Own The A.I. Revolution With Neil Sahota
Posted by John Livesay in podcast | 0 comments
Do you remember when IBM’s Watson, their artificial intelligence, actually beat jeopardy? Meet Neil Sahota, one of the key people behind the team at IBM that made that happen. Like all great ideas, Watson was conceived at a bar where Jeopardy happened to be playing on the TV. On today’s podcast, Neil joins John Livesay to dive into the world of artificial intelligence and its many elements, including artificial empathy. Neil talks about how artificial intelligence can actually make us more human. Tune in to this episode to unpack this insight.
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Listen to the podcast here
Own The A.I. Revolution With Neil Sahota
Do you remember when IBM Watson’s artificial intelligence beat Jeopardy!? Meet Neil Sahota, one of the key people behind the team at IBM that made that happen. You can only imagine the suspense and the stress they were under if it didn’t work. He also shares what it was like to live in China. He said, “It’s like the Stone Age meets the Space Age.” Find out what he means. Finally, he talks about how artificial intelligence can make us more human and there’s artificial intelligence for empathy. This is an episode you won’t want to miss.
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Our guest is Neil Sahota. He is an IBM Master Inventor, United Nations Artificial Intelligence subject matter expert, and a Professor at UC Irvine. He’s got many years of business experience. He works to inspire clients and partners to foster innovation and develop next-generation products and solutions powered by AI. His work spans multiple industries, including legal services, healthcare, life sciences, retail, travel and transportation, energy, automotive basically everything.
He is one of the few people selected for IBM’s Corporate Service Corps leadership program that pairs leaders with NGOs to perform community-driven economic development. He lived in China when he was there. He also partners with entrepreneurs to define their products, establish their markets, and structure their companies. He’s a member of several investment groups like the Tech Coast Angels. He’s also served as a judge in various startup competitions. I’m thrilled to have you. Welcome, Neil.
Thanks for having me on, John. I’m excited to be here.
We didn’t even touch on all the other things you do. You have a book called Own the AI Revolution. There are many things going on, and you’re also a speaker. Tell us a little bit about your own story of origin. You can go back to childhood, school, or wherever you want, that gives us a sense of how it all started. Were you always interested in computers? Did you have a robot friend?
No, not at all. I was a kid from the Bronx that loved playing sports. I live a couple of blocks from Yankee Stadium. We’re playing stickball, basketball, and football. My mom got tired of me always playing sports. She felt like I need to be more well-rounded. She insisted to me to try to learn the piano or the violin. I wasn’t into that. One day, she’s like, “You have to do something else.” We had been walking by a little strip mall area and they were teaching computer classes in there. I told my mom as an eight-year-old kid, “I want to learn computers.” She’s like, “What? Seriously?” I’m like, “Yeah.” She marched me right in and signed me up for classes.
If it’s between that and piano, I understand. I took piano lessons. I like music. There’s a big connection between math and music. It’s quite interesting to see how one little choice like that can make such a difference in how that all transpired. There you are taking computers. You liked it and took to it, but they weren’t talking about artificial intelligence back then, I’m guessing. There’s more coding.
Yeah. I was learning. It was on Apple IIe to date myself here. It’s cool to say that I could write these little lines of code and stuff would happen. You could do a calculation and get some graphics, but you essentially are enabling people to be able to do something with the machine. I thought, “That’s creative because I dig that.” Fast forward a few decades there, I was working with a lot of the C-level execs and they’re like, “Business intelligence was taken off. It’s amazing what computers are telling us.” I’m like, “Computers aren’t telling us anything.” There are cool tools to collect tons of data, slice and dice it, and create nice looking reports but machines don’t tell us anything. Could a machine do that? That’s how I looked down this path going like, “I wonder if there’s a way a machine tells us something. Could a machine find insights?”
You spent this illustrious career over twelve years at IBM dealing with their Watson ecosystem. For those readers who may not know much about that, tell us what that was like from the beginning to twelve years later because things move fast.
The thing with Watson started at a bar with all great ideas. There were three IBM Distinguished Engineers. They’re some smart guys. We’re thinking about something cool to do and Jeopardy! happened to be playing on the TV. We’re like, “What if we could create a computer that could play on Jeopardy!?” Most people are like, “How hard could that be?” It’s like playing chess. Jeopardy! will be giving an answer and you have to figure out the question. You think about language. How hard is it to understand people when they talk?
[bctt tweet=”AI will actually make us more human.” username=”John_Livesay”]
If I say I’m feeling blue because it’s raining cats and dogs, everyone knows what I’m talking about. If you tell a machine that, it’s like, “You’re physically the color blue because small animals are falling from the sky?” That does not compute. These were the hurdles and we figured out how to do this. We had to commit to the Jeopardy! challenge two years in advance. At that point, we didn’t even know if we could do this or not. Chris was like, “Of course, we’ll make it happen.” It’s no secret that it’s 50/50 that Watson would work the night of the Jeopardy! challenge.
Nothing like a little drama in a story.
Everyone got the blackberries out and the recipes all ready to go.
It’s visible.
Watson did not start off well. These 6 of the first 7 questions, the execs are a few rows in front, and looking unhappy. Everyone’s like, “I might be in the market for a new job. We have lunch or something.” It’s a testament to how fast AI learns. Watson turned it around. It turned into questions right, applying the strategy, and then it won the whole thing. We’re like, “We did not expect that.”
I’ve read a lot about how it learns fast, even how to bid because it’s not just answering and coming up with the right question for the answer, but also, which thing to bid on and not bid on. It’s fascinating stuff. I’ve worked with quite a few founders in artificial intelligence and trying to work with them on crafting a story around it. For people who aren’t into the weeds of artificial intelligence, there’s this whole thing around structured data and unstructured data, and everybody zones out.
I use the analogy of the tip of the iceberg. What’s above the water is what you can see and that’s what’s structured. This whole premise of how can AI help understand what people are feeling and not just if it’s positive or negative information that you’re trending on social media, but what causes it. My favorite story around this was, you come home and you see your wife crying. You don’t know if it’s tears of joy because she got good news or tears of sadness because something bad happened, or she’s frustrated you left your socks on the floor again. Until we know why someone’s crying, it’s not enough to know if someone’s happy or not happy, especially when you zoom out and look at it from a standpoint of how a company should respond with all this data coming through social media channels. I’d love to have you speak a little bit about how AI has grown past, “Someone’s happy or not,” to “Here’s the reason they’re feeling this way.”
There’s a whole area called artificial empathy in AI. It’s exactly like it sounds like. The machine is trying to figure out the emotional state of a person and dynamically respond to that. People feel emotions. How the world is going to be empathetic?
There are some people that can’t do that.
AI Revolution: Machines can only do what we teach them to do; so far, we have not figured out how to make AI creative or imaginative.
People are like, “Can a machine do this?” The answer is yes. It doesn’t have to feel it. We can teach it things or clues to look for. It’s areas about psychology, kinesiology or body language, and neurolinguistics are clues. It’s things that we, as people, use subconsciously.
Your eyes go up or not. The whole Neuro-Linguistic Programming, you’re trying to remember something or your face gets flustered and you’re angry. It’s not just the computer responding to what you type in. It’s got cameras and can start to see body cues. Ironically, it’s probably better than a virtual world because, for many people during a pandemic, I can’t read body language like I could in person, but the computers are like, “No problem for us.”
That’s a huge advantage. You’re seeing a lot of people build tools to help people connect better in the virtual environment, as well as communicate better. In addition to empathy, the machine has a way to use neurolinguistics to deconstruct language. You learn, “Neil is an auditory learner and John is a visual learner. Neil cares more about the fun factor of a product while John cares more about the value of the product. This is the best way to engage.”
Even the words to use. “You should use these words with Neil and these words with John to help communicate.” A lot started as marketing and sales staff, people realize, “This is an AI communication coach.” If you want to connect better with your kids or you’re wondering why your wife is angry at you, it can help us do that now and respond back. Rather than like, “What’s wrong with you?” The AI is like, “No, don’t say that.” “I feel like something is wrong here. Did something happen today? Tell me.”
There are many questions around just this. I could spend so much time with you. Let’s do it through the lens of marketing and sales. I’m always a big studier of Neuro-Linguistic Programming. I remember that back in the day, that was completely revolutionary information. Especially speakers, you and I are both keynote speakers. When we get up in front of an audience, we know that some of those people are going to be visually-oriented, so you need to paint a picture. Some of them are going to be kinesthetic and some of them are going to be auditory.
My favorite example of that is when I say the car door slammed. Do you see it, hear it, or feel it? I’m always fascinated by the people who feel the door slamming and yet, those people, you can almost predict that they’re going to have an amazing sound system in their car at home and Sonos speakers or whatever. I remember being in a car with a friend of mine and she was driving us around. I just moved up to Northern California in Marin County. She was driving and taking us someplace she’d been before. She’s like, “This doesn’t feel like the right way. Neil, I lost my mind.” I said, “Are you telling me you’re navigating by your feelings? Where’s the map?”
That was my first introduction to not everyone processes the work the way I do. From a sales perspective and speaking perspective, we need to use language that doesn’t make people shift. You’re like, “That resonates with me now because you said it in visual terms or kinesthetic terms.” “Does it ring a bell? Does that feel like the kind of journey you’d like to go on with us?” All those kinds of things are what a good speaker does. Maybe it’s subconscious. If it’s conscious, it takes it to a whole other level. What do you think about all that? How do you use that in your speaking?
It’s about connections. We sometimes lose sight of that. What we’re trying to do is not just this call or making the sale that’s the ultimate thing. We want to be successful. It’s about building relationships and creating resonance. This is a good way to tap into that. People have told me I’m an engaging dynamic speaker and people charged up in a good way. People are like, “What’s your secret?” I’m like, “I don’t know if I have a secret. It’s just that I think about what makes the most sense for the audience. What are the outcomes and the experience that they need?” I’m not at that stage to hear myself talk. How smart I am, I don’t care about that. I’m there because I want to create value for those people so I have to find a way to try and connect with them. That’s why I’m sure you do the same thing I do, John. Every time you’re asked to give a talk, I’m going, “Who is the audience?” All those types of things.
“Let me talk to a couple of people before I get up in front of them.” I can reference that so that there’s some customization to it all. Salespeople do that before they go on a sales call. That preparation pays off. Computers can do way more preparation than we can. What advantage do you think we have over AI from a sales perspective? If they know what language to use and they can do more preparation than we can, what do we have going for us?
[bctt tweet=”The best way to predict the future is to create it.” username=”John_Livesay”]
Machines can only do what we teach them to do. So far, we have not figured out how to make AI creative or imaginative. How do you paint the right picture? How do you tell the right story? AI helps us make sure we’re using the best possible words but they can’t tell us how to craft the story.
Do you think that AI can be a replacement or a substitute for therapy? If people need empathy, someone listening to them, and they can search their database of diagnosis or whatever, “You’re depressed. You need to eat more. Get outside and exercise.” Is that one of the industries that’s probably at risk of being replaced?
I wouldn’t say replaced or substituted but I’d say augmented or supplemented. There’s a lot of focus on this because there are not enough therapists in the world and sometimes, people need outlets. I’m going to tell you something that might blow your mind, John. In Nairobi, Kenya, there’s a project going on called Loving AI. To all the audience, it’s not what you think right away. The goal of Loving AI is to solve the biggest illness in the world, which is loneliness. Before COVID, about 40% of the world suffer from moderate to severe loneliness and they wanted to give these people an outlet. They wanted to create an AI, whether it’s a chatbot or an avatar, or whatever. They want to teach AI, unconditional love. The thought was, “If we can do this, everybody, no matter what time of day or how afraid you are, would have a safe spot to go to.” A substitute for human relationships with a safe spot to go to, engage, feel like they belong to something, and build their confidence so they can go out and engage people. Here’s the mind-blowing part of this. As they try to do this, how do you teach unconditional love to an AI?
It hard enough to teach them empathy, let alone that next step.
The question is, what’s the difference between unconditional love and love?
I know. I have a family. “I love you if you get these grades or if you do that.”
That’s a good example. There are different kinds of love. There’s a love between two spouses, love between a parent and child, and love with your friends. They went from this grandiose idea, which they’re working on to realizing, “This is way more complicated than we thought. We can’t even quite define love. We have to figure out what love means and what conditional love is.” It turned to this deep exploration of what it means to be human. One of the big things that jazz me about AI is that machines, that AI will make us more human.
It does not just free up our time to do higher-value work or do yoga, or whatever. It’s forcing us to think about things. Because we’ve had to teach these concepts to a machine, it’s forcing us to think, “What do these things mean? What is this?” That turns this grandiose exploration and that’s helping us develop better therapists and better psychologists in turn because then we’ll understand some of these things on a deeper level.
That’s what a salesperson is on some level. Even a hairdresser is a psychologist on some level. Anyone who’s interacting with people where they feel like they need to vent their frustrations or open up and share their problems or their fears. Even something like a mortgage broker. You have to say, “Here are my financials.” There’s some level of trust that has to be built. Adweek interviewed me to analyze which Super Bowl commercials told the best stories and it was a fascinating exercise to analyze them all.
AI Revolution: The goal of Loving AI is to solve the biggest illness in the world, which is loneliness.
Google was one of the top because they did that whole thing about the older man losing his memory and using Google to replay their favorite songs of his dead wife and to keep that memory alive. Anytime a product is a Sherpa to help someone be more human. It’s not about the technology. It’s about, “This memory would be lost without it. It helps me grieve and helps me remember someone I love that’s not here. I’m using my own memory.” It’s memories within memories, and then they showed a movie clip, and then you’re like, “Oh my God.”
You’re into the sophistication of stories within stories within a short commercial. That’s what I live for, that kind of analysis, having an advertising background, and all that. What was it like being in China? We can’t let you go without asking a question for goodness sake. Different cultures and different values, your meeting in the world of AI for the common language, I’m guessing. I’ve had some people that live there and said, “We moved to LA to better air.” I’ve never heard of that before, but you probably can relate to that.
China was interesting. I enjoyed my time out there. I lived in a city called Ningbo, which is a small city with seven million people. It was my first time in China, people have always said, “The best way to describe China is the Stone Age meets the Space Age.”
They jump right over the Industrial Age?
You can’t explain the size and scale of China and how things work without experiencing it. That’s true because when I get to China, everything’s on a massive scale. There are many people. The university has 600,000 students. You can’t even fathom that here in the United States. The Space Age meets the Stone Age is, you’ll be in a part of the city and you’ll see these 1,000-year-old buildings. A little bit dilapidated maybe and maybe some wirings. Right next to it is this totally sleek, modern, Platinum LEED-certified skyscraper. It’s such a dichotomy, but you can see the mindset in China.
Living there was immersive. I live like a local and work like a local. I understood how they thought. The thing is they think in terms of long term and in terms of community goals. They’re thinking not so much about what they need to try to accomplish this week or this month. They’re thinking about, “Where does my organization need to be in 10 years or 100 years? What are the steps?” No matter how many small steps they have to take to get there. This has shaped the culture and the mindset out there. They have amazing food.
That takes us to where you’re teaching. What are some of the favorite things you like about teaching?
I never thought I would go down this path, to be honest, but I enjoy connecting with the students, have a chance to share my knowledge, and more importantly, my experiences so that they make new mistakes and not the same mistakes I did.
That’s one of my favorite questions. If you could go back in time to your younger self, what would you say? As a teacher in college, are you saying to them, “AI is the future. You’ve got to learn this and embrace this.” I heard somebody say reading, writing, and coding. When you’re not teaching your children all three, it’s child abuse, to be prepared for the new world.
[bctt tweet=”Entrepreneurs have to be willing to take risks and think differently.” username=”John_Livesay”]
I tapped into Wayne Gretzky. I tell my students out. If you’re not familiar with Wayne Gretzky, he’s probably one the greatest ice hockey player ever. People used to ask him, “Why are you good?” He said, “My secret? I don’t skate to where the puck is. I skate to where the puck will be.”
That’s why people hire you to be the speaker. You help them visualize what’s coming around the corner, even if you can’t predict the pandemic. Maybe they could because it happened 100 years ago. They’re like, “We’re due.” What advice do you give entrepreneurs so that they can be like Wayne Gretzky in their business planning? The traditional business plans from yesteryear don’t even make sense anymore.
Things happen too fast, change too fast. You probably hear the expression all the time, John, “Feel fast. Learn change.” It’s true even in regular business, not just entrepreneurship. I tell entrepreneurs, “You’ve got to be willing to take risks when you have to think differently.” It’s not just you have to have the great idea. You’ve got the idea, build the idea, own the idea and create the infrastructure around the idea. You’ve got to do all these things to be successful. I have a framework I called TUCBO, Think different, Understand different, Create different, Be different and Own different. If one focuses on the team, they think if I get the T, “I’m golden.” Idea by itself is not worth the whole lot if you’re not going to build it, create it, get the buy-in, and build the infrastructure.
I will share the story of Tesla. Why is Tesla successful in electric cars, where everyone else has failed for decades? They have some great technology and they made some great advancements in batteries. That’s not the selling point. They didn’t think differently. They didn’t create differently. One of the big edges they created was they took away the reasons to say no. Are you worried about finding a charging station? They have an app for it that will tell you where they are. Are you worried about infrastructure charging stations out there? We’re building that infrastructure. We’re out there negotiating with the shopping malls, retail centers, theaters and grocery stores to get prime locations for those stations for you.
That’s what the competitors weren’t doing. I remember there was another electric car company right around the time of Tesla. It was like, “That’s just for rich people. It can’t hold the charge to go from LA to Vegas.” “Somebody put a charging station in the middle?” I like that. That’s a great quote. “Take away the reasons for people to say no,” and that’s true whether you’re Tesla pitching. I would be remiss if I didn’t ask you for a tip since you judge and hear many pitches for investment. Any tips on how to give a great pitch to an investor? What mistakes to avoid? Either one, whatever you want to do.
You have to tell a relatable story. You’d love that, John. I’ve heard over 2,000 pitches in my life. You have to tell a relatable story and you have to connect with the investors in the room. I see people come in and they probably have a great idea and they got some traction going on. They’re saying, “Fourteen-year-old kids are going to love this.” If you look at the room, the average person in this room was 52. How are they going to connect with that? If you said, “Your fourteen-year-old kid is going to love this better.” You have to tell the story and have to make it connect and stick. Otherwise, they’re never going to get it.
Also, a good story makes you memorable. Think of hearing 2,000 pitches. You probably remember the ones that have amazing stories because that’s how our brain works and keeps things in our memory because we’re not AI where we can’t just pull all 2,000 up at one time. We’re going to remember the ones that have that emotional story that is not only relatable but hopefully, has some emotional hook to it. I know you’re involved in social causes as well as part of your own purpose and premise. What’s in the book, Own the AI Revolution? That’s the hint. How’s that for a transition? We have artistic intelligence as part of a play on words instead of artificial intelligence on top of artificial empathy. You’ve given us all kinds of great ways to reframe everything, which nobody appreciates that more than I do. What is in your book that can make people intrigued enough to want to go buy it?
My book Own the AI Revolution is geared around what would I call the three Es, Education, Empowerment and Enablement. It’s been for non-technical business leaders, specifically because most of the books were technical or too high-level, too theoretical, or too fearmongering. It gives you a little sense of what exactly is AI? What can it do and not do? The empowerment is to help you answer the question, how do I figure out something to do with AI? Everyone’s like, “I know I should do something but how do I figure that out?”
It empowers you and shares a framework, a set of steps on how to do that. When the enablement is showing you, how do you do it? How do you build a team? How do you go out and put the product to market? It’s woven in with a lot of different real-world stories. It’s non-technical people that have started new business units, new startup ventures with AI to show you that you don’t need to be a smart technologist to do something with this. Most successful ventures I’ve seen were non-technical people. How many technologists know how smart they are? Know the ground problems of a marketer or a doctor or an accountant?
Own the A.I. Revolution: Unlock Your Artificial Intelligence Strategy to Disrupt Your Competition
When I spoke at the Coca-Cola CMO Summit, I was talking to the CMO of Domino’s Pizza. I said, “Your team built the app that tracks pizza from order to delivery.” What I thought was fascinating, Neil, was their overall goal was to give people the perfect pizza experience. From that place, they said, “How can we use AI to cut down a few seconds on the delivery time for the perfect experience?” We have thought if you want a pizza and it comes faster, it’s almost boom. It’s a Space Age stuff.
If you order the same pizza at the same time every day or the same order week after week, then the minute you open the app or pick up the phone, AI goes, “Let’s go ahead and put the order in before they finish completing it. We’ll eat it if they change it.” Those few seconds of getting the pizza started before the order is completed, the predictiveness that might give the consumer a better experience and they may not even notice it. “My pizza is coming here faster,” but maybe they will. I don’t know. That to me was one of my favorite examples of it being used in a way that most people aren’t aware of.
We may not necessarily notice that. If you think they still do some more small changes like that.
“How are they getting those pizzas? They’re fast.” Any last thoughts you want to share with us? Tell people how to find you for speaking. Any last thoughts you want to have to us about what is coming around the corner that you can share, like the puck?
I will tell you there’s a lot of cool things going on but I know a lot of people are wondering, “How can I be in front of the curve?” The best way to predict the future is to create it. We all have a shot or a chance to be a driver but we don’t realize that. Think about something. Even a small thing, a pain point, or an opportunity or something tedious. There’s probably an opportunity there for you. Do something small or big and it’s worth exploring. If you want to learn more about how to do that, definitely come and check out what I have on my website, NeilSahota.com, or you can follow me on LinkedIn and Twitter. I’m always sharing stories or things about what people are up to or I’m doing. Hopefully, you’ll find some inspiration.
I know we will. You’re riveting and thank you for sharing your intelligence, real and artificial, with us all.
It’s my pleasure, John. I had a blast.
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Focus@Will With Will Henshall
Posted by John Livesay in podcast | 0 comments
A great part of what hinders our productivity is our tendency to become distracted and lose our focus on what we are supposed to do. Did you know that music can actually help you solve that problem? Focus@Will is a new neuroscience-based tool that uses sequenced instrumental music tracks to increase your attention span up to 400% when working and studying. The mind behind this incredible invention is Will Henshall, a musician, scientist, songwriter and technology inventor. After a successful seven-year run with Londonbeat, a British-American dance-pop band who scored two number one hits in the early 1990s, Will turned to entrepreneurship, starting a number of startups in the digital recording industry. Listen as he describes the amazing benefits of Focus@Will in this interview with John Livesay.
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Listen to the podcast here
Focus@Will With Will Henshall
Our guest on The Successful Pitch is my friend, Will Henshall, the Founder of Focus@Will. He and his team have created a way for us to find the right music to play at the right time to make us all more focused. Not only does it make us more focused and gets us in the zone faster, but keeps us there longer and makes us happier. We do a whole in-depth conversation around how boredom at work stems from not feeling productive Focus@Will can help you solve that problem.
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Our guest is Will Henshall, who is the Founder of Focus@Will, which is a new neuroscience-based web/mobile tool that especially uses sequenced instrumental music tracks to increase your attention span up to 400% when working and studying. Will is a musician, scientist, songwriter, technology inventor, working with audio to find the right music at the right place at the right time. He was the Founder of the British pop-soul band Londonbeat and had two Billboard number one hit records. He went on to found Rocket Network, a Paul Allen/Cisco-funded San Francisco company in 1995. Afterward, he created a professional audio media transfer system, DigiDelivery, which he sold in 2003. Will has achieved notable global success as a technical inventor. Will, welcome to the show.
Thank you, John. That was quite an intro. I was worried you were going to say, “It’s 400 times more productive.”
If your productivity is ten, we get you to 40% or something like that. I have always admired you. We’re personal friends. The concept of having you share your wisdom about entrepreneurship and, more importantly, about life in general. You’ve also had some certainly challenging obstacles, let’s say. We’ll leave that as an open loop. Would you mind taking us back to childhood a little bit? Many people have a dream of being a rock star, movie star, or author. You certainly were able to fulfill, in a big way, one of those dreams. I’d love to hear the story of when that dream started.
For me, it was not wanting to be a rock star. It was about wanting to be a composer and songwriter, and not even wanting to be because I was. I would have been 3 or 4 years old and I can remember sitting at my folks’ piano and playing the black keys. If you play the black keys, it’s a pentatonic scale. It sounded like something from the South Pacific. I remember doing that at the age of four and going, “This is nice.” That got me intrigued with the way that the sounds all fit together.
At the age of 4 or maybe 5, I remember thinking, “If I made each one of these notes go up one, does it sound the same?” I was playing a pentatonic scale in the key of G major. I’m now telling you, but at the time, I didn’t know. That’s what got me fascinated by the math of music. I was always fascinated with getting a sound and looking for a grid and a method and different instruments. I had many instruments as a kid. I got a trombone and I was like, “Here are the partials.” You play octaves. As soon as I learned something, I put it down and not want to do it anymore. Music is in the blood, 100%.
Did you come from a musical family?
No. I have no idea why that happened. I often wonder whether the Milkman was musical or not. My dad plays piano a little bit by ear. There’s nobody else in my direct family that plays. My grandfather on my mother’s side was an artist. He was a technical drawing artist. He wrote books on steam engines and did all of the photographs and pictures. He was a visual artist.
Even though you didn’t have dreams of performing in front of thousands of people, you still found yourself on stages.
I did. Was that a cue to do this? Here’s something I wrote. Here’s one I made. I was the founder and the guitarist in this band, Londonbeat. This was in 1990, 1991. It’s the most played song in the world on the radio by a British writer.
Focus@Will: You can play in your unconscious mind a music that soothes it, that makes it calm. It’s like having the kids in the backseat be quiet so you can concentrate on driving.
You wrote the song. You played the guitar on the song. I’ve seen a video of you singing as part of that.
I wish was. No. I co-wrote the song. I was the main writer, but I wrote the song with the three singers, who are African American living in the UK, in London. I’m playing everything on the record apart from the drums and some of the bass parts. I can sing well enough to do backgrounds, but no one would ever pay me to sing lead. I’m a songwriter. As long as I can go, “Da da da,” someone who can sing can make what I mean. It was an interesting collaboration. The guys were much older than I was. I was in my twenties. They were in their 40s. They were soul brothers from the ‘70s. They were American. I was British. They were black. I was white. It was this fascinating hybrid of British pop music and American soul. It was successful. We were together for seven years, signed to MCA Records and RCA Records outside of the states. We sold a lot of records.
How have you parlayed that experience and success into being successful as an entrepreneur as part of working for a startup that raised a lot of money? Tell us about that experience, some of the challenges, and the highs and the lows.
I tell people that I’ve done seven startups, which is true. The first real startup was the band. The band, Londonbeat, how it works is similar to starting up a startup. What used to happen has changed a lot in the last few years. What used to happen is you write some songs and you’d finish them and you’d demo them. You’d take those demo recordings to a label and then the label, if they’re interested, would either sign you to a development deal to write some more songs or they would sign you and then you would find a producer. They would fund your startup. What happens then is that you run this little intrapreneur business within the major labels.
I’d been running a recording studio in my early twenties. I got a handle on how to survive and pay the rent and to be self-sufficient. Forming the band, I was lucky. I was introduced to the Eurythmics Management, Sandra Turnbull. At the time, Eurhythmics was one of the biggest bands in the world, Sweet Dreams (Are Made of This), and so on. They were signed to RCA Records. I had these songs that me and the singers, Jimmy Helms, Jimmy Chambers, and George Chandler, had written. All four of us had careers where we made a living independently in the business. We understood what mattered. What mattered was being careful with the cash, testing the songs, testing the product, finding the direction. We were the first MTV Unplugged band. We were the number one.
We used to go out all the time with me playing acoustic guitar and these three guys singing and then I join in and do the background. We did that a lot promoting the records that we made. MTV called up and they said, “Would you come and do some of your songs without the band?” We’re like, “Of course, we will.” I said, “Yes, but I want you to make a big huge TV set. I want us to be on TV.” Bless them, they did. They made us this cheesy cartoon-like TV, a big one, and then we stood inside it. It was the early wacky days of MTV. That was with a guy called Ray Cokes, who was in the MTV Europe. Ray Cokes had a show called Most Wanted with Ray Cokes. He was one of the first shock jocks. He used to do a live show to 220 million people every night without a delay on it. No profanity delay or anything.
Let’s talk about that company you’re working with in Silicon Valley and what that experience was like.
After I was in Londonbeat, I got interested in digital recording. I’ve always been a recording engineer and back in the day, it was tape machines going round and round. You would record on multitrack. That was an early convert to digital recording, particularly with the Avid Pro Tools system, DigiDesign Pro Tools. With three other guys in 1995, we created something called Rocket Network, which was an audio collaboration system that allowed you to network recording studios. We got funded by Paul Allen, by Cisco, by a number of other investors back in the early days before there was an internet, and startup scene. It started in London, in the UK, and then moved it to San Francisco in the end of ‘96, early 97. We raised about $50 million. We created the technology, which is available in Avid as Avid Cloud Collaboration, the first iteration of that. We sold the company to Avid in 2003. That was a rapid and vertical lesson on how to manage and how to build and grow a company. I went from being a guitarist and a songwriter to being a Tech CEO almost overnight.
What was the biggest challenge during that? Managing people?
[bctt tweet=”Running a development team was like being in a band with fifteen drummers.” username=”John_Livesay”]
Yes.
Not the tech. That’s what’s always interesting.
It was the fact that many developers are socially awkward and that’s part of the reason why they end up as developers. I’m painting a broad stroke here, but it’s fair to say that most of the incredibly talented developers I’ve met have been atypical. I knew about that because drummers are similar. Drummers are atypical. We have a common friend, Kenny Aronoff, who’s one of the most famous drummers in the world. For a drummer, he’s a good guy. He strings a sentence together and he’s funny, but he’s still a drummer. I should say that many of my musician mates are professional drummers, Mark Schulman, and a bunch of them. They’re atypical. They think about different things. I found that running a dev team was like being in a band with fifteen drummers.
Interesting analogy.
It took me a while to figure that out.
Everyone is on their own rhythm. You have to deal with each one slightly different. There’s a reason the band usually has one drummer as opposed to fifteen. Herding cats, a little bit, could be a reference.
Herding drummers and herding cats are similar.
You’ve started Focus@Will, which is a play on words about willpower and your first name. It’s the story of origin of the company.
It wasn’t my idea to name it. We were looking for a name and one of my investors, Salim Ismail, came back and he said, “Focus@Will, that’s the name.” I was like, “Yeah.” Do you know how he sold it to me? It was not my name. He has a strong spiritual outlook on life, similar to my own, and he said, “Will is Prana. Prana is Will, which is the will to live. It’s the will and it also means universal source. It could mean God, too. It’s that thing that is outside of you.” I was like, “That makes sense because it’s a play on words in multiple ways.” It’s been successful. People like it and it makes sense.
Driven to Distraction: Recognizing and Coping with Attention Deficit Disorder from Childhood Through Adulthood
The big problem you’re solving is that a lot of people have trouble staying focused, especially if they’re students and they’ve got many distractions going on. Most people don’t take regular breaks and their retention goes down the longer they try to retain things. That concept of solving that problem through music, you’re uniquely qualified to run it. What I find fascinating is a lot of businesses have a narrow niche, but this is for anyone who is both creative and logical. It’s not mutually exclusive. It’s for people who are students and entrepreneurs.
It’s not like you get out of college and you’re done, you still need to focus. Even if you’re a tech person or you’re someone who’s an artist, the need to focus on is something that changes throughout. The fact that you’re using science and math with music, which goes back to your childhood story, is something that I found fascinating when I took a deep dive into this. Would you mind describing some of the distractions? People might say, “I get distracted if my doorbell rings or there’s noise outside.” There are many other distractions that we may not even be aware of. Let’s talk about that.
You know how when you’re sitting down at work and, in theory, there’s no chainsaw outside and there’s no one distracting you and still, you can’t seem to get in the groove. You can’t get your flow going. There are two types of distractions. There are external distractions, which are the ones I talked about. By far, we are more limited by our internal distractions. We have two types of attention. We have our exogenous and our endogenous, our external and our internal. I learned a lot about this through the science team we have at Focus@Will.
Evolutionarily, our non-conscious minds pay attention to certain things that are keeping us safe. For instance, right now, if you smell smoke, you’re going to be like, “I need to check that. I need to pause.” If you smell burning, but it’s toast, you’re going to be like, “That’s toast. It’s not burned.” Your nonconscious attention, your exogenous attention, is constantly monitoring your surroundings. Your internal attention, which is me talking to you, you can concentrate and focus on what we’re talking about.
It was described to me beautifully by Dr. Ed Hallowell, who’s one of my science team. He’s a psychiatrist. He has written some bestselling books. Driven to Distraction that’s the one, which is about being distracted at work. He said, “Your nonconscious attention is like the kids in the backseat when you’re trying to drive somewhere and they’re like, ‘Are we there yet?’” What you can do is you can give them a book or put a video on or give them a Game Boy or whatever the kids are using these days. You can have them be quiet so that you can drive the vehicle.
If you think about, “I’m sitting on my computer and I have a spreadsheet. I have a piece of creative writing. I have some coding to do. I have to look at some QA on a science project.” What you want to do is have the kids in the backseat be quiet. What you’ve found you’re able to do is to play specific types of music. It has to do deal with how easily distracted you are, the types of music. You can play in your unconscious mind a music that soothes it, that makes it calm. It’s like having the kids in the backseat be quiet so you can concentrate on driving.
What a great analogy. One of the things you talk about on the website is that boredom is a distraction. If you’ve ever had to try and tackle something that you’re having trouble remembering, you don’t particularly it’s interesting and you’re like, “I’ve read this. I don’t remember a thing I read. How am I going to pass this test?” About blockchain, I was like, “This is not my idea of fun.” If we’re listening to the right music, science proves that even if something is boring to us, it somehow goes down like the Mary Poppins’ Spoon Full of Sugar concept.
There is a fascinating link between boredom and or lack of happiness. We did a survey with 25,000 of our most engaged users. We have a couple of million people on the system regularly. We asked these 25,000 and we said, “What is your single biggest challenge at work?” We’re like, “I know that’s something to do with productivity.” The answer came back from everybody first was happiness, “I am not happy at work. My challenge is being happy that work.” Second question is, “How do you manage that?” They say, “We like to listen to music when we’re working.” You’re like, “Why do you listen to music while working?” “It’s because it allows me to focus and concentrate and that makes me happy at work when I’m being productive.”
If I can turn around your question, is being bored a problem? It’s not being productive is the problem and that often creates boredom. If you’re able to manage this process, which is your non-conscious attention, it’s your limbic system. It’s the fight and flight reflex that’s spin all of our brains. If you can manage that response, what it gives you is this sense of peace and calm. It’s a flow state. Even if you’re doing something that is repetitive and is not particularly rewarding, if you’re able to get into a flow state doing that, you will find that there is a pleasure in it and you will be happy at work. Cue the music.
[bctt tweet=”Boredom is not the problem. Boredom comes from not feeling productive.” username=”John_Livesay”]
That’s going to be a great Tweet, “Boredom comes from not feeling productive or not being productive at work.” That’s a big a-ha moment for me, certainly. You also have a quiz that I took and I was fascinated. The question that made me laugh was, “Are you considered ADD or OCD?” I meant to check no and I checked yes and I was like, “I’m not exactly paying enough attention to the answer. That’s the wrong outcome. Let’s start the quiz over.” It asked a lot of different questions that I’ve never been asked before. I thought it was a fascinating process in that premise around distraction and focus and work and the combination of questions. You have twelve different options, at least.
There are 36 different options on the main because there are three flavors of each one.
They said, “You would be most productive listening to Electro Bach.” Since you know me, I thought, “Is that a surprise? Does that seem to be much in sync? Did I answer the questions wrong?”
Electro Bach is a unique channel that we created originally for a TV show called Genius on Nat Geo. It’s about Einstein. Einstein used to play the violin to get himself into a flow state. He had some specific pieces he used to play. The producers of the show said, “Is there a link between the pieces he used to play and the research that we’ve done in focus?” We said, “There is.” If anybody is reading and is musical, you’ll know there’s something called a sixteenth note. If the beat is going 1, 2, 3, 4, a 16th note is dividing each one of those up into fourths. You can see there’s a musician going, “Diga, 2, 3, 4 diga.” That is a pulse. Those pulses have been shown to help put you into a flow state. If you listen to Bach, in particular, any of the things that Einstein used to play, they are similar. Techno music is similar. Let me play a little burst of some of Electra Bach. This is what it sounds like.
Would this be something I would listen to on my phone while typing on my computer?
Yes. Listen to it on your computer while you’re working. Eighty percent of our users listen on their laptop because you’re working on your laptop and your phone is a distractor. I talked about the, “Diga.” There’s a pulse intrinsic in this.
How long does it take for the average person to hear that customized choice of music before they feel like they’re in a flow state?
There’s a timer on the app. Most of our users, the average session length is 80 minutes, which is a long time. That’s an hour and twenty minutes. That’s a long time. If you’re working without music that’s helping you focus, you can usually do about twenty minutes before the internal distractions kick in. The reason why we’re able to say that the Focus@Will system increases your focus state and your productivity by 400%, four times, is because instead of working in a twenty-minute chunk, you can work in 80-minute chunks.
Would it be fair to say that the monkey mind that we’ve heard about, conscious conversations with people, it’s quieting?
Focus@Will: If you’re working without music that helps you focus, you can usually do about 20 minutes before the internal distractions kick in. Focus@Will increases that time to 80 minutes.
It is.
The kids in the backseat are another way of looking at it. It’s the monkey mind of like, “I need to go. Am I hungry? Am I this? Why haven’t I heard back from that person?” Your mind starts going crazy.
All of the things that you’ve talked about are evolutionarily helpful to us as humans. You and I are in a cave back in the day and we’re drawing on the cave wall, doing some pictures of some tigers and stuff and we’re drinking a cave beer. Our backs would be to the entrance of the cave. What happens is there’s this timer in our brain that goes, “I can’t hear anything outside.” Your nonconscious attention is listening to the sound of the forest, the jungle. After a certain amount of time, you have this urge to check that there isn’t anything dangerous outside the cave.
It makes sense because you can’t assume that something safe now will be safe twenty minutes from now.
We all have this timer, about 20, 25 minutes. When that thing, in our brain, goes, “Did I lock the door? I think I left the oven on. I forgot to do that thing.” When you’re wired into a flow state, that timer is running. There is something called the Pomodoro Technique. You may have come across that. It’s a technique where you work hard for twenty minutes and you take five minutes off. Why is it twenty minutes? It’s called habituation. Our brains work with something called habituation and novelty. We’re always getting used to the sounds around us. If you’re interested in this, anybody reading, you can go to the Focus@Will site. There are articles about this.
You created a little bit of an open-loop saying there are three kinds of flavors once you’re inside a choice. What does that sound like?
It’s a little counterintuitive, but it makes sense if I quickly explain how this works. The quiz, that’s free, you can check it out and it’ll recommend a channel or a type of music that works well for your brain type. Our quiz, you said they’re weird questions. They’re based on a standardized psychological model called The Big Five. They’re weird questions. There are double negative questions in them after thinking them through. What we’re trying to do is to figure out, on your brain type, how easily distracted are you.
We’ve all got friends who are easily distracted. They are like hyper monkeys the whole time. Elon Musk, ADD. He’s not a friend of mine. You can see him and you’re like, “That guy is ADD.” Here’s another one, Jeff Bezos. Look at him. Steve Jobs. They’re all tech guys. What about Oprah? She’s got to be super hyper all the time. The more hyper you are, you might think, “I want to play someone some gentle music to calm them down.” That’s not going to work. It’s the opposite. The more hyper you are, the more energy you need in the music to calm you down.
This is similar to the fact that kids with ADD are often prescribed stimulants. You probably heard of Ritalin and Adderall, all the other drugs that kids are doing. Weirdly, if a kid is hyper, it calms them down. It’s to do with the way that your nonconscious mind is active if you’re ADD. The stimulants around you, including the music, are able to have you focus. Perhaps I should play you a little burst of this. There’s a channel on the system called ADHD Type 1. About 5% of our users listen to this and find it relaxing and they’re able to work.
[bctt tweet=”We are soul beings in human bodies.” username=”John_Livesay”]
I would not be in that percent.
Isn’t that crazy?
Yeah.
If you are ADD, that is good. It sets you on a groove and helps you get into a flow state. Most people in our system come up with either the Electro Bach or there’s a downtempo channel called Alpha Chill. Here’s a typical track from that. It’s like musical and easy going.
One of the things that I wanted to talk to you about before I let you go is you experienced a life-threatening heart attack and did a little bit of a recovery period. My first question is, what music did you listen to deal with the pain and the boredom of being in the hospital after your heart attack?
I had never been in a hospital before. In June 2018, I had an out of the blue widowmaker heart attack. I had no idea I was at risk. They said, “Look at your father.” My dad is in his late 80s and still causing havoc. I had this heart attack and then I woke up eight days later. My life was saved by my wife who gave me CPR and then the medics came, but I had no recollection of any of that. I started to regain consciousness over the next 8 or 9 days. The hospitals are noisy, pokey, prody. You can’t sleep. Every three hours, they wake you up. The music is awful, generally. They have music on the TV. I was in a hospital in Santa Monica, in California. The music that helped me was Baroque string music, Vivaldi, Four Seasons, music that I knew as a kid growing up. I trained as a classical musician so I had to learn some of this stuff.
Are you finding yourself more focused not just at work but being more present in life and not sweating the small stuff after this life-changing event?
I’m more still, generally, than I was. I found peace. I died and I described it as I shook God’s hand. There was no white light tunnel for me. Everything went off and I had a widowmaker heart attack experience. I was aware that there is this beautiful and loving energy. I was always coming back to consciousness. Every time you breathe in, you connect to this beautiful loving energy. It’s like loving awareness. It’s like a familiar love you have from your mother. It’s the love you have from people you know. It’s the love you feel when you see something beautiful. You see a beautiful nature scene or you’re in a forest. Every time we breathe, we connect to that. I was taken off the ventilator. You’re on this breathing tube, which is gruesome. The first breath I took after they took me off the ventilator was the sweetest, beautiful breath. I remember connecting to the source, to Universal Power, to God. Whatever you want to call it, there’s this loving awareness. There’s this beautiful, loving energy that we’re all part of. It’s simple. We are soul beings in human bodies.
Music is a way. Focus@Will is a way to get the right music to get us into that state as much as possible. That’s why you’re reinforced and you’re doing the right thing, even before you had the heart attack. It’s even a bigger mission for everyone. Will, I can’t thank you enough. If everyone wants to know more about you and Focus@Will, the website is FocusAtWill.com. Any other last thought you want to leave us with?
Focus@Will: The more hyper you are, the more energy you need in the music to calm you down.
The whole heart attack and coming back to life, it’s made me conscious of wanting to make a difference and be of service. Entrepreneurial Men’s Group based out of Los Angeles is called METAL International. It’s a group of entrepreneurial thinking, heart-centered men. We represent all kinds of men. I’ve become the CEO and co-leader of this group. Since I came back from the dead, a big part of my life has been wanting to serve and to make sure that the elders of the tribe are passing their wisdom down to the younger members who have a fresh and different view on it. Reply with the favor back. Men’s work and leading men’s work is an important part of my life.
That’s where we met, at that METAL organization. Now that it’s virtual, it’s global. It’s another wonderful way to get back and connect and learn. You’re certainly loved and admired as a leader. I’m honored to have some time to ask you some questions and get some insights into what makes you that we can all aspire to be the best version of ourselves.
Thank you, John.
I got a soundbite for you, you know how you’ve got special friends in your life and then any your special friends, you have someone else who accepts you and loves you exactly as you are? These are the special, few humans in my life and you, John Livesay are on that list. It’s a small list. Thank you.
I was honored to speak at your virtual wedding and have to visit me in Austin here. It’s likewise, equally, reciprocal. If you can find friends that become your family, you have a lot to be grateful for. That’s for sure.
Thank you.
Important Links
- Focus@Will
- Driven to Distraction
- METAL International
- Londonbeat
- Eurythmics Management
- Salim Ismail
- Better Selling Through Storytelling Method Online Course
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Financial Health Doctor For Female Founders with Jill James
Posted by John Livesay in podcast | 0 comments
Keeping yourself healthy is definitely worth the investment and in order to do that, your financial health has to be in tip top shape as well. The financial health doctor and CEO of SIF Industries, Jill James, joins this episode to share her knowledge about financial health. She goes into the details of what financial check ups can do for your business and what are at stake if you decide not to have your finances checked. In addition to this, she gives some amazing tips on how to pitch and get funding for a VC. On this topic, she also talks about having an exit strategy and what you need to prepare in order to justify a VC. In addition, she touches on how to be successful in a small business as she emphasizes the importance of knowing and understanding the economics of your business.
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Listen to the podcast here
Financial Health Doctor For Female Founders with Jill James
Our guest is Jill James. She’s the CEO and Founder of SIF Industries, which is a consulting and coaching firm that puts women on the fast track from founder to CEO. She started her career in banking with JP Morgan but she got the startup bug while in the Chicago Booth for her MBA. She’s had roles in product management, marketing, sales, and C-level leadership at six VC backed startups with four exits. She holds a BA with Honors in Political Science and an MBA in Strategy, Entrepreneurship, and Marketing from the University of Chicago. She’s an advisor to Boutique Box and is on the board of many programs and she lives in Los Angeles where I am from. Welcome to the show, Jill.
Thank you, John. It’s great to be here.
Let’s dive into your own story of origin and bring that little intro to life. You can go back to childhood, college, high school, or wherever you want. You had some interest in entrepreneurship and marketing. You had that little a-ha moment that I talked about while you’re at Chicago Booth but if you want to go further back than that, feel free.
I’m originally from a small town in Wisconsin and when I say small town, I mean a small town with 1,000 people with no stoplights. We had a stoplight one summer. It was exciting. Everybody wanted to drive across the bridge and drive in the stoplight. I was there my whole life until I was eighteen and both of my grandparents had small businesses. I grew up going to Northern Wisconsin in the summer and working in my grandparent’s old-fashioned soda shop. From the time I was six years old, I would pull the candy. I love to make the hot fudge sundaes and we made sodas from scratch with the old-fashioned pump and the soda machine.
I grew up doing that and my other grandparents had a trucking business. I didn’t realize it until later in life, but it was interesting to see one that was a true family-owned small business and one that had a little bit more scale. It became a major employer in our area because of the scale of the trucking business. Foundationally, I think of myself being raised by teachers, but I do have a lot of small businesses in my family and a lot of my aunts and uncles have large families. A lot of them have their own businesses. It’s certainly something that was always around me, even though I was much more on academic, go to college, and gets a job track.
[bctt tweet=”You have to understand the economics of your business.” username=”John_Livesay”]
I didn’t know what I wanted to do going to college, but I had a chance to explore things at Chicago and I was lucky that I got some great internships and I accidentally applied for a banking job. I thought it was a consulting job. I don’t know how that happened but I ended up working at a bank. I took the job that was the most interesting to me. I got exposed to a wide array of how stuff works but also being from a small town, I had some personal challenges with the idea that the budget of my town was a rounding error for the people I was working with. That was hard for me. I thought we could put that money to better work in the world.
That was the start of my path to going smaller. I got in the tech boom. I went to a couple of tech startups and that was the first exit. We built a trading platform for domain names back when that was the start of that thing with the first opening of ICANN and that’s how I got out of banking. When that all crashed, I did operate back in banking again. That’s how I went banking but that time I went back and I was a financial advisor to individuals with small businesses.
That’s probably the most instructive in my career of learning how the tax system works, learning how personal finance works because as a banker, you don’t know any of that. You know how to make a lot of money on a large scale, but I would work with people who are doing that. They had no idea how the personal finance system worked and they had no idea how small businesses worked. That has been the best job I’ve had for my whole career because I had to learn to sell and I also learned how you make money and how being a small business owner can help you make more money than you may get in a job.
I know that the readers are going to be interested in the fact that you have been involved with six startups that are VC backed. Rarely do I see somebody who’s had that many. I can hear the audience going, “Please ask her what’s the secret to pitching to a VC to get funding?” Did you learn any tricks or tips that you could see that when we say this, they open their pocketbook? One of my sound bites is when you tug at people’s heartstrings, they open their purse strings. A lot of investors I’ve interviewed talk about, “We’re more interested in the team and the idea,” and things like that, but I’m sure you must have some insights.
I never pitched anything that was zero revenue or pre-revenue. For me, it was always, “We have some money. We need to get to the next round. We need to offer some services. We need to accelerate or I need to get this round of funding, but I need the financials and somebody who can help me talk to that side of the business.” What I’ve seen both in terms of they want to see the team, but you also have to understand the economics of your business. That is true, whether you’re VC backed or self-funded and it’s one of the biggest holes in our knowledge as business owners of understanding our unit economics. That’s the foundation of my business.
Financial Health Doctor: Look at the potential of the business, what’s it going to take to get there, and how many rounds before you can hit that profitability point or before the business could be self-sustaining.
That’s almost all I do with people, even though we have a lot of things that we call it but it’s helping people understand their unit economics and why that’s powerful. That to me is if you can show that you have the margins on the scale to justify VC, it makes it a lot easier for them to give you the money. If you have already shown that you can make sales without their help and you’re using the money to accelerate and get a better team that also de-risks by a lot. Being able to show that you already have that product market fit and preferably on something that you bootstrap especially for women where it’s harder to get funding, that goes a long way to help them say yes.
I interviewed Brian Smith, who’s the founder of Ugg, those wonderful boots. Once he got his messaging right, it was first sold to surfers. It wasn’t a fashion statement at all. It was only sold in surf shops, but then it took off and he needed all this money to scale so that’s an example of a business that had some proof like you’re talking about revenue. To scale and hit the orders that were coming in, you needed that money. I always tell people, if you want to get your startup funded, whether it’s a seed round or VC route, if you’re got revenue coming in, you need to know your story. You need to have a pitch and you need to know your numbers. One without the other is a no go.
Even if you have a great pitch and great story and you don’t know your numbers, when they ask you, “What’s the cost to acquire a new customer?” you’re like a deer in headlights. If you’re only about the numbers and you don’t have a story to tell people, what problem you’re solving in a way that is unique and what your secret sauce is and all that stuff that they can then repeat and be proud that they are investing in something. The secret sauce is combining those two things. The other question I have for you, because you’ve had four exits, how important is it to have an exit strategy when you’re trying to get VCs to fund?
It’s important for you as a founder to understand how much money it’s going to take before that looks attractive and what that means for your actual earning potential. In some cases, I’ve seen slips where you’d be better off being self-funded than taking a couple of Angel investors. By the end of the amount of dilution that you accept, you have to be a massive company in order to get any money for you, let alone the people wh work so hard for you and stock options. You should look at what’s the potential of the business, what’s it going to take to get there and how many rounds are you looking at before you can hit that profitability point or before the business could be self-sustaining?
Also, is there any off-ramp? Are there breakpoints where if you had to self-sustain at that level, it would be fine? That’s what people have gone through in 2020. It’s like, “There’s no more funding coming. We only have this many months of runway. We’re going to have to be self-sustaining and we were counting on two more rounds.” There hasn’t ever been a thought of, “If I had to do that, what would it look like?” It’s a different mental model of we’re going to grow as fast as we can and find this customer and we’re going to get repeat revenue, recurring revenue, and lock these people in for as long as we can.
[bctt tweet=”Part of the financial health checkup is finding the things in your business that are profitable at the scale that you need.” username=”John_Livesay”]
Before we started the show, we were chatting about one of your earlier customers. She’s like, “I can sell but I’m not great at making a profit.” That is your own little story of origin of you doing a financial health checkup and it’s so odd to me that most people don’t think they need this because we all know we need to take our car in for a checkup, an oil change, or whatever. We know we need to take ourselves for checkups. If you’re a parent, you take your kids for those too and you should be doing it as an adult too. Somehow with our finances, we don’t want to look under the hood. Can you speak to what the stakes are if people don’t do a financial health checkup?
It brings up your stress and anxiety. I see many people that I start working when I say, “What do you think you’re going to make this year?” They’re like, “I don’t even know what I’m going to make next week. There’s no predictability now. There’s nothing I can count on.” Part of the financial health checkup is finding the things in your business that are profitable at the scale that you need. At this point, I primarily work with self-funded founders so we’re looking for enough margins in their business that we can drive their growth goals and mostly use debt and conventional financing techniques in order to grow their business to where they want to go.
A lot of them are in businesses where they need to prove that they can be a certain size before they could get an investment around $10 million or $20 million and they’re more $100 million to $500 million but they have that potential. We have to figure out where are those margins in your business. Also, get smart about who’s on your team, both in-house and out of house, that extended source team or a professional team of people you need who have the expertise and have an operating budget.
You would not believe how many people have no idea, even with financial statements, what they are spending on their business, and what the required things are to make their business run. In the financial health checkup, we look at how do we stack your revenue in a way that gets you to where you want to go profitably, pay you what you want to be paid, have enough money left over in the operating budget for the stuff you have to pay for, and get you the people that you need so you don’t have to work 100 hours a week.
We talked about how the riches are in the niches a lot on this show and you’re focused, and it’s a great example that you target and work with female founders, who tend to be creatives or not have a lot of managerial backgrounds. If someone is like, “I’m great about animation. I’m a photographer or anything that’s at all creative. I don’t know anything about how to manage a business, let alone scale, hire people and all that stuff.”
Financial Health Doctor: Investing is about things that drive your growth forward and there are a lot of things that we do without intention that should be done with intention.
It’s clear and it makes it easy for people to refer you and that’s why I talked about having the importance of a great elevator pitch. You need to be able to have a soundbite and go, “Jill James, you’re a creative person and you’re a female founder. She could help you.” It makes it clear and that’s what makes everyone reading go, “Am I that clear on who I help and what problem I solve?” You’ve got that dialed in. I’m sure a lot of your business comes from referrals, is that correct?
Absolutely, and this is the first year I’ve ever done any real outbound marketing and that was only because I wanted to start an offer of a more scaled product. Part of my personal mission is each year to double the number of people that I impact. I hit a point where I could not double without offering some skilled service. That required some outbound marketing and or they define those people who are looking for more of a group planning approach, instead of my one-on-one clients, which come from great referrals from my past clients.
You’ve got some great content here about are we spending or are we investing? Can you distinguish it for us? For some people, they’re like, “I’m going to invest in myself and take this course and learn how to run ads on Facebook,” or whatever it is they’re doing. You’re like, “Are you spending money that’s not going to give you a return on investment?” How do you define the two? How does someone know whether they’re investing or spending?
Spending is the thing to have to do to run your business. Spending is taxes, keeping the lights on, and having internet. It’s those things when LA sends your nasty bill every February. Investing is about things that drive your growth forward and there are a lot of things that we do without intention that should be done with intention like our marketing budgets and investments. If we have inventory that’s an investment. Our branding is an investment and PR is an investment. Many people think of these things as cost centers, “How much is that going to cost me? I’m scared to spend it because it’s not guaranteed that you’re going to get it back.” At a certain point, you have to have a bit of faith and understanding of your business.
If you put $1 in, you can get $2, $3, or $4 out. If the spending has the potential to do that it’s investing. I tried to look at what are the things in my business that if I put $1 in, will I get more than $1 back within a certain amount of time? I make bets on those. I gradually stretch what my comfort zone is to make more and more investments in my business. What I’m going through now is a major rebrand. When I saw the cost, I had a heart attack and I was like, “How much money is this going to put me into this next tier in terms of investment?” This is the payoff over the next months. I wrote the check and I started doing it. Our spending mentality says, “This is scary. I don’t know if I should spend this money.” Our investing mentality says, “What are we going to get back and where will we go into this fuller vision?”
[bctt tweet=”In a small business you have to be high margin and high service. That’s the only way to be successful in a small business.” username=”John_Livesay”]
One of the things I love to do is help salespeople and we’re all selling. If we’re working for ourselves or our own business, we’re selling ourselves or selling ourselves to get hired or get clients or about getting funding. Taking what I call, boring case studies, I’m sure you have lots of those in your MBA days, banking days into case stories. Can you tell us a story, you don’t have to give the name if you don’t want to, of a client that came to you struggling? They didn’t have what you call a financial oxygen mask on first. We all know that story of putting the mask on yourself before your kid and most entrepreneurs don’t think like that. They’re like, “I’ve got to save the business and I’m not making any money. I don’t have money to pay my mortgage or whatever.” Is there a story or client that comes to mind that you could take us on this journey? The goal for every reader is, “I see myself in the story.”
Some of them I’m still working with. We’ve been working together for a few years. I met her at a conference. I sat down next to her at lunch and started asking her what her business was. She was reselling someone else’s product and I asked super financial questions off the bat. When I meet people, I’m like, “How much do you make? What is your margin?” It’s those comfortable lunchtime conversations you have when you sit down at a conference. We started to talk about this and she said, “I know my margins and they’re fine. I’m reselling somebody else’s products. There’s nowhere I can go with this.”
We did a financial health checkup for her and what we realized was with the connections and the book of business, and everything that she had and what she was adding is customer service. It was super valuable for that customer. She also had relationships with producers in the space so we started looking at first more comfortably, what would we white-label? We make a white label product for somebody else. We started to go down that road and as we looked at it, she said, “I could not get this under my own name. I could sell this directly.” We switched from a resale product that, given the shenanigans the company was playing was between 15% and 20% in growth margin to a product that’s more 60% of gross margin.
We tested it out. There was no harm in floating this new brand and it turned out that her book of business was hungry for it. They jumped on it and the business has taken off over the last two years, in a way I don’t think we even anticipated. When I said, “What would be a nice size of business for you?” That’s about 1/3 of what her business is now. I find it over and over if your margin and you focus on your customer, what they value about what you do, which is sometimes not the product sometimes the customer service making their life easy. There’s a lot of value to that, especially for people in services, anybody who’s running around trying to hustle for money. If it’s time for money exchange, anything you can do to make their life easier then that’s valuable to them. She tapped into that and had a great product that was easy to say yes to but then added customer service on top of it.
It’s been an incredible growth story and having those pillars every time we get into, “The sales are overwhelming. What should we do next?” We say it like, “Does it serve the customer that you want to have? Does this feed into your customer service mentality?” We go back to those pillars and it’s like, “Do this. Don’t do that.” We can have as a foundation and it instantly makes clear, “What’s the right thing to do? Where should we put the money? How should we build this in the next stage?” I loved that we randomly met at lunch and I asked way too personal questions about her business.
Financial Health Doctor: The world is going to change no matter what. You can lead. You can follow, or you can fight for the past.
One of my other guests, Judy Robinett, wrote a book called How to Be a Power Connector and she says, “Talk to strangers.” There’s a classic example of you talking to a stranger at lunch. You were randomly sat next to if you believe in random things, I don’t but I love that. There’s something else that’s important that you’re able to help your clients with is identifying who you say no to, in terms of clients. Are these the clients that are never going to be happy, want refunds, and demand more of your time than what they’re paying for? Can you speak to that a little bit?
One of the things that I believe in small business is we have to be high margin and high service. That’s the only way to be successful in a small business. When I find small business owners or potential customers who again, cannot wrap their heads around the difference between spending and investing, and what’s it all about. Their comparison point is, “What can I get on Upwork, or what can I get my cousin who’s in college to do it?” I can’t compete with that person but I also know that they have no value and expertise. The time and direct answers that I can get for you, I focus everything on my business. Let’s get to the value that you need as fast as possible and I have a price for that.
If on the first day there’s something that we can do, that’s great. I’m going to tell you. I’m not going to dance through and be like, “The punch lines coming in four weeks.” I want to work with my clients in a way that if we have a great answer, let’s go with that. Let’s do it. That’s the whole point. It’s not to do the process. I have the framework. The framework works but when you hit that moment in the framework. You take off, you run with it. There’s no reason to wait like what many consultants do have, “Let me give you the big report. Let’s get to the end of this.” I want to do everything in a way and I want to have the client and customer aligned, so the minute that we realize what the breakthrough is going to be for the business, we start doing it.
It’s almost like if someone’s going for a checkup and they’re fine but if someone’s coming into the hospital and they’re having a heart attack, nobody wants a process. They want, “Can you save my business? It’s financially running out of oxygen fast. If you see a solution, please don’t make me wait for it.” What a great takeaway. If anybody wants to reach out to you, they can go to SIFIndustries.com, or they can google you that way as well. Jill, are there any last thoughts or things you want to leave us with? A favorite quote or anything?
One of the things I like to say to my clients is, “The world is going to change no matter what. You can lead. You can follow, or you can fight for the past.”
Jill, thanks for sharing your wisdom on how we should all get financially healthy. I look forward to hearing more of your success case stories.
Thanks, John. It’s been great.
Important Links
- SIF Industries
- Boutique Box
- Brian Smith – Previous Episode
- How to Be a Power Connector
- Judy Robinett – Previous Episode
- Better Selling Through Storytelling Method Online Course
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