Full Transcript for Jay Bourgana on Building a Management Bench and Fixing Bottlenecks

get into the questions, man, I've got a lot to ask and ⁓ about the NMA side and ⁓ Before we go in, can you give us a little bit of history about, you know, your experiences in banking in China, your retirement, and then how you got bored and you came back into the game? speaker-1: Yeah, and I mean most of my experience has been like very random and very ⁓ reactive. It wasn't really by design. And ⁓ you know, I was poor and I was thinking, hey, ⁓ where's money? Money's in the bank. Let me go work for a bank. And ⁓ so I ended up working for a bank for five years and ⁓ I wanted to know what ⁓ people who have money looked like. So they looked like business owners within my bank. So I started becoming more interested in business. banking and so I did everything from ⁓ business acquisition to cash flow financing to ⁓ working capital financing and then ⁓ I wanted to be on the other side of it. ⁓ as you know, I kinda figured I couldn't start my own bank. So let me go become, you know, an a an entrepreneur. So what do I need? I need to be more operational. So ⁓ I decided to go learn operations and the best place to learn operations is manufacturing. So I started working at a manufacturer in Southern California. I spent a couple of years there and then they sent me on the project, a two week project in China, ended up staying there for five years. And ⁓ I didn't know what I was doing, but I was just literally just solving problems one at a time. And ⁓ regardless of culture, man you know, product, process, it didn't really matter. It's just understanding kinda like what the bottleneck is and figuring out how to solve it. And ⁓ when you know, when the large inner real estate crash happened in two thousand eight, I came back and ⁓ a lot of companies were struggling in the United States and I kinda had developed this, you know, turnaround skill. So I spent another five years just doing turnarounds ⁓ of people of ⁓ companies that ⁓ had people that I knew, just friends, and they would call me and just say, Hey, can I can't figure out this problem. Can you come take a look and help us? Yeah. And ⁓ and then by then I kinda got tired of travel. So I've been like living in hotel for ten years and I wanted to have an address. So I went back to Southern California, looked for a place to live. A friend of mine, I was having coffee with him and he said, Hey, why aren't you renting? You should buy instead of rent. We just ⁓ printed a lot of money and asset, you know, inflation is gonna be higher. Yep. So I got interested in real estate and I ended up ⁓ not only buying real estate but also Starting a real estate company and and then ⁓ and I knew kind of like ⁓ to scale through business acquisitions. So I started, you know, buying at companies and ⁓ we grew large enough where we got caught the attention of an even larger operator who ⁓ sent us a cold email, sent me a cold email to say, hey, we'd like to partner, buy you, whatever. And and then a month later, I'd sold 70% of my company, kept 30%. We did a bunch of acquisitions ⁓ post that and then ⁓ COVID happened. And then when COVID happened, ⁓ they decided to not grow anymore. So I ended up ⁓ retiring in Hawaii. I thought, you know, retirement was a goal. Drinking my ties on the beach was the dream. But a couple of years into it, it felt like ⁓ empty and and and kinda got itchy again to do things and be productive. So I decided to come back and I enjoy teaching, I enjoy learning, I enjoy transformation in people. So I decided to do consulting but as well as teach ⁓ and A and then teach people how to do acquisition the right way. speaker-0: Yeah, amazing man. I I I wanna ⁓ there's so many questions I wanna ask along the way. So ⁓ but one of the things that you know when we're done a prequel and you're asking me my ⁓ about my content, you're like, Hey, what's your title? What's your best thing? I was like, Why'd this guy grilling me? So then I went back when I was doing my preps and I didn't realise how much content you've put out already. Yeah. Do you know what I mean? Like you you do your shorts, you do your posts, you do like everything. And I was consuming that I said, ⁓ that's why, 'cause he's like really into the game. ⁓ so I was ⁓ watching one of your shorts for ⁓ the Jared Bus story. Yes. About how he had ⁓ like he was at the time he was like a few million short and he was only like, you know, two hours to go. Yes. And I think on the surface I watched the document I watched not the documentary, the the Showtime, the T V show. That's a great show. And yeah, you know, on the surface, I mean, he looks like he's calm and all that. But you know those deals behind the scenes. What what they like? Like do people turn the w what's it like? What a speaker-1: Yeah, it's a great show. sad it's it becomes it's panic it's becomes survival and ⁓ I think there's some people there's some people when they get to a certain level of stress yeah you know beyond a certain level they become calmer really and then yeah things slow down because they develop ⁓ you know ⁓ an instant around there's no there's nothing to do to panic about you know I mean if you panic you're gonna die and might as well just calm down and then let's just take one step. Let's figure out what is the one thing that we can do right now to solve this problem. And I think he's one of those guys where they're comfortable with discomfort and when things when th but sometimes that kind of those types of people tend to be addicted to that speaker-0: Stress. Yeah, last minute thing, yeah. speaker-1: Yeah. It's almost like the the guys who did the free solo climb, you know, with no rope. Can't you know, they can't enjoy anything else. They have to be like on the mountain with no rope. So that's kinda like the type the so Jerry Boss is like the correspondent in business. You know, they need to do like big, extreme, high risk things. speaker-0: Yeah. So when you look at deals like that when they were like swapping

like twenty seven properties or whatever, like they had like money in the escrow, they were like involved multi teams, like when s you hear stuff like that, does that excite you? Does you do you say that's way too much for me? speaker-1: No, no, no. I love it. I think I think it's and I I love it. I think it's it creates a sense it's creativity. It's like yeah, you know, it's like cr you know, it's a creative deal making. It's like a puzzle. It's a it's a problem that no one can solve. And then, okay, what can I do to solve this problem? And I mean one of my you know, it's funny, like ⁓ you know, I s I go fishing once in a while and then with the guys and sometimes the line gets gets stuck. Yeah. And People like just wanna cut it and put a new line. They're like, No, no, no, no, I wanna entangle it and it's it's fun. Yes. Yeah, yeah. So it's like it's a it's a complex problem and you wanna solve. speaker-0: Analogy. Yeah, so when you're looking at like you probably watch sports 'cause you're Florida, right? So when you're watching these multi tr multi tr ⁓ teams deals and all that everything, like for you it's like a way of thinking around it. ⁓ speaker-1: Absolutely. That's it's it's creativity. And and and you you know, you'd be surprised, you know, y you would think there's ⁓ there's high finance, ⁓ there's like a high finance element to it, but actually eighty percent of it is just relationship based. Eighty percent of it is building trust, every every eighty percent of it is positioning every every you know, like you know, if like when you think of for for example these teams ⁓ in when you go in the league, they're let's say let's say for example Formula One. Formula One, they're only like eleven teams and they're twenty two drivers. Yeah. So, you know, for you to become an owner, you have to have such high trust with all the different players, not only at the league level but at the team level and so forth for them to accept you as, you know, an okay partner. So if you go decide to buy, they don't let anybody buy a team. speaker-0: ⁓ that's interesting. speaker-1: It needs to be approved by everybody. So there's a lot of it is relationship build that happened over years. It doesn't just show up. Yeah. speaker-0: Yeah, I got you. I I watched documentary too for that. I didn't even know how o any of that worked until you you watched the thing again. So like those players at the very top, like when you they were showing the owner of Mercedes, when they're showing the head guy from the ⁓ fr ⁓ the the Red Bull and all that. So these relationships were built many, many years ago to all the way to the top. Yeah. speaker-1: percent and it takes it takes a long time to develop these relationships. And it's the same. It doesn't matter. You could be a billionaire, you can be a hundred billionaire. It doesn't matter. And I mean if you don't have trust, if you don't have the relationship, if you're not someone that they can see part you know as a partner, they won't let them in. speaker-0: Got you, got you. One of the things that you spoke about on a on a podcast, the art of succession pod that you did. You know, your s your part two hasn't even came out yet. I just watched part one. I was like, ⁓ this is crazy. And one of the things you talked about, which I didn't really understand that much, was the ⁓ your days in in China around the culture and management bench. Yeah. Right. So I didn't understand that. And then you you started talking a little bit about it. ⁓ y and you said this is the the part where you kind of really value and take ownership of because you know, you build your own team and that was a big part inside your business as well. Yeah. Do you want to expand on that? It feels like that was like one of your kind of your superpower, like your talents kind of thing. speaker-1: Yeah, so one hundred percent. You know what when I ⁓ when I go to when I'm hired by companies to transform a company, a lot of times what I find is that the the company has gotten complacent around talent acquisition and talent retention. And and a business is just like a sport team. You know, it's like a a a collection of talented people that have to, you know, individually be talented but also have to work together as a team, you know, and then have to work for a purpose. And so what we do, you know, there are two I don't know if you f if ⁓ you're if you follow football, like ⁓ like soccer. No, there's you know, so there's the ⁓ back in the day there's the Barcelona school and the Real Madrid school. So Barcelona the develops kids when they're little. They they recruit kids at seven, eight, nine year old. They go scout them and they bring ⁓ into La Masilla, which is the school, and then they develop ⁓ You know, and they're the ones like Messi and La Minimal and all these players are like became very famous, they come from that school. Real Madrid does a different approach. They go and acquire players. They find they go to other teams that say, ⁓ this play is already proven successful. Let me just give ⁓ a hundred million dollar contract and then acquire them. So they're two different thoughts. But what they found is that the kid when when someone develops within your within your culture, within your school, you have a higher retention with that player. So there's a time where you can go to Messi and you say, Hey Messi, you know, we don't wanna you know, we wanna pay you a lot of money, but just you know, can you give us ten million because we wanna hire this other player, we wanna recruit this other player, or hey, we need you to work, you know, we need you to to speak to the team. They're they're in culture. They the they grew up in that culture. So they understand, you know, those Barcelona culture. Another player can come to Real Madrid and then, you know, may not get along with the boss, may not get along with the coach and then bounce. So for me, when when I've ⁓ developed my team, I've always

been looking for what is the ideal talent profile look like on my team? Yeah, what is the ideal salesperson? What is the ideal ops person? What is the ideal admin person? And so I look based on the people that did well in my company already, and then I'll try to underst identify that profile and I try to go out there and recruit that profile on my team. And every time I'm hiring someone, I'm I'm consistently looking for speaker-0: Yeah. speaker-1: Is this person ⁓ a potential for management position? So I'm always looking at building a management bench, you know, so not everybody is, but some of ⁓ are speaker-0: Management benches. Now I got it. Now okay. So you are looking for like a a ⁓ a building a strong bench so when somebody else moves on, you already have that behind you. Okay. speaker-1: Exactly. Or or if we ⁓ or if we want to go open a new division, or if we wanna go so we already have exactly we have someone that's ⁓ in our culture, understand our process, understand who we are, and then they can go and run with it. speaker-0: That's what he means. Okay, cool. So go going on to another thing that you said right after that in the podcast was about your you you said you're a systems guy, right? You say I'm a systems guy through and through. And I I ye I know you got traction behind you. I have traction too. I I I run traction. I don't I don't run traction. I run a version of traction, my own little version of traction in my company, right? I only have a company of of eight people. So when one of the things I'm very curious about, because I'm Chinese. I came from I I haven't been back for like thirty years. Like I came when China was still like very behind in times and all that. I know you're going back there soon again. But when you did that six years, like I c culture must be a factor when you you know, bringing these systems, the politics of it, you being an outsider, you know, like you not being on the inside straight away, like how does that affect everything? It's speaker-1: Yeah, it you know, it as a leader, ⁓ you have to find a way to align what you're doing, what the company wants to do with the people and how what their goals and their vision for their life. And that that also that's the same across all cultures. Everywhere. Anywhere you go, people want three things. ⁓ there there's a great book by ⁓ Daniel Pink. It's called Drive, which I highly recommend everyone to read. And there are three things that motivate People anywhere around the world, it doesn't matter where they are. It's mastery, which is essentially l learning, growing, feeling that you're getting better every year, every day. It's aut autonomy, feeling control over what you do over your life, and purpose, having a sense of what we're doing here matters beyond making money, beyond just doing things. Now, if you have people that are focused on growth and focus on being autonomous. And and work with purpose, usually automatically with that money comes. Because they're growing, they're working bit with purpose, and they're autonomous. So usually you you wanna like you wanna promote those people and you wanna give them more opportunity. So those money is just as an outcome of those three motivations. And so I've always had this sense for ⁓ purpose of a business. And that's one thing that a lot of a lot of Business owners do not explain. You know, you could be working for, let's say, ⁓ a food provider, ⁓ a food manufacturer that sells to all the Aldi's or any type of retailer. And then you go to the employee, the driver, or you go to the guy that works on the line and he says, What's your purpose? What are we what are we doing here? And he can't tell you. Just say, Hey, I'm here, I just do a job, I get paid, I go home. Or they'll say speaker-0: Purpose? There is a unified purpose. I didn't think about that. I just think it's a bit fluffy. So it's not like ⁓ speaker-1: Because because think about it, like all these companies compete to they compete on quality, compete on price, compete on you know value to the retailer, and then that retailer wants to deliver that value to the consumer. So all these companies are putting pressure on costs, increasing quality. And so without that that that race to push price down and increase quality, a lot of people are gonna go starving. A lot of people are not gonna afford that food. A lot of people are gonna go unhealthy. A lot of people so if we are as a company focused on, you know, improving quality, improving the ingredients in our food and lowering costs, we're essentially automatically feeding helping feeding people, feeding the poor, feeding you know and then you can extrapolate that to, you know, if a kid can f eat can eat, is gonna do well in school, is gonna have a better outcome in ill in life, is gonna you know, you can say you can extrapolate from that how we can change the world. speaker-0: Got you. So the one time. So actually it's go starts from small, then goes back to the bigger vision. So it's not the other way around. No. So because they can't connect the dots anymore. It was too it's too far from them. ⁓ okay. speaker-1: Customer edit. Correct. How do I impact the life of my customer? Yeah. And then what is the actual value that I deliver to the customer? How does it impact their their themselves? How do it impact their family? How do we impact the kids? How does that value create productivity, creates health, create, you know, revenue for the society, create taxes, you know, and then impacts the community, impacts the world. So you can extrapolate slowly and then expand it across the world. speaker-0: Then it becomes a big thing. Yes. Then it becomes got you Exactly. This this is very interesting 'cause I don't think anyone has explained it as clearly as you have, like in the in the roadmap. Yeah. Yeah. Yeah. speaker-1: One hundred percent. It's it's a problem I see everywhere. Every company that I go, I see I see like how like there's low morale

and then there's no sense of purpose. Yeah. And then so when I go to a company that has like this challenged, you know, that's the first thing that I so the first thing that I do, I explain I literally tell them, Listen, you guys do an incredible work and a lot of people are counting on you. There's there are hundreds of thousands of people. Like there are there are hundreds of ⁓ hundreds of thousands of people that are counting on you to to steen to stay in business, to keep doing your work because they're counting on the things that you're producing. So we're gonna work together to make sure this facility stays open, to make sure that this operation stays open and s and successful. So and then we have to go through the roster. We have to go through people who are the people that are focused on growth, who are the people that are focused on, you know, learning, who are the people who are focused on contributing to to the company and who are the people that are just like beyond we can't like there's nothing we can we can we can't do anything. Yeah. So we have to like we have to like separate ourselves and then hire more people that are cont contribution oriented. There I tell I tell the guys there are only three tea three types of people in the world. Are you familiar with like potlucks? Do you have like a potluck culture? speaker-0: I watch that beer. Yes, please tell that be I know that beer. speaker-1: Yeah, so so there are three types of people. There are people that ⁓ there are people that come to a pot like with a bag of chips and and and like a like a some package thing that they grab last minute from the store. And then there's some people that bring the best dish that their family has made, their family recipe, that they bring the steaks, they bring the the ribs, and then there are people that show up with a fork and sometimes topperware. Yeah. And they're just they're just extraction people, they're just takers, they're not givers. You know, so we don't want those guys in our company. We don't want those people in our organization. We want givers. Because we all know the more you give, the more you get. And when you have a a a team, a culture of giving, a culture of learning, you know, the the sky's the limit. speaker-0: Yeah, yeah, I love it. One of the things another thing they explained really well, which I have never heard explained this before, was the steps about like you come in and you go, All right, let's you know, ⁓ the bit that you that you to talked about about, you know, you ask ⁓ so what is it that you want? Like, you know, sometimes you just paint the walls and you just clean up the bathroom, you know what I mean? Like renovate the bathroom and now they go, All right, these guys are all right. Yeah. But then do you want to do that bit? And I have a follow up question with that. Yeah. speaker-1: Yeah, so so one of the first thing that I I do in the beginning is I want to earn before I make any changes to the company, I want to earn the trust of the team. And so the first thing that I want to do, I wanna because my first presentation, my first conversation is you guys are doing an amazing, amazing job. This organization has been around for a long time. The reason that I'm here is because we wanna continue this work and we wanna expand it and we wanna create opportunity for everybody. We're And also we want to make your life better. We want to make the customer's life better. We want to make the suppliers' life better. So I'm here coming to make the everybody's life. This only works if we all win. Win, win, win, win. So the first thing I do to prove that, you know, it's a very small gesture, but it it has measu massive impact. Is I just look at the spaces where the employees, you know, gather, either the kitchen or the bathroom or or like the the break room or whatever. And then I go and I I I I walk by, I walk with the cleaning lady and I find out, okay, what's happening, what's the problem, and so forth. And very immediately we want to make sure that all those places are spanking clean. If that cleaning person is not the right person, we'll bring someone else. But we really wanna make sure that you know we we replace replace everything, redo the tile, redo the floor and paint, make the place like really nice. If the flooring is dirty, we will press we'll sh make it shiny, we'll bring the guys. We'll spend money. It doesn't cost that much money, but we'll spend money to beautify the space where the employees if there's a microwave that's not working, we'll bring a new one. If the fridge is dirty, we'll we'll we'll detail it. If the ⁓ you know, so we want to make sure everything that the employees touch feel like, ⁓ my god, I can't believe this. This person just showed up and solve our problem that we've been complaining about for the last five years. Yeah. And then if the snack machine is not full, we'll bring another vendor, make sure it's always full. And then we'll we'll bring like the taco truck or we'll bring the Pizza Friday or whatever. And we really want them to feel that, hey, this person, he hasn't asked me anything yet and he cares about me. And then the next thing that I do is I sit with the teams and I ask them, you know, what can we do to improve the the the process, the business? Give us your all your ideas. And then we list those ideas on you know on the on on the board. And then we essentially mark them, the ones that are like low cost to high cost. Yeah. The ones that are easy to the hard ones. And then we'll take we'll start with the low cost and easy, low cost and hard, and then easy and no you know, and then we and then we work our way up. Yeah. And once when we put the people that ⁓ asked you know or or or suggested the idea in charge, and if those ideas work, we'll bonus those people. Yeah. And we'll bonus them, we'll give ⁓ a reward. Yeah. And then now it works two ways. One way whether it wor if it works, if those ideas work. Great. It's

it benefits everybody. If it doesn't work, also great, because now the they they've been heard, they feel heard, and then they feel like this person really went through with my idea and he wants to Now when I come back and I I suggest my idea, they're a lot more receptive to my ideas. And then we can and and and the whole process is always ⁓ a series of experiments. There's certain things that we're gonna do that are gonna work, there's certain things that are not gonna work. speaker-0: They were crossed off the list. If they didn't work cross they they don't have to think about it anymore. Exactly. So y it's out in the air, you've done it now, you can go to him like, hey, we did your way. Then I mean let's do yeah, okay, yeah. Yeah, so yeah, so speaker-1: So it's a series of experiments, and then we we we want to measure, we want to have good KPIs. And then as long as we're measuring and we know where we're going, we know that our cost is over here, we want it down here. Our productivity, our production is up here, we want it up here. So we kind of like it, we keep it very simple. The other thing that I always do is that a lot of times employees, especially in large operations, they don't understand the financials of a company. So they think that, hey, we're shipping millions of millions of dollars of product, therefore we may be making we're making millions of dollars. Yeah. But we're we're not, obviously. So I I actually bring them in and I share, you know, like a I give them like top line numbers to understand yeah to understand the the cost structure of the business. And then also to bring him into figuring out ways to reduce the cost. So let's say for example, if we're yeah, so if we say we have machinery that uses electricity. speaker-0: Yeah. speaker-1: And so we'll actually bring in the electrical company rep and then we'll have them present how does the electrical company price electricity. And then what can we do as a company to reduce our bill? And then we share it with them and then we say, Hey, we're using a hundred thousand dollars a month in electricity. We'd like it to be eight eighty. So when what do we need to do? And then as a team, we find these, you know, ways To reduce the cost of electricity. Then we go into the cardboard boxes, then we go to the wood palace, then we go to the plastic shrink wrap. And then we go like, you know, these like do incremental improvements, all these places that compound over time. And then one day you go from a facility that's losing money to facil to the number one product profitable facility. Yeah. Just by making these incremental improvements across all the different parts of the company. speaker-0: Efficiency. Yeah, that that's amazing. Cause ⁓ there's here's there's another gem that I didn't even understand. Like when you bring people in, it's kinda like a twofold, right? Number one, explaining to me the cost of things, say, Hey, you think we're making millions. Yes. Right. You're getting very loud outside about that. Look, we're not making millions. We are, you know, doing this. But at the same time, involving them, you say, Look, now that you know how the cost structure works, where you fit in, now you can try to help us save some money, right? And do it that way. So now the voice is used for something productive. Correct. Instead of doing a thing. Yeah, that's just that's crazy. I love it. ⁓ one of the things ⁓ I always wondered, you know, in my imagination, things like traction. Yeah. I feel like it's a very white kind of thing, right? Like everybody's cooperative. I just didn't know if it worked in other cultures and what are the pushbacks you get when you go in the big thing. Do you always implement it? Or like is it just a tool in your toolbox? Yeah, I think it's just speaker-1: the tool it's one tool in in in the box and then everywhere you go i it's gonna have to take different shape and different you know different need and then it depends also on the urgency of the ⁓ urgency of the place. Yeah. And and yeah, but it's not something that you implement across the board everywhere. No, absolutely. speaker-0: Okay, cool, gotcha. Because sometimes, you know, you talk to EOS implementers, which I'll talk to soon. Like they got the the hammer, you know, everything's a nail. Yes. Like you just go, go, go. And I just didn't know how that works. Yeah, you drink the cooler, they gotta be on it. ⁓ another book that I read, ⁓ and I don't know if this is relevant to you, The Theory of Constraints, but I read the cartoon version, but this one here, you know, everything speaker-1: Drink the Kool-Aid. Yeah, that's a good one. Yeah, Yes. Real the real version. Yeah, the original. speaker-0: ⁓ you do have it? Yeah. ⁓ great, but you got the real book version of it. The real one. So I read that. I understood about seventy, sixty-five, seventy percent of it, I would say. Yeah. I think when you're talking about like there's certain things I didn't really understand. Like how 'cause I guess I run a services business. Yeah. But you're in manufacturing, right? And they're adapted, they're trying to adapt this for services. And I didn't really get that deep into it. Like how much of that is real when you were in the factory manufacturing? speaker-1: Applies it applies everywhere. It applies in services, it applies in manufacturing, it applies it applies everywhere. You know, I mean even in ⁓ you know, we talk about services, ⁓ there, you know, there are different places where you're gonna there are different parts of the system that end up being the bottleneck, which essentially set the speed of the system. You know, for example, give me an example of a service. speaker-0: Service like my agency business. So like you know, yeah. So getting clients, acquisition. speaker-1: They're getting clients. Yeah, adds Yeah. So right now, right now your your your capacity, is it are you over capacity or under capacity? Under capacity. So that means your

bottleneck is sales, right? It's the new customers. Yeah, your customers. So now inside your customers, do you are are your sale do you have how many salespeople do you have? speaker-0: And the capacity. It's just me. I'm just me. Yeah. speaker-1: Do you have do you have more leads than you you can handle or less leads than you can handle? Lesses. So that means your bottleneck is in lead generation. Yeah. Now now on the lead generation side, where is the ⁓ do we have ⁓ do we have more traffic but people are are are ⁓ do we have a lot of people hitting the page but not filling the form? Or we have or speaker-0: Yes, Lazan I can handle it. We have problem with me because I have a team of A who's delivering but I I can't get out of the desk because I'm involved in accounts. Yes. Right. So I need to g free myself up to to get out speaker-1: Well, because that's where the bottleneck is. So what's essentially what you need to do, you need to move resources from delivery to generation. And so whatever the bottleneck is, until like you become you have more customers than you can handle, then your bottleneck becomes recruiting. speaker-0: Yeah. Right. Yeah, that's right. Yeah. Got it. Cool. So that actually applies everywhere then? Yes. For the thing. speaker-1: And and then you can go a little deep. You know, I mean if you if you think of like an all like an ad campaign, yeah, you you you could see like where it's gonna get stuck, where the conversion goes down. Yeah. And then that's where your bottleneck is. speaker-0: Yeah. That that that part I I'm I'm quite familiar with. So in terms of manufacturing is very similar as well. You can see w where where where it gets stuck. speaker-1: Yeah, we know where s we know that if we like I'll give you an example. So when I go to a facility, there's ⁓ there's people and there are machines and there's inventory. So ⁓ you know, ⁓ goods go from one side, people process them, go through a machine, come out the other side as product and then get shipped, right? Yeah. So usually, you know, when I come in, the facility cost is too high. So that means they're not producing enough. Yeah. You know, to pay for all the expenses, all the overhead. So what you know, so for me the goal is to increase the output of the facility. Yeah. Now what we do is that we clean up the process and maximize the output. And then once once we clean the process, maximize the output by chain by making sure the people understand the process, people and then and sometimes I just give them a visual. So for example, if let's say the people have to push product into a machine. The machine has let's say a a belt that is either green or black. It doesn't matter. Let's just color green. So visually, anytime that you could see the belt, you can see the green color. That means we're losing money. As long as that belt is visible, we're losing money. So visually that belt has to be full. So that machine is full all the time. Let's say twenty four seven. So

that's kinda like a visual that we know that the machine is working completely hundred percent. speaker-0: Yeah. Yeah, yeah, yeah, yeah. So speaker-1: So in order for to for you for execute that, a lot of things have to happen around the machine with people. It's a lot of it is having the right people, having the right training, having the right flow, having the right ⁓ scheduling, like a lot of things have to happen for that machine to be full all the time. Now once the people are not the bottleneck, then the ⁓ the machine becomes the bottleneck. Now now the speed, the production of the whole facility becomes the production of the machine. Now what do I do? I go find the manufacturer and I say, Hey, I need this machine to double the speed. Yeah. And then they're gonna say, no, we can't do that. And we're gonna argue back and forth. I'm gonna find somebody that do it. And then we're gonna speed up the machine. Now, when you speed up the machine, what happens? Everything else collapses. Yeah. Now we have to we have to go back and figure out the people, the process, the setup, the scheduling. Everything has to change until we get in flow with the machine. Once it becomes the machine speed, we just Essentially doubled. Yeah, exactly. speaker-0: Okay, co ⁓ go, sorry, yeah, no, you're right, you doubled. Sorry, I missed the punch, you just doubled. Yes. Yeah because you got a two there. Yeah, right. And then you go again if you if speaker-1: Now it's profitable, yeah, exactly. Now we go again and we add another we even we we increase the output of the machine or we add another machine. speaker-0: Yeah, yeah, I got you. That's amazing. ⁓ w one of the things I want to change gears a little bit. One of the things that you said the reason you came back into the game is ⁓ also because of your you feel like the word you use was atrophying. Yes. Like your your ⁓ acquisition or your your brain muscle and everything, like the sharpness kind of is atrophying. And another reason is I I think that ⁓ you you mentioned about development of people. Yes. You yours like the development people. I think that part, like me and you are are different in millions of ways. I think that part I really resonate with because I like my team. I guy I was in that school where I recruited them and I developed them from nothing, from VAs even, you know? Yeah. I and became like good ads people. ⁓ and I like learning because that's why I guess I do it apart to talk to people like you as well. ⁓ my question is with AI coming out, right? And you would have sat drinking the drinks in Hawaii and then when we saw the whole thing explode, ⁓ did that have anything to do with it? And How hard is it to I guess let go of good guys that you know AI's replacing and all that? Yeah, I I speaker-1: think that AI replaces good people. I think remember when we talked about good quality people, they tend to be ⁓ they tend to be growth oriented, they tend to be learners and they tend to be people that like to work autonomously and tend to be people that have purpose that understand purpose. So those people, because they're constantly learning, you can always you know ⁓ you can always do more with them. So those people are benefit from AI. They tend to ⁓ be able to be more productive with AI. Now it's on me, the the founder, to go and find them more customers. They're you know what I mean? Because so so for me, like I need to go scale my marketing and sales to be able to provide them more, or I might have to turn some of the ops people into salespeople in order for us to feed you know the the beast, to feed the machine, yeah, to be able to generate more output. Yeah, you know, so to me, AI is ⁓ essentially a speaker-0: Yeah. speaker-1: an engine of product productivity makes good people even better and and it just it it just amplifies you know who you have. If you have good people they're gonna be great. If they're not good they're gonna they're gonna be worse. That's what happens. speaker-0: Yeah. ⁓ Yeah, yeah, for sure. I think one of the things that you touched on just now is like it's up to the founder to to go and get more customers, right? Yes. So I feel like that's my job. So I have to come out from under the desk and then go and that's that's essentially my job. And I have to see around the corner. Yes. That's my job. Like they they're gonna be twiddling the thumbs if I don't give them something productive to do. Yeah. speaker-1: And the the CEO's job is to go solve the bottleneck. And and and then go and grab people, go grab people from one side and bring them to the other side. And if you have to train them, whatever. It's kinda like, you know, if you think of like you're you're in a restaurant in the kitchen, yeah, and there's like we need help, you know, in the with the dishes or we need help with the serving, you gotta go. You know, you gotta grab somebody, you gotta you gotta reallocate resources. speaker-0: Yeah. speaker-1: And you gotta take resources on one side, put ⁓ on the other, and then you gotta get in there. So that's the job of the of the founder, the owner, the the boss is to go solve the bottleneck. speaker-0: Yeah. Do you find that I mean you'd you've done so many turnarounds and you become you you've become an expert in that thing. I mean, sometimes people you develop to a certain stage and they're kind of you know, or relationships change and all that. Is it always a struggle to let people go? Like good people, like even people that you've worked, you know, many years with and it's a cliches of who got you here's not gonna get you there, you know, that kind of thing? Is it is always difficult for you? I I don't speaker-1: think it's difficult. What I find is that ⁓ at every stage you need ⁓ you need new skills, you need new knowledge, you need new capabilities. So, you know, the people that I've like, you know, hopefully that the people that I've hired are growth oriented and and I've invested in their growth. So

I'm constantly teaching, I'm constantly absorbed and I'm constant constant I can already see what's the change and I'm already like guiding them to to go to, you know, the next thing. Now, sometimes they hit their capacity and then it's fine. They can stay where they are and then we can bring new people that are gonna do the next thing. Like you don't need like to me, if you have a good person, you don't need to let ⁓ go unless they leave their their themselves. You know what I mean? Now if the good person changes, you know, something happened in their life and they don't longer wanna be speaker-0: Okay. speaker-1: learning or growing or whatever, then that's fine also. You know, they can there are a lot of other places where they can thrive. But ⁓ but within our organization, if someone will willing to learn, willing to grow, willing to ⁓ and has purpose, we can always teach, we can always guide, you know, to the next stage. speaker-0: Yeah, so it's up to me as well. Like all up to the founders, listeners with the founders to, you know, see that around the corner about that, about the people instead of being shocked and leaving them like unprepared when something hits and then they go. Cool. ⁓ so for my last ⁓ question on my list is ⁓ you know, one of the shorts I watched, you were talking about how you added a a million dollars of value in like six months because you well, I think you added a few vans and the person didn't that So I I find that very interesting because I came from a trades background. Trades as things like I was a ⁓ antenna installer, drive around in vans to do this stuff, right? Yeah. And I'm thinking I look at that and a hundred percent believe that what you've done is worth a hundred dollars, right? I'm I'm not arguing that. I'm thinking there must be like hundreds of thousands of businesses in the US, in everywhere. Yes. That's in the exact same position. It's it's not really about the technical side in my eyes. It's about something else really blocking them from, you know, doing something, talking to someone like you. speaker-1: Why not? Well, I'll tell you I'll tell you so so we can explain kind of like how that works. You know, usually when someone gets into the trades like you mentioned, like you know, air conditioning or plumbing or electrical or any type of trade, they tend to start as a technical person, as a technician. And then they do some they do good work and then people refer them to other people and then they get busy and they say, Hey, I need to get like an assistant. And then and then over the years, over thirty years, they get a van, they get a second van, they get a third van, they get a fourth van. And then they get to a place where let's say they do five million in revenue and then they're doing, you know, a million dollars in profit. Let's say twenty percent margin. So so now they get to that stage, they're still like healthy and young enough and they say, Hey, if I can do five million, I can go to ten,

or maybe I can go to twenty, right? And it's they say, okay, and I'm netting a million, I can then reinvest back in the business, maybe another three hundred, four hundred K, five hundred K, and then grow this business to ten million. Yeah. And so they start that process of scaling from five to ten. Now on the way there, on the way there, there is a point where they get let's say it's a seven million and then they look back. And then at seven million, they felt for them, they felt like the business is too big too much. Yeah. And it's ⁓ there are too many people. Yep. speaker-0: Yeah. speaker-1: There's too many problems. And ⁓ and they're it's asking a lot of them. Yeah. You know, they're getting a lot of like inbound calls. Yeah. And then they looked at their books and they find that at seven, eight million, they're making the same amount of profit as they did with a five. So at that moment, what they do, they decide to say, you know what, I'm better off at five, because I remember at five million, I was making a million and I was really happy. It was perfect, it was smooth. speaker-0: Yeah. speaker-1: I have like like 10 people, 18 people working for me. I knew where everybody was. Yeah. And we were cool. And I didn't have that that much of ⁓ inbound problems. Yeah. And then I already know what my customers are. I don't have a problem. So they shrink back and then they stay there for like 10, 15 years. Yeah. And then something and then what what happens is that 10, 15 years, a lot of people are coming asking them to come and help them, but they're saying no. They're saying no to business because they don't have enough capacity. Because they're limited the business to eight people or f or ten people with four or five vans. Yeah. And they said that's it, we're not growing beyond that. And then we're only gonna take customers we know and we're only gonna take customers who pay us this way and then or whatever. So so they literally you can sit there with that founder and that founder is getting the phone ringing, yeah. And he's not picking up because he doesn't recognize the number and he's not doing any advertising, yeah, he's not doing any marketing, not no salespeople, nothing. So speaker-0: Yeah. speaker-1: So that business has been essentially kept, has been like put a lid on it by the owner by design to protect his own lifestyle. To protect his mind. He just wants to like chill. He wants to come and work from nine o'clock to two PM and then go home. And then he doesn't want to talk about anybody on the weekend. So when you acquire a business like that, all you need to do is just take the lid off. And then all of a sudden all these customers come and they just say, ⁓ my God, like I we want you to help us. speaker-0: Yeah. Yeah. speaker-1: So you just need to add two or three more vans, you know, four or six more people. I'm not worried about the noise. I can I can take noise. You know, I my capacity to take noise is much bigger than his. Yeah,

right. Obviously I'm younger, he's a little bit older. Yeah. You know, so so that's what happens. And then very quickly you can increase, you know, a million, two million bucks easily. speaker-0: So basically what you you're also saying is that when they do it themselves and don't have the right people with the right consultancy at the first time, they feel like burnt out. I don't understand exactly what you're saying, right? 'Cause eight to ten, you don't really need a manager. Like you can still understand where everyone is. But when it goes beyond that, HR comes, accounting, right? And it's required. So to you, like that type of noise, no problem. No problem. Like we would deal with that. speaker-1: I've ran I've ran operations with hundreds and thousands of people. So yeah, going from eight to sixteen is nothing. You know what I mean? Or like thirty is nothing. So that's the challenge. That's the and and and you're not bringing more energy. The business already has its own energy. You know, again, like the steam is coming out. Like the lid just wants to pop. Yeah. And so I don't need to add more. I'm not bringing more. I'm just taking the the lid off. speaker-0: Yeah. So what's the common threat that stops these business owners from that? Just exactly what you said. The the past experiences, the feeling of burnt out, they don't want to try it again. It's risky for them 'cause things are changing around them, that kind of thing. Yeah. speaker-1: Yeah, exactly. Just just noise. You know, obviously demographics change. You know, like ⁓ you know, they've been like young kids don't wanna work as hard. Customers new customers are too demanding and they want, you know, reports via online and exactly. speaker-0: ⁓ there's kinda you don't know Yeah. Just small teething issues. Yeah, nice. So ⁓ what are you working on these days, Jay? Just to ⁓ wrap up the show. And thank you, man, so much. I've got so much knowledge out of this show, man. speaker-1: I appreciate it. So we have our next cohort sc starting ⁓ early October for the acquisition collective. So anybody who wants to learn how to buy ⁓ bu businesses, you know, small and large, doesn't matter. ⁓ we teach people how to identify what is the right business for them and then how to identify the the quality businesses and how to acquire them end to end and then what to do after that. ⁓ so it's a cohort base. We do it live with me, I teach it, and ⁓ we consult and we kind of help. coach them through their transactions. And then ⁓ the my other side of my other project is a p is my ⁓ parenting ⁓ project, which I I started kids business school. And so it's a program to teach kids how to start businesses and how to learn ⁓ from ⁓ you know being entrepreneurs and how to develop ⁓ agency responsibility, yeah you know resilience and ⁓ all the different capabilities that we want our next generation to build. speaker-0: Yeah, amazing. ⁓ can you give him the ⁓ the links? I'm gonna link all everything in the show notes. Yeah. speaker-1: Yeah, I'm I'm gonna send you I'm gonna I'm gonna email you all the links. speaker-0: Love it, love it. All right. Thanks so much, Jay. ⁓ yeah, man. So again, thank you for coming to the show. And yeah, we'll see you on the next episode. All right, we out. Yeah. Hey, what's up? Jeremy Yang, the online ads guy here, owner of Digital Glide Marketing. If you ⁓ found whatever you're watching helpful, you found interesting, like, subscribe, comment, suggest other topics you think we should cover here. We've aimed speaker-1: Wonderful. Appreciate it. speaker-0: to release weekly episodes helping SMEs with marketing, advertising, talking to professionals about growth, processes, all that good stuff. Right, see you on the next one.