Bozi: Alright. So welcome to another episode of 7 Figure Screw Ups. It's my absolute pleasure to introduce Jordan from The Art of Charm. Hey, Jordan.
Jordan: Hey, thanks for having me on that. I appreciate it.
Bozi: Alright. So in 7 Figure Screw Ups, we basically talk about big screw-ups and we'll talk about Jordan's screw up today and learn from his story. A few words about Jordan: so I was introduced to him through one of my friends, and I've been listening to his podcast. He runs a website called The Art of Charm where he teaches people how to master social skills and social interactions, get rid of any fear and anxieties they have from social interactions and really get them to the level where they can very easily, comfortably interact with others and become power networkers but also bring that into relationships with their love one, friends and family members. Was that an accurate introduction?
Jordan: Yes. Yes, you nailed it. Definitely. Yes, I would say it's essentially what you described. Yes, we try to have brilliant people come on and then ask them smart questions so that they can teach what they know to the rest of the world. Usually, we're also around human performance, human behavior and networking relationships and that's essentially what we're looking for. So yes, we'll have a CIA agent come on and talk about reading body language. We'll have an FBI hostage negotiator come and talk in about negotiation technique. We'll have some of the founding scientists, Robert Cialdini, come in and talk about influence; and Larry Campbell come in and talks about conversations. So we'd like to think it's giving people access to the best knowledge around from the people who are best at it. That's what we've been doing for 10 years.
Bozi: That is excellent and that is probably the reason why, as I just learned, you passed three million downloads of last month for your podcast which is pretty amazing in one month.
Jordan: Yes, I'm also really excited about that milestone.
Bozi: That's awesome! So let's dive straight into the screw-up. So the first thing I'd like to ask you is really how was life about before the screw up or failure that you would like to talk about. Where were you in life wise but also in business wise? What was happening?
Jordan: Yes, so for me, taking one failure or one screw up was really tough because I can look all along the way and find plenty of screw-ups where I messed up and flagged [00:02:45]. I guess, let me start with a question for you. Do you want a question, a screw up I should say, that started in the beginning of my business or do you want a screw up that started even before we officially started the business, because I feel like there are just so many?
Bozi: We can also cover two, if you have.
Jordan: Oh, okay.
Bozi: We could start with one. Let's say that if you are in a position of wanting to start an online business or you started and you're having first successes, first revenues and customers, we can pick one that you think you would like to hear at the time.
Jordan: I've got one in mind already. Sure. So do you want me to just dive in and describe it?
Bozi: Yes. I would be first interested to know where you were just before.
Jordan: Oh, just before that?
Jordan: [00:03:30 Just Before Screwing Up] So I was an attorney on Wall Street, and I had just started The Art of Charm podcast in my friend's basement. We've been going for maybe a year or two and then we're on satellite radio which had taped [00:03:41] up our show. So we were doing a radio show on the satellite, the podcast itself, and I was still a lawyer at that time. So I was a busy guy.
Bozi: Okay. So that was your side project. So you're basically thinking of turning that into full-time entrepreneurship and not working as a lawyer anymore, right?
Jordan: Kind of. I mean, I figured I'd be a lawyer for maybe four years and then, eventually my business would scale or not or it'll always be a side gig or I'd sell it, yes.
Bozi: Got it. So at that point when you started the business and you [inaudible 00:04:14] from the basement, was that a point where you already have some customers or you're basically creating content and just starting to basically build audience?
Jordan: Yes, we had a lot of customers actually, not hundreds and hundreds like we have now or thousands or whatever. But we had a few dozen but they were all high-ticket items, because we still run a school we have in L.A. At the time, it was in New York because I was working at Wall Street. We have a school where we teach body language, nonverbal communication, persuasion, tactics, influence and things like that in our residential setting. So people come in and live in the school for a week and go to the program. So we had a fair amount of clients coming in every week and staying at our place at the time in New York, now in L.A. that were coming through. So we were just barely surviving. I think we were paying ourselves enough to eat food every day, not save anything and absolutely not that much discretionary income. I mean, we largely relied on the same social skills that we were teaching back then to eat and drink and go out and get by because we were scraping by. I mean, I was a lawyer so I was okay, but everybody else on my team, we were just barely earning enough to pay them and I wasn't taking a salary at that time.
Bozi: Got it. So you were just gaining first traction in your, you know... There were small profits then generating some revenues, first customers in that kind of workshop settings or one week [inaudible 00:05:40].
Jordan: Exactly, yes.
Bozi: Since you already had first customers, it sounds like you already had some initial validation that the business could be there and that there may be at this form. So what happened then?
Jordan: So yes, [05:57 Where Business Misconceptions Lead You] I essentially made a really classic mistake which was I was treating my business like a hobby, and that was good for gaining traction and things like that because we weren't looking at all these distractions... or I should say, we were looking at the things that were discouraging and thinking "Oh, well this isn't feasible. It was just a hobby, it was fun, we were doing it, it was making some money and I was fine. And I was focusing on my locker [00:06:23]. So what that did, unfortunately, was it made me think, "Look, you know I can simply create a group of people that I really enjoy working with then this will be great. What happened was I ended up meeting to hire people that were going to provide $60,000 to $100,000 worth of value to the company, but I was only able to pay them 25 grand plus pay their rent or something like that.
So the only type of people that you can hire in that situation are people that really believe in your vision and the people that really believe in your vision and also trust you and are willing to work for less than their worth in promise of a higher return... Now, in startup land that's very common but back then in 2006, nobody would really think about it. The only people who were willing to do that are your friends, and [07:15 Discover Jordan's #1 Hiring Mistake] so I hired a bunch of my friends. I made several mistakes of thinking, "Well, I come from Detroit. I've got a Midwestern work ethic. I work my butt enough until the job is done. I'm tireless. I have integrity around this. I found that my friends were great friends, they were fun to hang out with but they had very different concepts of what they were worth, what they were entitled to and what it means to work hard. For me, that meant 12 plus hours a day for some of my friends. Towards the end, it started to mean waking up around 2pm, working for 20 minutes on whatever they felt like doing and then cracking open a cold one or leaving the office and showing up on Monday.
So eventually, obviously, we had to start letting some of these people go, because I'm not going to give people equity, let alone pay them a salary if they're not going to work. What I found, unfortunately, was a lot of these people had decided that what I was doing couldn't be that hard and they were just going to do it themselves, which I welcome competition. [08:25 Where Friendship Ends] However, they weren't doing this ethically. They were using office resources, stealing our client lists, appropriating intellectual property and basically, white-labeling things without permission. On top of that, not only were they doing that, they were telling those clients, "Oh, don't buy from Jordan on The Art of Charm. We've got this better thing." We found out because our clients were and are very loyal, and they said, "Look, just between you and I, I think something's going on.
I didn't believe these guys at first, these clients. I said that, oh it's just an administrative mistake. I'm sure there's something going on. I only started really looking into it and finding out the misappropriation and the outright theft when intern started to say, "Oh, yeah, you know we were working really late last night on a new logo." What new logo? "Oh, yeah, you know we're going on a business trip next week." Business trip? You're not going anywhere. I run the company with my business partner, AJ. You guys aren't going anywhere. Then I would ask the other guys where they were going, "Oh, yeah. I'm going home to visit family." But why is Mitch going with you? "Oh, he's going to hang out with my family." Okay, that's weird. Then I'm like, well this isn't really all adding up.
Then finally, when I needed to be hit over the head with a virtual hammer here was a client of oursâthat had been a client for a really long time, really good friend of oursâcalled and complained and said, "Look, I didn't want to complain before because I love you guys and you changed my life but so and so has been late for the last three out of four of our coaching calls." I said, coaching calls? Well, you don't have a coaching package with us. That guy doesn't handle the coaching calls. Johnny handles the coaching calls. So finally, that started to pull the thread that unraveled the whole sweater. I found that they're essentially running a shadow business using AOC clients/AOC resources. This is like eight/nine years ago now.
Bozi: And they were friends, the one who was fired?
Jordan: [10:22 Discover Jordan's #1 Hiring Mistake] They were friends of mine that were living in a place that I paid for.
Bozi: So it's two of you who are running the business, AJ and you, and then you had several people hired or your friends to help you grow your business, and they basically started working for less than you expected. I mean when you hire friends, you just took the level of trust that you expect would be higher, right?
Bozi: What actually happened for what you're explaining, it backfired completely on the other side where they started unethically behaving and not just making your business stay flat but also the effect was negative because of [inaudible 00:11:09].
Jordan: Yes, it was. At first, I was like, "Oh my gosh. I'm a terrible judge of character. What right do I have to teach The Art of Charm, for example? But what it turned out and this is like 20/20 hindsight based on years of looking back, even now. It was really one guy that kind of put the idea in the head of other people that were basically just interns here. So although I think some of the interns are kind of silly for doing this because they gave away a really great opportunity and their company that they were working with inside our office, once they got caught, I mean unfolded within just days. They got sued, of course, and even the settlements that came out of that were not in their favor directly.
So it's really, really one toxic seed but when you look at it, you think, wow I hired this person and he was really good at his job. I think it's somewhere along the way, he went, "I'm entitled to more." Instead of working for it within the parameters of our agreement or even talking with us about it like a normal person you would think would do, they just went, "Well, since I'm entitled to it, I'm just going to take it and since I know I can't do it on my own, I'm going to take resources from Jordan and AJ and the Art of Charm. That was really disappointing because not only is it a kicking you know what, because it's your business but you're thinking, "Wow, I put you up. You used to live in a trailer," right or whatever. I mean they were literally in college so it's not like these guys are horrible people. I mean we were just college kids. This is their first job out of college.
Looking back, I don't even necessarily, totally blame them. I think there was a lot of... I always try to shift the blame onto what could we have done differently, not to blame me but the extreme ownership would say, "What did I do wrong there?" I look at this and I think, okay bad hiring, willfully ignorant of bad practices and treating people like friends when they should have been treated like business partners. It's not to say never hire your friends. It's just to say never hire and to manage and be responsible for managing your friends. If you want to hire a friend, great, but treat them like every other employee and you should not be their boss. Somebody else needs to be.
Bozi: Yes and there are people who own their family businesses and it can work, but there are certain things to do to manage that properly. Now, were curious to understand what was the impact of what happened on you and your life, in business sense, emotional sense and relationship aspect?
Jordan: Yes, what happened from a business perspective was [14:05 The Hardest Blow] we ended up spending a lot of money on a lawyer at a whole legal case which I would not do again in the same way. It was unnecessary. I mean suing somebody who's broke, end up being broke for longer, who cares? It's not worth the stresses and the expenses. It's really silly. Had we just let him go, I think it would have been like, "Oh well, okay we had a good run." Instead, it was this protracted battle which also took a toll on us emotionally. We started looking at all of our employees that we were friends with. With a veil of suspicion, we started auditing everybody's work. We fired a ton of people who most of them honestly were not performing this enough. But plenty of people were let go just because they were adjacent to the situation and it was like, "Look, we don't want to have to worry that you were his roommate for three years and now, he's gone because of this and you're still here. We just can't deal; let's separate.
So that was tough because, not only do we lose employees that were bad, we lose employees that were okay and we lose friends that were good. So me and AJ started to [no audio 00:15:10] people and we started to become a little bit more selfish with the way that we dealt with the business. [15:14 The Road to Recovery] It took us a few years to recover and realize like, "Okay, look, we brought this on ourselves by doing certain things wrong. These are bad people that shouldn't be working with us anymore but we don't need to then treat every single person who crosses our path as some sort of potential thieves which is not good. It's like when you get married, then if you get divorced and you start saying things like, "All men are this way" or "All women are this way." So it's clearly not true. It's just a result of your emotional triggers being fired so strongly. It took us awhile to recover from that.
Honestly, looking back on it, the level of stress and the depression that we were going through at some level at that point in time was not worth it. What we should had done is just been like, "Oh, you're stealing from us. Okay, you're fired. Next," and gone on with our lives and not made a big deal out of it. It was us focusing on this problem and being wounded that caused more damage, right. It's like if you get a sliver from a piece of wood, what you do is you go, oh, shoo, and get tweezers, yank it out and put some alcohol on it and you call it a day. You don't take a rusty grapefruit spoon, sharpen it on the concrete in your driveway and dig a hole in your arm to get it out. That's I think what we did, by getting angry and being upset, with suing and all this stuff. We really just poured... We made it much more worse for ourselves in the process of getting rid of these guys.
Bozi: Alright, got it. As you said, it took a few years to recover. So it sounds like it's never really only about the business mess that's created but also, especially, when your friendship is involved. You lose also people in such process. I assume that having such experience, which I think is great having at the beginning of the business. I mean looking back is great. I'm wondering how did that one instance helped you in the future, probably related to the way you do hire today than you hire a few years ago.
Jordan: [17:15 Hire for Performance; not for Friendship] The way that we changed how we hire is well: (1) I don't do a whole lot of hiring myself; (2) I absolutely don't look to hire people I already know. I just look to hire top performers. I will work with friends on informal projects but now, it's almost always something where there's no money involved or where I purposely give them a really great sweetheart deal so that they don't feel burned and that I just do it mostly like, "Look, I'll promote your thing because I want you to succeed, and I'm not going to worry about tracking and affiliate payments, this and that and the other thing. I will just help you." That way, when they look to help us, they look at that with the same mindset or they don't want to help us and they're the type of person I don't really want in my life, right. But if they're willing to help us and we're willing to help them without remuneration, what this allows is for us to create relationships or we don't keep score. That's very, very useful because if I helpâ¦
My friend Noah Kagan, for example, he just launched a podcast. I helped him launch it, I put him in touch with my producer, my producer's taking time away, in theory, from working on The Art of Charm to help Noah out. I'm not asking for money. We're not charging him for any of our consulting, expertise or anything like that. Then later on down the line and even before that, since Noah and I've been friends for so long, we help each other on other things. We don't think well, I helped Noah launch his show so now he has to mail out my info product to his whole list. It's just anything that becomes transactional becomes complicated and then somehow, everybody feels like they got the short end of the stick or you have to do so much negotiating and so much "look, this has to be this way and this has to be that way and good faith this and good faith that" that it becomes tedious. [19:04 No to Hidden Contracts] Whereas, if you just decide to help other people without keeping score, then you're not worried about getting the short end of the stick and somehowâand I put that in air quotes "through the mechanisms of goodwill/the universe, so to speak.
Bozi: Harmonious [00:19:19].
Jordan: Right, which I hate those terms in general. I'm not [00:19:22]. But basically, if my goal is to help you now, then I can accomplish that goal really easily; and if your goal later is to help me and I'm not worried about extracting value as a return, as reciprocation for me doing something before. If your goal's just to help me and it's a clean one way thing, then it's perfect and I'm not saying, "Well, I'll help you this way and you only help me that way" and now, I'm mad about it because we have this covered contract, this agreement, that when unspoken, that you would help me in an equal way. Now, I'm secretly mad at you, you don't know why I'm being unfriendly to you and that our friendship has this weird thorn. It's got this weird sliver that we don't know how to remove. So three years later, I'm hanging out with you, you leave the cap off the toothpaste and I try to stab you, right, because it's all built up over time.
Bozi: Got it.
Jordan: It's really toxic. So I just don't keep score, and I create relationships where we don't keep score, where score keeping is not possible, where I can't get value in return right away, where I don't see how that person could ever help me. I want those relationships because they tend to come back and be helpful in... For example, this intro to John Corkin [00:20:31], he wasn't thinking, if I introduce Bozi to Jordan, then they're going to get along really well and then later on, I'll be able to ask them for something. That's not the calculation. He's just being helpful. But of course, what that creates is anytime he needs help with anything, I'm going to be first in line.
Bozi: Yes, and I think there are a lot of lessons in what you're saying. I mean, one related to the business topic and the way you hire and distinction you make with friends or not friends and transaction versus non-transaction. But also, I think what you said and the way you deal with partners can be applied to relationships. A lot of people are reiterating [00:21:07] their relationships, they're keeping score and you know, I take the garbage out and you'll do something for me. I'm sure that this has been discussed in your podcast [inaudible 00:21:16] --
Jordan: Oh, yes.
Bozi: -- that just call a relationship don't work and so--
Jordan: Yes, we called that covered contracts and it happens in relationships all the time. It happens in every type of relationship. For example, if you're in college and you've been driving this girl to and from the airport because you're friends but you secretly help. One day, she's going to turn around and realize you're the guy, it's a covered contract. You get mad at her when she doesn't do that. If in business, I help you and I expect you to help me and you do later but it's not what I had in mind, my expectations that were un-communicated were not met, I get mad at you, that's because of a covered contract. You see this in business. You see this in your personal life. Husbands and wives have it like you said. Alright, even the housework. Yes. Even the housework and then I'll do this other thing. Then what ends up happening is one person does the housework and then goes, "Why isn't she ever doing anything for me?" It causes a whole of drama because of a covered contract. If someone had said, "Look, I'll do the housework, you make sure things are repaired," if both sides know what their obligations are, they can both follow through. So you end up with these covered contracts, reciprocation problems, and being alone.
Bozi: Then it explodes in some little things like who bought the plate.
Bozi: I want to ask you one more question, and then ask you one of the final [inaudible 00:22:35] people how they can find you. My question is, how do you, as an already seasoned entrepreneur, handle your failure on a day to day basis, like a few tips on how do you do it?
Jordan: Yes, I know that most things I try are going to fail or at least, not have the results that I expect. So it's kind of funny because it goes along with keeping score. If I test something, I look at it like that test didn't work. Am I disappointed that I didn't strike/crack the code? Yes. Do I think, well we should just pack it in and go home? No, because I know that it's all a matter of iteration. I couldn't have started the Art of Charm podcast as it is now 10 years ago, because I didn't have the testing, feedback from the listeners and the skills. There were all kinds of things that weren't in place.
So realizing that it's all... and this sounds cheesy but I mean it, really all about the process, journey and things like that, you have to learn how to enjoy that. You realize that failure is a part of moving forward in that it's... Not just like failure is always moving forward or fail forward. I hate those stupid maxims. [23:44 Ways To Handle Failure] You're supposed to avoid failure but you're not supposed to avoid failure at all costs and not test things and figure out better ways to iterate and create new things. So I just look at it as part of the process and I don't worry about it. I really don't ever worry about it, because I'm zoomed out so far on the time scale that if I look at what we did this week and it didn't get us any new show fans or any email optins, that's fine. If I look at what I did this month and it didn't, then that's a bummer but it's fine. If I look at it in a year and it didn't, then we need to course corrects. But over 10 years, it's like investing.
Over a decade, you can be pretty terrible at investing and if you diversify enough, you're still going to see growth. It's just not going to be as flashy as the guy who says, "I got 80,000 email subscribers off one webinar buy these products. I don't care. I'm happy for that guy if it's true and it would be great to see that kind of result occasionally and you do sometimes. But really what I'm looking for is over the course of 1, 3, 5, 10 years, what have I built and grown and how does that works. That's much more important than what did I do today and did that move me forward. That's a great mindset to have to try to do that but the problem is if you do something and it moves you backwards, do you cry in your serial or do you figure out some other way to make it right?
Bozi: Right, exactly. You know, that having that big picture of you is like phenomenal strategy. You see, the more I do these interviews in the 7 Figure Screw Ups, the more I see that better promise of being successful entrepreneurs being able to really zoom out and think like will this matter in a year or will this matter in 10 years and then get the right perspective about it. Then, as you said, failure is an inherent part of the process which is hard to internalize. Alright. Thank you. It's been a great short conversation though, and I was wondering this podcast. So where can people find you? It's (229) 261-0931 or is there anything..?
Jordan: Yes, people can go to the 3049875502 or if you listen to podcasts, which I recommend, search for The Art of Charm podcast in iTunes, Stitcher, Spotify for some users that have that enabled. The Art of Charm, yes, we would love to have you here. We would love to have you here. We teach a lot about persuasion, influence, networking, mentorship and anything that people can apply in their business and especially, in their personal relationships. I think there's something there for everyone. We've done it for 10 years, so if something doesn't stick, we've got to figure something else out, right?
Bozi: Yes, learn your craft. Alright. Thank you so much for being a guest, and have a great rest of the day.
Jordan: Thank you, Bozi.
1. In business, treat your friends as business partners. Treat them like every other employee and let somebody manage them.
2. As business owners, don't do a whole lot of hiring yourself. Look to hire top performers and not people you already know.
3. Get rid of bad employees, not by suing but by firing them right away. This saves you time, energy and money and most of all, stress and depression.
4. Decide to help people without keeping score.
5. Avoid failure. If it comes, figure out a way to make it right.
Bozi: Alright. Hello, everyone and welcome to a new episode of 7 Figure Screw Ups. Today, I have an absolute pleasure of having Josh Turner as a guest. Hey, Josh! How are you doing?
Josh: Hey, Bozi! How are you?
Bozi: Good. Thanks. Yourself, all good?
Josh: Yes, everything is great.
Bozi: Alright. So how do I introduce Josh? I know Josh and I know him mostly through the work that he's doing related to LinkedIn. He is a Wall Street Journal Bestselling Author. He published two books, one is called Connect and one is called Booked. He's also right in an online program called LinkedIn University. So if you're interested in learning anything about LinkedIn, especially about lead generation, Josh is the man. Also, he has a company called LinkedIn Selling, which is in B2B lead generation space using LinkedIn. So anything LinkedIn, Josh is the man. Is that an accurate introduction Josh or..?
Josh: Yes, that will get the job done.
Bozi: Alright, that's cool. So as you know, 7 Figure Screw ups is really talking about failure/screw ups of very successful people like yourself. Before we talk about what your favorite screw up is, I'd be curious to know what life was about before the screw ups? Where were you with your business, with your private life, what was happening for you, what was the role you're in and then we'll get into that?
Josh: Well, like I was mentioning to you, in my company, weâve been really blessed to last five years where I haven't had a mistake that has caused us to hit the ground like we were doing amazing and then it's all down the drain. [00:01:55 Just Before the Screw Up] But I did have a situation before I started my company where I was a CFO of a construction company that had grown really fast and being part of a smaller company, we went from 5 to 23 million in revenue in just a few years. When you're in one of the few senior management roles of a company of that size, it's very entrepreneurial and you're very invested in it. I felt like it was my company. I had that kind of ownership mentally around it. It was a lot of fun before the mistake that I want to share with everybody. This is a lesson that has stayed with me over the years and it's something that a lot of people need to hear; otherwise, you have to learn it the hard way like I did.
[00:02:44 The Glory Days] Before it happened, the company was just doing exceptionally well, just growing like a weed. We thought that we were the bee's knees, the sky was the limit and we're starting new things, the banks were just giving us as much money as wanted and everyone in the company is getting raises, we're hiring people from all over the place and it was a lot of fun. We felt pretty good about ourselves.
Bozi: Alright. You said you were in a construction business. Were you in a specific niche or what kind of--?
Josh: Yes. We had a residential construction arm that built custom homesâvery high end, multimillion-dollar homesâand we had a commercial division. We did ground-up commercial construction, as well as tenant finishes and build out some stuff like that. We also had a manufacturing arm. So we had about 45,000 square foot facility in St. Louis where we built custom casework in cabinetry for commercial projects, as well as some residential. We also started a window distributorship, essentially a retail storefront selling windows and doors from a manufacturer like Canada. We had a few different arms of the company but it was really, really exposed to the downturn in the economy when in 2008, people stopped spending money, they stopped building homes, commercial projects ground to a halt and that kind of rendezvous was the beginning [inaudible 00:04:37] for us. So yes, that's what the company was about.
Bozi: Got it. So basically, life was good. The company was growing fast. You're a CFO, so you feel like you probably had a stake in the company as one of the early members or in a fast-growing company, you always have a good stake or solid stake. So now the question is, at that point, what actually happened? What triggered? What was the failure. Was it on your side? Was it economy that you said, external factors coupled with [inaudible 00:05:06] mistake. What happened?
Josh: The "what happened" wasn't necessarily one single event but what happened was is that in the heyday, as things were going really well, we just continued putting all of our money in the growth. We continued investing and doing new things, branching out and getting bigger, and [00:05:33 Discover Joshâs #1 Scaling Mistake] we never stepped back to say, you know what, we need to harvest some of this success and build-up our balance sheet and cash position. What happened was, at the time, our CPA, consultants or the bankers, everybody was telling us we're making all the right moves and we're doing all the right things. They're giving us as much money as we want. We had huge massive line of credit. We have termed it. We're financing equipment. It was pretty much had the sky's the limit on what we could get financed in. But what happened was that we're just a way, way over leveraged, way too much debt. When the rainy day came... The rainy day will come for every business, It's not a matter of if; it is a matter of when. When it comes, you just can't have enough money set aside for that rainy day to weather the storm, and we didn't have it.
So what happened was is that the banking situation changed in 2009 and all of a sudden, they cut us off. We weren't able to stem our losses fast enough. We started losing work. People stopped spending money and our backlog of work dried up. We started losing money. We couldn't shed overhead fast enough. We had built up so much debt and fixed cause. Eventually, we just totally ran out of money and had to shut the doors.
Josh: That was a pretty big business with us, sophisticated operation and lots of debt financing from banks and such and such [00:07:24]. A lot of people listening to this call might think, "Ah, I'm not that kind of business. That's not going to happen to me." But my business now isn't that kind of business either. We have zero debt and we could get some if we wanted to, but we have zero debt. I still take that lesson to heart knowing that from day one of starting my business, I knew that I was going to make sure I have plenty of cash for a rainy day is always going to be a priority. It's really, in terms of the financial side of the business, the number one metric that I pay most attention to, because I want to make sure that when... You know, we're in some good times right now. These last few years, everybody is doing well. Everyone...
Bozi: Okay. Before we go into that and [inaudible 00:08:17] the lesson that you learned, I will be curious to understand, you mentioned like we're growing from $5 to $20 something million, but using a lot of leverage/debt financing and suddenly everything collapsed. So you ran out of cash.
Bozi: The question is what kind of impact did it had on you, that failure and that you think overtime, emotionally or financially.
Bozi: Because this is something that I find that not so many people talk about in the online business space and it kind of everyone feels it or goes through it at some point.
Josh: Yes. [00:08:49 Dropping the Bomb] Well, it was terrible on a lot of levels. It impacted a lot of families. In our peak, we had over 100 employees. When we shut down, we were down to maybe 60 or something like that. So everyone lost their job immediately without hardly any warning at all, even though some of us in the management team, we saw it coming but we were trying and working hard to prevent it all the way up to the final day, because that's what you do. It was very difficult to have that meeting, to bring everybody in and the CEO of the company say that we're shutting the doors. Very difficult; lots of tears. It was really a company that was run like a family in a lot of ways. People loved working there. It was absolutely a great place to work. A lot of people had made long, long careers out of being with this business. It was an established business that had been around for over 25 years. So it was difficult. At the same time, it was difficult on the ego because you feel like a failure.
Bozi: What was the impact on you?
Josh: Oh, that's what... For me, it was what am I going to do next was one of the things, because when you're in that kind of situation, you have to, as much as difficult as the situation is on all of the other people impacted, like you still have to concern yourself with what am I going to do next. So that was a big focus of mine and I really channel a lot of my energy into that. [00:10:35 Hard Work Leading to Failure] But it took me some time to get past that business failing, because that's a hit to the ego. You don't want that on your record. But more than anything, it was just to work so hard for so many years and then to have it end in that kind of a fashion. It's difficult on a lot of levels.
Bozi: Have you experienced like guilt being CFO of the company or fear of how is it going to affect my future business or my career in some ways?
Josh: I'm still pretty young. I'm only 35, and when that company closed, that was 29. So I wasn't... What was it? No, I was 28, I think. I can't keep track of it all, something like that. So I was young enough that I knew that I was going to be okay. [00:11:43 Road to Recovery] So I wasn't too worried about it like yes, it's a little bit of a hit to the ego like I said but I felt pretty confident in myself. That's why I started my business doing my own thing. [Initially, what I started doing was working as a freelance CFO for other businesses in the St. Louis area and pretty quickly, I was able to get enough clients in the door to keep the lights on and pay my bills. So people didn't really have an issue with that kind of stuff.
Bozi: That's great. That's great. That's great. It's definitely a massive fall, what has happened; a massive failure of the company. As you said, a lot of people lost jobs. So you mentioned that the big lesson that you're taking from it was really about the cash flow: managing cash and making sure that if you have money in the bank, it was your debt.
Josh: Yes, most people don't do it, [00:12:36 Repeated Mistake in Business] Most business owners, even larger companies. I mean, with lots of business owners and lots of seven figure entrepreneurs were running companies doing a substantial volume that are still operating payroll to payroll and hand them out. It's crazy. They constantly spend, don't save enough and don't have anything set aside for the rainy day.
Bozi: Got it. So how did that influence your decision later on when you started LinkedIn Selling in terms of your overall philosophy on profitability in day one or when you expect profitability to come or financing versus not financing. What's the biggest lesson you've taken of that.
Josh: Yes. I think that there can be good debt. So I'm not opposed to debt if used properly. [00:13:33 Keep an Eye on your Cash Position] But generally speaking, like I mentioned earlier, I have a really, really intense focus on keeping an eye on where is the cash position going. A lot of people don't pay close enough attention in that because what's on your PNL doesn't always mean cash in the back. So one of the things that we do in my company as a 13-week rolling cash projection so that I can always see on a weekly basis where is our cash position heading for the next three months. Then of course, we look at longer term projections too but from a more short-termed management standpoint, we pay a lot of attention to it.
Bozi: Yes. That's great to hear. I was recently listening to Verne Harnish who helps these big companies grow and scale, has his book Scaling Up. One of the things he was saying was that large companies make exactly the same mistake of not keeping enough cash in the bank and he mentions Apple who is known to have a lot of cash in the bank as a company who is able to sustain big hits, going to begin amazed [00:14:44] and this is one of the parts of their philosophy.
Bozi: So I think it applies on all levels, whether you're in a midsize business, small business, online, offline or large company. I think it applies really. As you said, what is in PnL doesn't mean that you'd actually have cash.
Josh: Right, yes. I think that the best most practical advice I can give somebody that's in the earlier stage of their business is [00:15:09 Living the Right Business Mindset] as you start seeing successes in your business and the cash build up in your bank account, you have to go into it with the right mindset that you're not going to immediately start adjusting your lifestyle and going out and buying stuff: the new car, this and that and everything else. That kind of stuff, that's not what life's about in the first place. For me, it's always been more rewarding to make sure that I'm building a cash balance that is far and away more than most of our other peers in the industry than to have the coolest car.
Bozi: Yes. So stay lean. I think it's called the Parkinson's law, meaning that as much as you make, you spend as much as you make; something like that. So people get the raise, they start spending more, they buy their new car.
Josh: Of course, yes.
Bozi: I think staying lean also removes probably that fear of uncertainty and gives a little bit more certainty on a day to day running a business.
Bozi: Do you have any tips on how you manage fear of failure as one of the final concluding thoughts. You've been running a new business for the last five years as you said, and I'm sure your failure comes like whether this will work or your launch will work, [inaudible 00:16:35] on that. So how do you deal with some of your tips for dealing potential fear or failure? Let's say your last launch. I know you've had a very successful launch so that's why [inaudible 00:16:44].
Josh: Yes. Well, I mean, that launch, it was very successful. We had close to 90,000 people come through our world and optin to get my book when we launched it. We had a over 1200 new clients join our program: The Appointment Generator. So massive success, but living up to it like yes I did have that kind of fear of failure. It wasn't so bad that it was like debilitating or like handcuffed me. But I thought about it a little bit. The main thing for me is wanting to do right by all of our people on my team, all of our partners that support us, all of those things. That's what mattered most.
[00:17:30 Give Your All and Consider the Worse Scenario] At the end of the day, if you're putting in the work and you execute the plan, then that's the best you can do. If you can wake up in the morning and say, you know what? Yesterday, I gave it my all and I didn't let up. Then, I think you can feel pretty good about yourself at the end of the day. So I don't know. That's a tough one. I don't have the solution for it but I think that there's a healthy side to it because sometimes that kind of anxiety or stress kind of gets your mind thinking about things in a different way and can cause you to realize that "you know what, this is something I'm stressing about. What do I need to do about this so that it's not something I have anxiety about and usually, there's a solution to that. That's one way I think about it. But at the end of the day, I also think about what's the worst that could happen? Usually, the answer to that is it's not that bad.
Bozi: Right, yes. So it's always affiliates maybe pissed off or I would be, for a few days, not feeling well. So in a large scheme of things, as you said, "It's not that big." What I love about what you said is that also, you know what you control. Oftentimes, whether something are going to be successful or not, if you gave your best and sometimes, maybe you need some luck as well, right. But if you gave your best, because this is what you control, right?
Bozi: You live with that, then it's fine. So it's a wonderful strategy. So I think for me, it's a great take away.
Bozi: That's been great, Josh. Thank you for joining the call, first of all and sharing your story. I think the audience will find a lot of value in this. At the very end, I wanted to ask, how do people find you if they want to learn more about LinkedIn and lead generation for LinkedIn? What's the best place for you?
Josh: Sure. I'd say you can look me up on LinkedIn, send me a connection request and tell me you listened to this interview so I know where you're coming from or just go to linkedselling.com and you can check out our stuff there. We have different webinars you can sign up for and stuff like.
Bozi: Alright, it's been absolute pleasure and thanks once again for joining the 7 Figure Screw Ups today.
Josh: Thanks for having me. It's been fun, man.
Save cash for the rainy days.
When you see the business going down, give your people some heads up way before even dropping the bomb..
Keep an eye on where the cash position is going; PnL doesnât always mean cash in the back.
When business is seeing its initial success, build your cash balance before even adjusting your lifestyle.
Bozi: Alright, welcome to a new episode of 7 Figures Screw Ups.
Bozi: Yes! I have absolute pleasure of introducing Ryan Lee, the man himself. How do I introduce Ryan? So I heard of Ryan in multiple different occasions in the last years, and I finally got to meet him in person at his live event recently in Connecticut. So Ryan is focused on helping people build lifestyle businessesâ online lifestyle businesses. What I really appreciate about Ryan, the reason why I invited him today to the show is what he stands for and his values. In the world of a lot of people making money online and do business overnight, Ryan stands out for being authentic, real, and in a business for, I think, 17 years already. So seeing a lot of things and a lot of business models, and helping people build business that supports also their life. So that's where the notion of being a lifestyle entrepreneur means that your business is running in a simple wayânot always easy, but simpleâ so it provides more space to also have a life and not life or any [inaudible 00:01:16] of business. I don't know if that's an accurate introduction.
Ryan: Sounds good, man. I'm ready. It's not about me. It's about helping you people anyway. So that was good.
Bozi: Alright, good. So the hope for 7 Figure Screw Ups is really get to talk about supposedly about failures and screw ups. So before you talk about failures, Ryan, if you want to add something/anything about your story, what are you focusing on lately or what you've been helping people with over these years and then if you can share really one of yourâI assume you know, successful persons have a lot of failuresâone of your failures that you really love talking about. So you're free.
Ryan: Okay. So that was like a multitier 700-part question.
Ryan: So where do you want me to start? As you said, I've been online for a long time. [00:03:30 Just Before Screwing Up]] I started my first online business actually back in 1999; so pretty early in the internet world. I was working full-time in a children's rehab hospital, and I was a part-time personal trainer and strength coach. I decided, let me have a little website built to promote my personal training company where I was training athletes. I won't get into those stories how itâ¦ I mean it built, it was going well and then it took me a couple of years of kind of messing around till I made it. I took all this content we're creating and put it behind a paywall. It was the first membership site for strength and conditioningâsports training. There are probably thousands of them now but that was the first. It has taken me on this really interesting journey, and I've been blessed with a lot of success.
Look, I worked for it. I worked my ass off for it. It drives me a little crazy when people say, "Oh, you're so lucky," because they didn't see when I was working there and when I took a job then as a gym teacher in South Bronx. I mean, I have to walk to the public library pass the gangs and pass the drug dealers to get on the internet. They didn't see that but it was a journey.
Bozi: They say every overnight success is 10 to 20 years in the making.
Ryan: Oh yes and you know what? When I was working at the hospital then at the school, all my colleaguesâ¦ And you look, every one's got the wrong thing. They would do the job, do the 9 to 5 and that's it and they're done. Where I would get up 5 o'clock in the morning, I would train clients. I'd work all day, I would train clients, I'd work in my internet company, I've put myself through grad schools, so I remember those long days. Things were great and everything was on this kind of trajectory up. I know this is about 7 figure screw ups and the height of our business was probably about five/six years ago, my dadâ¦ and we were starting to really grow where we get seven figures a month in revenue.
Bozi: Just to clarify, that was your fitness business, right?
Ryan: Right, that was in the online health and fitness and more specifically, it was a nutritional supplement we were selling because we basically created the backend for all these health and fitness people. So it was going great and just looked like one screw up after another. The first big screw up, wellâ¦ and it's hard to say. I always take responsibility, right. I had a partner in the company and then a couple other very, very small partners which had little percentage. [04:36 Knowing the Right Decision] They kept saying, "Let's put more money, more money into research of the products." I said, "Look, our products are good. They're solid. We don't have to keep spending a quarter of a million dollars in every research, like we need to put money back into marketing. They disagreed. So what happened was we basically have one of our top affiliates, one of our top people promoting and started a competing company. He didn't put money into research and put it on to marketing kind of beat us.
Bozi: So just to clarify, at that point in timeâfive years agoâso you have basic health and fitness supplements company and you're doing already seven figures a month, you said, right?
Bozi: Alright. So it really has become a sizeable business.
Ryan: Oh, yes.
Bozi: You have a disagreement, internally, on how you should invest money.
Bozi: From what I remember, when we talked about it, all of your traffic at that time or most of your traffic was coming from affiliates.
Ryan: Right. [05:24 Ryan's #1 Hiring Mistake] That was a bigâ¦ seven figure mistake number one was we built the whole business, the whole infrastructure, pricing and everything based on other people promoting us. Really, an affiliate-driven business. Affiliate means other people promote us and they would only get paid when they made a sale and get commissions. It was great. So we didn't have any cost to acquire customers; we just pay commission. So if someone sent us a thousand people and no one bought, it didn't cost us anything. They were the ones sending the traffic. So it was great but it becomes like a drug, because we don't have any customer acquisition cost and it's all profit minus the commission. But once we started getting competitors undercutting us and like all this other stuff happen, we weren't in control and the problem is we relied entirely on other people to drive our business. Huge mistake, because once they started leaving, we weren't set up to you to buy traffic so the revenue just started pretty quickly going down because they weren't promoting us anymore.
Bozi: How many just to understand, so you said it's like most of your traffic was affiliates, basically 90 to 92% and then--
Ryan: Ninety-five percent of our sales.
Bozi: Ninety-five percent of sales, okay, relying on one distribution channelâ¦ run traffic channel I'd say. So now, you have how many of these affiliates roughly? These are like 5, 10, 20.
Ryan: We probably had a thousand affiliates but the reality is there's the old 80/20 rule.
Bozi: [Inaudible 00:06:52]
Ryan: But it wasn't 80/20 rule. It was more likeâ¦ I would say 10 of those affiliates droveâ¦ So if affiliates were 95% of our business, 10 people drove 90% of that. So we're talking big numbers. So when the top three, four, five, six people started to leave, it really affected us. So the biggest lesson and I've taught other peopleâ¦ [07:14 Build Your Own Traffic] So we created a second program, a second supplement company that was 100% getting our own traffic. It didn't rely anything on affiliates. I have people now who ask for my advice like, "Oh, I want to build this program. How do I find affiliates? What should I pay them?" I said, don't even worry about affiliates. If you're going to build a business, you must be able to build it so that you can drive and acquire your own customers. If you rely on other people at any way, you're really at their mercy.
So driving your own traffic is likeâ¦ it's the ice cream in an ice cream sundae. The affiliates are like sprinkles. It's nice to have but you don't need. You don't want to hold a bowlful of sprinkles; that doesn't taste very good or maybe [inaudible 00:08:00]. So it's a nice little to have but don't build your business based on other people getting your traffic or like, "Oh, I'm going to create videos and they're going to go viral." That's a crap shoot, you don't know. It's like oh, I'm going to buy the new house once I hit the lottery. Well, you don't know if you're going to hit the lottery.
Bozi: Yes, definitely. So I would like us to understand a little bit more about that time and like people know a little bit or how that failure felt. What was the impact of that failure? So you have like three, four, five big affiliates leading. At that time, I don't know how many of you are in the company's so if you could like share a little bit of the emotional impact, financial impact and any roller coaster that you've been through during those days, that will be great.
Ryan: [00:08:41 The Hardest Blow] It was a rough few years because during that time, my mom was only 63. She was diagnosed with cancer and passed away within two or three months. So that happens. I have partners; they're kind of all over the country. I got a big office because I had my own businesses too. So I hired all the staff and we started a new side business that just didn't work. I didnât want to go into details; it's a whole new another story. But I had this big overhead. So I had the big overhead, my mom passed away, then my father-in-law was diagnosed with brain cancer and had a stroke. That's my father-in-law. Then my brother-in-law who was only 47 had a stroke. All of this stuff was happening and it was just like the world was just like the world was just closing in at me. My wife and Iâ¦ I just had our fourth kid. We lived in this town called New Canon, a very expensive house and with the supplement company, I didn't take a paycheck for 4 years/5 years.
So it was just all this stuff was kind of caving in at once. I was trying to be positive and just keep working but there's so much stress and it just affects you. The way it manifested with me was an autoimmune disorder. So I started getting cramping, my fingers started feeling stiff and my feet were hurting as [inaudible 00:10:10]. I try to play tennis and my feet hurt. I went to every doctor you could imagine until finally, I went to a rheumatologist and he immediately saw. Some of my fingers were swollen, my feet were swollen and he said, "Oh, you have autoimmune. You have psoriatic arthritis." Oh, my god! What the hell is that? He said, "Oh, don't worry. We'll put you on this drug. It's called Methotrexate. I have a background. I said, well isn't that like chemo? He's like "Yes, it a chemo drug but as long as you're not around anyone who's sick, you should be fine." I'm like, Doc, I have four kids! What do you mean? He's like, "Well, you're coming for blood test like every week." I'm like, hell no. There's got to be aâ¦
So I found an alternative, and I just changed my stress. [10:49] What Matters Most] From that point, I'm like, okay, now when I just turned my business into money which I don't careâ¦ I was always happy when I was making noâ¦ When I worked at the Children's Hospital, I made 26 grand. I was happy. For me, it was never about the money and you could take away my money. I don't care. As long as my wife and my kids are happy and healthy, I'm fine. I could live in a one-bedroom apartment. When I tell you this, I don't buy anything for myself because I just don't need anything. I don't care. So the money wasn't even the issue but when it started affecting my health and I'm like, [inaudible 00:11:23], this like take years of my life. I knew something has to change. I immediately went into likeâ¦ It took me probably a good two years of just trying new things and breaking down like what's the essence of the business. When the business was at its peak, even before the supplements, everything was going great, what was I doing? What were my strengths? What did I love doing? What got me really excited to get back up and wake up in the morning? What was the most simple thing I could do, so I could spend more time with my wife and my kids and how could I generate that recurring revenue again? That's what has brought me to where I am today. It was a few years of just getting my ass kicked. So I finally got that.
Bozi: Thank you for sharing this very personal also, being personal today and real as you are as I know you and as I met you. Because yes, business is not only in a vacuum. It never operates in a vacuum, right?
Bozi: Things go wrong in different parts of life and for some reason, there are tendencies for everything to fall apart at the same point. I don't know why is that but it seems like there is this kind of law on that. So at that point, with all the effect and impact that it had, so you made a decision to get out of the business or change the way you do part of the business. I'm trying to understand how all that impact and everything you learned, what had led you to do something different in the future?
Ryan: Right. Well, in terms of the business thing, the first thing it led me to do was realize that okay, I need to build the business that doesn't rely on affiliates. I need to build the business where I can't just put thing out there and hope people come and find me. [00:12:57 Road to Recovery] I needed to get smart. So there were a few different areas. One was traffic or marketing, right. I'm like alright, I need to build a business where I can get my own customers; that was number one. Number two was I needed to get back to my bread-and-butter which is recurring revenue. So I needed to build a membership or software, something that creates recurring revenue, high value, that people are going to like, that I'm going to love running again and it's going to bring that nice level of cash flow.
Membership sites have always been like my strength. I love building a community and leading a community. So I knew it had to be membership. The kind of part B to that was the membership site had to be different. I had to innovate. It couldn't just be the same old same old. So that led me to the idea of let me look at allâ¦ What's the biggest recurring revenue sites in the world? Netflix/Hulu like with tens of millions of members. Instead of looking at ridiculous membership site, oh they have 300 members. Let me look at the oneâ¦ So I looked at Netflix and Hulu and I started like reverse engineering. What are they doing graphically? How does it look? How does it pop and why can't I have this in the content-based membership site? So that was the big epiphany of the recurring revenue part. The third part was what am I going to do like what are my strengths, what am I going to do, what do I love doing and what's going to really simplify my business, because I had too many moving parts and too many things.
For me, it was getting back to email. Email always drove our business. In my health and fitness business, our supplement business, and my marketing businesses, it was always email. I wasn't consistent like in email, sometimes once in a week or sometimes, twice but there was no consistency. So like I'm getting back to a daily email, really good content, opening up, telling people you're not just the wins but the losses; not just the hits but the misses and having contentâ¦ I call it entertainment like education and entertainment and giving some soft offers. Hey, if you're interested in this, click here and if you're interested in this, click here and just getting back. So simplifying, learning how to build my own traffic again and focusing on recurring revenue. With the three things I learned from all those big failures, and it has made the business. Now, we're back on track and everything is great. I'm happy and healthy for just like my kids are great. I have more free time because I'm much more focused on like the big thing. Email is driving our business so that's my main focus, as opposed to trying to do a hundred things at once. [00:15:29 Focus On One Thing] I totally get like the Gary Vaynerchuck idea of trying to be everywhere and never sleep. [Inaudible 00:15:37].
Bozi: Hustle, hustle, hustle
Ryan: I like Gary. I've known him for years. It works for him. I'm happy for him and it's great. It works for his family and that's awesome. It doesn't work for me. For being real, it really doesn't work for most people, because you try to do too many things. You just can't be everywhere. He's built differently.
Bozi: Yes, his heart [00:15:53].
Ryan: Yes. So I say pick your one or two things that you're good at, you love doing, that you're engaged with and do those things. Do them really well and just kind of go in with those.
Bozi: Focus on the one thing, I think there's also the hook one thing.
Ryan: Right, the one thing that [inaudible 00:16:06]. Yes.
Bozi: Yes. What is really amazing in your story when you go through such points of like failure or pain, typically there are lessons that they're way bigger than, let's say it was an affiliate, using affiliates as traffic like what you described. You built a business which you're happier, business that speaks more to your strengths, business that's more stable and it doesn't rely on other people's traffic. Through that pain, you've completely redesigned your business model, even the niche and everything. That is I think the benefit of failure because I say, "Because failure is always a basic of feedback" and that's for failure to change something.
One last thing I'd like to ask you is being an entrepreneur for 18 years, what are one or two pieces of advice that you have, for people listening or watching this, on handling or dealing with fear of failure and finally, how can people find you online?
Ryan: [17:12 Ways to Handle Failure] In terms of dealing with failure, fear really does hold people back. I get asked this question a lot. I think one thing to do is because sometimes tests look overwhelmingâ¦ Look, there are a lot of reasons why people are scared, right and I'm not a psychologist nor do I pretend to be.
Bozi: Let's say, you feel fear of failure. Like you're with your team or something, you're at home and you suddenly feel the fear that, "Oh, this may not go well." So fear of process.
Ryan: I'll tell you. I'll tell you the benefit that I had and why it helped me. I always worked with kids. So even in college, I worked with kids with disabilities. I was a teacher aide where I work with kids in the pool with cerebral palsy. I work with adults with mental retardation. So I've always worked with people who were kind of less fortunate than me, you know, being a healthy, college athlete. I couldn't believe all this other stuff that happens. Having the benefit of spending the first six years once I graduate from college, working at a children's rehab hospital and seeing the worse of the worse. I mean, from diseases, cerebral palsy, spina bifida, spina [inaudible 00:18:26], there's all these things, stories were like one kid, you know, his dad was on drugs and he was three years old and his dad shot him in the face. Another kid, his dad was high and threw him out a three story window. Like so many kids that have died from cancer.
I've seen the worse of the worse. Seeing that every single day and yet seeing some kids with cerebral palsy and they're on their 19th surgery and grueling physical therapy for six hours a day. They just wake up with a smile like, "Hey, Ryan! Good to see you again." Like what the hell do I have to be scared off or to complain about? Like nothing. Really! Like you know what, hey I did a launch and it didn't go as well. Oh well, I could still walk, I still have my family, I still have my health. The other stuff just really, really doesn't matter. It really is not that important.
You know, I'm not going to tell one to quit their job and go work in children's hospital but I will say like wherever you leaveâ¦ and some people might live in really tough areas like sometimes youâve got to get outside of your bubble or comfort zone and see the other stuff. It's really about having gratitude and appreciating what you do have. I always ask myself what's the worst that's going to happen. I say this to myself like if I'm nervous about doing it, like you know what? On my deathbed, am I really going to let this stress me out? These affiliates said, "no," on my deathbed, Is that what I'm going to be thinking about? No. Like I want to know that I had a great life, was a great dad, a great husband and like all these other stuff.
I'll never forget when I was in my early 20's when my grandmother passed away. We're at the cemetery, and I'll never forget this. We're Jewish and the rabbi said, "If you look around in every headstone here, it all says "Beloved husband or wife or brother or sister or mother/father. None of it says how much they had in the bank account or any of that stuff or what they did for a living. So at the end of the day, this is what really matters and that message just went through my heart and like, you're right. That really is what matters? So I tried to put everything in perspective. When you look at life like that, like so what? It doesn't affect my kid. I'll be fine and I just freaking... I'll just run for a wall. Like so what's worse that can happen? I wish there was like a magic thing we could do to have everyone feel like that but I've been blessed. I've always felt like that. I'm like what was the worst that can have happened. We live once, that we know it,0 right. We don't know what there is in the afterlife, if there's anything heaven/hell. Who knows what the hell it is, right? So I'm going to enjoy it and...?
Bozi: You don't have this information yet?
Ryan: I don't have it. You know what? I'm going to write an eBook about it. It's only $7 with 18 upsells.
Bozi: There you go; a new business model. You know what I love with what you're saying is that you operate in a very kind of high level in terms of really your perspective. So fear is there always. On a daily basis, it's there. But having that shift in perspective and what does this mean in the longâ¦ like a marathon of life and having that switch to perspective by seeing what other people are going through like the hospital as you've explained, just puts things into where they should be likeâ¦ as they grow.
Ryan: Right, right. Firm with where they belong.
Bozi: Yes, exactly.
Ryan: [21:49 "Don't Touch Your Principal"] In terms of tactical stuff, don't risk more than you can afford to lose. One of our family friends, he was an accountant and he ended up building all these real estate. When he passed away a couple of years ago, he was in his 60s when he passed away, he had a network of over $250 million. He always said to us, "Never touch your principal. The interest doesn't matter; don't touch your principal." So if you have $10,000 in savings and you make a littleâ¦ like don't risk all that. There were some guys, "Oh, burn the boats" and "Oh, just quit your job." Crazy! Don't do that. I'm very conservative. Be safe, keep your job, do all the stuff and don't risk your principal. Be really smart. Mitigate your risk as much as possible.
If you have this idea for software that's going to cost 100 grand, can you get the basic, basic, basic version of it for like 500 bucks [inaudible 00:22:46], just to test the concept and then take some profit and put it back in and slowly build, as opposed to, leveraging yourself, taking a second mortgage out, losing everything and risking all your money. It takes a lot of fear out because even now, I'm launching a print magazine which people think I'm insane, but I love print magazines and my audience likes it too. I've already calculated how much money I'm willing to lose. I'm not risking my house or fortune like I'm being very smart/ strategic.
So if you live with the big idea and mitigate your risk, there's a lot less to fear. [23:23 Celebrate Little Wins] Then just do celebrate little wins, even if it's a little thing like, "Hey, today, I've set up my Facebook fan page and got one fan. Okay, I'm going to celebrate. I'm going to treat myself to a little something," whatever it is that little thing you like. To me, remember before I said I don't buy anything, I lied. The only thing I do like buying, I love collecting old records.
Ryan: Like call [23:45] of the 80s. So I go to the record store but it's not a very expensive hobby. It costs me like five bucks because I only buy the used records. So there you go. So I'll treat myself. I do something great or signing on my... You know, I'm going to go to the records store and go pick for an hour and find like a little $5 record. So there you go. Celebrate the little wins.
Bozi: Those are incredible strategies. Thank for sharing. What you're saying like protecting the downside and going for big upside, like you mentioned in your print magazine. I'm believing the story when Richard Branson was thinking of starting Virgin Airways, and he wanted to protect the downsize so he called an airline company, Boeing or I don't know, Airbus and he asked them to lead the plane for one year. One plane, one year so he can see if the model works.
Ryan: Rather than?
Bozi: Rather than get like 15 investors and put all of his money into a new company which may not work. So I think it's--
Ryan: Who does?
Bozi: Yes --
Ryan: And even in the online world--
Bozi: Go ahead first.
Ryan: Sometimes, it's not that expensive to get started on line, but they'll spend two years of doing something. Like a membership site, you can get them really inexpensively, but they'll spend two years of their time and hour or they'll try toâ¦ Instead of spending $200 to go build it to hire someone, they'll try to build it themselves and learn all this code. Like what, are you crazy?
Ryan: Would you spend hours? I know you want to keep this short. I can spend days and days talking about this.
Bozi: This is a phenomenal and we touched a minimum [inaudible 00:25:01].
Ryan: You're a phenomenal man.
Bozi: Oh, thank you so much. You are an inspiration, Ryan, definitely. We talked about a lot of stuff. We've mentioned minimum viable products. Basically, we talked about different... Wait, the three ways or strategies of dealing with fear of failure, we've discussed. There's so much science behind and I feel like we can go for hours which is amazing.
Ryan: I don't know the science and the studies. I just know my whole thing is does this work in the real world and the only way to know is to live.
Bozi: How does it feel to you?
Ryan: I can live and all these various things, but you're right man. This whole topic that you're going through, what do you call, 7 Figure Mistakes or something?
Bozi: Seven Figure Screw Ups, yes.
Ryan: Seven Figure Screw Ups. I call it like a Seven Figure Ass Kickings. You do learn a lot. You learn a lot when you're going up but on the way down, like you learn. The key is you just can't repeat those mistakes. You just got to learn it, keep moving and don't let it stop you.
Bozi: Yes, exactly. No, I love it. This is going to be a thought, and I can't wait to also get all of my thoughts written from this amazing conversation. Finally, how can people find you or your membership site if they're building their businesses or they want to be or they already have businesses [inaudible 00:26:19].
Ryan: So I have few resources. So if you're interested in building an online business like the Netflix for lifestyle entrepreneurship, just go to 312-963-0010. F-R-E-E-D-Y-M.com. Depending when this is going live, we're also building out a new online network that's all about motivation. This kind of stuff we're talking about, but it's little 5-10 minute videos every day with the magazine and that's the GRT Network. Just grt.network.
Bozi: Yes, I remember seeing that recently in your email. So thanks for bringing this up. Alright, this was an amazing conversation. I feel like we could go for hours, but with respect too of your time, thank you so much and looking forward to see you again in person.
Ryan: Thanks, Bozi. Thanks everyone watching. Good luck!
1. Build a business where you can drive and acquire your own customers. If you rely on other people at any way, you're really at their mercy.
2. Success is a lifelong journey. It doesn't happen overnight and you have to work hard for it.
3. When in tough areas, ask yourself ,âWould this matter on my deathbed?â
4. Never touch your principal; the interest doesnât matter.
5. Celebrate you little wins, no matter how small they are.
Hello, and welcome to a new episode of 7 Figure Screw Ups. Here's Bozi, and I have a pleasure off having Scott Oldford today on the show. Hey, Scott how are you doing?
Scott: Awesome to be here man! Looking forward to talking about some failure.
Bozi: Letâs talk about screw ups. so let me try to introduce briefly Scott, and then we'll just dive straight into screw ups. So Scott is an online entrepreneur. He is an incredibly successful online entrepreneur and incredibly young sometimes annoying the hell out of me. I'm just kidding. I'm very happy for you man.
Scott: Man, listen. You know, I met an 18-year old kid the other day that's going to [00:00:54] some passing within 12 months and I was just like, uh damn it. Youâre happy but at the same time, youâre looking at yourself in the mirror and youâre like, âWhere did I get wrong?â Then we always come back to that and we canât compare ourselves to others. Weâve got to compare ourselves to ourselves so.
Bozi: Exactly, which is already one lesson, by the way. Very important, when it comes to screwing up, not comparing. Actually, being inspired by other people. It took me a long time to get to that point. Yes, so Iâm inspired by you honestly. So what Scott does though, for me to introduce him, he is helping online business entrepreneurs with lead generations through his flexy product which is called, âLeadCraft.â That's his main product. He's helping entrepreneurs in many other ways, which I wonât cover right now. So if you already started your online business, making some money, and a six-figure entrepreneur online, Scott is your man if you want to grow fast, control your traffic and scale your business. So is that a fair introduction, Scott?
Scott: Yes, I help six-figure business owners get this to seven figures.
Bozi: There you go.
Scott: Some of it, you don't have to be an online entrepreneur to utilize it but overall, I end up getting a lot of those guys. But I'm not a marketer. I do all the marketing stuff but I'm not a marketer. I'm more of a business mind versus the marketing mind. You know what I mean? Majority of marketing things piss me off in business. Most people are trying to, you know, too much crap with marketing and not looking at how their actual business is running, which is why most people stay below six figures or like 100 to 300 pay [00:0Scott:37] range. In my opinion, no offense to anyone whoâd listen to this, you're not making a million dollars, you're screwing over society because you have something that's valuable, but you just haven't leverage it the right way. That's why I'm pretty passionate about helping you get to seven figures because like when abundance and freedom happens, life starts turning good. You know what i mean? Before that, lifeâs kind of -not to sound entitled-but it's pretty shit. So yes, that's what I'm about.
Bozi: That is awesome, and that's refreshing to hear because marketing got bad rep because a lot of people is using it to manipulate other people into something instead of creating value and bringing it the right way. Alright, so let's talk about your screw up or screw ups. I know you have something in mind, and I would like to ask you, where were you, where the life was and where was business just before the screw up happened.
Scott: Remember what itâs like I screw up every day. I mean like there wasnât gone a day that it goes by that I have screwed something up.I think it's important to know that. If you fall in love with and being cool with and actually, enjoying it it with the failure process, your ability to become successful-and I guess say âsuccessfulâ-because you might literally mean to say, âI'm successful.â I'm living myself in a marathon [00:04:01] just like I got momentum. I'm not successful. I don't consider myself successful. But in saying that, business is essentially just a big series of failures, right? It's one failure after the other to try and figure out what works and what doesn't work. At some point, if you would stand that long enough, if you have enough persistence, determination and velocity, you will at some point get something else, right? So I think where I was before, I've been a bunch of different points, and Iâll probably talk about a couple of different failure streets. What I want to talk about thatâs specific to someone that's making $100,000, $200,000 or $300,000 is a couple of things. Number one, I was at a place where I had a couple hundred [00:04:49] half a million dollar business which again, youâre still broke with shit when you're running half a million dollar business.
Bozi: Half a million dollar in sales, just to be [00:05:00].
Scott: Yes, yes. Rap rap. So profit margin, you're making $150,000 profit. So I guess one of the things is as a society we want to grow more and more and more. As people we want to grow more and more and more. I think what majority of entrepreneurs got wrong is that you can grow in your life but you don't necessarily have to grow your business to grow in your life. Secondarily, majority of entrepreneurs because they feel insignificant in their life and majority of people become entrepreneurs because they need significance, right, as Tony Robbins talks about one of the six human needs are. Most entrepreneurs, if you look at is the number one [00:05:46] right? So I would back my last 15 years being an entrepreneur... The reason I'm an entrepreneur or have been an entrepreneur, at least up to this point, has been: I want to feel adored, acknowledged and significant. So what better way than to become an entrepreneur and have all these online magazines and people want to podcast and all these bullshit fame at the end of the day. What better way to get significance than to do that? That's the easiest way to get significance literally in the world.
Bozi: It sounds good saying âI'm an entrepreneur, right? There is also hope that--
Scott: Oh, yes. It's really funny because whenever someone says that I'm an entrepreneur, I'm just like, okay, so you're broke, because almost all entrepreneurs are broke. So I guess what I'm saying is for me to feel like it was growing for the sake of growing, because I want the features on Forbes, Entrepreneur or whatever, and then you do it and you're like, âMan, that's not satisfying.â You know what I mean? You know, I got to call them on the Entrepreneur and eighth [00:06:59] now, and I really want to write the damn thing. You know what I mean? Iâm just like, I don't want to do this. This is just not worthwhile. This is not what I want to be doing.
Bozi: So it sounds like that sense of satisfaction was like it's not the inner sense of satisfaction or [00:07:21]. So youâre kind of looking for external, then reach the goal and youâre like, âOh, there is no satisfaction out there.â
Scott: Right, so I think what it does come back to is realizing that significance doesn't have to come from your business and shouldnât come from your business. I think the next part is raw base are your lifestyle, not on what you think the world wants, right? Because I could sayâ¦ In the beginning of this year, I was like, âYou know what man? Iâm going to do 10 million in 2017 with a three million last year.â Everyoneâs, âWhoo! Thatâs awesome.â Everyone's like, âOh my god! I want to buy you a shit,â and like blah blah blah, âthatâs so awesome. Then like you start thinking over the fact, in order to be at $10 million dollars, youâd better make $850,000-$900,000 a month, right? Man, I don't want to do that. So you come back to reality and youâre just like, man, that's really not the kind of life I want.
Bozi: So what's the first association when you think about this? Just like, oh, that means when I break it down, I need to make 800,000 plus a month. What--?
Scott: That says to me like in order that you got a goal in my life, I have to do things that I'm not ready to do right now. I'm going to have to make sacrifices that I'm not willing to have, okay? So I went, less than four years ago with $700,000 in debt plus, okay. I had like PGS-like symptoms, I haven't fucking relaxed. I don't know of the last time I relaxed, okay. I unplugged for a weekend like three or four weeks ago, and it's actually at this point where I kind of started realizing this. It was the first time I unplugged since 2012. I'm going to this being like, man, I don't want my life to look like this... I don't want to repeat this that for the next five years of my life this, and I'm 25 now, I'm going to be 30 and Iâm going to be dead. My mother had a heart attack at 37. So like I'm looking at myself into the future. I'm like, yes, you know what? I can make up stories being like, oh I want this mega legacy. I can make up stories being the way I want all this impact. You can make up a lot of stories for yourself to justify the fact that you need to grow because of your significance, but in reality, it doesn't serve anyone.
So I think majority of entrepreneurs that get it to a quarter million and a half-million start to get into that realm because now, theyâre starting to get famous inside of their... especially online, because it's such a small little bubble. Then, you're on the road a lot for failure, right? As soon as youâre going to have a row of unfulfillment, you get down in a really lonely road.
Bozi: I love what you're talking about because I was just in Dallas a few weeks ago. It was a funnel-hacking conference. Tony Robbins was there. You know, I went to his âDate with Destinyâ back in 2012. The first sentence that came out of his mouth in Date with Destiny, was: Success without fulfillment is the ultimate failure.
Scott: It is.
Bozi: I love it when you started talking about failure and screw-ups from the point of fulfillment, which actually goes deeper. It goes into definition of success.
Scott: Yes. I mean to me... and listen, I'm so [00:10:53] to do this. Iâm still figuring the shit out. I'm not here to be your, as Tony would say, Iâm not here to be your guru.â But to me, you can get trapped inside of your own prison which is your business. You can get trapped inside you ownâ¦ You start a business that have freedom, you get to business, you're less freer than you've ever been and youâre like, âAha, men. Iâd love to sleep in on a Saturdayâ and you're like, âShit, I can't.â So you have this expectation of this and then it ends up being that. To me, Chris Broganâ¦ I'm not sure if you know Chris or not, but Chris Broganâs had a huge impact in my life. We actually don't really talk. We don't talk a whole lot anymore, aside with the fact that our roles are very busy. But he mentored me for a while, and I say that there are two things that he taught me. Number one was he allowed me to be okay with being myself and being okay, not the fact that everyone's going to like me. That was number one, but number two, that was instrumental to me, was success is being able to do what you want, when you want with who you want because you want to. That is success. When I look at where I was wanting to go in my business, 10 million, that would have been true, because at the end of the day, like after you start paying yourself over a quarter million dollars a year, like you can live pretty... There's a huge gap between like you can live a really comfortable, nice life and then like you've got a jet [00:1Scott:34]. In between, there's not that much space, like you canât go on Delta and be like, âCan I get the extra exclusive first class?â It doesnât exist. So if I can travel the way I want and live the way I want in a nice place here in Toronto, if I can do all those extra things and then I can be having impact and be working myself personally then maybe, we don't need the added big, crazy business that a lot of us as entrepreneurs want to have because it sounds sexy. We also got to realize is that we in life go through seasons. I I just went through a season of hell for the last five years, and Iâve decided I don't want to go through a season of hell for the next couple of years at least. Thus, es I'm going to align my business to wear that's too and I've decided that I was just like I'm going to align my business to where thatâs too. I decided that I was like, you know, Iâm not going to go for 10 million. Then it was like, okay, Iâll go for six or seven. Now, itâs like I'm going for three. I'm going for the exact same things last year, but just three times the profitability.
Bozi: So just to kind of... Itâs so interesting because you have so much to share. I'm also [00:13:48] going with this conversation, but like your 25, you went from 726,000, if I remember correctly, in debt, right, to repaying everything, building a successful online business last year, making two plus something, I think, million [00:14:08] in sales.
Scott: Thatâs [00:14:08] 2.8.
Bozi: Two point eight million in sales, and now you had a few launches and you killed it to last year, basically. Then this year, so you basically made it, right? You're in a very, very small percentage of people in online entrepreneurship bubble or--
Scott: Because nobody executes. Everybody is looking for the fucking secrets. There are no secrets, just execute. You get up 4 am in the morning, work until eleven o'clock at night and you just keep on doing that, look yourself in the mirror and you're just like, âDude, did I do better today than I did yesterday?â If it's a yes, keep on going; if it's no, change it. Stop looking to the left and the right. Stop listening to people like me that's going to tell you what to do. I mean no offense to myself, but like at the end of the day, nobody is going to get shit done besides you, and the only reason I got in any momentum is because I just go out and I just do it. I don't think about it. I don't buy a training course to figure out how to do it. You know, I had mentors. I pay a lot of money for mentorship. I pay like $12,000-$14,000 a month for my mentorship, mentors in my life, but people just don't execute. If you don't execute, itâs like all these guys post this on instagram, post in the little carpet just at Instagram or being like, âOh, which way should my email sequence go?â Fucking do it and figure it out! Look what that is, see what happens. Stop listening toâ¦ I think, at the end of the day, itâs lesss people follow less people like unsubscribe from your fucking business good [00:15:46] reason and everything else. Just do and you will be ultimately far more successful. You know how many people I follow? Like nobody. If I go on my Facebook newsfeed, I have my newsfeed turned off, so I can't see anybody else a shit. I don't have people sending me emails or whatever. Yes, Iâm in a few mastermind groups, but that's it. I spend a lot of money and curating to make sure I'm in those particular mastermind. So ultimately, I'm saying, put people like me on a business, but whatâs fruitful than that, if you execute, my success story is totally replicable. You can totally replicate it, 100 percent. I am no smarter than you listening to this right now. I guarantee it. I guarantee it Iâm not a smart [00:16:31]. I just have like Will Smith said, âI get on the treadmill, and I get enough before you get up. So I just have this dumbass work ethic because I'm just stubborn as shit, and I'm just determined just to do it just because I can, and like that's it.
Bozi: That's an excellent trait, [00:16:49]. So as you said, I love what you said in the beginning like business is a series of failures. That's an honest like a great quote. Iâm going to quote in that. Iâll put it below in the notes. Business is a series of failures and then I heard other business people saying, âLook, whatever you touch, you're going to fail like 80 percent, sometimes even 90 percent of the time. I think I heard Eben Pagan saying that once. It's really like that and I experienced in my online business. It's really most of the things wonât work. So I think the way you're saying, basically, just roll your sleeves up. Know that it's going to be failure after failure, not success after success after success. But somewhere along that line, something will work and out if it--
Scott: I look at the last year and last year, okay, with the 2.8 million, I said I wanted to do the same but three times the profitability. That's because here's another thing, when you figure out what works, stop fucking with it, alright. One of my mentors is a billionaire.
Bozi: I'll quote you on that.
Scott: Yes, so one of my mentor is a billionaire, and he said, âScott, you know what? Well, you want to know how I made a billion dollars? I just did boring shit that nobody else wanted to do.â He became very wealthy because of that. That is a thing. We as entrepreneurs, we want to do all this different fucking shiny thing. This year, Iâm going to be really profitable because I'm not going to fuck up this year like I did last year. It amazes me, at least I still did a pretty good profit last year, you know, if truth be told, get gone, everything else, but I'm running a business that can quite literally have 70 percent profit margin. No problem whatsoever. It amazes me, looking back, itâs where those moments where itâs like men, if I can be successful, everybody can be successful. Literally, if the matter [00:18:51] of dumbshit that I do on a day to day, week to week basis, and I still somehow got ahead, still somehow figured out a way to get ahead, then anybody can do this. Because I don't have fear of failure. I have, and I believe this is important for most people. Most people are not afraid to fail. Most people are not afraid to fail. Most people translate fear of failure for fear of success, because fear of success comes from the fact that you're going to lose your friends, people aren't going to talk to you, no one wants you to be successful. Your mother doesn't even want you to be successful, because she's afraid you're not going to call her [00:19:26]. Your DNA doesn't even want you to make you successful. Your DNA wants to go out, get someone pregnant, raise kids, replicate your DNA and call it a day, right?So like everything is against you, thus you're afraid of success.
Bozi: So actually, itâs fear of success thatâs just sounds... and then a much deeper level than fear of failure. Thatâs a--
Scott: Fear of failure is like, okay, whatâs the worse thatâs actually going to happen?
Bozi: That's how you deal with it, because I think, fear is like you don't have it anymore.
Scott: Yes, I mean like, listen. Not everybody is in this realm but like worse case scenario, I make half a million dollar a year consulting people on marketing stuff; worse case scenario. Worse fucking case scenario, right? I don't even have the ability to have any credit anymore. My highest credit card... even on my business. Iâve run $152,000 expenses a month and my company credit card, you want to know my credit limit is? Six thousand dollars. You know after like I ate that dumb thing up? A lot. My creditâs so bad, they only give me $6,000 credit card regardless of how much money I got in the bank. So I really donât have the ability to get in debt anymore. Like the only 100 percent cash. One hundred percent, there's no line of credit, no loan, no ain't shit, which is what I believe is what a business when youâre bootstrapping. I get these people are always like, âOh yes, bootstrapping, I can't afford it.â I'm just like I love going up one side and the other side of those people. Stop saying you're bootstrapping. Youâre fucking building a business in a right way possible and not going out being the idiot getting money from the bank and everything else. So anyways--
Bozi: Yes, people use jargon all the time, but first of all, I love how authentic and raw you are. You are one of the rare people that I follow online. I told you once, I unsubscribed to most gurus. I love that youâre saving where you are and even this. That we started talking about failures and screw ups, and we ended up talking about reassessing what success means really. When you're looking at your life right now and saying, âHey, you want to go 10 millions or I actually want to go also three million like last year where I will have more profitability and more time for myself, and search less for--
Scott: I want to be able to take outâ¦ With this, I've got to run but in this hassle-focused society, I want to be able to take out fucking three days a week and do whatever the hell I want. I want to be able to travel a little bit. I want to be able to, I don't know, go in the mountains and smoke weed if I want to, whatever, whatever. It doesn't matter.
Bozi: ChrisBrogan says basically, âYou wanted to reassess [00:22:12].
Scott: Yes, exactly. I think weâre in this hassle-focused culture that is so obsessed about growth and all these different kinds of things. The other side of it is, when it comes to being authentic, for me I'm not trying to be an expert, be a guru, and tell you what to do. All I can say, here's my journey, hereâs what Iâve learned from it, hereâs what I know. I can teach you this shit over here, but like everything else, itâs just like... I don't know. Nobody gives an expert or a guru a handbook, and we got to realize that everybody is just making their shit of as they go and you just got to look at people out of like I made the shit up a few years before you made the shit up. If you can find a few of those people and learn from them, or maybe you don't want to have to make so much shit up.
Bozi: Look, we're going to have so many quotes out of this short interview. I know you have to run and I have to run; otherwise, I think weâll talk for an hour here, at least. So I love this episode first of all. Thank you so much. I can't wait to have the notes out. One last thing, how can people find you online?
Scott: Just google Scott Oldford.
Bozi: Just google Scott Oldford.
Scott: Just google
Bozi: Alright. Man, thank you so much for this and have an awesome, awesome week and a year as well.
Scott: Alright, guys. See you [00:23:29]. Thanks, man. Bye.