TSP058 | Bob Burg – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John:

Welcome to The Successful Pitch podcast. Today’s guest is Bob Burg, the coauthor of The Go-Giver. In his book he talks about the five laws. The first one is value, giving more than you take. The second one is your compensation is based on how many people you serve and help, and finally your influence is of the ability to make others take action and feel good about it, being authentic, and then finally how receptive are you to receiving the good that’s out there.

He said investors invest in people they know, like, and trust. Your ability to have empathy is really a key part of getting people to know, like, and trust you. He said if you’re looking to make sales and get investors and get people to join your team, you should seek happiness because that is really what everyone’s looking for, so you need to look at what makes somebody else happy, what is happiness for them because it’s all relative, what happiness to you may not be happiness to others, and finally realizing people’s resources are limited like their time. So make sure that you’re giving is a good use of their resources and it’s going to make them happy. Enjoy the episode.

Are you a founder struggling with your investor pitch? Do you need warm introductions to the right investors to get your start-up 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.” Judy Robinett, best selling author of “How to be a Power Connector,” and on the board of Illuminate Ventures, and I, invite you to our free “Crack the Funding Code” webinar. Simply go to Judy Robinett, 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 our network of investors around the world. There’s a link in the show notes as well. You’re only one click away from getting funded fast.

Hi and welcome to The Successful Pitch podcast. Today’s guest is Bob Burg. Bob has some really interesting insights for us today. He ask the question, “Can a subtle shift in focus really make that big of a difference in your business?” He says yes. Bob is the author of a number of books on sales, marketing, and influence for the total book sales of well over a million copies. His book The Go-Giver coauthored with John David Mann has sold over a half-a-million copies and translated into 21 languages. It’s been reissued in a new expanded edition with a forward by none other than The Huffington Post founder, Arianna Huffington. Bob is an advocate supporter and defender of the Free Enterprise System, believing that the amount of money one makes is directly proportional to how many people they serve. Bob, welcome to the show we’re delighted to have you here.

Bob:

Well thank you John, I am just so delighted to be with you. Thanks for having me.

John:

Bob, your book The Go-Giver, first of all I just love the title that instead of the go-getter, it’s the go-giver. Can you tell us a little bit about how’d you come up with that great title?

Bob:

Well when John, a day with me and my awesome coauthor, and really the lead storyteller of the parable. He and I want to come up with a name that – you know, I had a little bit of a pattern interrupt to, but in a sense. So I think in any marketing message I think that – well the title of a book is sort of what the headline of a sales letter, and you want to draw people in. You want it to be a little bit different and a little bit distinct. So The Go-Giver was a title that people who are in sales or business, entrepreneurs, they look at that they say, “Wait a second, I have to be a go-giver.” Then the subtitle of the story about a powerful business idea. How does being a go-giver – what does that have to do with the business. So yeah, we did it for that reason, and of course, it did it that the message needs to be congruent with the title which we hope it is, and so the basic premise, John, is really nothing more than shifting one’s focus from getting to giving. In this case when we say giving, we simply mean constantly and consistently providing value to others, and that doing so is not only a nice way to live life, but it’s a very financially profitable way as well.

John:

Can you explain a little about what you mean? There’s actually five laws in the book and value is one of those laws about – when you give value to someone, you’ve had a great example about an accountant giving value to someone but people walking away happy that they got value and paid someone, and of course the person is also making a huge profits. It really is a win-win, isn’t it?

Bob:

It is, and that’s why when you first hearing these laws, these five laws, are somewhat counterintuitive in nature. So the law number one, the law of values says your true work is determined by how much more you give in value than you take in payment, and when you first hear that it might sound a little bit like hey, how do you stay in business doing that? It sounds like a recipe for bankruptcy, give more in value than I take in payment. But as you said obviously both parties win big. So we simply have to understand the difference between price and value. Price is a dollar figure, it’s a dollar amount, it’s finite, it is what it is.

Value on the other hand is the relative word or desirability of something to the end user or beholder. In other words, what is it about this product service concept idea that – or opportunity – that brings with it so much worth or value that someone will willingly exchange their money or their time or their energy or whatever it happens to be, for this value, and they feel great about it while you make a very healthy profit. In the example you talked about with the accountant, is simply very easy to get our arms around because we can imagine we hire an accountant for a thousand dollars to do our taxes. His price is a thousand dollars. What value does he give in return? Well, through his years of study in learning his craft, through his practice again and again through his desire to make our experience with him outstanding and he learns our business, he learns our needs, our wants, our goals, what we’re looking to accomplish through his services, and he’s able to actually save us. Let’s say $5,000 in taxes. He also saves us countless hours of time which enables great value because it frees us up to do what we would rather do and what we’re more productive doing. He also provides us with the security and peace of mind if knowing it was done correctly. We see here that while again price is finite, value is both concrete in terms of that $5,000 savings that’s pretty easy to get, but also to get our arms around, but also value is conceptual. When you think of that peace of mind, that holds probably more worth or value to someone that even the money they save. So what he did is he gave us more in value than what he took in payment, so we feel terrific about it and he made a very, very healthy profit which he should. The reason it happened is because his focus was on the right place. His focus was not on the money, his focus was on providing us with a super valuable experience. This is why we say that money is an echo of value. It’s the thunder to value’s lightning, meaning simply that the value must come first and the money you receive or the funding you receive or whatever is simply a direct result of – a natural result of the value you communicate or provide.

John:

I love that Bob. We’re going to tweet that out from the show – money is an echo of value. What you said is so valuable for our listeners from two samplings. Number one, to get customers because investors want to see traction and they want to see that you’re getting some customers and the best way to get customers is to provide value over and above the price be by solving the problems that they are needing to be solved which is both getting your taxes done let’s say, but also that peace of mind that you eluded too, because this desirability factor, I talk about all the time that you need to become irresistible to investors and give them a good return on their investment, and the best way to do that is to show value which is just what you walked us through in such an elegant way. Is there one piece of advice Bob that you received before you even knew anything about being a go-giver that was a difference maker for you?

Bob:

Well when I first started in sales about probably 35 years ago, I remember when I was first starting to get my legs and starting to produce, I was a little bit like Joe in the book, I had a lot of potential but my focus was on the wrong place, and I remember coming back from a selling appointment in which no sale took place, and I remember expressing anger at the prospect for not getting it, for not understanding why it’s a good thing for him and I, and it’s funny because this wise old kind of grizzled veteran — but I remember he said two things. One he said, well, Burg said, “When the shooter misses the target, it ain’t the target’s fault.” Meaning it wasn’t up to the prospect to get it, it was up to me to communicate value to him in a way that he felt it to be of value, because remember, value is always on the eyes of the beholder, it’s not what we believe as a value and it’s not what we believe they should believe is a value. It’s how they see it. We need to see it through their eyes.

The other thing he said is this, he said and this is one of the big game changers for me, He said, “Burg if you want to make a lot of money in selling, don’t have making money as your target. Your target is serving others.” He said “Now when you hit the target you’ll get a reward.” The reward will be money and you can do with that money whatever you want but never forget the money is not the target itself. It’s only the reward for hitting the target. Your target is service.

John:

That’s so great, especially for investors who are looking for the big billion dollar idea, something that’s going to hit it all the park. It’s all about how many people can you serve with this new product that you’ve come out with that you need funding for, and it’s the more people you serve, the bigger potential the market size is right?

Bob:

Exactly.

John:

Then you’ve also touched on something which is so important, which is empathy. Seeing something through somebody else’s eyes, right?

Bob:

It’s so, so very important. Empathy is defined as the vicarious experiencing of another person’s feelings, and we can say well isn’t that just a fancy way of saying put yourself in the other person’s shoes? And it might be, except for the fact that most of us have different sized feet. In other words, we all come from our own different way of seeing the world, our own beliefs, our own experiences. So while sometimes we’ve had similar experiences and we can understand how they feel, and when that’s the case by all means communicated that to them. There’s other times we really don’t know how they feel, and to say otherwise would be disingenuous and it would be counterproductive. So when displaying empathy, it’s not necessarily that you know how they feel, but you’re communicating to them that you understand they’re feeling something, and that that something is distressful to them and you’re there to help work with them through it.

John:

Yes, just that ability to not make everything focused on yourself, and having empathy for the customer, and most importantly if you’re pitching an investor, if you have empathy for the investor who is sometimes hears four or five pitches a day, that alone will set you apart from all the other people that are pitch being pitched.

Bob:

Ah, isn’t that true?

John:

One of the lines in your book is where you and John write a – the big question is does it make money? And while that’s not the focus, you’re saying it’s just a bad first question. Can you expand on what the first question should be if making money is a bad first question?

Bob:

Yeah, well the protege in the story was having at first of course a little bit of difficulty understanding some of these counterintuitive laws. He said to Ernesto, the restaurant tour he said, “So you’re saying asking people if it will make money isn’t a good question?” and Ernesto said, “No, asking if something will make money’s a great question. It’s just a bad first question. The first question should be, does it serve?” and that’s the key because if it doesn’t serve and when we say does it serve we also mean, is there a market for it? Because you can have a fantastic product, okay? But if there’s no – first of all if it doesn’t serve in someway nobody’s going to want it, but if it’s not marketable, if you can’t find the way to connect the benefits of that product or service with the needs, wants, or desires of the marketplace, it’s not going anywhere. So first, focus on does this serve a need and is it a need that people want served? Then you’ve got to decide, can I create that desire and need? Certainly, there’s many times you can, but there’s other times that you can’t so it’s always a question you’ve got to look at. So while we ask that question, it’s a good first question — a good question is not a good first question for the task that it serves that’s meant in one way that that’s just a good attitude to have. In another way it’s also meant to say, “Hey, you’ve got to ask that question first.” You’ve got to find out if there’s a need. Don’t even worry about making the money from it until you know it’s a buyable product or service worth investing.

John:

The classic example for me is Uber, right? It clearly is serving a need that didn’t people have – didn’t exist because wouldn’t it be nice to not have to wait in line for cab, or know who your cab driver is, or not to have money on you, or all those things, right? When you have that – all those problems solved with oh, can we serve this market and then oh, we can make money then I see the flow completely. Let’s talk about mentorship because nobody get’s funded doing this alone. In fact, a lot of investors really encourage people to have co-founders and get the right advisers on their board, so you really, I’m sure, are the great person to ask about mentorship and how do you find advisers and who are really mentors.

Bob:

Oh well it’s a great question, and it is a question that many people want to know, because – for the reasons you mentioned and let’s face it, it’s just much easier to navigate the road map to success if you have someone who’s been there and done that, and is willing to work with you and take you under their wing or whatever. One thing I suggest to people is don’t try and find a mentor by simply going to people who you admire and say, “Will you mentor me?” because –

John:

Yeah, it’s too direct, right?

Bob:

Right and it’s not something that’s going to appeal to them. It’s almost like saying, “Hey! Will you take your 40 years of experience and just let me have it all for free.” I mean it sort of comes across that way. So, but I think it’s very appropriate to connect with someone – ask if you could ask them a specific question, let them know you’ve admired their work, you’ve studied their – that you’ve read their books or you’ve studied their work. You would like a few minutes if it wouldn’t be inappropriate to ask them a question, a very specific question or two and that you’ll be very prepared, and to let them know – in other words you’re letting them know you respect them and you respect their time, you’re not asking just for something without committing to something yourself. Then, of course, send a handwritten thank you note and maybe make a small donation to their charity that if you can find, yeah. So, and then whenever you can’t connect them however you can. You never know what product your service they need or who they need to – so obviously you can’t provide the kind of value to them that they can to you, but you can sure communicate that you want to be able to do that. I think what happens is when you respect them and their time, you can then ask something else if you need to and you can ask permission, you can encrypt the scope a little bit in a very legitimate way, and eventually you develop, just like any relationship, you develop a mentor/protege type of relationship.

John:

I like what you said so much, the whole concept when someone says to you, “Oh can I take you out for coffee and pick your brain?” That doesn’t even sound fun, does it?

As opposed to what you said is, I have a specific question I want to ask you, and then you show respect that you’ve done your homework on who they are, and what you’re suggesting is even one step further which really sets you apart which is even if you’re just a founder that doesn’t have a lot of experience or a lot of money at the beginning but you can certainly afford a small donation to that person’s charity who gave you some time and if that kind of human connection is going to really further the relationship in a way that is again, all about value.

Bob:

Exactly.

John:

Great, great stuff. You make a point that I think we should spend some time with which is this whole concept of The Go-Giver philosophy is completely congruent with human nature. So I’d love to have you tell us more about what that means.

Bob:

Sure, and that’s such a fantastic point to bring up. There’s nothing – and I think sometimes when people hear go-giver they kind of get this image on their mind there, “Oh! Just give and give and great magical things will happen.” That’s magic. It actually makes very – The Go-Giver philosophy makes sense in a very practical way. We understand that then I remember one of my great teachers, Harry Brown, who wrote a whole bunch of books on investing, economics, and politics. He also wrote a fantastic book on sales which was really much more about human nature. He was a great student of human nature and he understood and respected human nature, and he didn’t expect people to be anything they’re weren’t. As Harry says, there are three basic principles and one of them is, everyone seeks happiness, okay. Now they seek in their own way. He would define happiness as a mental feeling of well-being, and we can take it there or we can have different definitions but, basically, it’s what is going to make a person feel good about themselves when push comes to shove. It doesn’t necessarily mean you gorge on two boxes of Oreos because you’re hungry and that’s going to make you happy, no! That might decide you want more long-term happiness by not having two boxes of Oreos, you know what I’m saying? But we all choose what we believe has the best chance of making us happy.

The second principle is happiness is relative. People understand happiness differently. What would bring happiness to one person would be absolutely meaningless to someone else, or might even cause them unhappiness.

John:

Yes. I love getting example of that for me personally is a – I don’t know, I have lots of friends that they maybe are happy when they go camping, and to me I couldn’t think of anything more miserable.

Bob:

I’m the same. Exactly. I was just thinking as you were saying that. How many people love to travel. I travel because I speak but I don’t like it at all, and if I could be totally just home and never leave the house or certainly, my town or at the airport, I’d be happy as can be with that. Okay, but many people they love travels, and so the worst thing we can do is expect other people to see happiness the way we see happiness.

Then the third principle, because the first one everyone seeks happiness. Number two: Happiness is relative, right? We all see it our own way. Number three is resources are limited. Now that doesn’t mean that we don’t live in abundant world. Of course, we live in an abundant universe, but we all have limits in certain ways. We all have limited years to live, we all have the same limited hours in a day, minutes in an hour, seconds in a minute what have you. We all have a limited knowledge of limited energy. We all have a limited amount of talents. You know what I’m saying? So what happens is what Harry says, what I buy into totally is that people are going to make decisions based in their mind if it has a greater chance of they’re being happy based on how they value happiness and constrained by their perceived limited choices. So as a go-giver, remember your focus is on bringing value to them. You understand that value is always on the eyes of the beholder, right? You understand that your job is to find what makes them happy and give it to them. As Harry says so many times in sales, people say, “How do I motivate a buyer?” And the answer is you don’t motivate a buyer, they’re already motivated. Your job is to find out what they’re motivated by and then assuming your product or service connects with that motivation, now you’re able to have a sale. So everything about the go-giver says it’s not about you, it’s about the other person. It means you’ve got to find – it means no one’s going to buy from you because you have a quota to meet. It means that they buy from you because they believe they’re more likely to be happier by doing so, than by not doing so.

John:

For our listeners, it’s such a great message because instead of trying to figure out how do I motivate an investor to give me a million dollars, you take a step back to your research and say, “What has motivated this investor in the past to invest in?” What kind of person do they invest in? What kind of industry are they interested in? What kind of person are they interested in? And that completely shifts your pitch as oppose to me, me, me.

Bob:

What a perfect way of saying it. You know, Dale Carnegie in his classic – How to Win Friends and Influence People. What I believe his underlying premise about the entire book is when he expressed in the sentence ultimately, people do things for their reasons not our reasons.

John:

So true. Well one of the other principles in your great book, The Go-Giver, is all about influence and, boy, founders need to be able to not only influence investors but they need to invest – be able to influence people to join their team because investors really are looking for a strong team and your leadership ability to attract the best people with technical skills for example versus your startup versus another one. So I’m sure you have some insights from your book. How do people create influence?

Bob:

Sure. Well, I personally define influence as simply the ability to move a person or persons to a desired action, usually within a context of the specific goal. Now what I call ultimate influence is the ability to do that in a way that makes the other person feel genuinely good about themselves, about the situation, and about you. Now the law of influence that says that your influence is determined by how abundantly you place other people’s interest first. Now this sounds counterproductive I guess it’s best and probably pollyannaish at worst. But when you think of it, the great leaders, the top influencers, the most successful salespeople, and when you’re looking for an investor, your salesperson, this is how they conduct their businesses and they run their lives. They’re always looking for ways to make the other person’s life better, to find value for them. Now, I want to just qualify this if I may that when we say, “Place other people’s interest first,” we certainly don’t mean you should be anyone’s doormat or a martyr, or self-sacrificial in any way, shape, or form. Absolutely not. It’s just that as as several of the mentors told Joe, the protege, the golden rule of business, of sales, of networking, and I guess – of pitching, would be the of being equal. People would do business with and refer business to. If I would say invest in those people they know, like, and trust. There’s simply no faster, more powerful, or more effective way to elicit those feelings toward you from others, than by moving for – stepping the outside yourself, moving from an I focus or me focus to an other focus, or as Sam – one of the mentors in the story who told Joe, making your win about the other person.

John:

That’s great. When you get people to feel like they’re on your team, and it’s a team effort or as I call it a co-pilot kind of feeling, man, things take off because you’ve really shifted it from all about me to even all about you to let’s make these all about us. Now, you’ve got people’s attention and it taps into what you’re saying of your definition of influence which is now you feel good about yourself for making this decision, you feel good about me, and you feel good about what you’re doing.

Bob:

Exactly.

John:

That’s a win-win. This is so incredibly valuable. Is there any last secrets or tips that you want to give people to make themselves have value and influence and authenticity?

Bob:

Well, one thing with authenticity is simply really tapping into your core, and not trying to be someone you’re not. Learning from everyone, adapting people everyone’s wisdom. We can learn from everyone adapt their wisdom but don’t try to adapt their personality, because it’s not going to work. So learn from all but stay true to your authentic core. Don’t try to go in there as someone else. Go in there as yourself. Then law number five – the law of receptivity simply says the key to effective giving is to stay open to receiving which means that when we have done what we’re suppose to do and we have been able to present this in a way that does serve others and benefits others, and there’s a win for everyone involved, allow yourself to receive the abundance that you’ve earned.

John:

That really speaks to your belief system that you deserve it.

Bob:

Yes, oh that was a giver.

John:

Because we can all sabotage yourself and say well, I did a bad job on that pitch and they’re probably never going to fund me, and you start making up all these stories in your head that may not be true just because your sense of self is such that, “Ugh, I don’t really deserve this or I’ve gotten so many no’s in the past that that’ll continue to be my future,” and you can’t do that, right? You have to hit the reset button.

Bob:

Absolutely, and study abundance. Study people like Randy Gage and Bob Proctor, and so many of the people out there who speak and write on abundance itself, because we get plenty of negative messages from the world, all telling us that people are bad and mean and nasty, and that money is a bad thing – all these horrible messages that we get. We get it from everywhere because that’s what sells. So what we’ve got to do is check our premises and not accept those things, and ask questions when you hear something that’s contrary to abundance, and then go out of your way to listen and learn from the materials that are based on abundance.

John:

Well Bob your book, The Go-Giver is certainly based on abundance and something that I highly recommend everyone getting a copy of, and we’re going to put it, the link in the show notes and obviously it’s on Amazon, but how can people follow you on social media? How can people find you to hire you as a speaker?

Bob:

The best way is just to visit my website which is burg, B-U-R-G.com and everything’s there from my influence and my insights, getting a chapter of the book so you can see how you like it first, my blog, and all of the places where I am on social media. It’s all there at burg.com.

John:

Great. Yes and your Twitter is just your name right? @bobburg?

Bob:

That’s right.

John:

That makes it easy. Well Bob, you have been an extreme giver of your wisdom, your insights and most of all, your spirit. Thank you so much for being on the show.

Bob:

Thank you for all your doing and thanks for having me on. I appreciate you greatly.

John:

Great. Likewise. Thanks again.

Thanks for listening to The Successful Pitch podcast. If you like 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. 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 a left side of a river bank, 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, then you make it real, 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 cross 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/webinars, and sign up and get in depth information on how you can get funded fast. Thanks.

TSP057 | Michael Glauser – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John:

Hello and welcome to This Successful Pitch podcast. Today’s guest is Michael Glauser, the author of “Main Street Entrepreneur: Build Your Dream Company Doing What You Love Where You Live”. He literally rode over 4,000 miles in 45 days, and interviewed more than a hundred entrepreneurs in a hundred cities. He distilled those interviews to 9 Keys to Becoming Successful. He said he is an entrepreneurial anthropologist. Business is all about building strong relationships, Michael says, and the way to do that is to become good at pitching. He said if you ask somebody to give you 15 minutes of their time, respect it. Don’t go over that unless they give you permission to keep talking. The real secret he talks about is work with zealous tenacity. When they were bike riding and would tired, instead of asking each other, “How are you feeling?” they said, “How are you thinking?” and that made all the difference to success. Enjoy the episode.

Are you a founder struggling with your investor pitch? Do you need warm introductions to the right investors to get your start-up 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.” Judy Robinett, best selling author of “How to be a Power Connector,” and on the board of Illuminate Ventures, and I, invite you to our free “Crack the Funding Code” webinar. Simply go to Judy Robinett, 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 our network of investors around the world. There’s a link in the show notes as well. You’re only one click away from getting funded fast.

Hello and welcome to This Successful Pitch podcast. I’m honored today to have Michael Glauser PHD, the executive director of the Jeffrey D. Clark Center, for entrepreneurship at Utah State University. He’s an entrepreneur, a business consultant, and a university professor. But what really thrills me about having Michael on the show is he visited a hundred cities, and talked to hundred entrepreneurs on a bike seat. He climbed over 165,000 feet high, and spent 4,000 miles in 45 days, so obviously he’s recovered from that journey but has lots to tell. Welcome Michael to the show.

Michael:

Thank you John. It’s great to be with you today.

John:

I love this concept of “Build Your Dream Company Doing What You Love and Where You Live”. Can you talk about the opening of your book which just literally grabs everybody by the — How important it is to have a strong opening is one of the things I’m telling everybody in their pitch, and you certainly do that in your book. Could you sort of give us the CliffsNotes of what that experience was – to have somebody come and want to buy your company when you weren’t even trying to sell it?

Michael:

Yeah, it’s kind of interesting that I had a number of reviewers look at the book, and they said, “Mike! You need a stronger opening. You need a stronger pitch to start this book.” So that story that starts the book of is based on feedback I got from particularly great writer named Scott Hamond. So what I do in the book is I talk about building this company – had built it for 10 years. It was a multi-million dollar business in the foodservice industry. We had about 500 employees so we were quite a large company, and I was sitting in my office one day minding my own business, and I got a call from the chairman of the board from a company called Yogen Früz International in Toronto, Canada. He said, “Hey Mike! I’ve been studying your business, I want to buy your company”, and of course I was flattered. But I said “Michael, it’s not for sale” and he said – what all buyers say is every company is for sale for the right terms, the right price, the right conditions. So he convinced me to let him come down from Toronto to Salt Lake City where our company was based and he spent a couple of days analyzing our financial statements, our company documents, and he came back into my office after the second full day of due diligence. He placed one page offer sheet on my desk, and I took a quick look at that, and knew it was not enough, that I would never sell it for that price. So I said, “Michael, I told you the business is not for sale. This price won’t fly, and I’m not sure even that a higher price would make this deal work”, and he said “Put a price that you would sell it for.” So I wrote down a really big number, I increased his offer by about 30%, and he looked at it with wide-eyes and said, “Wow! Okay, let me get back to you.” He came back the next day and he said “I’ll take your offer on two conditions.” The first one was that they had a facility in Dallas, they had their own executive team, they wanted to move the company, and he said, “We really don’t need you and we don’t need this office, and I’ve talked with my executive team and my board mate. They felt fine about that. So the second one he said, “Now this is the deal-killer. If you don’t agree to this, we’re going to have to get on our plane and go back to Toronto,” and I thought, “Okay great! Here it comes.” Since I’m not selling the company, I’m not going to compromise. Then what he said is he said, “You have to take cash for this deal at this price.” So that was it.

John:

As opposed to stock or something, right?

Michael:

Yeah. But we didn’t really want to own stock in his company. It was a food service company. He was rolling up a number of food businesses into one, and coming and buying companies in the US. So he offered us a very nice multiple and cash, and our board thought that they would be a good caretaker of what we had built for 10 years and so we sold the company, and that’s what launched me on this new career request which I’ve been on for about 20 years.

John:

What a great, great story, and what made you decide that you’re going to take this ambitious, needless to say, bike ride?

Michael:

Well, I’d been in academics earlier in my career, and I was pretty discouraged that the way entrepreneurship was being taught was very scholarly, very academic. It was professors correlating variables. It had very little link to reality. So I thought, you know, I’m going to go out in the field and kind of be a entrepreneurial anthropologist, and I’m going to start observing businesses from the ground – private research.

John:

I love that phrase, that you are an entrepreneurial anthropologist. What a great line.

Michael:

Yeah, so I started interviewing a — basically collecting oral histories, complete stories of how companies have been built from the very beginning of the concept up until the day that I hit the plan or the factor in the office. So I’ve flown on helicopters, I’ve toured factories and plants, I’ve spent hours and hours with hundreds of entrepreneurs. So I do this every year, and I try to interview about a hundred of these, so we have a huge database of success stories of old entrepreneurs, younger entrepreneurs, men, women, black, whites, Asian, Americans. We have all the demographics represented in this large database. This tour of the books about was focused more on entrepreneurs that are really trying to merge livelihood and lifestyle. They’re saying, “You know what? I’m sick of the big city. I’m sick of the corporate rat race. I want a smaller environment that’s safer and cleaner and friendlier,” and they’re moving to these places where there are no jobs, and then they are creating jobs for themselves, and for their family members and for people in their cities. So we wanted to find some really interesting fascinating successful people that could show us how to succeed in our careers in this new economy.

John:

It’s such a great story. So there’s a lot of preparation involved in that, and I also just want to go back to this concept of being an entrepreneur anthropologist. Even if you’re not going to take a bike ride to a hundred cities and talk to a hundred entrepreneurs. I think there’s such incredible value for any startup founder to think of themselves like that and say what, “I may not have a targeted itinerary like that but it’s important for me to talk to these many different founders as possible so I can learn not to make some of the mistakes they’ve made,” right?

Michael:

Yeah, well that’s pretty much how mature science has worked over the years. We first go out and observe a phenomenon for years, maybe decades, before we start creating theories and doing research about it – empirical research. When we came on studying entrepreneurship for — when I started my career I wasn’t fashionable into entrepreneurship, and if we had an entrepreneurship professor coming and teach the class, we’d kind of sneak in the back doors, because it was all about leadership in big corporations. This was in the ’80s and the early ’90s. Then when the market started driving the study of startups in entrepreneurship, we had a lot of college professors that started teaching the subject and just starting to do research by correlating this variable with that variable, and producing results that were maybe statistically significant but they were not practically significant. So we skipped that whole set of operation. So I thought if I’m going to teach entrepreneurship, I’m going to go out and start on the ground floor, and I’m going to look — you know what hundreds of entrepreneurs have done. I’m going to try to see if there’s some key factors from those that are successful from those that fail, and so pretty much what I’ve been doing for years.

John:

So let’s — before we started the show we were talking about the importance of a pitch. Can you expand upon that? Certainly if you’re pitching for funding that’s important, but, just the importance of being able to pitch for getting people to join your team. What are your philosophies and learnings from talking to all these entrepreneurs about the importance of a pitch. What makes a good pitch?

Michael:

Well I think most of the successful entrepreneurs I’ve interviewed over the years would say business is all about strong relationships. It’s about getting mentors and advisers around you. It’s about building team members, it’s about strategic partnerships, and that requires great relationship building skills and so, even if you’re not pitching for funding, you’re going to be pitching your business constantly to people that are absolutely critical to the success of your company. So you’re going to pitch potential partners, you’re going to pitch team members, you’re going to pitch strategic partners, you’re going to pitch suppliers, you’re going to start pitching your customers basically. So we have seen that the best entrepreneurs — they can give a really quick business description and exciting summary – you could call it as a business summary, a business description elevator pitch – but they can engage you quickly and interest you quickly with passion about what it is that they’re doing.

For example, I’ve been at the frozen dessert industry. We were the very first to create a whole line of ice cream type yogurt products that had no fat whatsoever – no calories and so, we would say we have a product that taste as good as the best ice creams in the market, but they have no fat and they have low calories. So that was the opening statement and that hooked people in.

John:

Sure.

Michael:

This business that we’ve built now, My New Enterprise, which is a training company for entrepreneurs with online training tools. We start of by saying My New Enterprise is the ultimate online resource center to help aspiring entrepreneurs turn business ideas into opportunities, and opportunities into sound businesses. So you kind of need an opening statement that’s engaging — that you’re passionate about. Then you need to describe a little bit about what your company does, why your team is the right team to do this, why it really benefits the customers, and why it’s better than other options out there. So those are kind of the steps to a great pitch that interest people in what you’re doing even if you are not looking for money.

John:

One of the things I really like in your book, the Main Street Entrepreneur — you know we’ve talked about the importance of having a second business model, and you have this great acronym N-E-R-C-M, NERCM. Can you break that down for us and tell us what those stand for and briefly what that is?

Michael:

Yeah, we look at successful entrepreneurs that succeed and those that failed, and compare them. What I say is successful entrepreneurs launch a true business opportunity not just an idea. So when ideas — something maybe you think upon the couch while you’re watching basketball, or you think up in the shower and you go and you think it’s great. Then you start looking online and you find there’s ten other companies that have already done it. So that idea is very different than a true business opportunity, and we find that those that create successful companies meet this test, we call it the NERCM test, N-E-R-C-M. So N stands for — the first step is that you have validated a NEED in the market place with lots of primary evidence. So you have people saying, ” Boy! I need that. Boy! If you created that I would buy it.” I have a problem with this, I don’t like the way I’m served, I don’t like these products. You have just a lot of great data that is continually coming to you. The E, the second step stands for EXPERIENCE, and this basically means that you’re familiar with that industry in some way, and it’s kind of interesting – the entrepreneurs we interviewed on this bike ride, a third of them had worked in the same industry they started their business. A third of them has worked in related industry, but a whole of – fully third of them were users of the product, they were serious users of the product. So they hadn’t worked in the industry but they’ve been using it for years. They knew who all the suppliers were, they knew their competitors, they knew what people like, what people didn’t like, and they thought the product could be better than it was. So first is the need, second is some level of experience. The third is RESOURCES. You don’t necessarily funding initially, but you’ve got to create a prototype and test it quickly, and prove that it works and so you do that with you know — you use mentors, you use used equipment, you borrow equipment, you work on old metal desks in your garage, whatever you get. You get something into the market quickly with a variety of resources often other than money, and just see if people buy it. That’s the biggest test of validity for a business concept is when someone starts buying the product from you.

John:

Have you ever come across someone who has become – than a customer of the business that who wants to then become an investor because when I’ve interviewed some other people, they said, “Man, if your customers have ever become investors that becomes really attractive to investors”, and I just wondered, with the hundred plus entrepreneurs you’ve seen, have you ever seen that happen?

Michael:

Yeah, we see that actually quite a bit where customers start using the product and go, “Wow! This is fabulous! This is better than anything else. I wonder who these guys are, I wonder what they’re doing, I’m going to go and see if they need some help,” and often that help is angel money begin with.

John:

Great! Alright let’s finish your wonderful acronym. So we’ve got NEED, we’ve got EXPERIENCE, we’ve got RESOURCES.

Michael:

Okay, C is CUSTOMERS, which you mentioned, and we found — it’s pretty amazing that a lot of these people have customers that have agreed to buy the product before it’s even built. So we found a guy that created software for the banking industry and a bank bought it before he finish the software. We found a lot of customers that said, “I’ll buy it, I’ll sign the contract. You build and tell me when it’s ready”, and of course this is what we do with crab funding with Kickstarter and Indiegogo is we create a concept, we throw it out in the market, we see if anyone wants to buy it, and if they buy it then we build it. So we saw that over and over again that they build it, they determine the need, they had the experience, they had the resources, and they had customers saying, “Come on! When is it going to be ready? I want it. I’ll buy it. I promise I’ll buy it!”

John:

That letter of intent – are people putting their money with their mouth is so important to investors where there’s crowdfunding angels or even VCs. They really want to see huge growth and rapid growth from people who really want this problem solved, right?

Michael:

Yeah. So the fourth item in the NERCM model is M, and that stands for business MODEL, and basically you just need to have the right margins. You need to know that you’ve got to grow some margin of 40 to 50 percent, you’ve got a net income of 15 to 20 percent, that you can charge a price that’ll allow you to build a sustainable business based on the finances and the numbers. So I’ll give you an example of this, we built this strong retail food company and I had all these major players calling me and say we want to buy your product to sell in our business. So for example, a chain of convenient stores called, and a chain of hamburger stores called. It was Hardee’s nationwide, and I kept saying we don’t sell our great retail product on the wholesale markets because we don’t want to dilute our brand but they kept calling over and over again and one week I had two major companies – it was Maverik Country Stores and Hardee’s Hamburgers called, and I looked at those accounts. They were – it was half a million dollars’ worth of business for a business I didn’t even have yet. So I called them back and said, “Okay, I’ll give you our product but I’m going to put it in a different box with a different name so we don’t dilute our retail brand. Would you be satisfied with that?” They said, “Absolutely!”, so we created a new company called Northern Lights, and we launched that product to those two customers, and we had a half-a-million dollars of sales on day one. So the need was there because of the phone calls I was getting, the experience was there because I was in the industry, we had all the resources – strong cash flow – we had customers that were ready to buy, and we knew the business model work because we’re already in the industry. So that’s what I call a NERCM opportunity or true business opportunity versus an idea or a pipe dream.

John:

What you just did there is a wonderful example of taking a concept and attaching it to a story so that it comes to life and become as memorable, which is what you need to do when you pitch. Great, great example. What I love to do now is expand on what you said about business is all about strong relationships because the investors tell me time and again, we’re really investing in team even more than the idea. So one of the key things you talk about in your book is developing your supporting cast, and advisory boards are really important to angel and VCs. So can you talk about how to build a good advisory board, you have a whole wonderful graph here that’s you know – through networking and finding the right advisers.

Michael:

Yeah. It’s really pretty simple. Most of these entrepreneurs use – they create a brain trust, I call it, which is basically mentors and advisers. They have some primary mentors that will meet with them regularly every week. Maybe their father or their cousin or their uncle or their neighbor or professor. But then they need to identify experts in fields where they need input, where they don’t have the skills. So the first thing we have people do is really evaluate what are the needs of this new business, what skill sets does this new business need? Then we have them do an honest evaluation of what skills do they have personally, and so they see that they have some of these skills but they have a lot of missing pieces as well. Then through a process at networking we have them go out identify three to five mentors that they can visit with and they say, “Hey! Here’s a business I’m building. It’s very exciting. I’m passionate about it. I’m committed to do it. I’ve got these skills but I don’t have these skills and I can’t afford to hire anyone yet.” So I need some advisers or mentors that I can call, do you have anyone you can refer me to that might know about marketing or finance, or retailing, or offshore manufacturing or whatever, and you start generating list of names as referrals. If you go to 5 people, they each give you 3 names, there’s another 15 potential contacts. So the very best entrepreneurs – most of the ones we see in the book, they have 6, or 8, or 10, or 12 people that they’re talking to regularly that have agreed to mentor them. What I found is that successful entrepreneurs are very open to mentoring new entrepreneurs. They’re very willing to do that, and I mentor aspiring entrepreneurs all the time. What they often do is I have them say, you know, you need the lunch can I come to your office and bring you lunch or meet you for lunch once a month, and it’s pretty amazing how many people are willing to help. So what we have found is the bigger this brain trust of mentors and advisers, the more success you’re going to have because they — you know you don’t have to learn everything though trial and error. They could show you what they have done and help you jump-start this venture basically.

John:

Do you have an advice for people who are looking for mentors? In other words, if you’re going to find someone like you who is so experienced, and gets lots of request to be their mentor, I would think you have a certain criteria whether you thought it through or not, I’m guessing you have thought it through based on your skill set. But if some of it just got — how you approach someone is so important — in other words “Hey! I want to pick your brain,” which to me does never sound pleasant. It has to be a two-way street, don’t you think?

Michael:

Right. Absolutely, and what I advise people to do is start with the people that you know. They’re willing to see you. If your pitch is impressive and they like what you’re doing, they’ll refer you to their friends, and if you have a referral you’re more likely to get in the door. But you need to say to them, “You know, I really like what you’ve done. I’ve tracked your career, I’ve seen what you’ve done, I’ve read about you. It would be an honor to meet with you. I just have a few questions and it will only take about, I promise, no more than 15 minutes of your time.” Especially younger students, being younger students they know a lot about social media, and they’ll say, “I might have a few things I can help you with and I’m willing to share as well.”

John:

There we go. That’s what I was looking for. I love it. It’s show respect, do your own due diligence on your potential mentor, and then offer to help even if you think you don’t have anything to bring to the table, you probably do. It’s just the offer is worth something, right?

Michael:

Yeah, in the long run if the relationship’s going to work, it’s got to be mutually beneficial. There’s a lot of things young entrepreneurs can do for more successful and older entrepreneurs. I find that the students I teach at Utah State University, they don’t know a lot about of business concepts, but they know some things about social media and marketing, kind of this new-age marketing that I don’t understand as well. So they do have some things to offer and then the other thing I often hear an aspiring entrepreneurial comeback and say — I asked this incredible guy for 15 minutes, and I was in his house two-and-a-half hours. I am really proud of that, and I say, “Well good luck getting in there again because he’s going to think you’re going to take two-and-a-half hours.” You’ve got to respect the time commitment that you make and say, “Okay, the 15 minutes are up, I’d love to speak with you again,” and then if he invites you to continue, great, but you’ve got be respectful of their time, you’ve got to research their background, and you’ve got to think of something you might be able to offer to that relationship.

John:

Nice. Really great takeaways there. Michael, thank you. Now the other thing that I have never seen before, and I’m always loving a graph because it’s visual, and the importance of a decent person, and a skill set. I’ve talked to many people in HR, especially in other startups and they say, “You know what? So many people are in such desperate need to hire somebody, they hire the wrong person and, in their gut, they know it’s the wrong person but they need that job filled, and they get it filled with the wrong person and that’s detrimental to everybody, and you’re better off keeping a job open versus filling it with a wrong person. First of all, I guess my first question to you is do you agree with that, and do you have a story around that?

Michael:

Yeah absolutely. We find that team Marcus is tough. It’s hard to build a strong team. You have a lot of people, different opinions, and you want the team to be diverse. You don’t want them to be like you. If you hire a group of people like you, you’re not going to be successful. So what we saw on a bike ride across America with these successful entrepreneurs is they tended to hire based on character first. They hired people that were honest, that had strong work ethics, that didn’t have huge egos, that were willing to do all the jobs that would be great team members, and then if they needed a specific skill like engineering skills or graphic design skills, they would then hire for skills second. So, character first, skills second. If the job was something that could be easily trained, someone could easily learn to do it through training, for example maybe customer service wrapper, customer service manager, or a small shop manager whatever then they would trade and they would find the person with the great character and then do the training to bring them up to speed on that job. So that graph kind of shows that if the person isn’t a decent person – if they’re not honest, they don’t tell the truth, they don’t work hard, they have huge ego they always have to be right. You just don’t hire those kinds of people. Even if they’re highly skilled on the skill set that you need. So you hire decent people and you make sure that if you need specific skills, they have those skills, and if those skills can be learned, you find people that are willing to learn the skills.

John:

The same thing is true not only when you’re building your own team, but the kinds of investors you want to have in your culture, because you get married to those people specially if it’s at the VC level, and you can work with them in years. If you don’t want to be micro-managed, and you don’t have a sense of trust, that can be disastrous too, right?

Michael:

Yeah, I think it’s especially important that you get group of investors that really like what you’re doing, that are passionate about what you’re doing, that are honest and decent people that they know that you have to be treated fairly, and that you have to be successful or they’re not successful. If you get investors that like to take advantage of new deals and have it highly favor them as oppose to the entrepreneur, that business is just doesn’t going to work. So you want people to know that this is going to be win-win relationship here, and they have to be willing to mentor you and help you and have had experienced relative to what you need to do. I call it smart money versus just plain money.

John:

The other chapter that’s a big favor to mine in Main Street Entrepreneur is “work with zealous tenacity”. We’re going to tweet that out. It’s such a great line and great chapter title, and you have several examples in that chapter. Pick your favorite one if someone who’s got zealous tenacity.

Michael:

Well, I think that pretty much everyone that we’ve interviewed over the years has that combination of zeal and tenacity, or passion plus tenacity. First, I looked at these as two separate traits like you first had to have passion, and then you had to have tenacity. But it’s a combination of the zealous attitude towards your business and the — you know I’m not going to quit attitude, so I call it zealous tenacity, or you can call it even zealacity for short. So this passion comes from your purpose. Most of these entrepreneurs had a very engaging purpose for starting their business, and it was more than just making money. They know they needed to make money, but it was I want to make money doing something that I love, I want to create jobs in my town, I want to solve the problem, and so this passion flows from that purpose, and coupled with tenacity, that’s how you build a business. This is probably the most important quality of all the things in the book. If you don’t have a passionate tenacity and a drive to stay in there for three to five years, and pivot every time you need to until you gain traction, you’re not going to succeed. So I gave a lot of examples in the book, the one that’s quite impressive is Jon Schmidt, the founder of — co-founder of The Piano Guys, just absolutely loved music and he played music. He could play music eight hours a day. He was writing songs, he was performing and he was never more than kind of a regional talent in the Intermountain West here. He really discovered YouTube and the internet and started creating these just bizarre videos where they’d take a piano and put it up on a 1,500 foot red rock cliff and play a song. The videos went viral and they’re now the number one act booked by Sony Entertainment Worldwide. It was his passion and then hey, he hung in there for almost 20 years before he really hit the big time. So there’s just story after story like that in the book, and people loved —

John:

That’s some visual and I can see why it’s a huge hit on YouTube, but the way you described that story right? It’s a red rock, it’s high, where instantly — you’re such a good storyteller Michael that you’ve just made us visualized somebody playing a piano on a top of this rock overlooking — it’s great. This begs the question for you to talk about what you have in the book on zeal and tenacity with the actual bike ride that yourself. Talk about tenacity and you have to go back to your why am I doing this in the first place? Can you share with us some of your important lessons learned about managing your thoughts and taking regular breaks?

Michael:

Yeah, we were extremely passionate about this bike ride. It was more than just a bike ride for us. We were seeking out some of the most innovative entrepreneurs in the country, and we were going to spend time with them in their plants and their factories and their offices, and we were going to record them on video and audio. We’re going to produce a book and documentary film, and we just wanted to bring this message to the world and so we were very, very passionate about that. I have trained for about six months for this bike ride. We rode almost a hundred miles every day and we climbed a lot of big mountains. It was very, very difficult but the commitment had been made before. We’d made a public commitment that we were going to do it, so there was no backing out. We’d get up on some mornings the first couple of weeks, you’re just absolutely exhausted, you’ve ridden a hundred miles, you’ve ridden through the rocky mountains, you got out of bed and you can barely stand up, and you knew you had to get on that bike again and ride another 80 to 100 miles. If you thought too much about that, it was almost overwhelming. So we quit asking each other “How are you feeling?” We started asking each other “How are you thinking?”

John:

I like that. What a great distinction. Wonderful.

Michael:

Because if we said “How are you feeling?” we all felt — the answer is really, really bad. My rear end hurts, my back hurts, my feet hurt, I’m tired, and so if we started thinking you know, we’re going to just go slow today, we’re going to stop after 20 miles and eat some food, we’re going to have a nice lunch break, we’re going to go a little bit slower, we can do this. If we were very positive in our thinking, we could do it, and the amazing thing about this bike ride you know – I’m not young guy, I’m 60 years old so it was a challenge but I had trained well enough to do this, and after about two weeks, all the pain started going away. There’s no more back pain, the rear end no longer hurt, the legs didn’t hurt. After the last, say, four to five weeks, it was really pretty easy. The physical journey was easier than we thought it would be, and when we got to the east coast in Virginia, we felt that we could have turn around and ridden all the way back to Salt Lake City, Utah.

John:

Really? Wow.

Michael:

Here’s another interesting fact, we were burning six to seven thousand calories a day the first few weeks, but as our bodies adjusted to it, it was like our bodies said, “Okay, this guy is going to keep doing this every day. This is reality. I’ve got to figure out how to do this.” Then we started using fewer and fewer calories. We could ride a hundred miles a day and maybe use 2,500 or 3,000 calories of food the last few weeks. So you just adjust and it really wasn’t as difficult physically the last month as it was the first few weeks.

John:

I would assume that’s the analogy when you’re running your startup, right? We have to pivot, we’ve talked about that in your book about it’s so important to pivot to get multiple revenue streams. The same thing with pivoting your thinking is what allowed you to complete this bike ride in the same concept of “How do I feel about my business right now?” it’s like, “What am I thinking?” I just loved that so much Michael. Are there any final thoughts you want to leave our listeners on how to be a successful entrepreneur from any of the nine keys that you have in this wonderful book, Main Street Entrepreneur?

Michael:

Well I think the thing that was most impressive to me when we finished this bike ride is that I often work with companies to get venture funding, tech companies, companies that go public, and we were working on this project with this basic businesses that everyday men and women in America were creating all across the country. I was so impressed that when we finished that anybody can do this. We can’t all build the Facebook, or Google, or an eBay, or an Instagram, but anyone can build one of these main street businesses where you’re doing something you love, you’re serving customers, meeting needs in communities, you’re living where you want to live, you’re creating value and you’re taking care of yourself. So I would say that anybody can do this that really has that passion and tenacity and want to learn this keys to success which are outlined in the book, Main Street Entrepreneur. I think the other thing, there are probably two statistics that really troubled me this last few years, and one is how unengaged we are at work in this country. The Gallup poll shows that about 70% of us are unengaged, we don’t like our work, we don’t like our jobs, we work so we can go play after work. I think that’s kind of a tragedy, and then the second statistic is the rapid rate which jobs are going away due to the acceleration of technology that there just aren’t going to be enough jobs in corporate America and throughout the world. So, the need for entrepreneurship, the need to create your own company, create your own job, is going to be greater than ever, and that’s exciting to me. I’m not alarmed about that, that’s an exciting opportunity that we have a chance to create our own jobs, create our own companies, live the lives of our dreams and do it where we live. That’s the message of the book.

John:

It’s great. It’s a great, great message. Very inspiring and backed up with actual ways to do it and not just a dream. Michael, how can people follow you on social media? What’s your Twitter and all that good stuff?

Michael:

I’m @mjglauser. I’m on LinkedIn, Twitter, Facebook, Instagram. My website is mikeglauser.com, so it’s M-I-K-E-G-L-A-U-S-E-R.com, and we’ve just launched the new website in conjunction with this book. It’s themainstreetentrepreneur.com, and it has a lot of free resources, videos, and podcasts, things that are really helpful to entrepreneurs in addition to training program we’re just launching as well that is available at teachable.com, and if you go to my website, mikeglauser.com, you can learn all about that training program.

John:

We will put all those links as well as, of course, the link to buy Main Street Entrepreneur in the show notes for our listeners. Thanks again, Michael. It’s been a privilege and I loved your whole way of thinking, and your way of showing us how to have zeal and tenacity.

Michael:

Thank you, John. It’s a pleasure talking with you today.

John:

You too.

Thanks for listening to This Successful Pitch podcast. If you like 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. 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 the river bank 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, then you make it real, 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.

TSP056 | Andrew Goldner – Transcription

Posted by John Livesay in Uncategorized | 0 comments

John Livesay:

Welcome to The Successful Pitch. Today’s guest is Andrew Goldner, who works at GrowthX, which is a VC fund. He has a really fascinating background from working at Thomson Reuter in Asia to being a lawyer to now being a VC. He has a whole explanation of what it takes to be successful to get funded as a founder and the qualities they’re looking for in a person, which include humility and the ability to focus. He said being busy doesn’t mean you’re making progress. You need to have thoughtful intention of what you want to accomplish every day and then be transparent to your team so that you can get what you need. He’s really big on focusing on the quality of the meetings you have with investors and not the quantity. Enjoy the episode.

Hi, and welcome to The Successful Pitch Podcast. Today’s guest is Andrew Goldner, the co-founder of GrowthX. Andrew has a very interesting background that goes all the way back to when he was winning the Journalist of the Year award for Thomson Reuter in 2009 and then has now become a VC. So he has quite an interesting background. He’s a mentor at Golden Gate Ventures. He also mentors Startup Mexico, helping them become innovators there. He has a whole wide range of experience and we can’t wait to hear him tell us all about his insights and what it takes to become a successful founder and get funded. Andrew, welcome to the show.

Andrew Goldner:

Thank you very much, John. I’m happy to be here.

John:

I always like to have people tell us how they got to where they are and, certainly, we don’t get many journalists becoming venture capitalists. So that’s an interesting story. I’m guessing you had a passion for journalism and somehow it transitioned into shifting from telling stories to making them.

Andrew:

It’s actually a little bit different than that. I would love to claim myself among the profession of journalism. I’m not actually a journalist. At Reuters, I was the publisher, and so to a certain extent, I was a suit in the corner. But I had the distinct honor of working alongside of some of the best journalists in the world at Reuters after Thomson and Reuters came together. I do think that I appreciate journalism and understand the rigors of journalism and I think I was fortunate, from that perspective, to connect with journalists. But, I, myself, am not a practicing journalist.

John:

Got it, and yet you got honored with Journalist of the Year in 2009. How did that come about?

Andrew:

Yeah, that was very special. I mean, every year, Thomson Reuters and Reuters, historically, has gathered some of the best journalists from across the file. David Schlesinger, the editor-in-chief at the time instituted something very new that year, which was pushing innovation in the newsroom, which is a lot of what we were working on together and I was fortune enough to be working alongside of some of the top journalists in Asia Pacific when we innovated around the idea of taking the Reuters messaging platform and bringing in journalists into a chat room so that clients could interact directly with journalists as they were at the edge of news and provide an edge to those clients such as FX traders. It’s something that we started regionally and ended up going globally and it still operates today.

So, at the time, pushing innovation and wanting to recognize it, David created that new award and so I and the team that I was fortunate enough to work with were awarded the Journalist of the Year for that work.

John:

Well, to me, it seems like the bridge between that award and what you’re doing now is that it all stems from a passion for innovation.

Andrew:

That’s absolutely right, John, and I appreciate that perspective, and I think if you look at my nonlinear path, I think there are a couple of themes that are consistent and, certainly, entrepreneurs and innovation is one of them. I try to do that inside of a law firm. I did that inside of Corporate America. I did that on my own. I’ve done that at early stage companies and now, of course, doing that at GrowthX.

It was an extraordinary time to be at Thomson Reuters and to be associated with Reuters News. There was a tremendous amount of innovation that’s gone on that continues to go on and, of course, the changes that are taking place in the media space are dramatic and so innovation has certainly played a role.

John:

So, tell us a little about what you do at GrowthX and what makes it so unique in that the way you do seed funding has its whole premise that you and I talked about earlier which I just love which is you don’t have to move to get funded.

Andrew:

Yeah. Well, to think, there is a couple of different components to the story of what we’re trying to do at GrowthX. We want to try and keep it simple but the reality is we are trying to innovate and do things differently, and so it’s less of an obvious story. I’d say the first component around GrowthX is that if you look at the history of GrowthX, we were born as a consulting firm that provided market development services to seed stage startups. The idea being that seed stage capital is plentiful nowadays but because the cost and complexity of launching a company and a product are so much less than they used to be, the reality is that you differentiate yourself at the early stages of a company.

Nowadays, less so about the product and more so about how do you take that product, apply it to a market, go to market, find product market fit, earn predictable revenue, and scale, and the reality is that, though seed stage capital is plentiful, the expertise in Silicon Valley and startup cities around the world in going to market, finding product market fit, earning predictable revenue is actually in quite short supply.

So we started out as a consulting firm, earning both cash and equity and, through that work, we were able to prove that our market development expertise is actually a more valuable form of currency than investment capital because as we were building that consulting firm working alongside venture capitalists, they were deploying money and getting a certain amount of equity in return, we were deploying our human capital and not only get compensated with cash, but we were earning significantly more equity than the angel and seed stage investors were getting at that same time.

So that was really the genesis. So GrowthX quickly grew from that into a venture capital model because we thought that there was a way to capture more value for everybody involved and align more long-term with everybody involved, and that includes the founders and the portfolio companies, the limited partners, the general partners, the co-investors. Everybody in our community, we think, is more better aligned as a venture firm that invests dollars in human capital as opposed to just consulting services.

John:

So tell me about some of the vision you have. I know you’re starting to do some work in markets like Nashville and Dallas that are not traditionally known as — well, Dallas has a Hubbub up but Nashville is certainly not. Letting people live where they live and still get access to seed capital, what’s the big vision for GrowthX? Are you going to be –?

Andrew:

I appreciate you asking because it’s obviously a lot more interesting than it is with the structure of the fund. The reason I bring it up is because they’re related. The reality is we started out with the premise that you’ve been referring to, which is that you ought not have to leave your home to build your company. The founders of GrowthX find it surprising that founders from around this country and around the world move themselves to one of the most expensive ZIP codes in the world in order to position themselves better to raise money when, in reality, they’re causing themselves to need to raise more money and for those people that have spent time in Silicon Valley, it’s a wonderful place but it also is high-paced and can be a bit of a rat race and so getting lost in Silicon Valley is an easy thing to happen to young founders.

So, our premise is unless your customers are in Silicon Valley, why move here? There’s more opportunity to work with developers in your hometown and leverage developers elsewhere. Keep the cost base low, stay focused, and let’s see if we can bring venture capital to you.

So, when we broke it down and said, “Well, how do we solve that? How do we do that at scale?” because of the economics of venture capital, it’s what led us towards the model that I just discussed which is being local in these communities. Being insiders as opposed to outsiders just visiting with a GrowthX team there that not only deploys capital and is an active member of the entrepreneurial community, but also can build a team of market development experts who can help these seed stage companies with the traction requirements that they’re going to need to satisfy to then raise series A venture capital is how we’re going about doing it.

So, yeah, our first office was opened up in Nashville. My partner, Brad Holliday is a 20-year veteran of the space in around the southeast and so we were lucky enough to connect up with Brad and have him as a partner in the fund, open our first office outside of Silicon Valley in Nashville, Tennessee, and we’re very active around that state. Tennessee has done probably the best job of every state that we’ve been exposed to in terms of the intentional approach to using entrepreneurism to fuel economic growth. Launch Tennessee runs a network of accelerators around that state and they’re just doing a terrific job and, by the way, playing to their strengths, which is part of the theme as well.

You have companies that are assuming they need to come to Silicon Valley to raise money or to accelerate their growth. But the reality is, again, unless there’s a history of “been there done that” or the customer base here in Silicon Valley, why not go somewhere like Memphis if you’re going to do logistics at the seat of FedEx. Or if you’re going to do health tech or music, why not do it in Nashville. Or if you’re going to do CPG, why not do it at The Brandery in Cincinnati. Or if you’re in retail, why not do it at REVTECH in Dallas with Nordstrom and Neiman Marcus.

So I think we’re looking for opportunities to enable communities that are playing to their strength and enabling their startup communities and we want to play a very important role, not just as outsiders, but to be there and physically present.

John:

I love that. Can you speak a little bit, Andrew, about your other big disruptive shift a little bit in that everyone talks about the importance of the team and building a network of trust? But what I love that you said to me earlier was that your GrowthX is going to be featuring the founder’s faces as opposed to the logos of the companies that you’re funding.

Andrew:

Yeah, thank you for asking. I mean, we’re working on a new website right now. What we’ve got up is just kind of a placeholder and we’re being very serious about this website because it is going to be our face to the world and we want it to embody all of these concepts that we’re building the culture of GrowthX with.

I think, typically, when you go to a fund website, you’ll see the portfolio with logos. Our view is that it should be community and human-centric and so our landing page is going to be filled with the faces of our founders. You’ll be able to dig in and hear their stories – to read about and learn their stories – and certainly hear about what they’re working on now. But, ultimately, we’re building a community of people. We refer to it as a trust network.

John:

It’s so great because when you have a trust network, then that’s ultimately what the investors are investing in is you and they have to trust and like you before they’re going to invest in you and most people lead with the product when they’re pitching as opposed to leading with who they are.

Andrew:

Well, that’s absolutely right. One of my founders — co-founders at GrowthX is Will Bunker. Will is the founder of what became Match.com and, after exiting that, has become a very active angel and venture investor and he was doing a significant number of relatively small investments and he came up with the idea of the trust network. Because the reality is when you’re doing over a hundred different investments, which he has in his portfolio, at the pace he’s making those investments, the only real way to do that is to build a network of trust and to do that by focusing on relationships and not transactions.

So that as you’re looking to do deals or as deals are brought to you, you trust the person who brought you that deal. You layer on a little bit of your diligence but you can make the quicker decision, and when you’re looking at a deal and you want to act fast, you can look into your trust network and say, “Who is a subject matter expert that we can enable to help us think through this? Who are the co-investors that would be strategic or otherwise helpful to this company and how can we enable them to come in?”

Again, because we optimize for relationships and not transactions, we’re not looking to take a piece of every relationship that we form. When we connect an LP in our fund to another fund, we don’t look to benefit in any way other than helping to grow relationships. When our LPs invest directly in the startups in our portfolio, we don’t force them to form a sidecar so that we can take a couple of different points of carry in addition to that which we have in our portfolio. When we introduce startups to other investors, we don’t sharp elbow ourselves into a larger position. I know, by the way, if, ultimately, there’s an investor that makes more sense than us then we’re in for the long-term. We’re playing this the long game and so if that particular opportunity doesn’t pan out for us, that’s fine because there’s plenty of other opportunities and if it works out for someone else in our community, we’re just as happy.

John:

Well, that so speaks to your character and, as you said, the long-term vision and not forcing something that’s not a fit and trusting that the right thing will be a fit. One of the things you wrote that I just love the analogy is An Astronaut’s Guide to Life in a Startup and, specifically, this whole concept of humility as it relates to a minus one, a zero, and a plus one, can you bring that to life for us?

Andrew:

Well, I mean, that’s something that came right out of the book that Commander Hadfield wrote that was my inspiration for that piece. You know, again, when you enter into an organization, if you’re striving too hard and too quickly to show off just how much value you can add or how smart you are, you end up distracting and detracting more than actually adding value, and a startup is an extraordinarily sensitive entity. It’s one thing to step into an organization of 55 thousand employees; it’s another thing to step into one with only 5 that’s only been around for five months.

So, absolutely, one of the things that we talk about and certainly something that we look for in the founders that we’re investing in is that idea is your best case when you enter into something new – as odd as it may sound – is to really try to be that zero, to just try to sit and listen and learn. Don’t be too quick to act. Don’t be too quick to think that you have to show off your value or your intelligence. The most important thing is that you have a neutral impact until you’re able to then add value and then reach for the opportunity to become a plus one. But, you know, as Commander Hadfield wrote, proclaiming your plus oneness at the outset virtually guarantees you’re going to perceived as a minus one regardless of the scales that you actually apply regardless of how you actually perform.

So, it is certainly a lesson that I’ve learned. I’m proud to apply it and it’s certainly something that we look out for when we’re speaking with founders.

John:

Well, it’s almost like if you say you’re cool, you’re not cool.

Andrew:

Yeah, I mean, I think, to a certain extent, that’s true. I think humility is something that’s very important. We’re often asked at GrowthX, as a fund, of course, “What do you guys look for? What do you invest in?” and I think the answer they’re searching for is, “Industries, sectors, stage, business model.” Our answer is a little different. Our answer is it’s very human-focused and our number one response is we’re looking for founders that lack hubris. I’m biased. I grew up in Cleveland, Ohio, so I have a bias to Midwest and the life lessons that you learn at an early age growing up in the Midwest. I think humility is an important thing for people to have.

John:

Well, I’m just supporting your bias because I’m from the suburbs of Chicago and I gravitate towards people from the Midwest. I think just growing up in an environment where there’s so much snow and you just help your neighbors that you don’t even know get out of the snow because you hope somebody will do that for you sets the whole tone for your mindset. Speaking of mindset, in addition to humility, you talk about attitude and focus in this great article. Can you speak a little bit about what kind of attitude does it take to keep bouncing back when things don’t go right?

Andrew:

Well, listen, I think that is. Attitude really fortifies. I think it was Elon Musk that famously said that the startup adventure is like chewing broken glass while edging yourself towards the abyss. It’s an extraordinarily uncomfortable thing. It’s literally living minute to minute, hour by hour, day by day outside of your comfort zone. It’s what makes it an extraordinarily difficult journey and when you’re going through that and you’re feeling not just the inter-month highs and lows. This isn’t just the intra-week high and lows. This is the intra-day high or lows. From one hour to the next, you could go from cloud nine to the deepest of doldrums and you may simply have been set off by an email from a venture capitalist.

What fortifies, what gets you through it is the attitude. There’s going to be a lot of challenges and a lot of miracles between startup and success. The one trait, at least, that I’ve been – that I’ve observed – when I have met with entrepreneurs across continents, the thing that is the most common among them isn’t the full stacked development skills. It’s not their high IQ. It’s just that orientation to stay calm and carry on.

John:

Yes, I call it getting off the self-esteem roller coaster where you’re going up and down.

Andrew:

Very well put. I’ll tell you what, when everything is flying high, when everything is going well, it’s easy, right? But when you’re facing the end of your runway, when you’re not sure how you’re going to pay your employees, when a deal that you were certain you were going to land and you were counting on ends up flipping the wrong direction, that’s when true character shines.

John:

Right, and in your final aspect, it’s so important, especially running a company, is how do you stay focused and not get distracted? You have some great insights on that.

Andrew:

Well, it’s a very difficult thing to do. I mean, honestly, there I’d refer to Greg McKeown and his book, Essentialism. It’s a must-read and it’s not just a must-read for anybody who’s an entrepreneur that asks me to suggest a book but anybody that I speak to who’s asking for advice on a book to read or is struggling through what so many of us struggle through nowadays in the age of information and constant attention and awareness and access is the ability to focus and prioritize and I think there’s a lot of extremely powerful messages that Greg portrays through Essentialism. For me, one of the single strongest ones is the idea of being intentional of what your priorities are, otherwise you’ll find yourself spending most of your time working through other people’s priority list.

John:

Yes, that’s so great because you’re constantly reacting and you’re not focusing on what you need to get done then you don’t make any progress, right?

Andrew:

That’s exactly right and, you know, I like to share with people in the context of this type of conversation. I would no more ask you to subjugate your priorities to mine than I would accept you asking me to subjugate mine to yours and though very few people, hopefully that you run into, are open and obvious about wanting you to subjugate yourself and your priorities to them and their priorities, the reality is that the subtleness of their behaviors or the subtleness of their reactions to your relationship, that’s the message that comes through loud and clear. When they’re impatient about an email response, when they’re needing something fast, or when they want you to reply and they push you, the reality is that you have a set of priorities and you need to communicate those clearly to the people in your community and do so with respect and if those people don’t show you the respect back and appreciate that you need to focus on your priorities and that you’re looking forward to engaging when you have that opportunity, well, that’s an invitation for someone to nurture themselves out of your community.

John:

Yes, or out of your company because sometimes you can hire people who are so needy and impatient that they don’t understand that you have other people to answer and other things to get done besides what they need done.

Andrew:

That’s absolutely right and I had this conversation often in the context of fundraising because not only do I spend all day every day with the fund and meeting with founders, but I also give a fundraising workshop and I do it as frequently as I’m invited and helping founders understand how to avoid the number one mistake that I believe a founder makes when raising investment capital and that is the mistake of being busy for making progress.

In Silicon Valley now, for a variety of reasons, it’s not difficult to get a meeting with an investor but the reality is is that investor aligned and is it an ideal investor for the story you’re telling, the company you’re trying to build, the stage you’re at now? So I find, often times, a hand will go up in the audience at the workshop and, “Well, Andrew, I appreciate what you’re saying but I’ve been working with one VC. I really want them on board. I’m really trying to help them understand the following things. They don’t seem to understand it so I need to make sure — I need to tell my story differently so I can help them understand these things or the questions that they’re asking don’t seem to be relevant but I need to make sure they understand them because I have to get them on board,” and my response is, “Listen, if you’ve taken the time and you’ve been thoughtful and intentional about defining, through logic, what the profile is of the investor that’s going to be most likely to be interested in what you’re doing now and it’s consistent with the story you’re telling and the company you’re building, you know right away that this person you’re speaking with, it’s just not a relevant person for you to be raising money for right now.” The traction effort delta. I’m getting money from them — it’s alluring and so be respectful, be polite, suggest that maybe this isn’t the right opportunity but you’d like the opportunity to engage later, and speak with the people that appreciate what you’re doing and that get what you’re doing and want to dig in from the right perspective as opposed to somebody you think is distracting.

In a roundabout way, I’m asking your question right back. The focus, I think this is how you focus. I mean, focus doesn’t happen without being thoughtful and intentional about it and whether it’s what I’m going to accomplish today in spending the first 15 minutes of my day being thoughtful about what my priorities are and then being polite and transparent with everybody else to let them know what I need to focus on today and hope that they’ll appreciate that and stay in the community or whether it’s what I’m going to accomplish in 2016. I think the same applies is the way that you stay focused is by being intentional about what your priorities are and whether it’s a post-it note on your monitor, a reminder app on your iPhone, whatever the case is, whatever it is that you need to do, keep it front and center.

John:

We’re going to tweet out a couple things you said. One, being busy is not equal to progress and the second is focus on quality not the quantity of meetings you have with investors.

Andrew:

That’s exactly right. I mean, I’m amazed at how often I am meeting with a startup and when I ask them what their fundraising strategy is, it is essentially to reach out to Google or Quora, find out what the top investors are in their geography or at their stage, to alphabetize those, to drop them into an Excel Spreadsheet or Google Sheet, to share that Google Sheet out with their friends and invite everybody to please annotate it with who they have relationships with, the strength of those relationships, and their willingness to make an introduction. But at no point have they even stopped to consider whether that fund or that person is the right person for the story they’re telling and the product they’re building. Is this the right person? Is there a reason that they will be attracted to what you’re doing, not just generally deploying capital?

So, for me, when I give my fundraising workshop or I’m speaking with entrepreneurs, I quote Albert Einstein and it’s one of the few opportunities I have to quote Einstein, when he says if he had an hour to solve the world’s problems, he would take 55 minutes to find the problem and only 5 minutes to solve it. I think that’s one of the most important quotes because it reeks of intentionalism and that’s a word that I probably overuse but it seems so useful, especially in the context of moving at the speed of startup. It’s very easy to jump into action but the reality is, by first spending a significant part of the time being intentional and defining what it is you’re trying to accomplish before you jump into action, it can actually be more productive.

John:

Well, you get a lot more rapport with someone if you show them the respect of doing a little bit of homework on who they are and what’s important to them.

Andrew:

I think that’s right.

John:

Well, before I let you go, we’re actually going to mention — put the Essentialism book in the show notes for everybody. But I do want to ask you about the Cargo Chief story about how hard it is to change people’s behavior when you’re putting a new product out.

Andrew:

Oh, Cargo Chief. Well, you know, Cargo Chief is just a fantastic, fantastic company. It’s out of the Bay Area. The CEO and co-founder Russ Jones is an outstanding man – proven track record. Essentially, Cargo Chief is the Saber of long haul trucking. Imagine if there were 10 thousand different airlines and if you wanted to go from New York to Chicago, you had to pick up the phone and call each of them and ask them if they were going to Chicago and whether they had a seat on their plane and then keep calling until you found one that was going where you wanted when you wanted and, in many ways, that’s how long haul trucking works currently and Cargo Chief is doing something extraordinary to innovate around that so that they can know the lane and capacity of every truck on the road in America.

We started working with Cargo Chief and helping them to find product market fit pretty early on and I think one of the things that we identified early is that when you’re building a two-sided marketplace when you are introducing an innovative product, you need to be careful not to drink too much of your own Kool-Aid in that the product might be innovative. It might ultimately lead to efficiencies in cost savings or higher profits but human behavior tends to trump everything else and changing human behaviors is extremely difficult and one of the things that we have found with innovative products, especially in the marketplace, it’s difficult to build up liquidity in that marketplace when you’re forcing to change your behavior from launch without having any true value to offer to or to be perceived by the customer.

So the advice that we offer and, certainly, the work that we do at GrowthX when we’re working alongside of select portfolio companies and helping them get product market fit is to figure out how to engage current behaviors and provide a significant amount of value by engaging those current behaviors and then, over time, as you introduce more value and deliver more value, then you can begin to change behaviors.

John:

So great. That’s really, really helpful. Andrew, how can people follow you on social media. Give us your Twitter and all that good stuff.

Andrew:

Oh, I appreciate that. So, personally it’s @agoldner. GrowthX is @GrowthX_SF, and growthx.com. We love having visitors, we love to hear from people. It’s a placeholder now but give us about four weeks and I think people are going to enjoy what they’re going to see. It’s going to be an opportunity for them to join the community and interact, introduce themselves, and we feel very fortunate to be in the space we’re in at the time that we’re in it to be meeting founders every day who are devoting themselves to ideas that they believe in and we think of those as opportunities and we always want to express our appreciation and we love hearing from founders. So if we can be useful, we want people to reach out.

John:

That’s great. I love the attitude, I love the intention, I love the focus, and, most of all, I love the message of humility because that requires a lot of emotional intelligence, which is what a true leader like you have.

Andrew:

Well, thank you, John. I really appreciate it. I’m honored to be on the show among your other esteemed guests. I really enjoyed this conversation. Have a wonderful day today.

John:

Thanks for listening to The Successful Pitch Podcast. If you like 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 recur. 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 that 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.