things — I really appreciate things that I think are things that they struggle with, and that’s true with any generation. But one of the things I love about millennials is that they really thrive on and demand authenticity and they thrive on being independent in their thinking, and really valuing I want to be able to express myself and be who I am. I love that. I want to make sure to protect that, because when you do that and you make sure that you got the right people in your organization that they can just be themselves and it’s going to work. Suddenly, you no longer have to draw passion out of them, you don’t have to draw in each and out of them. It will naturally organically, come from them because they’re just being who they are. You don’t want to force it anymore, you don’t have to draw it anymore, it comes from their core. It makes everything else a lot simpler.

John:

I think I’ve never heard anybody express it quite like that, because if you have somebody who’s just quote “phoning it in” and doesn’t get to express themselves and has to feel like they’re a robot and has to tone down their personality and their vision and their comments because they are not appreciated or wanted, then there’s no way that you’re going to be passionate about your vision. But if you encourage them to be authentic so you don’t have to be that one person that work and one person off work, and just looking at the clock until you can get off work to be yourself, then they’re passionate about their whole life and passionate about their day and they’re probably not going to leave at the next offer that’s just slightly more money, right? Because they’re motivated by more than money.

Kurt:

Yeah, and I can speak from experience, watching this happen. First of all, the retention level at Classy Llama and now Nucleus Commerce, it’s the second company I started — It’s just phenomenal. I mean people stay. I really believe it’s because they are able to be fully themselves here. The second thing is, we haven’t compromised on our team growth, and so when there’s an opportunity to grow, we don’t get loose on our standards in order to take advantage of the growth opportunity, but rather we limit our growth to how quickly we can find quality people and this is wisdom. You have find from Jim Collin’s and others, but I’ve seen the benefits. Other than that, people want to stay because they know that they’re being honored in who else is coming into the environment because they work with great people and they get to be fully themselves in the space that they’re in. That makes a space that they want to stay in.

John:

Well, one of the big cost that’s sort of hidden and really doesn’t get itemized is the cost of attrition and turnover. It’s hard to put a dollar amount on it but when you have to start from scratch and retrain somebody and get them to start developing relationships with the clients from the get-go, that’s a big hit on your productivity which affects your bottom line. So if you can attract and retain good people, that is gold right there, and that’s a big big part of being successful, financially, emotionally, every way, right?

Kurt:

Yeah. I think that a lot of times, there’s too limited view on the compounding effect where you can look at money and then you say, well, if I got a 5% return on money every year, after 20 years, it’s way bigger than 100% which is 5 times money. But this aim is through of time. A lot of people don’t realize that time is a resource that compounds, so how you invest your time now and the return you get now is something that can compound. Then the other thing is people like the investment you make in people and in building that team. If they stay with you and the team stays together, it’s like a sports team. The longer a sports team stays together and stays united, the more effective they’re going to get because they just start learning each other, they learn the game better, yes, but they also learn each other better and that’s strength of the fabric as we’re calling it, grows and you become more effective together in what you’re doing, as well as more effective as a team. I can’t underscore how powerful it is.

I watched these private equity companies come in and they buy up other companies, or even public companies, whatever. They come in and they buy in — they buy these companies and they insert — they’re like impose their culture on them, and then I see all of the good people scatter. People are balling up like they’re like quitting. I’m going “that company that bought that organization doesn’t understand that the most valuable thing in that company is leaving and it’s the people”.

John:

Yes. Well let’s talk about also the importance of saying no to the wrong client as well because that — you can’t just take any client even if you need the money because that can be a nightmare as well as drain on your time, your employees’ moral, and maybe even costing you money, right? Have you had that experience?

Kurt:

Oh yeah, many times. Honestly, that shows from that same thing of we have standards and we stick to our standards, our culture standards and who we work with as a — and the clients early, especially early, it’s just so painful because you got only so many opportunities and you need the revenue, and so you have to draw a line somewhere though and say these are the ones we’ll take and these are the ones that we won’t. I think I can say confidently that in my business I’ve never turned away a client and regretted it. I have many times accepted a client and regretted it.

John:

Ah, there we go. There’s the line everybody. You never regret saying no but you’ve often — you can say yes and regret it. It’s very much like dating too. I think people respect you if you’re not desperate and say, “Look, this is who we worked with. This is who we’re for, this is who we’re not for and we’re not so desperate that we’re just going to take anybody’s money.” It’s not a dictatorship, right. When you work with us, it’s a collaborative cons in the situation. We may not be a good fit for you. It’s not just a one way street if you decide whether you’re going to hire us or not, right?

Kurt:

I think a lot of it has to do with the willingness — when people want success before it’s time. When they’re engage with these different clients this angle, I can accept these fewer clients and I can live on a really lean budget and kind of rough it for a little bit longer in order to be principled in who I am expecting as clients, or I can say yes to more and try to grab that success before it’s time. It’s just that that lure of impatience and you just got away. Let success happen when it’s time. You focus on living by the right principles and the right standards and doing things the right way, and success will come when it’s time. You just do the hard work, the success will come on it’s time.

John:

Nice. Well, let’s talk about who your ideal clients are, both for Classy Llama and Nucleus.

Kurt:

Okay. Classy Llama typically works with companies that are generating, let’s just say $1 to $50 million in online sales. They’re looking for a partner relationship and they’re focus on or they’re needing help or wanting to build on the Magento platforms. So we’re focused on that piece of technology, that’s a key niche for us. So we’ve been building on the Magento platform since it came out in early 2008. We have focused on it, we pushed everything else off our plate and focused exclusively on it since being gold partners with Magento which is the high level of partnership you can have. Anyway, we are deeply invested in Magento, we know it very well and so we look to help. It’s established eCommerce companies or well-funded to sometimes well-funded startups as well, get going in their eCommerce businesses on the Magento platform.

The Nucleus Commerce actually serves the same market. It just does it in a different way. We sell software extensions that help people, specifically that are getting on Magento 2.0 which just came out recently. We’re on one of the early providers of additional software that enhances the functionality and offering of the Magento 2.0 platform.

John:

Fantastic. I love how much symbiotic relationship there is there that the extension of the second company totally gets the knowledge you learn from the first. Is there any book that you recommend for our listeners to read about life or business that you found specifically inspirational or helpful?

Kurt:

Two books. One is the Good to Great by Jim Collins. It has some really great fundamentals there and what I love about it is it’s all data driven. There’s a lot of things that are data driven like — that’s data driven by — it doesn’t really, smack up true because you can make any data look like anything. Well, I read what he found and I feel like this was a true blue, data driven exploration because it’s found a lot of unexpected surprising truth that isn’t popular. When I see something that is not popular and I see the data behind of them, like okay, that’s not popular and I know it’s true, and so i trust it. I really believe that it good work with the — the Good to Great book.

I would actually offer up for young entrepreneurs that are just getting started, I’d offer up a book that I wrote called Finding Truth at the Bottom, and it really outlines three keys to being effective, to being productive. It also really tries to confess certain common paradigms that I think are really confused about what the expectations are around, what it looks like to be an entrepreneur, to run a business. I just think there’s some common held lies about what that means. This book really tries to conduct that. It’s a simple read, it’s fictional, relatively short. I know a lot of people have really gotten a lot a value out of it.

John:

Fantastic. We’ll be sure to put both of those books in the show notes with links, and I assume your book is available on Amazon?

Kurt:

Yeah. I’ll get you the links of that.

John:

Perfect. So how can people follow you on social media? What’s your Twitter handle, all that good stuff?

Kurt:

My Twitter handle is easy. This is @kurttheobald. I’m on LinkedIn, /in/ktheobald and those are the two key interface points on the business front that I use.

John:

Fantastic. Well Kurt, it’s been a pleasure having you share your wisdom of how you’ve been so successful not just in revenue but creating a culture that attracts and retains the people who — not only share your vision, but contribute to it.

Kurt:

Yeah, I appreciate the opportunity John. I hope I helped a lot of people.

John:

Fantastic. Thanks again.

Kurt:

Thank you. Bye.

Thanks for listening to The Successful Pitch Podcast. If you liked the show, please go to iTunes and write a review, and encourage your friends to write reviews too. It really helps get the word out.

You know, people say that the longest distance is between someone’s mouth and their wallet. People can tell you they’re going to invest but when it comes time to write the check, they don’t do it. So, how do you get people to say yes and then follow through? Visualize yourself on the left side of a riverbank and you have to cross the river and on the other side of the river is where the funding happens.

So, first, you make up your idea and then you make it real and then you make it reoccur. Once you start dipping your toe into the water to get to funding, that’s where I can help. I get you across that river faster than you would on your own with a lot less frustration than you will get when you hear a bunch of no’s and you don’t know why. So, if you want some help getting funded faster with less frustration, go to my free funding webinar, sellingsecretsforfunding.com/webinar and sign up and get in-depth information on how you can get funded fast. Thanks.