Brandon Dawson: 9-Figure Founder Reveals the Real Reason Businesses Stop Scaling | Entrepreneurship | YAPClassic

Brandon Dawson scaled his business from zero to $75 million, but behind the success, he was losing control. After taking the company public at 29, he watched investors sell it out from under him and learned that growth is not sustainable without the systems and leadership to support it. He started over with a new playbook and has since built multiple nine-figure businesses, including Cardone Ventures, which he co-founded. In this episode, Brandon reveals why 97% of businesses fail and shares how entrepreneurs can beat the odds to scale massively. He also discusses his core leadership principles and the key traits of a great business partner. In this episode, Hala and Brandon will discuss: (00:00) Introduction (02:21) His Early Life and Entrepreneurship Journey (08:25) Bootstrapping a Startup vs. Venture Capital Funding (19:04) Why Entrepreneurs Should Prioritize Cash Reserves (26:14) Scale vs. Scaling for Business Growth (36:48) Why 92% of Businesses Fail to Scale Past $3M (40:26) Raising Your Leadership Lid (45:47) Actionable Steps to Improve Leadership Skills (55:47) Building Nine-Figure Businesses With Grant Cardone (01:03:02) The Key Traits to Look for in Business Partners Brandon Dawson is an entrepreneur, business scaling expert, and co-founder and CEO of Cardone Ventures. He has built and exited multiple businesses, including Audigy Group, which he sold for a reported $151 million at more than 77 times EBITDA. At age 29, he took Sonus Corporation public on the American Stock Exchange. Brandon is also the author of Nine-Figure Mindset and the host of Building Billions with Brandon Dawson. Sponsored By: Indeed - Get a $75 sponsored job credit to boost your job's visibility at Indeed.com/profiting Shopify - Start your $1/month trial at Shopify.com/profiting. Northwest Registered Agent - Get a complete business identity with Northwest. Visit northwestregisteredagent.com/YAPFree and start using free resources to build something amazing. Mindstone - Master practical AI skills without the complexity with Mindstone’s AI Competency Programme. Head to experience.mindstone.com/yap and get 10% off. AT&T - Stay connected with reliable, secure internet built for entrepreneurs. Switch to AT&T Business at business.att.com. Quince - Make your summer wardrobe feel easier. Go to Quince.com/profiting for free shipping on your order and 365-day returns. Now available in Canada, too. Resources Mentioned: Brandon's Website: bdawson.com Brandon's Book, Nine-Figure Mindset: bit.ly/9FigureMindset Brandon’s Podcast, Building Billions: bit.ly/BuildingBillions-Apple The 21 Irrefutable Laws of Leadership by John C. Maxwell: bit.ly/21-Laws Good to Great (6 book series) by Jim Collins: bit.ly/GTG-Series Rich Dad's Cashflow Quadrant by Robert T. Kiyosaki: bit.ly/CashQuadrant Sell or Be Sold by Grant Cardone: bit.ly/Sell-Be-Sold Start The Work by Natalie Dawson: bit.ly/StartTheWork Three Feet from Gold by Sharon L. Lechter: bit.ly/3-Feet-Gold Active Deals - youngandprofiting.com/deals Key YAP Links Reviews - ratethispodcast.com/yap YouTube - youtube.com/c/YoungandProfiting Newsletter - youngandprofiting.co/newsletter LinkedIn - linkedin.com/in/htaha/ Instagram - instagram.com/yapwithhala/ Social + Podcast Services: yapmedia.com Transcripts - youngandprofiting.com/episodes-new Entrepreneurship, Entrepreneurship Podcast, Business, Business Podcast, Self Improvement, Self-Improvement, Personal Development, Starting a Business, Strategy, Investing, Sales, Selling, Psychology, Productivity, Entrepreneurs, AI, Artificial Intelligence, Technology, Marketing, Negotiation, Money, Finance, Side Hustle, Startup, Mental Health, Career, Leadership, Mindset, Health, Growth Mindset, Passive Income, Online Business, Solopreneur, Networking

• 0:00Speaker 00

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• 1:08Speaker 01

  97% of businesses fail out of 34 million, and most of them stay at 3 million or less. If the business is going to grow and scale, the person in charge of the business must grow and scale.

• 1:21Speaker 00

  Brandon Dawson is the co-founder and CEO of Cardone Ventures with Grant Cardone, and he's a serial entrepreneur who's built not one, but multiple companies into nine-figure successes.

• 1:33Speaker 01

  I went and raised my first million. I made 100 presentations. I was laughed out of most of them. I bought my first business. I had no idea what I was doing between 26, 27.

• 1:42Speaker 00

  You ended up selling your next company for a lot of money, like 77 EBITDA. Why do you think you were able to sell it for so much?

• 1:50Speaker 01

  Bootstrap your company, be in control of it, and learn to force the company to make money. And if the company doesn't make money...

• 1:57Speaker 00

  There's sort of like a bottleneck or plateau at 3 to 5 million that a lot of businesses hit. How do people get over this?

• 2:06Speaker 01

  You shouldn't be trying to push your business by spending more money and by hiring more people and by buying more assets. You should be trying...

• 2:14Speaker 00

  Hey, Young and Profitters, there's a big difference between growing a business and actually scaling one, because sometimes what looks like growth is really just more people, more expenses, more stress, and a founder still carrying the whole business on their back. Today's Yap Classic is about what it really takes to stop chasing growth blindly and start building a business that can actually scale. We're bringing back my conversation with the brilliant Brandon Dawson, the co-founder and CEO of Cardone Ventures. Brandon went from being voted least likely to succeed in high school to building a multiple nine-figure company and selling one for over $150 million. And in this episode, he shows us why your business will only grow as far as you do as a leader. So lock in, Yap fam. If you're ready to 10x your leadership, your money, and your mindset,

• 2:59Speaker 00

  it's time to think bigger with Brandon Dawson. Brandon, welcome to Young and Profiting Podcast.

• 3:04Speaker 01

  Yeah, thank you for having me on your show.

• 3:06Speaker 00

  Yeah, I'm super excited for this conversation. And today, you are a scaling expert. You know, you've scaled multiple companies to over $100 million. You're the CEO of Cardone Ventures. But when I was doing research, I found out that in high school, you were actually voted least likely to succeed, which is really surprising, considering how far you've gone in life. You're probably the most successful person that has come out of your high school. So talk to me about how that happened and, you know, what kind of a chip that put on your shoulder as you kind of grew up?

• 3:41Speaker 01

  Yeah, you know, it's interesting. I don't think school has any determination on who somebody's ultimately going to become. And the one thing I was in school is I was very competitive in sports. In fact, it's the only reason I cared about school. My parents told me if I got less than a C average, they would not let me play sports. So, I mean, honestly, the only reason I did anything in school was so I could play sports. But I graduated from a little tiny school in the middle of nowhere in Carvallos, Oregon. And it was kind of a joke with my classmates. I mean, it was a small school, 35 of us in our class. We had all been going to school together, most of us since the seventh

• 4:23Speaker 01

  grade. I was kind of the athlete slash class joker. And so it was kind of a running joke, because I was the one with the worst grades. And so I didn't go to school because I loved school. I went to school so I could play sports. And as soon as I was out of school, I was out of that little town, too.

• 4:42Speaker 00

  Yeah. And you didn't go to college. You just went straight to work?

• 4:46Speaker 01

  Well, I tried. You know, I went for a few months until they told me I was going to fail math and have to do it again. And I was like, I'm not, I'm not doing this. I'm going to do something I'm excited about. And I moved up to Portland, Oregon, and started inside sales, and then very quickly moved to Atlanta, Georgia, become an outside sales rep for a device manufacturer. And that's where I really kind of grew up and realized I loved selling. I loved the randomness of traveling around to 11 different states at 18, 19 years old, and really just learned to grow up working with older people. And it taught me a lot about how to communicate.

• 5:23Speaker 00

  And initially, you first started working with your family, right? Your family was in like the hearing aid business. You started working with them. And then you eventually got fired by your own family or kicked out of the business. So talk to us about what that was like, and then how you ended up starting your first business on your own.

• 5:40Speaker 01

  Yeah. So, you know, it's a long story, but when I was eight, my mom married a guy that invented the end-of-year hearing aid. And it was, it was a startup. And so by the time I was 23, 24, we were the largest manufacturer in the world. And I had been inside sales. I had worked in every area of that business. And I was the youngest of all the kids. It was a mixed family. But by the time I was 24, 25, I was running North American sales. I was director of US sales. I had fired, hired, and fired all my older brothers. And my parents started going through a pretty vicious divorce that went on for like seven years. And about halfway through that, the new family was

• 6:23Speaker 01

  coming in, whom I was very close to and still very close to, but I just felt trapped between my mom and being in the way of the new family. So I just removed myself from the situation, decided I was going to be an entrepreneur at 26 years old.

• 6:38Speaker 00

  And so you took your skills from that industry, and you started your own company, and you ended up scaling it and selling it, going public at 29 years old.

• 6:48Speaker 01

  Yeah, well, it wasn't such a great success story. I went and raised my first million. I made 100 presentations. I was laughed out of most of them. I bought my first business. And I was the only person ever at that point to consolidate the hearing care space. I had no idea what I was doing between 26, 27. Finally, Warburg Pincus backed me. And at 29, I was the youngest person to ring the opening bell of the American Stock Exchange. It was phenomenal. The experience was unbelievable. But, you know, trying to go from 0 to 75 million in three years, buying, you know, 130 businesses was not easy. It taught me a lot. I learned a lot about Wall Street. And then one day, right at the point where I was going to be unbelievably valuable, they said, "We're selling

• 7:30Speaker 01

  your company." So I didn't get fired. They just sold it out from underneath me, and I went and started over.

• 7:35Speaker 00

  Yeah. So that was a company called Sonos, right?

• 7:37Speaker 01

  Sonos, yeah, Sonos. S-O-N-U-S, yeah.

• 7:40Speaker 00

  Okay. Well, you know, we've got a lot of entrepreneurs tuning in, and you starting a company at such a young age, you raised money. You know, what are some of the lessons that you learned from that first experience building a business? Like, what are some of the key lessons that you learned that you were like, "I'm never going to do that again if I start a business?"

• 8:00Speaker 01

  Patience, perseverance, and persistence, because I made hundreds of presentations. I was laughed out of most of them, to be honest with you. I tried to buy, I had a deal full of a half a billion of businesses. I couldn't, I couldn't raise enough money fast enough to close on them. I couldn't integrate them fast enough. I couldn't systematize them. You know, this whole idea of creating a platform company where you, you know, 125 to 175 million, you have all the technology, all the systems, all the people, all the leadership, all the marketing, sales, everything's perfect, everything's flawless. It sounds great, but it was a beast trying to shove it all together in five, six years. And about the time I shoved it together and we were going to be a global leader,

• 8:43Speaker 01

  was in 2001, when the tech industry busted. In my private equity group, I was in a fund, and they said, "Hey, we're liquidating the fund, and we're going to turn all our equity to cash." And of course, getting flushed into that system wasn't something I was very excited about. But I learned the most important thing is, I was a victim of private equity for a year or two until I realized I kind of created my own conditions. And I also was a victim of the time. I mean, 2001, there was a lot happening. And then September 11th happened, and everything changed. The point here is, is the biggest lesson is I want to be in control of my destiny. I didn't want to use anybody else's capital. I would never want it to be in a position where somebody

• 9:23Speaker 01

  could flex on me, tell me what to do, and certainly sell my company without me wanting it to be sold. So I decided I was going to reinvent how businesses were built for small businesses. And the marketplace was showing me a huge opportunity, because 97% of businesses fail out of 34 million, and most of them stay at 3 million or less. So I just saw a massive opportunity to reinvent how small business can be scaled up.

• 9:50Speaker 00

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• 11:20Speaker 00

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• 12:29Speaker 00

  What's up, Yap gang? I recently had Gary Vee on the podcast and he told me something that really stuck with me. If you've got sales DNA, you've got to be paying attention to live selling because it's one of the biggest opportunities right now online. And that really got me curious, so I checked out an app that he told me about called Whatnot. I jumped into a live show and I instantly got it. The seller was showing products in real time, answering questions in the chat, and building a real relationship with the buyers. It didn't feel like boring shopping. It felt like a community. Whatnot is the largest live shopping marketplace in the country. And for entrepreneurs, the results are really hard to ignore. Sellers on Whatnot can sell up to 10 times more than traditional marketplaces. And the number of sellers making over a million dollars a year on the platform has doubled.

• 13:13Speaker 00

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• 13:28Speaker 00

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• 14:25Speaker 00

  I want to like double tap on this because it's really interesting. One thing I didn't get to introduce myself like properly when we first started. I'm an entrepreneur myself. I have two companies, basically I have a social media and podcast agency. And then I have the number one self-improvement podcast network. So I get podcast sales for people like Russell Brunson and Neil Patel and Jenna Kutcher and all these like really big, like, yeah, it's awesome. And I bootstrapped my company. I just, you know, sold what I was good at for myself, like LinkedIn and podcasts and getting sponsorships. And then I just started making money and kind of did it step by step and bootstrapped. Now I have a new boyfriend who is a VC entrepreneur and he raises money. And our experiences are totally different.

• 15:09Speaker 00

  His is not about being profitable. He just has to grow, you know, three X a year and just raise more money and raise more money. And for me, I'm just like, you know, just making money and that's all I'm focused about. And he's got way less equity than I do and I have almost 100% of my company. And so it's just so interesting, the two different paths. For entrepreneurs who haven't started yet, just talk to us about like pros and cons of taking VC money versus just trying to bootstrap yourself and like when people should think about taking money if any time.

• 15:41Speaker 01

  Yeah, so look, I mean, obviously VC, private equity, they all have their place. If you have something that you can time to introduce into the marketplace, to reinvent a space that you need massive horsepower, you need great relationships, and you need sophistication of people that understand how things are supposed to work, along with their network of people. Venture capital and private equity is a perfect place for that. If you're a novice entrepreneur with an idea, most of you aren't going to access private equity or venture capital. So you've got to have something that a venture capitalist or a private equity group really says, this looks amazing.

• 16:24Speaker 01

  So you could spend all your time pitching to never get a deal. So you can waste an enormous amount of time with your concept to your business and never find funding for it. And you've got to remember 97% of all businesses fail. So if I'm a VC and I've got $100 million and I'm going to go put $3 million into 33 companies, I only need one of them to work and I can still get my returns marked at 3, 4, 500%. Whereas if you're the entrepreneur and you're one of the 33 that succeeds, that's great. But if you're one of the 32 that fails, they'll also cut you off at the knees faster than you can blink. So, so, you know, it's not, it's not for the faint of heart.

• 17:09Speaker 01

  And, and you better have a solid plan. And here's the thing about businesses, and you'll know this more than most people understand, that what you do is only going to get you so far. It's who you do it with and how you do it that's going to scale and create value. And so you can have the greatest idea and be the smartest technician and be the greatest inventor, but most likely at some point, you're going to screw it all up because you don't understand leadership. You don't understand all the science behind actually finding, attracting, aligning, and developing and keeping great people. You don't understand how to actually properly run a sophisticated financial organization that's responsible, like a public company would need to be.

• 17:52Speaker 01

  And so all these things get learned through trial and error. And VC is not patient money. And private equity usually has a fuse on it somewhere between four and seven years. And if you're trying to personally scale up and learn all these different things, at the same time, you've got to create the product, deliver the product, make the product work, make sure it's differentiated in the marketplace, that timing usually doesn't work out. So they start bringing new people in and they start cramming down and you need more funding. And next thing you know, you don't have control of your company. They do. And they've got better choices because the thing you built worked, but they don't need you involved anymore. And you don't know how to handle the other aspects of the business, which is how and who. And you end up getting replaced. And that's usually, and Steve Jobs even went through that cycle.

• 18:36Speaker 01

  So that's usually what happens. And if you don't have the stomach for that, and statistically, if you're going to be the 32 that fail versus the one that succeeds, then I think there's a different way to do it, which is the way you did it and the way I've done it now four times over.

• 18:53Speaker 00

  Which is bootstrapping and just, yeah, I love that. Okay, so you ended up selling your next company for a lot of money, like 77 EBITDA, when usually things sell for like four to eight X, right? Why do you think you were able to sell it for so much? And, and, you know, did you do that intentionally? Like, were there things that you did intentionally to ensure that you were going to sell so, so much?

• 19:18Speaker 01

  Yeah, so when I launched the business, first of all, I was the first person to create a, a, what I call reverse consolidation equity model. The problem with consolidation is you go raise capital from VC to private equity. You go out and start acquiring a whole bunch of other people's problems. Then you got to systematize them. Then you need to build leadership. You needed all this complexity. And so usually you go through a, a period of when you're buying, you go through devaluation on your way there. So you're always trying to raise more capital. You're always trying, you're always got, you know, the idea, you could be out of business anytime for more money, more money, more money, more money. Your story gets diluted, people stop believing in you. Every time you do a valuation, the next round of valuation, it gets less in value because you need more money.

• 20:02Speaker 01

  And so you go through all this, what I call the devaluation cycle when you're using other people's money and then you ultimately lose and give up control. And then it becomes, is it really worth it? With everybody mad at you and things not working? And those are the cycles. So if you know that that's what you need to be prepared for, then the other option is bootstrap your company, be in control of it, and learn to force the company to make money. And if the company doesn't make money, you don't have a lot of headaches because you don't have a lot of people. And if the company does make money and you set up your reserves, you have enough money to invest in the next iteration. And if you make a mistake, you don't have somebody cutting your throat because you don't know what you're doing and they're going to get rid of you.

• 20:43Speaker 01

  And so I would look at, when I was running around with my private equity groups, I was looking at what they would define as platform companies. A platform company is between 125, 175 million. It has leadership, it has systems, it has processes, it's profitable, it's predictable, it's got growth trajectory, and, and it's dependable. Because all private equity, venture capital is entirely different. Private equity likes to invest in things that's predictable, it's consistent, and it has upside. Otherwise, they're not interested in it unless they're going to consolidate it into somebody else they like and they're just investing in you to get rid of all you and the people around you. So you got to know who you are and what kind of target you are. Because a lot of people are excited, oh, I'm going to do a deal with private equity.

• 21:27Speaker 01

  And then they close and then they're fired and their team's wiped out because they were, they were a bolt-on or they were a, a plug-in or they were a whatever. They just got rolled inside of somebody else's organization. So seeing all this, I was like, how can I in the small business space create multiple platform companies? And that gave me the idea of reverse consolidation. Instead of me raising capital and diluting my equity and going out and buying businesses and trying to turn owners into employees, which doesn't really work very well. Why, why don't I start a platform company and go to owners who are struggling and say, I'll build marketing, sales, leadership, operations, finance, technology. All, you can offload all that to me.

• 22:11Speaker 01

  And instead of me buying your company, I'll give you equity in my company and with the right to swap to buy into your company at a predetermined valuation. And, and I was told it wouldn't work. The SEC said I couldn't do it. All this taxation issues, franchise laws. I bumped up against all that, but I was able to create a workable model that I launched in 2006 with the idea that if I could build the prototype to consolidate a vertical, I could do it across hundreds of verticals. I launched that business, bootstrapped, built the rules and requirements of how I wanted to build a business without needing anybody else's capital. And read a lot of books to really become an expert in the things I was not good at the

• 22:53Speaker 01

  first time around. And then all of a sudden by eight, nine, 10, I was Inc. 500, Inc. 5,000, fastest growing this, fastest growing that, entrepreneur of the year. And so I hired a research firm when the market went to shit in 2009, uh, because of the real estate space. And I was able to hire FTI, a billion dollar research firm, and I looked at 10,000 verticals. I hired eight people inside from Wharton and Stanford. And I wanted to understand what makes businesses work, what causes them to fails, what are the things that we could create from an infrastructure? And I built what I call now the transformational growth platform, which is taking belief, operational effectiveness and leadership. And in the center of all that,

• 23:34Speaker 01

  scaling it from zero to a billion, there's 11 breakpoints from startup to a billion dollars. We identified seven from zero to 125 million and just reverse engineered based on the businesses that proved they could become a platform, exactly what's involved with doing it. And I built basically 10 elements, 76 sub elements and 240 things you got to master to get to 125 million. And then it multiplies that to get to a billion. And I built it all off the research with the idea that when I sold my business, I was going to start a new company, which is Cardo Mentors now. Uh, then one of my mentors told me in 2013, you can't just go start a whole bunch of new companies. If you don't prove this concept to work where you're using a shared equity model with your clients

• 24:19Speaker 01

  versus a cram down acquiring model, you got to prove the cycle. So what I did is I looked at all the highest valuations paid for businesses with the same research company. And I said, why did some of these businesses sell for 30, 40, 50, 100 X EBITDA? Like, what did they have? And I took that, put it on top of the other model I created, and I had an idea in 2013. If I position my organization like the highest valued companies that sold, and I sold it the way they sold, I could command one of the highest values for me and my partners. And I went and on 2015, I did a roadshow, eight specific targeted potential buyers. And these are sophisticated,

• 25:01Speaker 01

  like EQT out of, out of Europe, 56 billion dollar PE group, Siemens Medical, these are not small companies. And I pitched them and my pitch was, I'm Brandon Dawson, I have a $35 million company, it makes $2.2 million in EBITDA. I've reverse engineered your business. And if you acquired me, I would add $2 billion worth of value within 36 to 48 months, and I want 10%. That was my pitch. I was told, I was told it would never fly. I had eight presentations. I had eight bidders. It was a reported 151. It was an actual 189. It was better than 77 X EBITDA. And the company that acquired me was a billion and within three years, there were four and a half billion in value.

• 25:40Speaker 00

  Wow, that's really incredible. You're so smart. I feel like you just think like so much differently.

• 25:49Speaker 00

  What's up, Yap gang? I recently had Gary Vee on the podcast and he told me something that really stuck with me. If you've got sales DNA, you've got to be paying attention to live selling because it's one of the biggest opportunities right now online. And that really got me curious. So I checked out an app that he told me about called Whatnot. I jumped into a live show and I instantly got it. The seller was showing products in real time, answering questions in the chat, and building a real relationship with the buyers. It didn't feel like boring shopping. It felt like a community. Whatnot is the largest live shopping marketplace in the country. And for entrepreneurs, the results are really hard to ignore. Sellers on Whatnot can sell up to 10 times more than traditional marketplaces. And the number of sellers making over a million dollars

• 26:31Speaker 00

  a year on the platform has doubled. So if you've got products to sell and you're looking for a new way to reach customers, search Whatnot, W-H-A-T-N-O-T in the app store. Download it and you can start selling right away. That's Whatnot in the app store.

• 26:48Speaker 00

  Hello, young and profiteers. If you're running a business, getting website traffic is only half the battle. The real key to profiting is turning those visitors into paying customers. And I know checkout friction can quietly kill your sales. That's why I always say, serious entrepreneurs build on Shopify. Shopify is a commerce platform that helps you launch and run an online store without needing to be super technical. You can build your storefront, manage your business, and make it easy for people to buy. And here's the major advantage. Shopify checkout with Shop Pay converts up to 36% higher than the competition. With Black Friday coming up, now's the time to get your store ready and simplify your checkout experience. If you're ready to launch your business

• 27:31Speaker 00

  before Black Friday, go to Shopify.com/profitting to start your free trial. That's Shopify.com/profitting. Go to Shopify.com/profitting today to hear your first.

• 27:47Speaker 00

  What's up Yap fam? You guys know we love reading on this show. So I'm always excited when I find a book I genuinely think is worth sharing. Life at the Speed of Play, Launch Products People Love by Mark Pincus is one of those books. Mark is a legendary Silicon Valley entrepreneur and investor. And this fast-paced 170-page book is his playbook for testing ideas quickly, navigating uncertainty, and figuring out what's actually worth pursuing. One of my favorite concepts is what he calls the abyss. Those moments when you feel stuck or unsure of what's next. Instead of fearing uncertainty, he shows you how to use it as a tool for discovery. Right now, Mark is doing a buy one,

• 28:29Speaker 00

  get one offer for Yap listeners. Go to GetMark'sBook.com/Yap, buy one copy for $32 and get a second copy free. So you can keep one for yourself and give the second to a friend, future co-founder, or someone who needs a little push. One of the things that you mentioned is that significant cash reserves were really important for you when you were, you know, growing your business. Talk to us about the importance of having cash reserves and how you think about it, and what is a good amount of cash that we should have on hand?

• 28:59Speaker 01

  Yeah. And, and the reason that was a rule is because literally four years of my life in the previous company, I would be sweating by 10 o'clock in the morning, uh, every other week, because I'd have payroll coming and I was always short 200 grand, 300 grand. And I was dialing for dollars and I was scrambling to try to get money. And I was like, I am not going to live that way. I mean, it's so horrible. And for any entrepreneur that's living that way today, there is an alternative. The alternative that I decided I was going to create a rule for myself when I started my company. I turned the whole idea of revenue, profit, and cash into a game. And so what I did was when I launched my company, I had 90 days of cash. And I told my team, for every two weeks,

• 29:43Speaker 01

  here's the target we have to hit in revenue, and it buys us two more weeks of being in business. And when we launched that business, June 15th, 2005, I had literally 90 days of capital. My target was to generate 15,000. In the last two weeks of June, I generated 76,000. So then my goal was to get 30 days of cash reserves. So if I went to zero, I could live for 30 days. That was target one. Target two is 90. Target three was 180. Target four was a year. Target five was 18 months of cash in my account. So I never had to think or worry about money. It showed a discipline in the business. Well, within 36 months, I had 18 months of cash in the business,

• 30:26Speaker 01

  in the, in the bank. I never once thought about money in that 14-year cycle. I was running events with 12, 1400 people that I would pay for millions of dollars. Money became zero issue, and that's the discipline. And that's how we teach business owners to grow and scale. Consequently, I launched this business with Grant Cardone six years ago. And I said to him, we're going to launch a business. We're not going to use any money. I don't want you to put any in. I'm not going to put any in. And in, and I said, in the first 60 months, we're going to go from dead stop to 125 million in revenue, and then the next 60 to a billion. And, and so we just finished our, our fifth full year. It's five and a half years. And last year, between Cardo Mentors

• 31:11Speaker 01

  and Tenex Health, which I bought Gary Brekka's 1.5 million dollar business, and then turned it into 125 million dollar business within 36 months. So between the two businesses, we own 99% of Tenex Health and Cardo Mentors. Last year, we did 240 million in revenue. We made 45 million of EBITDA. And we've never borrowed a dime. We've never, uh, invested a dime, and we have cash reserves of about $50 million.

• 31:37Speaker 00

  Wow, that's really awesome. So do you, so do you recommend like 18 months be like the ultimate goal for entrepreneurs to have on hand?

• 31:44Speaker 01

  Look, it's all about, people will say, you don't need 18 months. So of course you don't. But if you had 18 months, and all of a sudden you can buy a competitor and you had extra cash, that would just accelerate your growth cycle and you have confidence to be able to run it. But if you don't have 18 months and you've got one month, you're never going to buy anything and you're never going to risk anything. You are going to, you know this. I don't know how many people you've probably hired, thought, they're going to save my life. And then you're firing them six or nine months later, like they didn't do shit. They caused problems. If you're a young entrepreneur, as you go through the growth cycle from one to three million, and three to eight million, and eight to 15, and 15, everything dynamically changes with a multiplier. Because when you're three millionaire less, and you know this, you're doing everything. When you go to

• 32:26Speaker 01

  eight to 15, you now have to do everything but through other people. And if you're not skilled at finding, attracting, aligning, developing, and keeping great people, how do you do it through other people without them degrading what you did that worked? And if you can't, you end up breaking and going out of business. By the time you're 25 million, on average, you've got somewhere around, I don't know, 25 million, you got somewhere around, uh, 50 to 150 people working for you. If you've never taken a leadership class, or you've never taken a communications course, or you didn't become an expert in, in, in personalities and, and communications and leadership, you're in big trouble. And so the things you need to evolve, if the business is going to grow

• 33:10Speaker 01

  and scale, the person in charge of the business must grow and scale. I've never seen an entrepreneur that built a $3 million business that stayed a 3 million entrepreneur and grew to 100.

• 33:22Speaker 01

  So the business will follow the leader 100% and then after 15 million, the business will follow the leaders. And then after 45 million, the business will be culturally the leader. And, and if you can't make those transformations, you're out of business.

• 33:38Speaker 00

  Let's, let's, let's go deeper on some of those concepts. So one thing I want to talk about, we were just, you were just talking about teams. One last question on your sale of Odigy, is that how you pronounce that business, Odigy?

• 33:51Speaker 01

  That's correct. Yes.

• 33:52Speaker 00

  You actually shared some of the earnings of when you sold with your employees.

• 33:57Speaker 01

  Uh, when I started the model, I shared 45% of the equity with my customers on an innovative program I put together and my employees.

• 34:07Speaker 00

  Yeah. So your employees knew when you were hiring them that that was like part of their compensation package.

• 34:12Speaker 01

  This is where most business owners, John Maxwell talks about in 21 irrefutable laws, the leadership law of picture, where there's no picture, people get lost, they get confused, they don't know where they fit into the picture. So they start emotionally self-selecting in or out of certain things. And how many times do you think a business owner sat back and said, man, I was just getting ready to promote that person and then they quit? Well, because that owner did not paint a picture. There was no destination. The employee could not see themselves inside of the owner's bubble. They couldn't translate, if I'm here eight years or 12 years, what do I get out of it? How much could I put in my bank account? How wealthy could I become? Because no business owner generally starts

• 34:55Speaker 01

  their business with a 10-year plan showing value, valuation enhancements and increases and, and, and what it means to the individual because they build it year by year, step by step, brick by brick, from the ground up until it traditionally collapses. Cause at some point, your best people feel overwhelmed, overworked, underappreciated, and they have options. So if you can't keep your good people, every person I hired, in fact, my president started first job he ever had, and I said, you're going to have seven to eight bosses. And if you want to quit at any time I put a boss in charge of you, then you're the wrong guy for me to let you run this company eventually. And he's like, but I, I don't like these guys. I'm like, yeah, but I have to hire them because they technically know how to do the work that you don't know how to do. And what makes you great is you culturally

• 35:39Speaker 01

  understand the organization and you represent the brand. But if you culturally, operationally and financially don't learn to integrate those three things, you can't be in charge because you won't understand how to grow the people underneath you. So you have to have the competency to do the job, not just the confidence to do the job. And so everyone understood. And when I sold the business, 65% of my leadership that got 15 million out of the business, it was the first jobs they ever had in their career.

• 36:08Speaker 00

  Wow, that's incredible. Um, all right. So let's move on to like some of your scaling and leadership principles. First off, you always talk about the difference between the word scale and grow. Can you talk to us about the difference?

• 36:20Speaker 01

  Scale versus scaling. Yeah. Um, people confuse those things. Scale is maximizing what you have. So if you're at 10 million in revenue and you're making 15% profit, before you try to go to 25 million, you should try to go from 10 million in revenue to making 3 million in profit. That would be scale, maximizing what you have. Scaling is the rapid expansion of what you can prove works. So now, once I'm 10 million and I move my 1.5 million to two and a half million of profit, and I'm feeling like that's a really good spot for our organization. So instead of trying to just bank a bunch of revenues, I'm actually trying to increase the bottom line, create bigger cash reserves, create discipline into the organization. And, and basically, once you do that, and

• 37:04Speaker 01

  then you're like, okay, I'm going to hit the go button because I have safety, I have cash reserves, I have great people, we know what we're doing, we were able to improve the performance of the organization, not just chase revenue. And now I'm going to bump to the next level. Because the thing is, is that each time you bump in 10 million increments, what got you to that 10 million isn't going to get you to the 20 and what got you the 20 is not going to get you to the 30. And if you're the main driver of the business, you have no idea what you're doing. And if you think you're going to hire anybody to come fix your problems between 25 million and start up, you're wrong. Most people you bring in will break your business because they're bringing in the context of their problems from their other jobs, and they're bringing them into your little business.

• 37:45Speaker 01

  So if you want to go from zero to 25 million, you're just going to have to concede that you have to home grow that team, if you've never done it before, because you don't know what that team actually looks like. And you've met plenty of people that are like, oh, they're 6 million in revenue. Here's my CEO, here's my CFO, here's my COO, here's my CMO. There ain't no CEO, CFO, CMO that is worth their weight of anything you're paying them at 6 million in revenue. Those are 75 million to 125 million dollar jobs. Somebody considering their CFO and their CMO at 6 million in an organization like ours or yours would be a director level. Someone making 80 to 150,000 dollars a year. They don't know anything

• 38:28Speaker 01

  about a 25, 50, 100 million dollar business. So what happens is business owners hire these people in, they get close to them, and then they're constrained by the competency, the skillset, the leadership abilities, and the thinking of the person they gave a big title to, but they've never actually run a big company. And so now they're stuck and that all the decisions that are going to be made across the spectrum of five or six people are all going to be wrong because nobody's ever done it. And so you just have to own that. And if you want to build a 25 million dollar company, you have to say day one, I have to grow into being the kind of leader and responsible business owner that knows how to build a 25 million dollar company. Once you make that commitment, you're like,

• 39:12Speaker 01

  what does a 25 million responsible, profitable, successful business look like? And if you don't go out and find that data, then you have to concede you're building your business through trial and error. It's the slowest way to do it. It's the riskiest way to do it. And if you let your ego get involved, you're going to go out of business.

• 39:31Speaker 00

  Why don't we take my business as like a case study and you can kind of tell me like, what do you, what do you think I should do? Or like, because I'm kind of at like a pivotal point. So my company made $7 million last year.

• 39:40Speaker 01

  How many employees do you have?

• 39:41Speaker 00

  I have about nine US employees and like 40 international. So actually our talent, we do a lot of international talent, lots of people in India and Nigeria. And then I have about nine US employees. In terms of my executives, I just have two. I have one girl, Kate, who helps me run my social media agency, and then my business partner who helps me run my network, who's like more of my COO. Uh, to your point, we don't have like, you know, fancy titles. We don't have a CEO. We have like somebody who helps us with finances, but he's, you know, not a CFO. And I haven't really spent a lot of money hiring executives yet, because to your point, I feel like when I do hire, um, you know, expensive US hires, they don't do anything. They're not helpful, um, especially at this

• 40:25Speaker 00

  stage. Cause to your point, they don't know enough. And I'd rather like, you know, Kate, for example, who's one of my highest paid employees, she was an intern that started with me seven years ago.

• 40:34Speaker 01

  Exactly.

• 40:35Speaker 00

  Yeah. So talk to me about like what, you know, we want to get to 30 million dollars in the next three years. What do we, what do we do?

• 40:42Speaker 01

  Okay. Well, um, zero to 3 million is just the thing that you do, it has to work. Now you just mentioned that effectively you have two different businesses doing 7 million.

• 40:51Speaker 00

  Yeah. I have two different businesses doing 7 million. My podcast itself makes a million dollars a year.

• 40:56Speaker 01

  It makes a million and the other business makes six?

• 40:59Speaker 00

  Six and a half.

• 41:00Speaker 01

  Okay. So, so now, so what you got to look at, those are two separate businesses. And, and so when you aggregate the revenue, and what you already said is you have a service leader, somebody who's running each of those businesses is what you defined, right? So you have a key stakeholder in each of those businesses and then you're the visionary. And then you hire and help for finances and things like that. So that's kind of how it, it's built. The what you do will get you to 3 million, who you do it with gets you to eight. So what's allowed you to get to where you're at is you've got a couple of people you can rely on and depend on. And I call this the rule of three. I've never seen a successful eight to 15 million dollar business that didn't have three stakeholders because no one person can do all the things that you need help doing. You can't run a

• 41:42Speaker 01

  podcast plus an operating company, plus be the host, plus be this, plus be that, plus be doing the books in the middle of the night. Um, you can't do all that and be 8 million by yourself. It just doesn't work. So 3 million, you can get there by yourself. The move to 8 million, there ultimately is always going to be three people involved with doing it. To get to 15 million, those three people need to evolve to critical positions in the organization. The visionary founder, you're going to be one of those, there's no question. But if you don't flank yourself with a controller level financial person who is easy for you to communicate, easy for you to get along with, easy for you to trust, because theft is a big thing in these businesses. If, if you don't have that by your side, you're

• 42:26Speaker 01

  going to start making technical, financial decisions that will break your company eventually. The other side of you is you're going to need that operator, that person that you just talked about, but they're going to have to look, they're going to have to help you across both organizations.

• 42:43Speaker 01

  Now that move to 25 million, by the time you get to 25 million, because you're going to be running your business on somewhere between 12 and 17 different systems at 25 million. You're going to have your CRMs, probably different ones for different businesses. You're going to have your technical teams. You're going to have your different automation you're running on. You're going to be using your social media. All this needs to get consolidated into something that you can look at and take action against. And at 25 million, you're going to be having to switch your business from cash to accrual somewhere in there, which means you're going to start changing compensation structures. You're going to piss off people. You're going to start realizing that the money you book is revenue is really deposits. And so you're going to think about the context and the strategy. Your business is a little different.

• 43:26Speaker 01

  You're going to need a different caliber person who can make that transformation financially for you.

• 43:30Speaker 00

  We did that already. We did the accrual already.

• 43:33Speaker 01

  Perfect.

• 43:33Speaker 00

  Yeah.

• 43:34Speaker 01

  There you go. So you go from cash to a hybrid cash accrual, and then eventually you go full accrual. So, so these are all the things that, that for your business to mature. But at 25 million, you're going to need five people that are running your business alongside of you. You're going to need a financial person. You're going to need some level of technology person. You're going to need your operating person. You're going to need your salesperson to make sure you're closing and getting the money in. And then you're going to need you setting the tones. Here's where we're going. That rock over there is where we're sailing to. There's no compromises and we're going to do it within the boundaries of how we structured and run the organization. You're going to be looking at cash collected daily against monthly targets divided by 30 days. And people are saying, but we don't work 30 days. There's only 20 days in a work week.

• 44:18Speaker 01

  You're like, no, that's a rule that somebody else made up. We work, we take money in 30 days a week. So how do we offer things where we can collect money? Or how do we run dual teams? So Saturdays and Sundays, we can also generate capital. Somebody has to be in charge. And this is what happens with businesses is they start to grow. The business owner gets trapped in doing all the work and hopes the people they surround themselves with, they're going to set that tone. But those people have never been in that kind of environment. They, they, they don't work in that environment. The work-life balance starts to become a conversation. All because targets are being missed. People are pissed they're not making the money they want. And all that weight starts landing back on your shoulders. And people are saying, you don't give us the attention. You don't give us the time. You're too busy. You're not giving us the right direction.

• 45:02Speaker 01

  I would start today at seven and say target is, if you're going to do 30, you might as well do 45 because what you're going to have to do to get to 30 isn't going to be any different to 45. You could say 25 and say, okay, this is what it's going to look like. At 25, I'm going to have four other partners. At 25, we're going to be running 25% profitability. That's $6.25 million of profit. We're going to be generating $2 million on average, $2.2 million every single month, divided by 30. That's our daily cash target. And I'm going to be looking at that cash collected every single day. And if we're ahead of schedule, we're going to adjust our target up. If we're behind schedule, we're going to attack it and get back on target. And you're going to drive with that level of intensity.

• 45:46Speaker 01

  And if you don't, and you're like, oh, it's working and I hope it works. And they're going to be great. It's all going to fall apart around you. And that intensity never ends all the way to 125 because to go from 25 to 45, 45 to 75, 75 to 125, you as the owner are going to have to make leaps and bounds of, of a skillset adjustment. And the way I have done that is I bring retired people in who are really an authority. I hire them for up to 18 months to work side by side with the younger people I'm developing. So they understand how to make the move from cash to accrual or hybrid. They understand what cash collected is. They understand how to put money aside and how to get money on the money. And they understand how to manage the balance sheet.

• 46:29Speaker 01

  They understand like, somebody has to teach, if you have a great finance person who's young and hungry, that you trust, somebody's got to develop them on what a $125 million CFO looks like. Well, you start hiring those people. And then if you don't like them, you get rid of them and get somebody else, right? But you're not burning out your one person you really like, but they just don't know what they're doing. And the biggest risk is those people aren't going to want to let you down and they're not going to want to show you weakness. And you're going to find out something really bad when it happens, but they're not going to let you know it's happening to fix it ahead of time because they're scared that you'll lose confidence in them.

• 47:05Speaker 00

  Hmm.

• 47:06Speaker 01

  So that's what you're going to do to get to 25 or 30 million.

• 47:09Speaker 00

  So I know that there's sort of like a bottleneck or a plateau at three to five million that a lot of businesses hit. So how do people get over this? And what are some of the common challenges that you see at that stage of entrepreneurship?

• 47:26Speaker 01

  Yeah, well, just look, just statistically, 34 and a half million, small to mid-sized businesses.

• 47:38Speaker 01

  92% I believe are stuck at 3 million or less with 12 employees or less. So it is breakpoint one. And that's because the what works? And then you hire a friend or two, and then maybe you got your daughter or your wife or your mother working in the business. And, and so things are kind of working because you are good at what you do. Now you're at three and you're stuck and you're, and your profitability is shrinking. You don't really know how to manage your business well because you have all these personalities. You're not exerting leadership because you don't want to upset your mother-in-law and your daughter or your wife. And so there's, people are tiptoeing around each other, but now you're spending more money.

• 48:20Speaker 01

  You're hiring marketing agencies, you're hiring employees, you're buying vans or you're increasing your location size because you're pushing your business to growth. And all along that you're pushing it, this is scale versus scaling. You're getting diminishing returns. As you get diminishing returns, you start to get flustered. You start to get frustrated. You start to get fear. You start to have anxiety. You start to get more stressed because you're making less money and you're working even that much harder. And you start to give up on the idea of getting big and you decide to settle on what worked with the people it worked with. This is the cycle these businesses go through. I call it the washing machine cycle. It just keeps going. You take something out of a washing, put something about here, and it's still banging

• 49:05Speaker 01

  around, banging around. And it's because the what you do is only going to get you so far. Recognizing from three to five million scale versus scaling, you shouldn't be trying to push your business by spending more money and by hiring more people and by buying more assets. You should be trying to slide to five million with the same people, the same assets and the same resources you have at three. Because there's no way you've maximized your operational effectiveness in your business when you have no idea what you're doing and you assume you do because it works. But it will not work when you go from three to five. Increasing the costs, increasing assets, increasing time, isn't the thing that's going to take you to five.

• 49:49Speaker 01

  Being more efficient, being more effective, hiring higher quality people who can execute without you babysitting them and do it for you instead of you doing it. These are the things that are going to move the business and they will pull the business up versus you shoving it up. And this is why so many business owners wear themselves out. And that if you listen to people, they'll use the right language. It's like rolling a huge rock up a big hill. Yeah, because you need a team to pull the rock up the hill. So you doing it because you're good at something and you've been doing it is the thing that's going to kill you. That rock will roll back on you. You recognizing you need to surround yourself with other people who are as committed,

• 50:31Speaker 01

  who want to help you pull that rock up the hill and they come alongside of you. Well, that's a different skillset because you have to create that. And you can't do it with no accountability, no discipline, all that stuff in your business. And you can't do it by giving people bigger titles because you don't make enough money to give them raises. Those aren't the things that are going to get you there. And if you don't technically choose to change who you are, how you think and what you do as the leader of the business, you're guaranteed to have the business follow the leader.

• 51:00Speaker 00

  Hmm. As we're talking about these leadership principles, you brought up John Maxwell, who I love. I've, I've been to a bunch of his events. I haven't interviewed him yet, but I love his books. And you mentioned one of his principles. You also talk about in your book, the law of the lid. Can you talk to us about the importance of the law of the lid when you're thinking about leadership in a business?

• 51:18Speaker 01

  A hundred percent. You know, I was not a good leader in my first business. The first thing I had to acknowledge is I really sucked. I was practicing on everything. I let my ego get in the middle of it. I thought leadership was telling people what to do and demanding that they do it. It was, it was really all backwards. Okay. So when my mentor, when, when we went through what I did well and all the things I screwed up when I was going to reset and start again, he gave me a list of books based on where I identified my biggest weaknesses, leadership, operations, finance. And he gave me a bunch of books. John Maxwell, 21 Irrefutable Laws of Leadership, Sharon Lector, Cash Flow Quadrant, Beyond Positive Thinking for how, because my thinking was broken.

• 52:01Speaker 01

  Jim Collins, Good to Great, Great by Choice, How the Mighty Falls series. He gave me all these books and said, read those, come back to me and tell me what you did wrong the first time around. So I had that context contrast, right? You need that as a business owner. And I came back and I created this massive list of all the shit I did wrong. And then I started reading the books and fill them in the gaps. And the first book on leadership was John Maxwell's 21 Eury Feudal Laws. He ended up writing three, now he's got four, but he ended up writing three additional law books. So he had 53 laws and then I created a whole algorithm out of the 53 laws. But the first one I read in the first chapter was law of the lid. Lid is a cap. It's, it's, it's, you cannot be a five leader and have eights working for you. They, they'll leave you.

• 52:44Speaker 01

  You can't be a, a five producer and develop 10 producers. They'll leave you. You can't be, you can't be an inspiration as a three. Oh, business sucks and everything's hard and expect people to be excited and work for you. So I created, it just became so obvious when I started getting into Jim Collins and John Maxwell. I realized there was three lids in business. Lid is the cap. It's the belief lid. The higher you believe, the more energy effort you'll push into achieving it. As soon as you lower your belief, you give up on pushing. So the higher you believe, higher you achieve, lower you believe, the lower your cap. Well, the only way, if you believe high, that you're actually going to reinforce getting there

• 53:29Speaker 01

  is through operational effectiveness. So I realized there's an operational effectiveness lid in the business. If I'm a three sales manager, I'm only going to produce twos and ones. If I'm a three producer, I'll have twos and ones. So the only way for the business to grow and scale proportionate to my belief about what's possible is if my operational effectiveness grows and scales. So conversion, uh, all the, all the numbers and the stats and all those things have to grow, or eventually I go, oh, it's not going to happen. Or my team says, oh, he's crazy. He believes he's going to be a hundred million, but he's been doing three million for 10 years. Nobody believes me anymore. Well, to have high effectiveness and operational effectiveness and to have a high belief, there's

• 54:13Speaker 01

  three stages of leadership I identified. First is the me leadership. Do I have the patience, the persistence, the perseverance? If I really believe in getting to 125 million, I am never giving up until I get there. I don't care if I fail a thousand times. I don't care if, like, I'm going there. Okay. Now, that takes strong me leadership. People are like, oh, we can't do it. It's not going to work. Screw it, I'm going there anyway, right? Strong me leadership. If I lower my me leadership, I am guaranteed everyone around me is going to lower their leadership expectations. But once I start going, I have to create we leadership because that move from eight million to 15 million to 25 million is no longer me propping everybody up.

• 54:58Speaker 01

  It's the core leadership team telling everyone and inspiring everyone, we can do it, we can do it, we can do it. I can't do it all by myself. But something magical happens. So that goes from me leadership to creating we leadership, a group of us doing it. That'll be three at 15, five at 25. At 45 million to 75, if your business is still pushing, it becomes us leadership. And the definition of us leadership I created was cultural leadership. Your whole group in your company is pushing and pulling the company to success. Because if you take the statistics, a Gallup poll for 25 straight years, every year they interview 100 million US workers. Two thirds say they're actively disengaged or disengaged. 18% admit they're sabotaging the company.

• 55:43Speaker 01

  So if you have 100 employees, 60% are doing little to, to nothing and 20% are trying to put you out of business. So that's a lot of weight for the business owner to hold themselves. But by the time you make those moves, you, your we leadership teams dragging those people. But at 45 to 75, your culture, your people who have been there and they're committed and they got your logo and they believe in what you stand for and they believe in you and they believe in where you're going and they believe they're going to win with you, they'll run off the bottom 30, 40%. And so if you get your, if you cannot understand that it goes from me to us, or me, we, us, and you grow yourself your lid, because those are all three different lids. That's why when people are like, oh, I'm a great leader.

• 56:28Speaker 01

  How many, how many employees do you have? 20? You, you're just benchmarked against the wrong person. Like, like you're, you're good from where you came from, but you're not good to what is available. And I think most people get stuck on where they came from versus what's really available.

• 56:45Speaker 00

  Hmm. In terms of like actionable steps that people can take to increase their lid, level up their lid, you mentioned a bunch of really great books, which we can put in the show notes for everybody. What else should people do? Should they get a mentor? Should they join an entrepreneurship group?

• 57:02Speaker 01

  You know, I, I, it's a tricky subject. First of all, uh, on the books, I consolidated, I took all, I took 15 books that I created my business model. And I highlighted, if you went to one of my events in 2008, you would have had 15 books in front of you and there would have been 500 tabs and my notes as to why those 500 tabs are relative. I consolidated a majority of that for the belief aspect. So the three lids, belief, operational effectiveness, and leadership. I consolidated, uh, the belief into my book, Nine Figure Mindset. So if somebody's like, how do I take the shortcut to not having to read all these books? You can simply go to my nine figure mindset and you'll get it.

• 57:45Speaker 01

  My wife wrote, Start the Work and, and Teamwork, which is the people aspect of growing and scaling your business. And then my partner wrote, Ten X Rule, Sell or Be Sold, which is you for you and learning how to communicate your sales proposition. And then of course I would rip through the John Maxwell's leaders, the lids books. He's got four of them now, or, or the, the laws books. He's got four I would go through right now. So, so you can consolidate into just that group of books. Uh, but Sharon Lecter, Three Feet From Gold, uh, you, everyone should read that and think about what's my, what's my one little thing I'm not thinking about where I could tap

• 58:28Speaker 01

  into the gold in my business, because most people do that wrong. Here's the net of it though. If you're not committed to personal development beyond where you're at today, if you're not willing to grow your awareness, if you're not willing to really judge your overall effectiveness, if you're not willing to test into your own ideas on, are you actually evolving as a remarkable leader? Or are you relying on what you've already developed for leadership skills? You have to be honest with yourself because when things stop working, you've tapped out your lid and then you're going to start defaulting to blaming everything around you.

• 59:10Speaker 01

  And the truth is, it's simply you chose not to continue to grow your lid. So, so the resources for this, we can, there's plenty of these resources. Now it goes over to mentors and it goes over to advisors. And what I'll tell you is most people are communicating entirely to the wrong mentors and wrong advisors. They're what I call polling, asking people, what would you do? And what do you think I should do? And how would you, how did you do it? Or how would you do it? Well, the problem is they don't know what they really want to do. They don't have that clear picture where they're going to. They're talking to the wrong people who have never done it. Or maybe they did it, but they don't know exactly how they did it. So they give you the same thing you're going to get at Harvard, which is, uh, you gotta be a great leader. You gotta be strategic. Uh, you gotta have a plan.

• 59:51Speaker 01

  You got, you know, it's like all stuff that's like, okay, how exactly, right? What is the specific, exact way to do it where it builds one on another? And that's what I developed because I realized it doesn't exist in the marketplace. The only way really today is trial and error. There's no science. So I wanted to be the first in the marketplace to create the science of scaling. And that's what we've done. So we've been able to show people. Now, since launching this business, I personally have created $200 million companies from dead stop, no invested capital, no debt. We've run nine billion of businesses through Cardone Ventures. We've got a portfolio of about 230 business owners that are doubling and tripling in size.

• 1:00:36Speaker 01

  And so now we're going back and studying what we did with all them. So people can just get the quick answer, but here's the net effect. If you're talking to somebody, and I have some friends in the marketplace, and you've interviewed some of these people who have been hugely successful building their business, but the information and data they're giving you is still somewhat generic. So it's like, here's what I did and here's how I did it. That's great, but that doesn't tell you in the moment, in the heat of battle, if I'm making a choice between one, two, or three, or A, B, and C, which decision do I need to make to get the fastest result? And what should I expect that result to be?

• 1:01:15Speaker 01

  It's very difficult. So, and, and here's the thing I would tell everyone watching or listening to your show. If, if you're asking guidance or advice from somebody who's never done it, like what I call pulling your friends, your family, other business owners, what do you think I had to do? You're already gonna go broke. That's a guarantee. The only people you should be asking anything of are people who are living, breathing examples of what you're actually trying to do. Because if you go to people in multiple industries, it's gonna be different. Those nuances of the things you need to do, the tech. If I'm trying to build my HVAC business from five to 25 million, it's gonna be entirely different metrics, different things I look at than if I'm building my restaurant chain from three to 15 locations. Because you're gonna have a lot more employees, a lot more moving

• 1:02:00Speaker 01

  parts, a lot more inventory issues you have to manage versus the HVAC business. If I'm building the HVAC business and I'm comparing myself to the dentist that wants to have 100 locations, there are base similarities. But the nuances is what's gonna make or break you. So you need to find people that are actual living, breathing examples in the thing you're trying to do. And here's a pro tip. If you're sitting here right now thinking you want to start a business, don't. Go find a business owner that has a $5 to $10 million business that's frustrated. They've been able to demonstrate that they're able to be in business, but they're not really growing. And perfect the art of identifying the perfect

• 1:02:42Speaker 01

  kind of client, how to communicate to them through me, what you do, what you teach people to do, how to promote to them so they can actually hear what you're saying, how to engage them to get them to be interested in what you're talking about, and how you can help them and just work with a business owner and figure that out. Because that's what most technician-owned businesses, 88% of them, never learned how to do is to activate new clients because they started their business with friends, or with an inner circle, or a warm market, and they just built it till that ran out and tapped out at 3 million, and then they don't know how to promote and get new customers. Every business needs new clients. And so if you could just perfect that, you could build just about anything.

• 1:03:24Speaker 00

  Yeah, I love that advice. It reminds me of what Cody Sanchez talks about, which is like buy boring businesses, but you're suggesting go work for somebody.

• 1:03:31Speaker 01

  She talks about buying laundromats and stuff. I mean, look, that's, Cody's awesome. And, and, and if that's what you want, and I've got a lot of wealthy friends that own 50 laundromats, or 20 car washes, or, I mean, those are unbelievable. I, I, I'd just be completely transparent. I started buying mini storages in 2000. In 2000, I have 680,000 square feet with a couple partners, and they pay me 60,000 a month, and I've got all my money plus out. So those things are great. I view that as a different type of, of business. That's more of like, if I want to build a micro portfolio of things that will cash flow, and there's nothing wrong with that, and Cody's the best in the world at talking

• 1:04:11Speaker 01

  about it. I'm a business builder of businesses, things that actually can become 10 million, 50 million, 500 million, a billion. That's the market. I don't do startups. I'm not, I'm not even interested in talking about how do I hire my first employee or my second employee. It's just, it's, it's not my expertise, or where I choose to spend my time. My sweet spot is 3 million to 100 million and 10Xing that. And, and, and if you're a business owner and you're at that stage and you're frustrated, you just simply need to understand, you just don't know what you don't know. And the hardest and slowest and most complicated and dangerous way to do it is through practicing trial and error. And so you need a different

• 1:04:56Speaker 01

  solution. So if I'm in HVAC or dental or anything, who do I want to talk to? I want to talk to the dentist that built 100 chain unit and sold it. I want to talk to the, if I want laundromats, I want to go find somebody, I learn from Cody, and then I go find somebody that owns 10 laundromats. And I say, look, you teach me how you did this, I'll go find 10 more and make you a 50/50 partner. Drafting is always faster than being in the headwinds by yourself. Every professional sport proves that out in motorsports and in bicycling, is if you can cut in behind somebody who's already moving quicker, you both move quicker. I'd rather learn from somebody who's a living, breathing, proven example in whatever I

• 1:05:39Speaker 01

  want to do, and I'd rather give them half of whatever I'm gonna do, because that was my value pop to Grant. Grant, I don't know how to bring in millions of people into this audience and do all this social stuff, but I do know how to take a business owner and blow their business up and make it highly profitable and valuable. I'll give you 50% of a new company, I'm the managing partner, I control everything because it's my IP, you're my partner and own half. Once I prove to you and you feel that I'm credible in what we're telling you, me and my wife and I, we're business partners, then you just blow on us and tell people, go talk to my partner. And that's how we've created a quarter of a billion dollars in five years with no invested capital, no debt, that's worth, you know, probably a couple billion dollars right now, to be honest with you. So, so the idea is, doing it by yourself is broken thinking, because you're never gonna get

• 1:06:24Speaker 01

  big by yourself. Doing it and inventing an already invented space is stupid, so that that's gonna be a high condition for failure. So what is the fastest and biggest way to become successful? Find an example that's doing it. Make a commitment that you'll add value to them. Make a bigger commitment that if they teach you how to do it, you'll partner with them. And go become an expert in something that's already proven to work by somebody who's proven they know how to do it. There's $6 trillion of businesses getting handed off in the next eight years from baby boomers who have 3, 5, 10, 50, 100 million dollar businesses, and they never made any money. They're just giving those businesses away.

• 1:07:06Speaker 01

  So becoming an expert on how to start, grow, optimize, scaling, blow it up, and then exiting at a high value, makes a lot more sense than just starting something hoping over the next 20 years, you can create a legacy value in that business.

• 1:07:23Speaker 00

  Hmm. You just tapped on something that I was gonna be my next question, which is your relationship with Grant and Cardone Ventures. And this idea of creator entrepreneurship is really popular right now. And essentially, you know, it's all about getting eyeballs online and, and having social media, and the biggest entrepreneurs out there also have a huge personal brand, like Grant does. So talk to us about, you know, why you teamed up with him, and sort of how you see things evolving, and why you thought having a partner who had a big personal brand was really important for your next company?

• 1:07:55Speaker 01

  Yeah, so we hired the same research firm, uh, when, in 2016, when I sold my business for the 77x EBITDA, I hired IGS out of Boston. It's another huge research company that private equity uses. I gave them the original work we did with FTI out of Chicago. And I said, refresh this 10,000 business scoping thing over the next three years while I integrate my business into the Danish public company that we took from 1 to 4.5 billion. And when we had done all that, and all that new data came back, I told Natalie, Natalie and I were talking about starting our new company. And, and so we were like, what's the fastest way to success? And she's half my age. And she said, you should look at some of these social media people who have legitimate businesses. So she made me a list of 25 people, because

• 1:08:38Speaker 01

  I wasn't following social media. And I hired my same research company, and I said, here's what we want to build. We want to build a business that helps entrepreneurs and business owners across these hundreds of sectors to be able to grow, scale, create massive value. We want to do it with somebody who has high credibility, somebody who understands how to build a business. And so, go, I turned them loose. They came back and said, here's a list of three people. We went deep on those three people. The reason we picked Grant and Elena Cardone is because Grant, I created the first reverse triangular merger, decentralized, democratized equity structure with business owners, long before blockchain came out, to innovate the small business space and create platform companies. Grant was the first

• 1:09:23Speaker 01

  person that actually took, uh, the, the laws that changed from David Weald during the Obama administration, crowdfunding laws. And, and he was the first to actually do it in, in multifamily. And when I went to his event, he had raised 250 million directly from his community. Nobody else had done that. I knew we were gonna buy businesses and wanted to do it with our community. So I said, that's a perfect fit. He does it for real estate. I'll see how he does it, and I can do it for businesses, with business owners. Then, underneath that, he was the number one marketing and sales guy in the marketplace. And so he had that down. Now, I'm a scaling expert. Based on the engineering, I know there's 10 things to build a big business, you gotta be an expert at. First,

• 1:10:08Speaker 01

  strategy. Second, promotion, marketing. Third, sales, conversion. Fourth, people. You gotta find people. Fifth, you gotta be able to deliver. Sixth, you gotta understand your finances and get your numbers right. Seventh, you gotta become a masterful leader. Eight, data. You gotta know what you're looking at. Nine, uh, systems and technology, because that's different than data and expands and grows as your business. And then 10, investment thesis. What to do with your money to get the highest returns and grow scaling faster, right? By either amalgamating, or acquiring assets, or bolting on, or tucking in, or buying your technology, whatever it is. Well, he had the sales and marketing and investment thesis for real estate. I had everything else. So we went to that conference, my wife scoped

• 1:10:53Speaker 01

  it. We went there to say, okay, what does his audience look like? Who shows up? And while we were there, we had our list of all the verticals we were excited about. And we just started a meeting of 34,000 people. I never knew anything about Grant Cardone, other what I saw online. We went and bought seats, 35 grand, sat in the front row, with the idea that if we didn't see what we wanted to see by the end of the half of the first day, we're out of there.

• 1:11:17Speaker 01

  We saw everything we wanted to see. We met so many remarkable business owners that were there and we're like, why are you here? What are you doing with Grant? Well, it just so happens, John Maxwell was speaking at that event. But John and his leadership team, whom Natalie and I are extremely close to for the last 10 years, we went to dinner the night before and we were talking about, I wonder what this is gonna be like. I wonder what we're gonna see. I wonder if it's all hype. Well, both of us agreed at the end of day one that this was a unbelievable thing that Grant was able to do. And I had decided that if he could put 34,000 people in a stadium on Super Bowl weekend with the lineup, I could look through the things I didn't like and I could hone in on the things that I was blown away by. So a few weeks later, we approached him, we met him there, whatever, but a few weeks

• 1:12:02Speaker 01

  later, we approached him and said, we'd love to talk about partnering. And the reason for that is, is he has a network of 25, 28 million people around this world. Most of them are business owners. Most of them invest with him. They have high trust with him and he has his haters, trust me. This whole social thing and media thing for me is, is new, okay? But it seems like anybody's successful, half hate, half love. It just kinda seems like it is and a lot, most are jealous. But he has now raised over $2.2 billion. We've first in the marketplace to do a Bitcoin-backed balance sheet, multifamily, that is gonna become a hundred billion dollar business. We launched our Cardone Equity Group. His audience has been phenomenal for my wife and I. We've been able to add value to his

• 1:12:46Speaker 01

  business. He's added value to ours. And to put it in scale, when we partnered with him, his training business was only 50 million. Today, it's 150. Our business from startup is 120 and our health business that we bought for 250,000 from Brekka's wife is 125, 130 this year. So in three, in five years, we've created three businesses, all over 125 million, all profitable, all following the exact example of what we teach over 9.8 billion of business owners to do today. So we're extremely bullish. We're launching our private equity group, Cardone Equity Group. We're now out buying businesses with business owners that we have high trust and confidence in. We launched Cardone Financial Group. It's a whole series

• 1:13:29Speaker 01

  of financial assistance programs I've created for entrepreneurs and business owners. And we have Cardone Ventures, which is our growth, scaling and venture company for entrepreneurs. So what we see combined is a multi-hundred billion dollar, maybe trillion dollar portfolio as I've just opened Cardone Ventures, Cardone Financial Group and Cardone Equity Group UK. We're opening our UAE branches and then we'll be in Asia by the end of the year. So I've, when I partnered with Grant, I said, I will help take the Cardone name to a global enterprise. That'll be my commitment to you. If your commitment back is to do all the things you're remarkable and teach me how to do it. And once you have confidence in

• 1:14:13Speaker 01

  my wife and I, let's just put our heads down and go full steam ahead. Well, after the third year, he's like, dude, we're gonna kill this thing. And it's been a remarkable relationship. And that's why we partnered with him with the hopes that we would be exactly where we're at today, helping entrepreneurs and business owners create massive value, legacy net worth, having a great time doing it, and having our brand reach, real estate, business, finance, a whole thing, and innovate the small to mid-sized business and real estate space and create a trillion dollar portfolio. Everyone's winning with us. That's the idea.

• 1:14:46Speaker 00

  Yeah, you guys have done an incredible job. I've been hearing about you and Natalie for, for years now. And it's just so impressive what you've built with Grant and Elena. You know, month going on here. So in terms of picking your business partners, I know you have like, I think it's like five different elements that you look for in a business partner. Can you break that down for us?

• 1:15:08Speaker 01

  Yeah, well, first of all, that, that, that persistence, perseverance and patience is very important. People who want it now and want to demand it now, I, we won't partner with those people. They're just, it's not even realistic. Most of them have businesses that are anywhere near how valuable they can be and they just want it now, want it now, and they demand and they're unhappy immediately. And it's the same behaviors that got their business in trouble in the first place. You have dealt with people like that in your marketing side. They hire you, then they bitch 90 days later, your marketing doesn't work, when the reality is they're getting more leads than they've ever gotten in their life, but their internal operations suck. And instead of blaming their people inside, they blame you because that way they don't have to address their friends and their family and their people that have been around. So they go through these cycles. So what

• 1:15:53Speaker 01

  are we looking for? Open-minded, forward-thinking, high-integrity, patient, persistent and willing to persevere. And if they have that, we will dominate anything we put our attention on.

• 1:16:05Speaker 00

  So I end my show with two questions that I ask all of my guests. The first one is, what is one actionable thing our young improfitters can do today to become more profitable tomorrow?

• 1:16:16Speaker 01

  Yeah. Great question. Identify the three things that create the most value in your business right now and put 80% of your attention just on those three things. Period.

• 1:16:30Speaker 00

  Love that. And what would you say your secret to profiting in life is? And this can go beyond, you know, business and financial, but what is your secret to profiting in all areas of your life?

• 1:16:41Speaker 01

  You know, I accidentally stumbled on it in the walnut orchard when I hired all those people to come in and pick the walnuts. And I didn't know then the impression that would make on me now, but my absolute secret is understanding that the only way to get huge is to amplify and multiply through others by creating value. And if you can do that, there's an enormous amount of wealth creation, no matter what you're doing. And so in all my decisions, I never think about me. I think about the impact of the people who I'm either working with, working for, partnering with, advising, guiding, because if they're winning,

• 1:17:25Speaker 01

  I'm gonna win all day, every day. And, and I just want to do one quick shout out because I talked around it, but I didn't directly address it. Having the right partner. Partners, plural. My wife is absolutely a beast and she's incredible. And Grant and Elena are also equally absolutely incredible. So surround yourself with people that you love, you admire, you respect. And here's the thing, I don't want to let any of those three people down. So for those business owners that really want the hack to success, stop thinking about yourself and become the absolute best partner to everyone you work around and you work

• 1:18:07Speaker 01

  with and make yourself the center of that partnership. Instead of thinking about you, think about how can I just do something so amazing? Because then everyone's gonna love you and they're gonna want to be your partner.

• 1:18:19Speaker 00

  Really good advice. Now, I didn't get to ask you about the walnut story. We kinda skipped over it in the beginning. So I'd love for you, if you can, if you've got like a minute, just so people understand the context and the leadership, you know, principles that you learned when you hired those students to help you at the walnut farm.

• 1:18:35Speaker 01

  Yeah, well, I had been sneaking in past my curfew. My dad grounded me and, and I was frustrated because they were going on a two-week vacation. I was home alone, but he made me pick the walnut orchard, which he knew would consume my time between school football practice and working at the, the night deposit as a dishwasher till midnight. So I went to school the next day and the seniors, or I was a junior, they put little notes on all our lockers saying, senior fund drive. They're trying to raise a thousand dollars to go on a senior trip. And that was my first entrepreneurial epiphany. I went to the captain of the, I was a co-captain of the football team. I was a junior and the senior I went to and said, hey, I, I think I can help you with that thousand bucks or some portion of it if a few of you showed up at the walnut orchard. Because if I could

• 1:19:17Speaker 01

  pull the walnut picking forward, I could go spend the following weekend with my girlfriend who I was terrified she would bail on me because she was going to Oregon State and I was in high school, right? So I was like, didn't want to lose her. And I ended up with like 35 kids and their family and everybody come out. And in two days, we picked that thing clean. And I didn't do any of the things I hated. I didn't get my hands stained. I didn't do, I just went around topping trees and putting stuff in the burn pile. And then the parents bought all the walnuts because they were, and, and I didn't understand it. But when I look back on it, the parents showed up and did that with their kids because they're graduating. They wanted to show them they were interested, right? They, they did something I hated to show the people that were their kids, they loved them. And then they bought

• 1:20:02Speaker 01

  it to, to like thank me. They bought everything to thank me for allowing this to happen. Everything I hated turned into something that was like a massive blessing for other people. And I think what I'd like to say to every business owner who's right now frustrated with their business or pissed or, or fearful or upset because they're struggling, just remember, the very thing you hate can create life for somebody else. So instead of thinking about what you don't like, ask yourself the question, how could this resource create life for somebody else? And then give them an opportunity to come solve that problem with you and watch how fast the things that you're frustrated with turn into the things that you become

• 1:20:46Speaker 01

  the most joyful about, which is watching other people succeed.

• 1:20:51Speaker 00

  I love that. What a great way to end the interview. Brandon, this was such an incredible conversation. You, you're welcome to come back on the podcast whenever you'd like. Where can everybody learn more about you and everything that you do?

• 1:21:02Speaker 01

  My Instagram's easy, at Brandon M. Dawson. My YouTube channel is at B Dawson. And, you know, obviously I'm trying to build both of those. My podcast is the, the Building Billions by Brandon Dawson. So those three areas, or just go to Cardone Ventures.com. You can look us up there too. But look, I love, I think you, my wife would kill it. I looked you up and I, you know, I know who you are. I looked you up. I looked at some stuff before we got done with the show. I know how hard it is to be successful in this space and you've done such a great job. I just want to congratulate you.

• 1:21:36Speaker 00

  Thank you. That's so sweet. Thank you so much. Thank you, Brandon. I really enjoyed our time together.

• 1:21:42Speaker 01

  As did I. Thank you for having me on your show.