How Sean Work Was Able To Scale Judicious Through Delegation and Setting Up Effective Processes

[02:34:32] Tom Shipley: How's everyone doing? Um, I'm so excited that you all flew in from everywhere. Um, as Felix says, is I can't get intensed and focused. There's so much that we come from a place of abundance. And what, you know, I learned long ago that there's no such thing as competition. There's people that I just want to be around and hang around.

[02:34:59] Tom Shipley: Um, I started figuring this out many years ago, but three years ago, I put a. stake in the ground, and I said, that's it. I only want to surround myself with people, and I had this long definition that are generative, that have passion, that are on fire, that want to have impact, and then I narrowed it down to, and then that list got so long, I narrowed it down to something really simple.

[02:35:21] Tom Shipley: I want to surround myself and create environments where I surround myself with people that give me energy. And that really sums it up because at certain points in our life and life is just too short and most of us feel that we're on this earth to have an impact. And the question is, is how can we enjoy the ride and how can we find ways to leverage to have more impact?

[02:35:41] Tom Shipley: So for us, we come from this world of, of, of, of abundance. The concept that while we're trying to do something revolutionary in the way we're trying to change the model and the way roll ups are being done and aggregation and holding companies, especially in the agency world. And it's a very impossible feat.

[02:35:59] Tom Shipley: When we talk to original partners, investors about this, and externally, as we're talking that our plan is to share our secrets. And that's because we come from a world of abundance because ultimately is we can only acquire 12 to 20 agencies a year. There are 43, 000 agencies in the world, uh, that overdo over a million dollars in the United States.

[02:36:25] Tom Shipley: And you do globally multiply that. Okay. So we come from the world of abundance is how can we help? And also we look at competition. And I start with this is, let me talk about numbers for a second. How many businesses were started in the United States last year? Okay. Any idea? Close. 4. 4 million. We're starting the business last last year.

[02:36:50] Tom Shipley: How many of those businesses are going to exist two years from now?

[02:36:55] Tom Shipley: Very good. Exactly. How many of those businesses will exist five from five years from now? Okay. How many of those businesses will do over a million dollars and be five years from now for women? Less than 1. 7 for women for women, but businesses that last over five years. Plus to over a million. Now, it's under 4%.

[02:37:18] Tom Shipley: Yes. Less than one. Less than one. Now add those that do over 5 million. Now we're going to the point one. That odds are 10 million at another point one. So look at this, and so the question is, is when you decided to go into your business, were you putting yourself in the category of the 99 percent of businesses that will not last have significant scale in five years?

[02:37:47] Tom Shipley: Or did you have a different vision? Did you look at yourself as those people with the drive, emotion, passion to create something unique? And to me is, you've already self identified yourself that you're in this room. So, what my goal is, is if we can share one, two, or three concepts, we're gonna give a lot of information and you're gonna be full of content that you'll probably forget 80 90 percent of.

[02:38:11] Tom Shipley: Or if I ask you two years from now, but what I think you're going to do is that if you leave here with one, two or three concepts that anchor into you, that change the way you think about your business, the way you want to grow and gives you a new strategy, it can change your business and change the direction that you're heading.

[02:38:31] Tom Shipley: And if we are any part of this journey, if we had some small part of it for us, that was success. And when Valerie started saying, lean in and be here is. If you allow us to take you on the journey and be part of this is we will help ship make that paradigm shift. That you came here for um, just a quick background the very, you know, i'm gonna start from the very beginning I'm going to try to go through A lot very short because I want to get into the meat of this But just for um a quick background looking at the numbers, okay um, i'm from cleveland, ohio and orlando florida and one day I came on from florida state university to My parents house and they said what are you doing?

[02:39:15] Tom Shipley: Aren't those you have exams next week? I said yes, but I won't let you know after exams Um college is going amazing It's fun, but it's not real. It's not having the impact that I want to have a life. So I'm gonna let you know respectfully at the end of semester, I'm moving to Israel. I'm going to follow my dreams and passion.

[02:39:31] Tom Shipley: I'm going to have this very young country that after 2000 years of yearning for a Jewish state, there is one. And I'm going to have this impact where I want to go to Israel. I want to move there and to serve in the army. My father sat back, smiled, almost laughed, and he said, Let me understand this, Tom.

[02:39:46] Tom Shipley: Athletic, you run a little bit okay. You know nothing about the country. You know nothing about the army. And you speak this much Hebrew? What can you say? How much is this? And Hein, where's the bathroom? How's that going to help you? He said, you know, if they let you in, what are you going to do? Be pushing papers?

[02:40:03] Tom Shipley: Underestimate me. So I said, thank you, dad. I appreciate your support. I love you. And that's what I did. I moved to Israel. And again, it's just like you is what percent you focus on is. I learned about a number of things when I was researching to go in and learning hard and basically is if I had the opportunity, I lean in and I learn.

[02:40:23] Tom Shipley: Okay, so I learned about the army, looked about the opportunities, identified the top four special forces unit. I learned about one that was all about, about wherever people were in trouble, going across, whether it's across the world or going across enemy lines and saving lives. And that's why I said I want to get into.

[02:40:40] Tom Shipley: Now the odds are very clear. Ten thousand out of sixty thousand combat soldiers, ten thousand tried to get into my unit. Out of the 10, 000, they pick 1, 000 of after a number of batteries of tests. They pick 1, 000 of to go through Hell Week. At the end of Hell Week, they pick 25 out of the 1, 000 to go through a 13 month course.

[02:40:57] Tom Shipley: Or 18 month course. At the end of 18 months, there were 13 of us. I'm going to say the foundations of what I learned in entrepreneurship happened during that period of time. And I'm going to share a little bit of lessons along the way, today and tomorrow, but there's so much that I want to give. I'm Ben Walt.

[02:41:14] Tom Shipley: Back then I thought I was giving the country the greatest gift because they got me for three years. In the end it was really the other way around, or the other way around. Ultimately through every crucible we learn and we gain so much knowledge and information. And so, what I learned is also is, is it was clearly impossible for me to do what I did.

[02:41:37] Tom Shipley: When I was sure that they laughed at me, okay? And I'm used to being underestimated. And everything we intend to do that's big in life is, it's impossible until it isn't. So quick lessons I learned is success is all about the team. I, I don't, you know, it's easy to fire poor performers, but how do you recruit, how do you retain the best talent of eight and nines?

[02:41:59] Tom Shipley: If people are five and sixes, they are fine. They are destroying your organization. They're destroying your culture. You're doing a diss. We are doing a disservice by keeping people that are pretty good with good hearts versus saying, I want people with great hearts that I trust that are dependable and strong in that all in.

[02:42:15] Tom Shipley: So it's all about the team and trust and have a lot of great stories about that. And with the team, you can do a great team. You can do exceptional things, especially at great times when you need people at their best, but also at really low times and every business go through a cycle. Um, Your why is everything, especially as entrepreneurs, because this is tough what we do.

[02:42:36] Tom Shipley: Yeah, there's times that we have the wind at our back, but there's times we have gal force wind at our face. And the question is, understanding our why is really part of what anchors. I also learned that you can always take another step, no matter how difficult it is, you can never take another step. And I learned in business, when I was told by my board and other people that you are done, you're done, might as well give up, is you can always take another step.

[02:42:57] Tom Shipley: And where it started with is when I learned about my unit, I visualized myself in uniform being one, the 13 out of the 10, 000. And when I visualize myself and I assume that identity, it's not just visualizing, it's assume the identity because I know the person who started that journey is not the person that it was capable of being in the internet unit.

[02:43:17] Tom Shipley: But I knew that I follow the process and I go all in, don't hold back. The person I will become along the way will be that. Now, what we're, I'm, what we're going to challenge you on is your vision, right? To really get, show you the possibility of what you can do with your business and your direction and where you're going.

[02:43:38] Tom Shipley: And I want to challenge it. If you're, at the end of this, if you say, I'm dead on exactly what I do, I know where I'm going to be in five years and I want to change it, beautiful. However, understand that if we can stretch that and show you what is possible, but understand the identity that you have to assume to be that leader to get yourself there, Then that's what I learned there is that you have to assume the identity, understanding that along the way you will become that person, that leader.

[02:44:06] Tom Shipley: Um, and the biggest thing that I learned is Chovesh tov ze chovesh shomal ter, chayal tov ze chayal shomal ter. A good medic or a good soldier is one who improvises. You will never in life have the amount of resources that you need to succeed. However, it's all about resourcefulness. Now, what does this have to do with business?

[02:44:27] Tom Shipley: I'm going to say just quick background is. While I started my first, um, my first real business, I'm going to say in 1999, Web 1. 0 in 2005, we, my partner and I had this audacious vision that we were going to change the way beauty brands are built and scaled. And so, he was, uh, Army, uh, uh, former, um, officer in the, uh, Army's, um, in, in, in the Rangers in the U.

[02:44:53] Tom Shipley: S. military. And I was, and two special forces guy in Richmond, Virginia said, We're going to change the way the beauty industry grows brands. We're going to take a multi channel direct response model, and we're going to be able to compete against L'Oreal, Johnson Johnson, Procter Gamble, and we're going to build our first brand within the first three years to 100 million.

[02:45:12] Tom Shipley: You know what people said when they heard that? They laughed. And especially after our first year, 12 months after the launch of Hydroxytone, where we hired great formulators to do this, and we tested it with people on the network, and we launched this product. We test the model, and we proved it. We found out how we can acquire customers through, we started with print and online, and we found out how we can acquire customers at a certain cost and the lifetime value by getting on continuity, and the model worked.

[02:45:38] Tom Shipley: The problem is, is that, you know, How do we have the cash and the infrastructure to scale, which we did not have. We had 300, 000 in revenue at the end of the year, and we were slightly losing money. To get there, we went all in and mortgaged our houses, maxed our credit cards. We did everything. We even found a way to feed our families by, by actually taking our cars that we own and actually getting loans against it.

[02:46:01] Tom Shipley: I didn't know that cheap back then, but I figured out everything. If you're resourceful, again. But we were done. And people said, you're done. You don't have the cash. the resources. What to do? Now, what I learned in my degrees in engineering is, it is all about asking the right question. And Einstein had a great quote, if I had an hour to solve a problem, and my life depended on the solution, I would spend the first 55 minutes determining the proper question to ask.

[02:46:28] Tom Shipley: And once I know the proper question, I could solve it in less than five minutes. So enter Dr. Rogers. So, um, I was in my master's degree, and we were hired by Taco Bell in order to, they had a problem. What was the problem is, they were, their goal was to increase the number of stores they have nationwide, and they wanted to shrink their footprint down of their stores.

[02:46:55] Tom Shipley: So they hired us, they said, our stores takes up two thirds of our footprint, we want you to create, uh, A new type of storage unit where it takes more spaces more ergonomically efficient More effective that we can work with And therefore we can shrink the size of our footprint and save money on all the construction we're doing for the next 20 years exciting project So we went in we did an inventory analysis a move analysis a motion flow analysis.

[02:47:19] Tom Shipley: It was a very cool project We came back and we're sitting scratching our heads and and the four of us are there and we said what do we do? We said the best systems thinker that we have You that we know of is Dr. Rogers. Let's go talk to him. The four of us went to his office and Dr. Rogers, we have a problem we want to share with you and get your cup on.

[02:47:38] Tom Shipley: He said, sure. Sit down. We sit in the front row and we're all sitting there and Dr. Rogers is this man and he has his hair going in every direction. He's this big beard and he's slouched like this and he's sitting behind the counter and he has his leg crossed behind his desk and he says, so what's the problem?

[02:47:56] Tom Shipley: So we started explaining to Dr. Rogers, we said. Taco Bell hired us to shrink their footprint so they can have less investments in their, in their, in their, in their physical plant that they're building out to reduce costs and they're looking at storage, how they can reduce it, and they want us to redo their shelving and how they're doing their storage in order to be able to shrink that.

[02:48:17] Tom Shipley: So, he looks at us, he said, so what's the problem? So I repeat the same thing again. I said, Well, Dr. Rogers is talk about hired us to be able to shrink their footprint to add more stories on. And I'm starting to speak faster and we're looking at shelving. We did this type of analysis, analysis, this analysis and we're stuck.

[02:48:34] Tom Shipley: And he said he starts raising his voice from his quiet, unspoken voice. He said, What's the problem? And I repeat it again. And he said, What's the problem? And here I go through. I said, Taco Bell is hiring us. And I go through the whole thing. And he said, he stands up and he said, So what's the problem? And now suddenly, when he stands up, Jack Rogers is six foot seven.

[02:48:54] Tom Shipley: Okay. And he says, What's the problem? And his voice is getting louder. And I repeat the same thing. And he said, So what's the problem? And I go through it. I figured I just have to say the same thing repeated faster. Okay. Taco Bell is hiring us to shrink their footprint. They want to expand nationwide. They want to invest less than the physical footprint.

[02:49:08] Tom Shipley: And they're looking at the way there. And I'm going faster. And he says, so what's the problem right now? Dr. Rogers arms had a length of a, probably about, I don't know. It seemed like 20 foot span. They were massive. And he started shaking his head and I started answering faster. And before I finished, he said, so what's the problem?

[02:49:24] Tom Shipley: And I started answering again. He said, so what's the problem? Okay. And I'm answering again. And he said, so what's the problem? And he's screaming and there's spit coming off his mouth. And he said, so what's the problem? And I said, Taco Bell does not have a storage unit. Problem. The problem is, is they have inventory that comes in three times a week from PepsiCo that does a delivery yet.

[02:49:46] Tom Shipley: They're carrying certain items that are there on the shelf for a month. Certain items that are there. I said, they have an inventory management issue. He sits down. He says, sometimes we're just not answering the right questions. And the most important thing we do is the right one. Dr. Rogers on the, this really isn't Dr.

[02:50:05] Tom Shipley: Rogers. So, um, what's the problem? So, Atlanta Coast Brand, what's the problem? What would have to be true to quickly generate sufficient, consistent cash flow and required infrastructure to be at scale to 100 million from 300, 000 and losing money when we're out in 36 months? for joining us. So, what we did is, we brought a client along the way to generate a little bit of, a little bit of cash flow for us.

[02:50:34] Tom Shipley: We developed a relationship. They liked us. We liked them. It was a test. We loved their business so much that we joked and said, we either want to build what you have or we want to buy you. They were a 15 million business in Hoboken, New Jersey, and we were Richmond. They were doing, there was, um, they were in two townhouses on the water and they had one person shipping out 10, 000 packages a month from the kitchen.

[02:50:56] Tom Shipley: They had built their own CRM platform in 2006, you didn't have off the shelf platforms back there of Funnels or Shopify. So you had to build everything from scratch. Um, they had an accounting system, they had everything. And this team, this really efficient team of 18 people, and they had 15 different product lines.

[02:51:12] Tom Shipley: And they were generating a million and a half dollars in cash from scratch. And, look at this. If we could, and we'd joke with them about how we did, about what they had. Okay. And they said, well, how much would you pay for this? We, so we threw out a number of two and a half times cashflow. They said they were young.

[02:51:28] Tom Shipley: They were 26 years old. They started the business when they were 21, this young couple, they said, done. So we went out and again, we had nothing. We were done. Remember we had a business that someone looks at our businesses. It is losing money. So how can you take a business that's slightly losing money?

[02:51:45] Tom Shipley: It's a startup 300, 000 in sales and by a 15 million company generating a million have revenue. Again, resourcefulness, we used our network, we went hard, we found a person that specializes in debt equity lenders. We found a mezzanine lender to do this. They said, we're not going to find it. We're financing you because your experience and we're financing that business because of the cash flow and the success.

[02:52:08] Tom Shipley: You put the two together, we believe in this. And so, uh, he went out and we got to five firms that he knew, got three term sheets. We didn't pick the most expensive one. The cheapest one, we picked the one that would be the best partner. That's what we did. And within, uh, within two years later, we exceeded a hundred million in sales.

[02:52:27] Tom Shipley: And next year we did 150 million in sales over the life of that brand. Hydroxyl and we did over a billion dollars in revenue. It gave us the foundation to launch other iconic brands, whether it was Christie Brinkley, skincare or care, Nick. So, and that's where we were. So it was the platform. Um, so what I'm going to share is, is that.

[02:52:48] Tom Shipley: There's always resources, there are tools out there, there are skills, there are options out there that you might not be thinking about. And there are different, I always, in the Army, I always look for, for, for force multipliers. Things that make everything easy and what the leverage is. And what I'm hoping that we can do to you today is, and tomorrow, and Friday morning, is give you those tools, give you that leverage for those paradigm shifts, and just to see, take the, what you view today as impossible, and make it possible.

[02:53:17] Tom Shipley: Thank you,

[02:53:17] everyone.

[04:18:54] I'm going to bring Tom back up. Tom has the distinction of having the coolest name session of all three days, but I will let him introduce that. I think you're really going to love this. Um, last session before lunch, so we're going to hit you with a whole bunch of spreadsheets and numbers, because that's what we all want to do right before lunch, right?

[04:19:14] I promise it's going to be really, really fun. Go for it, Tom. Okay, so, um, This is an interesting session and experiment. It came out of, so we put together, curated this beautiful group of, of, of agency owners that get together on a regular basis and come to our events and then we Slack channel this in our boardroom.

[04:19:39] So and it's always on, we always extend these events by a day, a half a day or an extra day and a half so we can spend one on one time with them. And so last time Peter challenged me and he said, why don't you show? On a whiteboard, how we actually built the model is how can you go from zero to a billion dollar valuation through acquisitions?

[04:20:02] And why don't you show everyone what that looks like? And then I went, wow. And so let me ask you this. Let me start with this is raise your hand. If numbers and spreadsheets are your second language. Okay. Raise your hand. If numbers and spreadsheets are a foreign language. Okay. Okay. And, and by the way, And they're always going to be two different.

[04:20:27] And so I'm going to try delete a session. That basically takes into mind, and I'm going to bring it down to, not bring it down, I'm going to present it in a way that starts with, it's not about the numbers, and you don't have to be a math whiz in order to understand this, because it's the fundamentals of how you grow your company, and how you accelerate growth, and then the, really the power of just following a formula on what you can do to increase enterprise value.

[04:20:54] So, basically it's, ask for it. There's so many good finance people here. How many of you could have built a proforma on it? To build a billion dollar company? There's two. Not yet. Okay. Tomorrow I guess. So let me start with this. So my goal is, is I want to show how a person who has a two million dollar agency Can grow it into a 20 million agency and from an enterprise value, from just the model assumptions we're going to present, it's basically have an enterprise value meaning the amount of money you're going to have when you sell your business.

[04:21:35] If you were to sell today, if you were generating 500, 000 in profit or EBITDA, you'll sell it for about 1. 5 million. Not all in cash, and so, but 1. 5 million dollars. But how, in four years, by following this straightforward formula, and the process we're going, you can actually end up with a 17 million dollar exit.

[04:21:57] Okay? Does that sound interesting? Okay. So, and so, what we're gonna do is, the goal is to go over a plan on how to do this. So, let's go over some, the two biggest, I'm trying to do some basic assumptions here and I'm trying to, there's ways of, of making this more complex and increasing the size of what you're doing and your growth rate over time, you can change on that, but let's just get the core concepts straight, because the fundamentals will give you a different perception about what is possible in your business.

[04:22:26] So, my assumption to start with is we're going to grow at 20%. Agency 20 percent per year if you do to y3x It's a lot faster than that by some of the things that you're going to learn over the next two days I mean because it's going to blow you away about how you can scale your agency Um, but it's higher than this but we're going to use this as a base assumption 20 growth per per year and we're going to assume One acquisition every six months and of course if we we can see what the model does when you say one a year But we'll start with that.

[04:22:55] Okay Now, for the example that I'm doing today, it's a 2 million agency, okay? Doing 35 percent profit contribution. What that means for me is it's all the variable call costs before the fixed costs of the agency and anything that has to do with the actual production above the line. So, which means an, uh, overhead of 10%.

[04:23:20] So what that means is. Your net profit is your revenue minus direct expenses in G and A, which means you're having your net profit or your EBITDA of 500k. Which is somewhere about a 25 percent EBITDA, or profit. And the growth rate, I said 4, I'm trying to keep math simple, so I did 4. 5 percent per quarter, which means 19.

[04:23:43] 3%, but that's why I rounded up to 20 percent growth rate per year. And then, while I recommend, and Peter recommends that, if you want to keep The nature of your agency the same without changing massive shifts in culture, the maximum size for an acquisition should be about a third of your size of your business.

[04:24:02] When it gets larger than that, you certainly are going to basically, it's more of a merger from culture and people and everything else, unless that's, and that's really headcount perspective, or we're just going to say revenue and say the similar amount of revenue per person. Okay, so right here, but I'm going a little bit higher than that because it makes it simple to do 50 percent versus what I'd have to do in my head in order to do, um, a third.

[04:24:24] Okay, and then, um, what I'm also assuming is the name, the whatever we're acquiring this agency that we're going to acquire, which is going to be half the size is going to have the same level of profitability. So that's the example. Now I'm going to warn you. Number one is You guys talked about your handwriting.

[04:24:42] You ain't seen nothing yet. Okay, and we're gonna do this on the whiteboard, okay? And then I have other problems such as that I battled my whole life. I'm dyslexic So occasionally see numbers in verse and therefore I'm really addicted to things that I can type and spreadsheets But we're gonna do it on the board.

[04:24:58] Okay, and then if I spell anything understand, it's a Florida education, okay? Yes, okay So this is what I did. So we got together and did this exercise and more of how we built Ava. But it anchored and it created some aha moments with the, with the, with the people, with the team in the room. When we did that, I said, why don't, We just do this again, but let's do a real example to show that if a business I know that an average size of a number of business here is about 2 million, but if you're 20 million, just put a zero on it.

[04:25:33] Okay. So, um, with that, and I'm going to use that as the example is very simply is that I'm going to put, we're going to do this by quarters

[04:25:52] and we're going to put year one here,

[04:25:57] year two, And also gonna do the same thing. Q1. I've also never used this board before, but we're gonna give this a try. Q3. Q4. Okay? It's amazing. Okay. And I appreciate Jeff, he didn't have it the last time, but he thought this would add such a significant value. I'm also going to put a little plug in it. I can't thank Jeff Hahn.

[04:26:19] He's a guy who leans in hard. He is an open heart and opening up his home for us last time. And this time was such gracious hospitality. Can't thank you enough, Jeff.

[04:26:32] And at the end of the event, he said, Oh my God, I know how to make it even more cool. Or we're going to, I'm going to buy a board for the next event. I went, Oh my God. So that's Jeff. Okay, so if I look at that is we have our current business and what I'm going to do is I'm going to show you the basics on the board here, then I'm going to jump and we're going to do this live on a spreadsheet.

[04:26:53] Okay, perfect. Thank you. Okay, so we're gonna do this live on a spreadsheet after that. Okay, and walk that through and I'll try not to go. I go at a pace where someone can understand it. Okay, so your current business. Okay. And when I get really excited in front of people, I really can't spell. Okay, so what and what size of the business is our current business?

[04:27:19] Okay, 2 million, which means that I'm going to say my Q1 number would be 500, 000. Okay. Now, what I'm going to do is I'm also going to assume now I'm going to grow and I'm going to keep the math simple and I'll talk about monthly growth rate. I'm going to say by quarter, I'm going to grow by what percent?

[04:27:37] 4. 5 percent per quarter, okay? Which means is I'm going to cheat right here because I didn't have the advantages last time so I had to do math on the fly. So, um, so just, just, just to show you some numbers here is I'm going to do 522, okay, and then it's going to be 546. And I'm just going to go to the next one right here is 570.

[04:27:59] Okay, great. Great, nice growth rate. Now let's talk about doing an acquisition.

[04:28:06] Okay, so an acquisition, I'm going to do the first one right here in Q3, because I'm going to do two a year, right? So in Q3, I'm going to do an acquisition, and how big of an agency is it?

[04:28:21] So, So it's 1 million, so per quarter, that's 250k, right? Now, I'm going to grow that at four and a half percent per quarter, so then it's going to be 261k

[04:28:36] 273 and I'm going to go on from there and let me also fill in this for Q1 because I'm giving just an example of this of what this kind of looks like. Now I'm going to do acquisition 3. Okay. Sorry, acquisition 2. Appreciate that. Okay. So we're going to go to Q1 and do another acquisition. And this one's going to be 250.

[04:28:59] Now we start growing the numbers. And you see the power of the growth here. So this went from 500k. And over here at the end of Q1, we're at 1. 19 million. Generating right here, just to give you an idea, of 391, 000 in profit from 175. So what we're going to do is, we're going to go over here and I'm going to build a model live, because it's too difficult to see and to, just to show you how it works.

[04:29:27] If you'd like, this is a simple model. I'd love to build something a little more advanced that you can play more with. But at the end of it, if you like something, uh, if you'd like me to share the model, I'll be more than happy to do that. So, um, I've never done this before in front of people. And, um, so I can't be responsible by, um, okay.

[04:29:55] Okay. And then, thank you. Okay. And then, uh, Tatjana, how do I get this on the screen?

[04:30:08] Thank you. Yes. If you want to come up and come closer, feel free to do that.

[04:30:28] That's how you fund it. In a number of ways, right? Just like, Can I close this tab? Are you done with the presentation? Yes. Okay. The first deal can be structured from the installment payments, and then you can leverage the first installment payment. The idea is to buy cash, There you go. Thank you. And then the next, you have to remain the obligation, and then you have to factor in, can your balance sheet handle it, or do you want the EBITDA contribution to it.

[04:30:55] So I'm gonna walk you real high level through the model with all the numbers filled in, and then we're gonna go back and we're gonna build it from scratch. Okay? So in the end, get closer if you need to. Okay? Yes, feel free. And if I need to zoom in, I will. So just to give you an idea here, one level what?

[04:31:15] Zoom in once so we can see.

[04:31:21] How's that? That's great. Bravo. Okay. So. I'm going to show you right here is the assumptions that we put are over here and your revenue. It was transcendent PowerPoint Two million thirty five percent contribution. It means that the generator it's generating seven hundred thousand before EBITDA ten percent overhead So 500, 000 profit, which is about 25%, okay, and we're going to buy agencies that are quarter the size.

[04:31:46] Okay, two per year, annual growth rate down there. So over here in the model, just to keep it easy, rather than going through line by line of your P& L, is basically is, here's what the revenue is, then straight at 35 percent contribution. Here's what the contribution of your business is. I'm laying in right here overhead.

[04:32:07] So therefore, I'm going to assume, now the question is, is when you merge two agencies, is there going to be any synergies, ability to, do you need the same number of people or can there be some reduction in, in, in some of your expenses? So for the model here is I put in a 25 percent synergy. It could be zero because a lot of times we do acquisitions at Ava, assuming zero synergies and everything else is not.

[04:32:34] And if there is, there's upsides to that, um, because we do not do full integrations at Ava, which gives us our profit that shows growing per year. And I can get my annual number here, okay, revenue and EBITDA now on this model that. I built that I'll share with you is, um, what I was looking for is I want you to see the geometric regression of run rate.

[04:33:01] Uh, who can tell me what run rate is? Pardon? One month times 12. Yep. Yep. That's it. Or one quarter right here. I'm making it easy. Times four. It's basically because when I do an acquisition, I can't just look at, um, My run, my business profit, if I look at my last 12 months, is not really showing much. Let me put an example.

[04:33:23] Shane, 6 million in revenue. Well, the reality is he's been in business 10 months. He bought a business 10 months ago. So, if I ask him the day after he bought it, what his 12, trailing 12 month revenue is, on his new business, it would be zero. And so again, and there, but what is his run rate on a basis? So I like to look at run rate because if I do an acquisition, I want to understand is what is the true health of my business?

[04:33:47] Because if I go for financing and they're going to look at the actual historical 12 months of the business as we perform it out, but this is, therefore I just want to understand the difference between my, my EBITDA and also what our current run rate is, because that's what your value, your business is, is your run rate EBITDA.

[04:34:04] So, if we can look at it as a proxy for it. The next thing we, I did in the model is multiples. Um, I did have on the other slide some guides for multiples, that I don't want to mess with and pull up right now. Is, but from multiple perspective is, the assumptions I'm using, and I changed the multiples.

[04:34:22] Multiples, as Peter shared, and we'll be going into more detail on this, it is the, uh, the, uh, How much you multiply times your profit level, your EBITDA to give you the value of your agency. And we'll make that simple from here. Um, the higher the EBITDA is an organization is the more it's, it's the more the, um, it's the more value and the more competition there is in the marketplace for your business.

[04:34:44] So the higher the multiple is going to be, there are some discount factors that Peter will be talking about and feels to be talking about, such as if you have a hundred percent of your, your customers is from one client. It's a discount factor. If you can't generate sales and repeatable sales, it's a discount factor.

[04:35:01] We're going to forget all that. I'm just going to make this whole multiple off of EBITDA. So just as a guideline and the deck, I'll go back to it. It's, I assume smaller agencies, 500, 000 in EBITDA is about a three times over 750, three and a half times multiple over a million, three and a half. And I did it over, you know, over two, four and a half times EBITDA in the model that we built.

[04:35:27] And over three million, I put a five times multiple on it, okay? And so, that's the way we came up with the enterprise value. So I'm going to go to the top again. And let's start building this. Acquisition one. At this two quarters later, we do another acquisition. Two quarters later, we do another acquisition.

[04:35:48] Acquisition. Two quarters later we do another acquisition, okay? So, um, we're gonna build this from scratch. Okay? Kinda, I'm using a template that we'll give to you. Okay? So, starting this is, what's the annual revenue of the business I'm starting with? Two million dollars. Thank you. Okay, and the, uh,

[04:36:12] Great. And then the percent EBITDA we said? Ten percent, right? Okay. And that gives us the 25 percent EBITDA. The size of the acquisition we said is half. Okay. Oh, that looked pretty ugly, didn't it?

[04:36:42] Like I said, you should test this out in advance and not do this live. Um, oh, I'm sorry. That's the way I did the model. Sorry. It's 50%.

[04:36:55] Okay. That's your million. That's your 225. The contribution I said is going to be the same.

[04:37:16] Give me one second so I can do a quick fix on here.

[04:37:35] Okay, so 10 percent is what we talked about. So that fills in. So automatically, the model starts filling in everything that I want it to. And if I wanted to do things like, um, change the acquisition to size, but this just builds it out. And it gives you the numbers. So the important thing is you can see that very quickly.

[04:37:58] As you're going for this is the real power is the power of growing the EBITDA. And so again, we're growing through two different methods. One, we're growing organically by growing our sales. If we can accelerate our sales, such as what you're going to learn today, instead of 20 percent, if we can grow by 25 or 30 percent, that's our goal.

[04:38:15] Okay? Then the second thing is through acquisitions. If you only do, Integrations, acquisition is tough, but it's still the easy part. The most difficult thing is the successful integration. If your business can handle a pace of two acquisitions a year, it's a beautiful model, and that's how you get to such a high growth in EBITDA.

[04:38:32] If, if not, then you do one acquisition a year, because the worst thing you can do is do an acquisition. And, um, I know of a number of people that were in an acquisition bidge. They, they acquired too much too fast. They didn't have the infrastructure, didn't have the team. And everything blew up. So and again, it's a destruction of enterprise value.

[04:38:53] It's a destruction of people by doing that. So having the, you know, at a certain size, you can afford to have a, uh, due diligence integration and management operations team, a domo team. That's basically a domo, a domo office that's managing everything. And at a certain size, if you, uh, You're going to have to time slice from your team, or you can outsource it to someone else and have someone else help you with that whole process.

[04:39:15] Okay? But really, really key and important is this. But, all I've done here is going from a model of saying, What would happen if I do an acquisition every six months, and what would go? And then you can see if I go back down to the bottom here, from doing this, and you ask a question about financing, and I'll get that into a second.

[04:39:35] Okay? So basically, the EBITDA run rate keeps on growing, and as we go over time, as I get to going out to four years from now,

[04:39:50] 3 million per quarter, 1 million in revenue, in contribution, 300, 000 in overhead, and therefore my,

[04:40:02] I'll tell you what, give me one second, let me just anchor this, so you're not looking all over the screens and you can follow what I'm doing.

[04:40:15] So we're doing how many deals a quarter? Every six months, two deals in a year, realistically.

[04:40:32] Thank you. Um, she's not really helping me that much, but we're going to go through here. So we understand what's going on. Here's your multiple, and this is how you get to the 17 million. It's just taking your run rate EBITDA times FISA gets you 17 million. Now the question comes in is how do you finance this?

[04:40:47] Okay, how much cash do you need? So here is the EBITDA that we acquired. Every quarter. Okay. So we acquired 350, 000 in EBITDA. Okay, is what we're acquiring per quarter. The next question is, is, uh, then how much is a first payment? What we're going to show you over the next couple of days is different types of deal structures.

[04:41:10] We at AVA, what we do is we typically, uh, the deal structures that we do is we typically do a hundred percent asset purchase of companies, but we actually have the owners rollover. Part of their cash into equity. So they're going to have ownership. The new entity, their ownerships is typically 30 to 40%. We don't have to be meaningful because we want them to invest interest.

[04:41:31] I believe that every entrepreneur should have three exits in a lifetime. Now, the thing is it, wouldn't it be cool if you can figure out a way to have your multiple exits and cashflow out of the company that you're passionate about that you built. So if you can figure out our way with the right partner where you're taking out money along the way You're building something bigger and better where the most significant money is at the end.

[04:41:52] Now, I'm gonna have to put the warning out There is 80 percent of agencies that sell to especially large companies and large The the large holding companies 80 percent of the owners do not stay for the earn out Why? Because and this is why Felix who did sell to holding company is so passionate about about changing this model is Um, I work with different types of financing sources including private equity and private equity.

[04:42:18] My partners are typically high pressure and and high expectation What? And pointy eldos. Yeah, sharp eldos. Now what happens is that I'm in environments I love setting high expectations with my team. We build it together and we shoot for the Realistically, but we shoot for the moon, but keep low pressure because if you have the right team members They will raise the bar on a constant basis Living in an environment where there's sharp elbows, high pressure, you're meeting with your, you suddenly for the first time have a boss and they're meeting with you weekly or biweekly.

[04:42:50] Why aren't you hitting your numbers and pressuring you to do more? Most entrepreneurs do not live well in that environment and therefore at a certain point they said, I've taken enough cash off the table. I'm just gonna walk away and when they walk away the team says this is not the culture we signed out for A third of the half the team walks away then from an economic perspective.

[04:43:09] Let me put on icon Let me put on WPP and eccentric's hat is We just bought a company Uh, we lost some of the team. We lost a number of the team members good We'll integrate in the rest of our operations. We lost a third of the clients. We still keep 70 Therefore finance and we didn't pay the full earn out.

[04:43:27] So financially it's a win for us Financially, that's financial engineering, it's a win for us. I call that a destruction of enterprise value and a destruction of people. Some people might say human capital, but that's what it is. It's, why would we do that? So that's why we believe there is a better way to, uh, of doing that.

[04:43:45] Okay? So, but Of course they do. Of course they do. Yep. Yeah, yeah, it's all financial. We modeled that up. And what's interesting is that the person who, one of the people who came to our last, our last event, um, she was part of the rise, she was general counsel and COO of Public Strategies, which was bought by WPP, and from there, her and her boss, Jack Martin, then took, um, took over, Um, Killa Nolton, which was I guess 350 million in revenue.

[04:44:18] Biggest PR firm, and of WPP, they took it over and Jack said what he loves about our model and why he wants to be on our advisor, our board of advisors, is because this is the way business should be done versus the destructive model that's out there. So take, go ahead. So I just had a question, so you were talking about, uh, you make all these accumulations and you said when you buy in that, You're, uh, you're giving them 30 to 40 percent, but then how does that look four years down the road when you've made eight?

[04:44:49] What's everybody's percentage then? Well, by the way, so it all depends on the deal structure. If we're not, uh, and again, where we're sourcing the capital from to doing acquisition. Assuming that we're not sourcing outside capital and we're doing it all through debt so I don't have to give away more equity in the business.

[04:45:06] Then, um, basically at the end of the process is the equity is the equity. Their percent is their percent. Okay. Again, we have different deal structure, whether we do group level or whether we do individual agencies. But our goal is is that the the pie increases. Let me give you an example Um a number when I uh talked about the deal that we do with urban nutrition What I didn't see here is the whole picture which is we set the deal for two and a half times EBITDA But we bought 85 of the age of that company I uh, we bought out the other 15 for more than we spent on the 85 That's the way because basically we took their EBITDA and their revenue and it was a hockey stick That's the way earn out should work.

[04:45:50] That's the way everyone wins Okay, so in this situation what I was modeling it is so let's just say in this model We did 35 percent rollover the rest of it. We're doing in three installments Of over it could be At close at 12 months into 24 months just to keep it simple Which means that the percent of cash i'm actually putting out of pocket Is 1.

[04:46:12] 25 percent Okay. So again, that's my assumption on here. It's it's add from me being able to borrow money if i'm going to borrow it is banks and different lenders and mezzanine lenders are comfortable with Taking how much money you're borrowing and dividing by the trailing 12 month EBITDA or profit of the company and saying we're comfortable with the 2 to 2.

[04:46:33] 5. You can get up to 3, kind of in this marketplace. But, so we're saying we're doing deals and we're going to buy them at 1. 25 percent of what their EBITDA is at leverage. And the rest, we're going to self finance through the cash flows of the business. And that's what this model is based on. So the only money I have to go figure out how we're going to do is How we're going to come up with the first payments.

[04:46:57] And then, I talked about the expanding pi principle for having, uh, small degrees for larger pi because there's dilution calculated into that. When you move up different levels of EBITDA, and this is why EBITDA accumulation is one of the primary objectives in an aggregation, is you're moving up multiples.

[04:47:15] So you don't have access to an 8 to 12x multiple if you're sub, you know, 20 million and even. So if you want to get higher multiples, meaning the available buyers are different, Tom's modeling it to the highest level buyer at the maximum even that you can accumulate over five years. And therefore that small piece of that little percentage that remains, instead of having this multiple applying to it is having this multiple And that arbitrage is the value if there's dilution.

[04:47:46] So there will be dilution. You're planning for, you're expecting dilution. But simply like you said, the leverage. Yeah, and let me put it this way. I don't care about dilution. I don't take percentage of ownership. I can't deposit percent ownership in my bank account. What I care about, if I, let me put it this way.

[04:48:02] If I can merge my business with another business, and it's a good deal and suddenly, or let me say, I can bring, I can do an acquisition and let's say instead of cash, I'm doing it purely with stock and I get away a third of my company, but it increases the value significantly overall is I don't care because the question is, is what percent of the pie do I own?

[04:48:22] Other real dollars I own. But in this case, what I want to show here is, is that, but unlike starting with a platform where you have zero revenue and zero EBITDA, in this case, let me assume that on my business, I've run a healthy, I have almost zero debt on my business and this is my first acquisition with zero debt on the business.

[04:48:39] Now suddenly, when I talk about this leverage, because I have existing EBITDA on the businesses, my leverage of debt, the amount I'm borrowing to, that I need to borrow for the acquisition to the EBITDA, is 0. 5. Just for the deal. I'm assuming no debt, correct.

[04:49:06] Peter? Out of the, out of the hundreds of due diligence week, Tony? Yeah, so on average, uh, healthy businesses have at least three to six months of working capital. Extremely healthy businesses that are run conservatively by good owners have millions on the balance sheet. They're just not deploying that funds Any company that's using AR to cover expenses is a distressed asset and therefore it's transacted differently, but the vast majority of profit Especially if they're looking to sell They have very little debt Yeah, if you're looking at agencies that claim debt They're not the ones looking to sell unless it's distressed.

[04:49:43] So if you're overwhelmed by a debt leveraged position, you're classified as distressed. You'll trend for probably lower multiples anyway. You're not looking for a deal because you're looking to make money. You're looking to someone to relieve your debt obligations. And therefore you can actually trade debt.

[04:49:58] So if you look at, uh, like they talked about buying the bank over in, was it Switzerland? Swissdebt. Credit Suisse was a 1 transaction. It's not a 1 transaction. They took on the debt, which was a significant financial obligation. So, uh, you're able to do these types of things. Uh, again, if you look for one specific deal and you find a company that has debt, that's the difference between, uh, being programmatic and sourcing, having a lot of conversations.

[04:50:29] Or just thinking the deal in front of you is the only deal. If you talk to enough sellers, uh, and this can be 20 sellers a year, you're going to find better deals that are not over leveraged or carrying too much debt. I don't mean to hammer on this, but we all had access to EIDL in 2020. I'm assuming that everyone in this room took it.

[04:50:47] No. No? No. No? Never mind. I'll stop talking. Okay, but also let me share this with you is it depends what the debt ratio is because that's a big thing. And let me put this way is what lenders look at is if I'm first in line, what is your debt ratio? Okay, so right here is what I'm showing you here is this is the if I'm in first position from what you're borrowing to what's ahead of me, what the ratio is.

[04:51:13] Obviously, what I did is I bought a company for essentially my payment was 437, 000. Now I owe those owners double that 900, 000. So my balance sheet, I do owe that. But from a lender, the question that I'm looking at is who's ahead of me and how much what's the ratio ahead of me. So from a seller note, They're very comfortable with that position as long as they can see that you can service, meaning you can pay for it, what interest rate or depending on what that, the amount you're borrowing for that for, and that understanding that how much at risk they are, if suddenly your business goes south, can they push you to sell the business to get their money back?

[04:51:59] So that's overall the structures that there. So what I'm trying to show you is that, uh, If based on this formula from a first position lender is this is a very doable deal and there's a lot of lenders that out there and I don't care whether you're looking at a uh mezzanine lender that's backed by the small business administration with an SBIC type of loan or whether it's a there's a lot of mezzanine lenders that do which mezzanine is only means it's they typically do mostly on high interest.

[04:52:25] Debt and they take a little bit of equity in the deal can be anywhere from two percent to ten percent of the business of what they're looking for. Again, there's different ways because traditional banks will not finance these deals. In your experience with mezzanine lenders, small businesses, several that I have talked to want to write a check.

[04:52:52] Okay, private equity, um, um, at a significant size build business and getting the right private equity partner in a heartbeat. In a small business, never, because you have to be entrepreneurial and you will not find that. There are significant growth partners, private equity is not. I would pure venture, the problem with venture is you're going to give away too much of your business.

[04:53:15] Pure equity, you're giving away too much of your business if you're smaller and you want to scale fast. Therefore, I prefer, and I've always used mezzanine lending. And mezzanine mean it's in the middle there, it's above banks. So, um, I prefer mezzanine lenders, and like I said, my first deal I did when I bought Urban Nutrition, we borrowed, again, it wasn't big, we, we, we, it was a million and a half, so we, we borrowed, I think at that time, three and a half million dollars.

[04:53:39] And they were unbelievable partners for us. And there are also some bad mezzanine lenders also that are

[04:53:49] They, senior, however, they allowed us to bring a bank line of credit ahead of them. An asset baseline. So let's wait. We borrowed money from them, but we were growing so fast and we in that business had such a big receivable. And remember going from. 15 million to, um, to 125 million and then to 175 million is, we were eating cash.

[04:54:11] However, we were very profitable and we were getting, we had significant receivables and significant inventory, so they allow us to go to an asset based lender and put that in front of the mezzanine lender. So. And then, last thing is, uh,

[04:54:34] so are there, what types of mezzanines are there? There are

[04:54:41] plenty out there. There are plenty out there. There are those they want to see. The question is that I, as that every lender says is how much you want to borrow this money, do you have skin in the game? There are some groups that I don't know if they're mezzanine, but they're specially financed that act like mezzanine.

[04:54:55] There's one group here in Austin. They're opportunistic, but they want you to put a personal guarantee in. Very few mezzanine will require personal guarantees. Okay, but there are out there. They're those that say, but just give me or you put an equity because they want to, they want you to know if things get tough and they always get tough in the business, they're going to say it's not my money and that's what their biggest concern is.

[04:55:19] So they need to get comfort comfortable that basically, uh, if, when things get tough and they will do the experience to get through that, aren't you going to walk away or are you, I do have the ability to grind and get through this and they feel that the more you have at stake, the more you're going to do that.

[04:55:34] So it depends.

[04:55:39] Yeah, they were my first lender that deal and they were great. It was a, it was a basically mezzanine lender and they were a small division of one of the biggest lender, uh, basically one of the biggest finance companies in the world, but they were a small division out of Tennessee and they were, and that's what they built their model based on and our sized, uh, range.

[04:55:57] That's it. So if anyone wants to grab me and have any conversation about funding, again, there are a thousand and ways to, and I, we, at the last session, we had some fun and I shared, I think, 256 ways to finance a deal. Um, and again, there are so many ways to. To finance deals if we want to talk in one of the sessions more than happen to share with you what I can Um, but i'll share with you that if I say what are some lessons i've learned over the years is that The right financing per partner at the right time is critical acquisition getting acquisition financing for the right deal is a smart way to go and I have no problems getting leveraged on that and The other thing is that Sometimes I spend too much time looking for money and not enough time focusing on my core business where the answers for growth and cash flow were sitting right on my own in my own business on my balance sheet and my P& L and my operations and generating new customers.

[04:56:53] So there's a balance to that. So again, my goal at the beginning is to show you very simply is 20 percent growth per year

[04:57:05] and one acquisition of a company, two acquisitions a year of a company that's a half of your size gets you an increase in your enterprise value by 11x. A million and a half is a nice day. And if, basically, if I buy your business for a million and a half, it's a nice day for everyone. But that, will that change your life and that just, that starts to create generational wealth?

[04:57:28] Does, does, does, okay, but, but does 17 million cut that in half? Does, even at eight and a half to nine million, we do one acquisition per year. Does that make a difference? So anyways, so that's it. All right? It's what's possible.

[04:57:50] We are going to break for lunch. It is right at 1230, so we'll take an hour and Lunch is kind of as you came in in the front foyer area up here. Tatiana's getting it all ready to go. Feel free to go. It's buffet style. Pick up everything. Again, drinks. In this fridge that has a clear front door, and, um, do as much mingling, sit in different places.

[04:58:12] There is, one thing I didn't point out is upstairs, it's a big black door, right Jeff? There is, um, a door that goes out to a beautiful, like, deck patio, that's a beautiful place to go eat as well. And then out front there's some chairs as well if you want to eat outside while it's still decently cool out.

[04:58:28] So 1. 30, be back and ready to start again. One other question before we do that. Um, Jeff and his crew have offered to do a barbecue cookout for us tonight. So after we're done here, it'll probably be around 5. 30 or so. Does anybody want to stay and do cookouts? We just need a final headcount.

[04:58:50] For, for barbecue dinner here tonight. So you can go off and do your own dinners if you want. Anybody who wants to stay and do this? Okay, one, two, three, four, five, six, seven, eight, And we're getting plenty, so if you change your mind and want to stay, all good.

[04:59:15] Okay. Um, how was that last session? Excellent. It was excellent. Okay, I'll start with this. Um, just a reminder for tonight is, I don't want to forget this, but we are having our legal counsel, who is the best MNA attorney and general, and she's also our general counsel joining us tonight. She's external. I used her when I had to go head to head with the.

[04:59:43] Number one M& A law firm and the most expensive law firm in California. My private equity firm spent a million dollars in our law firm doing our contracts. Robin went head to head with them and she is incredible. So she'll be at dinner tonight. Feel free to answer any questions and she's there. Okay. Um,

[05:00:08] so what I want to talk about is that. What does it take to be a transformational leader? And let me just tell you a backstory here. Um, we have this line of close brands and I showed you this, I shared with you the great story. We were in skincare, Hydroxotone was doing great. We wanted to create the next product and under our Hydroxotone brand, we would create product idea after product idea after product idea.

[05:00:36] And they were, um, we were running out of a little bit of headroom. And the question is, is What is that blue ocean opportunity? What is that next thing we want to look for? What is the next thing we're going to launch? And so what I'm about to share with you is how many people here know what a blue ocean, a red blue ocean strategy, you know, a blue ocean strategy is.

[05:00:59] Okay, how many of you ever heard of purple ocean, uh, strategy, uh, purple ocean? Okay. So with care and ink, what happened is that, um, we're looking for that next big product, that big opportunity. And we kept on niching down and niching down, but it wasn't, we didn't find large markets and large market opportunities.

[05:01:18] And so my, this is just by happenstance that my mother came and she was a very. Proud woman who didn't wear a lot of makeup but didn't care and she just the way she carried herself and she said, Tom, I love the skincare products you give me. They're nice, but can you do anything about this? And she pointed to her hair and she had thinning hair.

[05:01:38] My mom, she's so proud and I couldn't believe this was coming from her because I didn't think she cared about it. Then my sister had Similar problems from death from chemicals on her hair because you name it. She did straightening. She did keratin treatment She did everything to it and coloring and had similar issues with her hair.

[05:01:58] So, um, I was thinking about this and I said, oh you just go and you buy I'm in the beauty industry and I had no idea and then I did research and I found out the only thing available the only product available for women was Rogaine had a F1 SKU for women. Here you have a situation, a problem. One out of every three women suffers from hair loss at some point in their life.

[05:02:23] The older they are, the higher probability, the older they are, the more discretionary income they have, and there's no brand dedicated for women. So that's what we did. And everyone told us we were foolish. You should create a unisex brand because you're missing out on such a big population. I want to find a very big market, and I want to niche on it, and I want to own it.

[05:02:46] And so we spent two years developing the first FDA system, approved system, for women's hair regrowth. And when we launched in every single channel, We won and over a span of one year, two years, we created this marketplace and eventually we were, we were the category leader and the category king. And to this day, even though Johnson and Johnson, almost every beauty company have come after us and try to win us and take us off the shelves.

[05:03:12] And again, retail is brutal, direct response is brutal and retail is also brutal is. We were never lost any shell space, but we've always gained shell space over the years while brands that they launched to go against us were knocked off the shelves. And again, because we were the category leader. So one of the lessons in leaderships and strategy I learned is, is.

[05:03:33] Red Ocean Red Ocean for those people that don't know are if you think about if one of your if someone came to you and said, I have the best idea. I came up with a methodology for a softer toilet paper and I want you to invest in this toilet paper business and you say, okay, you're going to go against Kimberly Clark that has a full vertical integration and you think you compete and get off and know what margins are there.

[05:03:55] Why would you ever do that? And I know I'm not going to invest in you. Red ocean where there's so much competitions out there. It's like swimming with the sharks and there's just blood in the water. So blue, the problem with blue ocean is, is there's no demand. Blue ocean is where I come up with this great new idea that everyone needs, but no one knows about it.

[05:04:14] An example of it is that an Israeli. Inventor came up with a better version of a toothbrush that better that basically is you put effervescent pills in it and it is a combination when you do that of a water pick and a tooth and it was brilliant and they did clinicals on it your teeth are Whiter, brighter, healthier in general, less decay and long term wise prevents gum disease.

[05:04:40] Brilliant. And we looked at that in our brand, but I said, now I need to educate the whole population of how do I use this product? And this is something better. So Blue Ocean that we passed on it. And so that's why I came up with the term of purple ocean opportunities. And what is purple ocean? Purple ocean is where there's a strong red ocean of customers and there have demands that are being met and there's nothing there.

[05:05:06] And what I like to do is I like to create a new vehicle and pull them over from the red ocean. And I think what Trent shared is he's created a purple ocean opportunity and created this irresistible offer. So, let me share, let me, I'm going to segway just for a second if you can help me, because I want to steal your ideas.

[05:05:30] Steal, I want to learn from you. There's a, there's a little piece of paper in front of you, and what I want you to do is, if you were speaking at a conference for CEOs and were asked to share your two top rules or advice to give other fellow CEOs there, and you were speaking, what two piece of advice would you give them?

[05:05:51] Take a minute.

[05:06:06] It could be fellow CEOs. It could be younger CEOs that are looking for you as leaders. What advice do you have?

[05:06:48] Okay. Now, if you can pick one and I'm going to quickly go around the room and if you can tell me the one of the two, you wrote down and then we're going to collect the cards. And if you don't mind, I'm going to look at them and for us start.

[05:07:07] Smart. Free yourself up for the 10, 000 hour. Say that again. Free yourself up for the 10, 000 hour. Which means? Get rid of any 10, 100 or 1, 000 taxes. Very, very good. Highest, best leverage use of your time. Wyndon. Um, never leave your heart behind. Lose heart, you lose the business.

[05:07:34] Biggest possible vision. Hmm. Relationships are key to results. Think unrealistic, then make it real.

[05:07:49] Uh, trust and empower your team. Uh, I wrote prioritize health. Say that louder. Prioritize health. Hmm. Hmm. Uh, remember to build the company you want to build, not the company you know how to build. That's really good.

[05:08:15] Be bold and adventurous. Say it again. I couldn't hear you. Be bold and adventurous. Oh, wow. Love it. Speak less, listen more.

[05:08:32] When doors close, invent windows.

[05:08:38] Ask, uh, Chad GPT to criticize all of your decisions so you get great feedback.

[05:08:50] Don't compromise on your core values.

[05:08:55] It's repetition and drive around mission, vision, values.

[05:09:01] Get any toxic people out of your organizations and your life. Uh, attitude equals altitude. Hmm. I actually didn't write this down, but build a partner program. That was a huge part of my success or our success. Hmm. Free cash, not vanity. That's great. Okay, I'm done. Nice. So, um, The biggest advantage a company has, period, is this culture.

[05:09:40] Your incredible offer that you came up with will become copied and no longer be a competitive advantage. The technology that you invented that giving you the advantage over everyone else. Will be beaten by new technology. Everything in your organization over time will wear down. It will no longer be your competitive advantage advantage.

[05:10:04] The ultimate competitive advantage is the culture you have in the company and the team you built, because in good times, you'll be able to invent and invent and iterate. And in bad times, the same thing. Now the reality is, is the most difficult thing for us, CEOs who have pride. And issues with shame is that ultimately is there are mistakes and people are fucking up in your organization.

[05:10:30] Okay. People are making mistakes. Your team are making mistakes. Things are dropping. COVID happened and suddenly your business is on the verge of bankruptcy. The bank crisis, your line, your bank just called you up and said, we're pulling your line. You're are, you have no cash. You're going out of business.

[05:10:48] There are a lot of things. You lost your biggest account, which responsible for 70 percent of your business. And you don't know how you're going to make payroll now that this is going to happen. And I'm going to say, as you look around and as you find the reasons in your business, ultimately, you are responsible for everything that happens in your business.

[05:11:09] And this is why I'm very big believer in extreme ownership. And it starts with every time I get frustrated with someone in one of my organizations, or a mistake or something that we made, we should have seen something. My worst my one of my pet peeves is I don't mind making mistake once we learn from it But when we make the same mistake three times and it's very costly and then when that happens and especially it's by the same person my question is is Not how could they do this again?

[05:11:41] The question is, is what did I do to create the situation from happening? It ultimately, no matter how we sit and said that this happened and this happened to our organization and these problems that we had or this loss opportunity, we always have to understand that we could have done something to prevent it.

[05:11:59] And I'm going to say when it really comes down to it,

[05:12:07] It's you, and I'm going to say that even with things that we can control is what we do to build anti fragile, a strategy for anti fragile organizations. It is the team. And I'm going to say this, that even I look at my team and if your team and customers are not giving you the energy, and if you hate your business, and if that's what your complaint is.

[05:12:29] Either sell or let your team go. Again, we are so much control of everything and we as leaders are need to be thinking one step ahead. To me, this is kind of like whether I want to call it as the matrix or whether I call it call of duty or whatever from a strategy perspective is we just have to be thinking one, two, and three steps ahead of about the possibility.

[05:12:50] We were talking a lot about just the last conversation about sales commissions. How many people have developed them as smartest, most. Beautiful sales commissions and it's incentivized the wrong behavior. Okay. So it's, and so whenever I even do sales commissions and sales strategy, I always think about, I assume that the null hypothesis, whatever the brilliant thing I just created, or my team created, start with that is it's going to blow up and it's going to incentivize the wrong behavior.

[05:13:22] And starting with that saying, okay, then. What can we do to make sure that it's anti fragile and it makes sure that it incentivizes the right behavior on that. Now what I want to do is I want to share with you a lot of lessons that I learned in building my organizations and what ultimately that I do is I'm a business architect.

[05:13:41] I understand how to get to the long term goals and how to Integrate strategy, marketing, platform, I. T. Financial systems and how to build the organization and the culture to achieve things that a lot of people would say cannot be done. And I like when people underestimate me and with the right planning and architecture and team and culture.

[05:14:03] You can do the, what people say are impossible and make it possible. And I love that. And I love to talk about that. Want to get me really even more excited. Let's talk marketing. Okay. I love marketing and sales. I love talking about developing irresistible offers, irresistible offers that customers.

[05:14:23] Basically hear about it and they can't say no to and then how to develop your business and your upsells and your cross sells and what your organization looked like in the operational infrastructure. You need to over deliver your customers that they never want to leave you. I love to optimize because I'm an engineer, maybe an industrial engineer by background, optimize all areas of the business.

[05:14:45] But I'm not going to talk about that. Okay? Because ultimately, as leaders and organizations, Transcribed We are responsible for the mistakes and the problems is and the limitation why certain organizations get to a million dollar and they get stuck. Why do some companies get to five million dollars and they're growing at 10 to 20 percent?

[05:15:08] Why some get stuck at 10 million or 100 million or 200 million? Why is the organization and the employees aren't ones that We love and why aren't the clients that we have ones that we love and they're acting with every day and it's because of what's going on right here and right here. So what I've learned along the way is that, um, when it starts with is that how many people here at some level of trauma in their life?

[05:15:38] Okay. Um, and there's very few people at some level didn't have some level trauma and people had it significantly worse than I did. I know that. Yeah. And on the one hand, my father, who's been one of my closest friends for a few decades, and we've had marathons and run, had amazing experiences together. We talk almost every day.

[05:16:01] Growing up as a kid, he was a different human being. He was dealing with his own shit and he decided the best way that he felt he had a great sense of humor. So he made me the brunt of his jokes. He would make fun of my stuttering, my dyslexia, my, and again, on why I couldn't do anything right. It made him feel good and he had such a wit to them.

[05:16:21] He can cut me down like this and I stuttered and he's just like, thought that was funny to make fun of me in public with it and ridicule me. He didn't know any better and he didn't think, and he was wired differently back then. And so, but again, that created a lot of trauma in my life. That started these loops in my head that said, how do I protect myself?

[05:16:43] And we learn things along the way from bad things that happen. And we create this loops and it's part of our prefrontal cortex about how we protect ourselves in these, in these loops. And the problem with that is it limits our ability to think. It limits our ability to think bigger, to be creative. Like we're naturally put on this earth to do.

[05:17:04] And then as, and we have these same patterns that create this dysfunctions and our relationships in our workplace. And I don't know, something that, uh, Brené Brown says that she learned over the years that I love this is that when she's having an issue with someone and they're coming up in this almost a combat mode, The thing that she quickly changes to is the story in my head that I'm telling myself.

[05:17:33] And this is where our organization is. We're passionate about assume positive intent, and it's really tough to do. Assume the best in human being and just start saying is the story in myself and my head that I'm telling myself about why they're behaving to me. So in this way, indifferent, aggressively, whatever, well, maybe indifferent because they got some bad news, something at home.

[05:17:55] Again, there's a lot of reasons that people, that you interpret things. So again, the question is, is what is our role as leaders? But I'm going to say as human beings on this earth, how do we live our best life? How do we get past the trauma and open up our mind? How do we open up our mind into the possibilities?

[05:18:12] How do we understand that ultimate, the greatest commodity that we have on earth starts from here and what your team needs. We have a responsibility to achieve great things. We want to capture, I think someone said, hearts and minds. We want to capture the hearts of our teams. If they're committed to you and they're passionate about you.

[05:18:31] And if you're aligned from your values perspective is you can accomplish great things. And then remember, um, when I got out of this, when I got on special forces, and I was running my first company that I took over and it was time that I had to fire someone, I'd say, I got this because I just was pretty.

[05:18:52] It was. Out of the military, kind of cold, black and white. You're not doing your job. Good luck. And again, and so something that I had to get back in touch with is understanding is as leaders is it is about heart. It is about opening up. It is about vulnerability. You create those environment. People can be open.

[05:19:09] People, people can show up. People can be open. You're creating the environment that people can do their best with an open hearts and an open mind. We can also do what our next responsibility is. Take our vision and our job is responsibly as CEO is to take our vision of what we're doing and our passion and transfer that into the energy of your team.

[05:19:36] It means that I don't care how it was an interesting discussion that we had with our leadership team earlier on and running across, okay, so running cross continental leadership team of really high caliber people where we're wired completely different. And in our organization, we have a little special problem that we speak two different languages of English.

[05:19:58] There's the English, there's American English, and there's British English. And directness versus subtlety is really tough to kind of, um, to kind of, kind of work with. And, um,

[05:20:17] the question is, as we have these breakdown in communication for Zoom, because we don't see each other face to face, is how do we. Break through those communication barriers, barriers and the way we communicate differently. And when it comes to his value alignment and if people understands where your heart is, you can break through most communication problems you would that we have.

[05:20:39] So when it starts with it is that yes, I want to talk about marketing strategy and how to optimize this and strategically how we actually change things. But that's really it. It starts with our teams and our attitude and our openness. Now, let me talk about the next thing. And I have a lot of things I wanted to share.

[05:20:57] I'm not going to get to probably most of them because the advice I got in this room was brilliant and so but we'll quickly might flip through some of them. This is some of the discussions that we're having about strategy is as leaders. Most of the problems emanate because we're not asking the right questions.

[05:21:15] We're not looking at the data. We're not we're sitting a lot of times in a place because we're we're. paying the bills, we're worried about all the downside of what can happen, and we're not living in a world of abundance. We're living in a world of scarcity and a mentality of scarcity. And that's so natural because, again, we're protecting ourselves and we're protecting our organization.

[05:21:34] But therefore, we're not seeing the obvious opportunities that are the biggest breakthrough we have in the organization. Uh, one of my earlier companies, uh, T Shipley, it was, um, I don't know, I love the name of the company. Company so much I changed my name to it. So, but we were my first business again. We sell the mailed out millions of catalogs every month to to consumers.

[05:21:57] It was web 1. 0. So it was an exciting world. From that perspective. We had 14 pages in the sky catalog. And the business model, as I was raising money during that early days of Web 1. 0, it was a fundamental model that my average customer, my cost per order was 60. My average lifetime value customer was 165.

[05:22:18] It took six months for us to break even, and basically from reoccurring orders on that. And then it was amount of us generating enough customers that would generate the reoccurring revenue that would then cover our overhead. So we were, you know, it was a battle trying to get to that point with the, with the amount of time I was spending bringing investment dollars to get to that break even.

[05:22:39] So we're in the black and I was spending most of my time on the phone with investors and I was white knuckling it to raise the money in. And. Inevitably, I'm going to share two different stories that happen that are both relevant is we had it was a B to C business. We sold mostly consumers and periodically a corporation would call up and say, Hey, you have the most incredible executive guests, leather, leather briefcases, bags, pens, whatever.

[05:23:09] And they said, we want to place a 35 average corporate order was 3, 500. And we want to place a corporate order. We said, that's great. We're going to get someone who was responsible for taking these calls. Great. And while I'm sitting there building the perfect, we're optimizing our circulation strategy, our merchandising, we had brilliant copywriters and just the photography, and we optimized every part of our strategy on the B2C business and building this perfect wall to get here.

[05:23:39] What we didn't realize was that I had the wrong business model. The business model was, I figured out a great way to bring in great consumer, great prospects. But I had a B to B business and I was bringing in business executives were buying from me on my B to C side. But my real business was my corporate executive and promotional business.

[05:24:03] And I didn't realize that I had an advantage that every, um, company in that niche did not have is we have such a massive inflow of so many executive CEOs as a marketing from wall street and companies across America that I didn't realize that that was the business. And I focused, I had the wrong strategy.

[05:24:20] I was responsible for the difficulty and I said, my answer is I'm going to raise money. Now, what happened as a certain point of time dot com blew up real problems, capital blew up. And then I said, shit, we're out of money. What do we do? And this is where I'm going to say, at least I came up with a good idea.

[05:24:36] A buddy of mine calls me up from investment bank and I never did an acquisition ever. He said, I have the perfect acquisition for you. A division of Boise Cascade is shutting down one of their billion dollar divisions. They own a 15 million company. They don't care about, I think it would be a perfect add on into your business.

[05:24:55] Do you want it? And I said, let me take a look at it. I started due diligence and then. With an acquisition, I was able to bring in a group of investors out of New Jersey that brought in another business that they had, and we merged all the businesses together in and raised the capital to do this and brought them all together in Orlando, Florida at that time, but it was the acquisition that gave the opportunity to raise the capital that we needed and also did the acquisitions and like this between the three businesses, we were over 25 million.

[05:25:29] But that was a strategy when it was I could have done. I didn't. I would passively waited for the opportunity, but I could have actually from a strategic perspective, answering the right questions coming out the answers. So ultimately, as leaders, sometimes it's up to us. And the problems were having the businesses were not asking the right questions.

[05:25:49] We're not filling the room with the right people. We're not surrounding ourself with people that are, can be honest and direct with us and making us think differently. So just, I don't even know how much I'm going to fly through a lot of this and just. Go on because I think that your advice was great. Um, as I share with you, this is the core of things we talked about.

[05:26:09] I talked yesterday about recruiting your team, about bringing in nines and tens. If you have mediocrity in your team, you're doing such a disservice. And we've heard this over and again, but I'm going to repeat it a thousand times. Is that it is unfair to your superstars on your team by having mediocre and good player and mediocre players on your team.

[05:26:27] It drags everyone down. And then what worst thing is when you heard is why didn't you do that sooner? Okay, and that's our responsibility as leaders. Um, we, um, Valerie talked about a little bit is the commander's intent going back. Is that, um, and in the military, but this goes especially businesses. I don't have to tell micromanage my team very, very clear is.

[05:26:52] This is the intent. This is the reason why. And again, your team deserves to know the why of it. This is why we're doing things of this purpose. And so let's focus, let's have this goal in mind, and let's talk about what done means. Let's meet. Next week touch base on this or when and what I love to do with my team is I say, when you have a rough draft or rough plan, touch base with me because I don't want to see you wasting your time going in different direction.

[05:27:20] And then let's just look at it and then just go from there.

[05:27:27] Whatever you have you as anyone ever worked in an environment where the leadership team is pretty toxic and brutal and criticizes everything. Okay. And what happens when the team does not have confidence? They don't work. They're not motivated. Also, I know that if I'm put in a high pressure situation and constantly criticized by those around me, I'm as probably, well, I'm very deliberate at what I do, but my effectiveness go as it goes away.

[05:27:58] And most people, when they are given confidence and the tools work at their best, our responsibility as leader is to build the confidence of the team. Um, I can't say enough about ego. And again, I've seen so many, the worst problems that I've ever had in business is because the per, because my partner, Um, uh, it was an issue with ego and shame and ultimately even when, um, even when I picked a bad part, you know, when I picked a partner that wasn't compatible me, it was a bad partner because of us and because of me.

[05:28:31] A bad partnership was never because of them. Ultimately, I'm responsible for the people that I pick in, in my life and the partners I bring in regarding of the, of what the issues are with the other person.

[05:28:45] We heard that you share your vision and the vision and the mission and the why over and over and over with the team and your values because your team should be able to repeat those over and over again. Again, it's about alignment. And the other thing that's really important. The organization is, is, um, let me ask you this.

[05:29:06] How do you teach your team that they can criticize the emperor and tell them they have no clothes? Yes, and I can say, um, yes, be vulnerable. And I constantly when as someone tells me in public challenges me, I validate them. I applaud them. I recognize them because I want it to be a pattern in the organization that they can question.

[05:29:35] It is everyone's responsibility to question everything. And if people create an environment where even if it's a bad question, they're shamed in public in the meeting is you're creating environment people not to do that because your team is going to see you hitting a brick wall before you do. And if they're afraid to say that, then that's a problem.

[05:29:55] I talked yesterday about high high expectation. Um, yeah. Low pressure in the environment because who wants to deal with an environment where you're ridden every single day is miserable. Um, and, um, how many people read the book radical candor? Okay, we adopted it. And I'm gonna say, I maybe adopted this and complimented Alex Hermosi by calling it sincere candor.

[05:30:22] And our organization is that. And this is from the, I was talking about in, in, um, with our colleagues across the ocean, um, their version of radical is different of radical candor. You know, our, you know, our team in the UK diversion of radical is different than ours. So, um, I feel that I'm not as great as being really brutally direct, viciously direct.

[05:30:45] It's not in my nature to do so. Um, however, I like directness. And so I'm direct, but sometimes my directness is too intense for, um, for our team in the UK. And they're subtle. And when they're being direct, they're, at least our employees over there, um, their version of direct is not direct for us. So us as an organization, we're constantly saying, how can we get better at radical, at radical and sincere candor?

[05:31:12] That we feel we can be, we have the trust that we can be direct without the person being hurt and shutting down. It is not easy to do, but having that organizational organization of doing that is critical

[05:31:26] because this is way too long after the ideas you shared. I'm going to go over. I'm good. I'm going to mention transparency. How many people share their numbers with their teams? Okay, it's a really, really scary thing to do. I remember when I started doing this, the concept of. The team is going to wonder is if there's the company's making so much money, I should get paid more.

[05:31:49] But the problem is is at a certain point, it's like at a publicly traded company is your salary, your salary, the company made me bet. And again, if you have the right culture and the right environment, and the numbers are the numbers, people get numb to it. And you're all working for different goals and you make goals exciting as the organization.

[05:32:07] As long as a buddy of mine, uh, was working with the company and His CEO and the founder who was pulling all the cash out of the business said, I want you to go to a very special place for me with me. He said, okay. He said that he went over and he sat on, he brought him drove out to this beautiful area of town, just a little bit aside the hills overlooking the town.

[05:32:28] He said, sit down with me here. He said, do you see this pot of land right here? I just bought this. And when the company hits, finally hits these goals, this is the pot of land I'm buying for my next house. I just want to share this special moment with you. Now, my buddy's reaction was. Um, this is all about you.

[05:32:47] And that was the end of the relationship there from his number one employee again. So it's question of is there's transparency and the again, it's it's your intent versus the way you do it as far as making it about yourself and your own personal goals on that. Um, now there's this is probably one of the most powerful questions that I like to ask.

[05:33:14] Okay. I asked these questions in prior. So right now, every day when I make my priority list, every week, when I say, what's my plan for this week, every month, when I say what my plan is for this month, I asked the same question, looking back one year from now today, what is the one thing that I can do today that has the biggest question, the biggest impact, what is the greatest and highest use of my time?

[05:33:41] And that's what I pull up the top. And I make a goal that that has to be done today as the number one goal. Um, Has anyone ever had something really bad happen where you, I don't know, physiological, where you feel it, where you feel like you have a gut punch or a weak of the knees moment. And the anxiety is either eating you up here or eating up here.

[05:34:02] And your head is so stuck. You're not present with your family. You're not present at work because of the anxiety of this thing. So one of the tools, and again, that used to plague me and still I battle a little bit. One of the tools, this tool is very similar to this is what someone gave me along the way in a coach.

[05:34:23] And she said to me, she said, Tom, what would the you two years from yourself, two years from now be saying to yourself today? And I, and sometimes, I mean, I've hit some massive week at the knees moment of imminent doom for the company. And again, that creates that level anxiety because the responsibility that we have leadership on us is exactly that is, is looking at that is what two years from now, what will I look at this?

[05:34:51] And most situation is And against effective tool. The one final thing I want to leave with, and is one of the advice that was given along the way that someone shared here is the biggest and the most important advice you can give to anyone is to invest in your health and invest in yourself. I'm going to say that health, I've done a decent job, but not good enough with over the years.

[05:35:13] And the one thing that I stopped doing that I started over indexing on five years ago was over, it was investing in myself. From education growth, whether it's in business or outside the business, because it's kind of like, I wanted to ask you, this is how many people in this room over their lifetime are going to earn over a million dollars, 5 million, 10 million.

[05:35:39] Okay. So let me ask you this. If you were to buy a racehorse and it's earning potential was 10 million, how would you take care of it? What food would you feed it? What exercise would you give it? How would you curate it? Where would it live? Okay. You do that for a horse. You get, you nurture your kids. They want to go to college.

[05:36:00] They say, I'm going to want to go to Georgetown or MIT or, and our tuition is 60 Would you figure out a way to pay for the best edu you know, as you're talking about Stanford, MIT, figure out a way to pay for their education. I did that every year, sending my girls to private school. I did it every year, sending them to college.

[05:36:24] I don't think about it twice. But me spending the similar amount of money, investing in myself, either for my physical health, or even on education, groups, people to be around that make me better leader, and enjoying the processes, I would never do. I would never do. And I'm going to say five or six years ago, that's what I did.

[05:36:46] And I shared the story with, uh, what happened with Atlanta coast brands. When we hit the wall, it was only because of the people that I invested in what rooms to be around and the level of the caliber of people that can help me through this, that helped me navigate through that. So again, we're talking about investing is investing in your mental health.

[05:37:06] Investing in your physical health, investing in whatever you can from the development and investing. The biggest ROI that I'll ever do that I realize is in myself. So even if I do a business deal, sometimes I've done business deals and invested significant time for the experience, knowing that there probably wasn't going to be an ROI, but from the best use of my time, long term it is.

[05:37:29] And that's some of the responsibilities that we have with ourselves.

[05:37:38] Wow, I was sharing a lot, wasn't I? Um, and the final thing that I want to share with you is, and you, I've talked about this before and I talked about, um, what the journey that we go on is tough. It's not easy and there's different, um, why do you do what you do?

[05:38:03] If I told you tomorrow you can make the same amount of money you're making now, have less stress and do the same thing every day and a job, And a nice environment working nine to five. How many people raise your hand? We make the switch.

[05:38:21] We are. The thing is, is we are the evolutionary hunters. We are entrepreneurs. We have this need to create Peter sang from MIT when he wrote the fifth discipline talked about, imagine that I put this. You just have this big rubber band and you put it around your hands like this. And you feel that pressure, and over time you have your hands and you feel that pressure.

[05:38:46] It's just really uncomfortable. And over time, you want to release the pressure so you keep it down. We as people in our lives, what happens is that we are meant to create. It's who we are. It's our DNA to create. And if we have this passion, this drive to create great big things is we feel that pressure around us.

[05:39:05] Now, a lot of times over time, that pressure becomes so great. So what do we do? We lower our vision, lower our vision, lower expectation, lower expectation, the pressure's off. But the truth is, As he shared, he said, one of the best things you can do is understand is that pressure is kind of like the, when you're training for exercise and you feel that soreness and that soreness in your muscles, that pressure you feel is extremely healthy for you.

[05:39:32] So instead of being white knuckling it. Relax. I understand that pressure is healthy for you and it's just who we are. How many people in my life have ever, I used to fight it even with when people, he said, why are you working? Why are you pushing? Why are you trying to get things from the next level? Why are you at even thinking about adding a zero Tom?

[05:39:51] Stop. Why is, it's just who I am as the DNA of my makeup. I love accomplishing things that were seemed impossible or difficult to do. And I love making the complex and making it simple is who we are. But ultimately when all said and done is that question is why I know why I'm doing it, why this is business to me is the greatest game in the world and I love it and it drives me and I'd rather be doing this than watching basketball or football or playing sports.

[05:40:23] Yes. I love running. I love cycling. Um, especially when doing Peter, but you know, something when it really comes down to it, it's the game that I love and I'm all in, but I know my why my why is to impact people's lives. My wife, my wife is to give as much as I can because 30 years from now or 40 years, however many years I have on this planet, or whether it's 12 months from now, I want to look back and say, how many people's lives have I impacted in a positive way?

[05:40:51] If that's what I'm known for. And that's why my legacy that left on the earth and we're here about impact and knowing our why from an impact perspective, knowing the why for the people that are the most important in our lives is important for me for why to know that my family knows that I'm there for them, no matter what.

[05:41:08] It's important for me that my family knows that I love them. It's important for me, as I did a paradigm shift with my daughters, that they know every single day I'll drop whatever I'm doing if they need me, including sometimes his dad. I just would call him to call to say, I love you. Or I have a question about my.

[05:41:25] My, I've taken a law class in corporate law. I have a question. Okay, I'm on a zoom. I'm stepping away. I want them to know that they are the number one priority in my life, even regardless of the crisis that I'm dealing with. I know my why. And so we need to keep on way of figuring out ways to anchor ourselves because that's what it is.

[05:41:45] So the final thing I want to just share with you is just a thought. I shared with you when I went into the army and my defining moment and my defining moment was not necessarily when I got sworn into my unit. We're repelling from the helicopters and we got our wings. And I was one of the 13 out of the 10, 000 to me.

[05:42:05] The defining moment is when I went back to Florida state left to talk to my father because I knew the reaction he was going to give me. And ridicule me at this. And I remember that I was still dealing with a lot of trauma. That's before I became the man I became through that journey afterwards. And I knew what he did, and I know the impact he had on my life.

[05:42:29] And the defining moment was, even though I was going up against what he would say and his will, and I was subjecting myself to the ridicule of him, the defining moment was me saying to Dad, I love you, but this is what I'm gonna do.

[05:42:45] We look at the defining moments in our lives, and sometimes it can be simple things, sometimes it's big decisions. The question I'm gonna ask you today and to think about is, Is there an opportunity for something today or something tomorrow to be your defining moment where you're changing the trajectory of what you're doing for yourselves or your family or the loved ones in your life?

[05:43:13] So that's the challenge tomorrow. What we're going to do as far as an exercise, we're going to run through a 90 day action plan for you to make commitments to yourself on what you're going to do coming out of it. But the question and the core that I come out with is, is, is there an opportunity today for there to be a defining moment?

[05:43:30] Thank you.

[05:43:36] One question for Tom while Felix is setting up. What's your favorite day of the week, Tom? Monday! Oh my God! Okay, who here likes Mondays? Okay, because everything's perfect on Mondays. Sorry about that, I get really excited on that. It gets me so excited about Mondays! Every Monday morning, we get on a call, and Tom's energy level is here, and most of the team is like, Monday, Monday, Monday, Monday.

[05:44:02] And Tom's like, Ha! It's the greatest thing ever because it brings us all up. It's a favorite day of the week because everything is perfect, we start again, and everything is possible, so. Yeah, absolutely. That's it. And if you have a question about if Tom's why is really his why, did anyone watch Tom when Ayelet was on the stage?

[05:44:17] Do you know how many videos and pictures he took of his daughter? It was beautiful. Anyway. Absolutely. Okay.