We all share the same 24 hours… so how do peak performers seem to squeeze in so much more?
For Jay, it’s not just about saying yes or no to opportunities. It’s about setting up systems (a virtual FAQ has saved him countless hours) and putting conditions around his commitments (use the words, “Yes, IF…“).
Jay also goes in-depth on hiring and tells us why it’s a scary but worthwhile exercise to do the math on how much a single bad hire would cost a company.
Looking for that one person who will take your business to the next level? You’ll want to hear about the “missing persons report” Jay uses to stay on the lookout for his next team member and the counterintuitive question he asks himself before each and every hire he makes.
This episode is packed with proven wisdom from one of the sharpest business minds in the game. So make sure you listen through to the end, and subscribe so you won’t miss the next one!
J: Welcome to the BiggerPockets Business podcast, Show #6.
“Gosh, probably about 50% of my hires over the last five years have come from my singular networking activity, that coffee. Either it was that person or they knew someone that they could connect me with and a referral is a great way to fill a spot on your team”.
Welcome to a real-world MBA from the School of Hard-Knocks, where entrepreneurs reveal what it really takes to make it. Whether you’re already in business or you’re on your way there, this show is for you. This is BiggerPockets Business.
J: Hey there everybody, I am J. Scott, your co-host for the BiggerPockets Business podcast and I am here with the one, the only, Carol Scott. How are you doing, Carol?
Carol: Hello, darling. Doing great today. How are you?
J: I am doing awesome. Glad to be here.
Carol: So I have a fun little story that happened. So the other day, I got a phone call from a friend and she said, I’m just done with my house. I’ve been with it for 15 years, but I don’t feel like moving. I need to remodel the whole thing. So, please, please, please—I know you’re moving, so I need you to come over to my house and tell me exactly what to do with it before we head out of town.
And I’m like, okay, great—you have exactly one option. I’m going to be in your neighborhood Sunday at 11:00 dropping off both my boys for different play dates, so I’m going to be there Sunday at 11:00. And she’s like, oh my gosh, I have so many other things to do that day. And I’m like, don’t know what to tell you. That’s realistically my only option at this point.
And she’s like, okay, great. Sorry, I shouldn’t have said anything. Just come on over. So we go over, we chitchat, we laid out a whole plan of everything that she’s going to do. And at the end of it, she was like, seriously? I have to apologize. I’ve known you since you were 18 years old, because we knew each other forever ago. And she’s like, you’ve always been exactly this way. You decide what needs to happen and you figure out your schedule is, and you basically tell everybody that.
You know, I love you, but this is the time that I have carved out for you. And you either kind of fit into it or you don’t. So, it was just kind of a good reminder that you need to really protect your time. You can say no. You can set boundaries. You can set parameters so that you can still be really effective and make the other person happy and keep yourself happy because you’re not overcommitting.
J: I love that tip. You have to protect your time. And that is a great segue into today’s guest, Jay Papasan. He is the VP of Publishing for KellerINK He has written some of the greatest investing books on the planet, including The Millionaire Real Estate Investor, The Millionaire Real Estate Agent, and one of my favorite books of all time—The One Thing. Today, he is here and he’s going to talk about some really cool stuff.
One, he’s going to talk about communication and how we can communicate better to protect our times. So just like you were talking about protecting your time with your friend, he’s going to help us all protect our times within our business. He’s going to help us learn how to say “no”, learn when to say no, when to say yes, and how to provide tremendous value when we do say yes without spending too much of our time.
And then we’re going to go into some of his favorite hiring tips and he’s going to tell us about how to be better managers and better hiring managers when we’re bringing in people into our business.
Carol: And do you want to hear the coolest thing? He really explains how protecting your time in your business is really brought to a whole new level when you hire the right way, because they really have a lot of correlations with each other. So make sure you stick around for all those tips.
J: Yep. And if you want more information about today’s show, if you want links for things we discussed in today’s show, make sure you check out our Show Notes at BiggerPockets.com/BizShow6. And let’s welcome to the show, Jay Papasan. How are you doing, Jay?
Jay: I’m doing awesome, J. It’s fun to have another J. on the other side of this.
Carol: Jay and J. and Carol in between. Thank you so much for coming on the show with us today, Jay. Great to talk to you.
Jay: Thanks for having me. I’m super excited.
J: So for those who don’t know who Jay is, and I assume it’s probably not too many of you, let’s do a quick recap of who Jay is. Jay, you are the Vice President of KellerINK, which is the publishing arm of Keller Williams Realty. You are the co-author of a whole lot of books, some that are audio and you guys have probably heard of. The Millionaire Real Estate Investor, The Millionaire Real Estate Agent, and probably your most seminal work, The One Thing.
So these aren’t just bestselling books, these are amazing books. Sometimes those two are mutually exclusive, but in your case, both bestselling and absolutely amazing books. You’re a husband, you’re a father. I believe you have two kids?
Jay: That’s right. I’ve got a 13-year-old son named Gus and a 13-year-old daughter named Veronica—14-year-old son.
J: Awesome, awesome.
Carol: Super fun.
J: And you live in Austin, Texas? What did I miss? What do you want to add to that little autobiography there?
Jay: I’ve got a dog named Taco that rules our life. That’s pretty much it.
Carol: Hi, Taco!
J: So, Jay, originally when we were planning this show, we wanted to talk a lot about hiring. I know you and I chatted a few weeks ago and you had mentioned hiring was a topic that you wanted to chat about as a topic that we wanted to chat about, but that was our first discussion. That was about six weeks ago and that was a discussion that you and I had that really made an impact on me.
Basically, it just changed my perspective on communication. The way you controlled the discussion, the way you kind of steered the discussion, the way you added value to me, and ultimately the way you kind of—I want to say this gently, but because you ensured that I didn’t infringe too much on any of your future time. It was really amazing.
And it’s changed over the last six weeks the way I’ve approached communication with other people that have reached out to me for conversations and the way that I network. So if it’s okay with you, I’d love to spend the first part of this discussion talking about communication, talking about networking, talking about some of the strategies that you employ to ensure that you’re providing value to others without detracting too much from your own time and your own bandwidth.
J: Love it. Excellent. Fantastic.
Jay: Dive in. This is like stuff I get to talk about all the time but I still love it. It forces me to live it, even on my bad days, I don’t want to.
Carol: That’s great.
J: I’m going to start with the question that has driven me nuts for ten years now, ever since we kind of semi-retired and started our own businesses. You seem to be really good at being able to say no. And a lot of people aren’t good at saying no.
But you’re also good at when you say yes, putting boundaries around that yes. So can you talk a little bit about how you say no, when you say no, when you say yes, and how you put those boundaries around your yeses?
Jay: Sure, sure. And in all fairness—I appreciate the compliment. It’s a great compliment, for me to have someone say you’re good at saying no. Because for me, it’s not always easy. I find that there are two broad behavioral groups. Assessments would back that up. There are people who are task-oriented and people-oriented.
And when we wrote the one thing, the two feeds of focus stood out, is the inability to say no and fear of chaos. So I happen to be task-focused. That’s like, I first go to like, what are we doing and how are we going to do it? Not, who am I going to do it with?
My wife is on the opposite end of the spectrum. She’s people-focused. And in my experience, people who are people-focused struggle with no. People who are task-focused struggle with chaos. I want everything to be neat and in order and in my control, right?
So part of that is a little bit of natural behavior. But I also had to role model this as a business people. So the first step to saying no, especially if you’re people-oriented, and a lot of people in sales and real estate are definitely people-people because you have to know what you’re saying yes to. And I think a lot of people haven’t made firm commitments.
So, I think about, ask yourself, when was a time in your life when your whole world revolved around one thing? Maybe it was finals when you were in college, right? Maybe it was that three weeks before your wedding when everything had to happen by a certain time and everything was revolving around it.
I remember when I was training for a marathon for the first time in 1997. I trained for it to quit smoking. I think I had run one road race before that like in sixth grade. And certainly I was thrown into the New York marathon with three months to train for it.
If I didn’t do my mileage every day, like I was doomed. And I knew that so everything revolved around, when am I getting my mileage? And negotiate with everyone around you. So knowing what you’re saying yes to is huge. That tells you what to say no to. And I don’t like saying no. I don’t like saying no specifically to people on my team and people in my family. And even to people I don’t know so well.
So I tend to say things, whether it’s phrased as a no or not. It’s more like a not now, or yes, if you do this. So putting conditions around what you will do. The most common request I get is someone wants to write a book. And I say wow, like today, we were looking and this year, we’ll click over at four million copies of our book sold.
So we got a bunch of bestsellers, like woo hoo. It’s a big milestone coming down the pipeline and each time we announced those milestones, someone in my network says hey, I’m writing a book. Can I get some coaching? And I just created conditions around my yes. I wanted to be able to say yes to everyone just from a karmic standpoint. Because so many people helped me.
But to get that time on my calendar, you won’t have to formally ask for it and then you have to watch a one-hour video that I created. After so many of these requests came through, I just created a pipeline where if you’ll just watch this video and then circle back and ask again, you’ll get on my calendar. And it’s amazing—out of the seven people—I’ve gotten the stats pretty close. Out of about every seven people who ask me, only one will do that.
Carol: That’s really powerful.
Jay: Yeah, so I’m saying no to six out of seven people without saying the words ‘no’. Either that means the video was really good and answered their questions or they couldn’t be bothered to watch it and why should I bother to give them my time? So that’s one technique right there.
J: I assume, presumably that that video is providing some value to you if they’re listening to it. It’s also providing value to them, hopefully answering enough of their questions that they don’t necessarily need to sit down with you or they don’t necessarily need to sit down with you right now. Maybe it’s enough information that they can get started and they can push that request out two months or six months or 12 months.
Jay: Yeah, it pushes it into the future right away. Already, it’s got a factor where they have to do just something, anything, and a lot of people won’t do anything. They have an instinct to ask but there’s no follow-up attached to it at all. So it filters those people out.
But I actually, we have an annual convention where we have, I think this last year we had 227 individual breakouts around real estate and real estate investing at Keller Williams Conference. So for two consecutive years, I taught a class called, So You Want to Write a Book. But I had the forethought to video record it. And that was all about, the first time I got it mostly right. I got a bunch of people who had a lot of questions.
Second time, a year later, I knew enough to kind of—here’s 80% of the questions people have, I know I’m going to get answered. So it’s just like at a big company, we would have an FAQ. Here are Frequently Asked Questions. I kind of figured out in my world around my number one time request and created something that I didn’t have to show up for to answer those questions.
J: That’s right. People walked away saying Jay helped me. He provided me the value I needed and you didn’t have to put in any additional work to do that.
Jay: That’s right and I didn’t have—I nodded my head. So if someone was watching the video on YouTube, I don’t have anything in there that I think was particularly self-interested. It was really about how do I leverage my time better? I knew I wanted to say yes, so how do I say yes and it take less and less of my time going into the future?
Carol: I like that and I think that’s a really nice tip for our listeners, too. I guess whatever type of business you’re in, you’re always strapped for time, right? You always have people who have requests, and of course, like you said, you don’t physically have the time to do all of those things. So that’s a great tip.
If you can create some type of tool that will be helpful for your customers, for your vendors, for whoever those people are, then that can be something beneficial to them and you’re not saying no to them. You’re just saying, absolutely—but first, you need to do this. And so it’s a win-win all the way around.
Jay: You got it. I think there’s a—I want to credit, it was probably before that but I can connect it to a book called Procrastinate on Purpose by Rory Vaten and he’s a friend of mine and when I interviewed him a long time ago, he told me about the 30 times rule. He got this from somebody on the airplane.
So a lot of times we’re in business and it’s something that we do really well and it takes us an hour every week, like some function of business. Just call it widgets, right? We do widgets and we do it really well and it takes us an hour a week. The reason we never delegate that to our team, the reason we don’t say no to it, by making someone else say yes to it, but even if it’s within our control, is it takes about 30 times as long as it takes us to do something, to train someone to do it as well as we do.
I have no idea if there’s any research behind it but I was like, duh. That makes total sense. Because every week, you’re thinking, why would I invest 30 hours to get an hour back? But even if it took you 30 hours to get an hour back, how many hours do I get back that first year?
J: Right. You get back 52. So it pays for itself.
Jay: 22. 52 minus 30, right? And the next year, you get a full 52 back. So I think it took me about four or five hours to prepare for a one-hour talk, an hour of delivery. So call it ten years to get back probably a weekly 30 min call for me for the rest of my life. So it’s the kind of math we have to do. When do we delegate it? When can we automate it?
It usually just takes, all right, I’m going to make an investment just like BiggerPockets is all about investment. We’re talking about investing our time. Can I invest my time so I get a lot of future time back? I think that’s the way wealthy people think.
J: That’s great. So let me ask you a question. So I get a lot of people that, they don’t necessarily ask me, I want to write a book. Or they don’t necessarily say, I want this specific piece of advice because we have a lot of stuff. We get people—unfortunately, Carol and I, we get a lot of people who say, we’re doing the same thing you’re doing. We’d love to take you to lunch.
We’d love to just pick your brain. We value your time but if we could just have some of your time, that would be tremendously valuable to us. And it’s those people, it’s very difficult to say no because I remember when Carol and I were starting, we had people who, we did the same thing. They said yes to us and we’ve been very successful thanks to their generosity of time. How do you say no to somebody like that?
Jay: Well, I’m looking at my bookshelf and I’ve got Face Out, Negotiating Real Estate, Flipping Houses, Estimating Rehab Costs. So how much time do you think it took you to write those books?
J: Probably about two years total.
Jay: So it’s a lot, right? It’s a lot of effort but now a lot of times, you could say hey, would you mind reading this? We’re going to be talking about this. Would you mind reading this book? I invested two years of my life making this available to the world. That could become our baseline for having a better, richer conversation.
So I want to have a better use of our time. You don’t have to say the same things that you have to say in your book. So again, anytime you can do that. Other strategies—making an event, right? Make it an event so that instead of meeting one person, you can meet a bunch of people.
J: That is a great tip.
Carol: That’s an excellent tip. We actually—I’m going to take this down to a personal level, really quickly. We’re moving, Jay, and we’re right in the middle—
Jay: I’m sorry. I just did that right before my signatory last month.
Carol: Oh, my goodness. Just so you know, I never thought of it in these terms, but really, it’s really prominent in a whole life level like us, too. We wanted our kids to be able to see the new school they are going to be going to, so they called the principal, we’re going to be in town on this date. Is there any way we might be able to come and tour the school for a half-hour? Absolutely.
Here’s your half-hour block. We’re actually going to have you meet with the Assistant Principal. Two days before we got there, we received a phone call from the secretary that said, you’re actually going to be meeting with the Principal, but it’s your family along with seven other families. Because what they did, we’re like, wow, if that’s not such an eye-opener from what you’re talking about, from an event standpoint.
One person is interested, and of course, more requests. If you’re in business or whatever you’re doing, more requests are always going to be coming in. So if you have some time blocked out anyway, perhaps like you said, you can create an event around it. Get more people involved so you’re really maximizing that time.
Jay: There you go. So like maybe once a month, ya’ll host a happy hour for couples. And people can show up, right? And they can bring you referrals. There can be a total win if four of you say, look, once a month I get together. It’s on this topic.
If no one RSVPs, we don’t do it but here’s how you do that. I know people who have turned that into a money-making thing, right? They can charge admission if you get into a system where there’s real value. But it’s a way to leverage your time and still bring value.
But by making it for that morning or that afternoon, it’s only focused on that topic and you can reach more people, you’re creating more like a legacy. You’ve developed these skills. You want to share those skills. Writing a book is a great legacy thing. But how can you reach a larger impact, a larger audience and have a bigger impact? That’s the question you want to ask.
Instead of being a one-to-one business, it’s going from I do it to we do it to they do it. How do you make that progression? To be able to reach larger and larger audiences with your impact every single day.
J: That’s great. Two things that struck out to me from our conversation first, you started the conversation—you showed up about three minutes late and you gave me literally the most sincere apology that I’ve received for anything. You would have thought you just killed my dog the way you apologize for showing up three minutes late.
That sent the message to me how much you valued my time and there was immediately a personal connection there. This is somebody who isn’t just a random stranger but I’m looking forward to speaking with. I don’t care if you were three minutes late. I was thrilled that we had a chance to talk and you basically demonstrated to me the very first thing off the bat was I value your time. I value you, and that apology, that stuck with me.
Jay: Oh, cool.
J: So thank you for that. First of all.
Jay: I didn’t throw my kids or my dog under the bus. My kids made me late or whatever. That’s good. That’s good. I did a good job that day.
J: Yes, you did.
Carol: J. My J. Husband J. Let me just jump into Jay, and just reiterate Jay Papasan. I’ve got to tell you, I’ve got to reiterate everything you’re saying. I remember when he got off that phone call with you and he literally came downstairs.
He was like, wow, I just had the most impactful conversation I’ve had in years and years. And this is why and these are the things he’s done. It truly has, however long ago that was, it has completely changed the way my J., my husband J., approaches everything. So I’m so grateful for this.
Jay: Is he doing the dishes and laundry like I told him to?
Carol: Oh, absolutely. You get all the credit. You get all the credit.
J: So the second thing—I guess there are three. The second thing you did is your tip. But I’m going to throw it out there because just for expediency, you’d probably get to it. But you started the conversation with, we have a short time together. How can we best use this time to—I don’t remember your exact words but how can we best use the short time we have together to benefit both of us?
So right off the bat, you focused us. You forced me to think about, why are we having this conversation? I assume you probably already thought about it yourself. And then you basically created parameters around the conversation that wouldn’t allow it to go too long or kind of deviated into places where it wasn’t being useful to either of us.
So I just found that tremendously useful. You’re simply saying, how can we best use this short time together? And strategic use of the word ‘short’ to kind of send the signal to me that your time is valuable as well and I need to respect that. I love that.
Jay: Well, thank you. I think it’s a function of over the years, our life, our wife and I, it’s just gotten crazier and crazier. I feel like my day is kind of kneaded out and tablespoons, to quote the old poem, right? There’s just a lot going on. And when I’m meeting with someone I don’t know, I do want to know, what’s the one thing we can talk about that makes this a win?
Did you have an agenda because if it aligns with mine, it’s awesome. I’ll start right there. If it’s way off the reservation, I can reset expectations right off the bat. That came from messing it up a lot of times. So for about five years now, one of my events that I lead people to is people want to get together.
So on Wednesday mornings, I have a standing coffee date. And I went to the same place. People have to come to me. That’s my way. I’m a super incredible introvert. You just wouldn’t believe. I can do this. One on one, I can teach. But usually, it takes energy, not give it back. I like to be alone with a book or a fishing rod. That’s just my personality.
But I know to be a business person, I have to network. So every week, I try to meet with someone new. And I can focus people on hey, let’s get together for coffee. Great. I meet on Wednesdays. I’ll hook you up with my remote assistant and we’ll find the next date available. But that becomes a thing that I move into, and those meetings, I never know who I’m meeting. That’s how I start them off now.
Because sometimes people have a burning question and they don’t ask it until we’re five minutes to the end. And then I feel really bad because like, I’ve got to go, right? So I just learned the hard way that I need to get that question up front so that we can at least set expectations about whether we’ll get there or not, so hopefully we can really provide value.
Carol: You touched on something I think is really crucial in there, and first of all, fascinated to know that you’re an introvert. That’s a major shocker to me. That’s like, I can’t even get my head around that. Knowing that that is the case, I think that a lot of people are, right? And there are a lot of amazing business people who just happen to be introverts.
So I like how you said that you set that expectation up front. What types of tips for people do you have who are introverts to get them out of their comfort zone so that they can get that maximum information, the best interactions possible? How do you get people to open up more and be more effective?
Jay: First off, if you’re in business, and you’re not doing any—we call it prospecting, right? Prospecting is when I go out and I talk to my prospective customer and I look for what might or might not work. If I’m not in touch with the market, my business is going to suffer at some point. If I’m just doing marketing, I’ve got great spreadsheets to tell me what does and doesn’t work.
But getting in the trenches with people, a lot of times, that’s when the magic happens where you find partners, future employees, all those things. So if you’re an introvert like me, it’s not a ‘should I’, it’s a ‘must do’, period. So find your strategy. Going to conferences is not going to work for me. One, I have to leave my family, my kids still want to hang out with me. I just don’t want to do that yet. I don’t like meeting tons of strangers. I get more value.
So you get to pick your poison but you have to do something and you have to do it regularly. Doing it whenever you think about it actually doesn’t yield a lot of results. My little one coffee a week over five years has actually added up to a lot more than just one person added to my database each week because it’s compounded over the years. It forced me to create a newsletter to stay in touch with those people. It’s created events.
When people want to keep coming back for another one, I can say hey, I’m having a get-together on this time, so I don’t have to do another one-on-one. Regular inputs, right? Regular investments and that really adds up over time. So I would just say pick something that matches your personality. For me, it’s one-on-one.
If you’re an extrovert, then I mean, my wife—it’s not coffee. It’s like millionaire mochas or millionaire margaritas. It’s more of a party atmosphere for her. But if she does that regularly, it adds up and her business is about, I want to say 70-74% referral-based. And she did over 100 million in volume in real estate last year. So it’s not a small business.
She’s regularly getting—we throw movie parties. We do things like that. How can I get face-to-face with my potential customers and partners on a regular basis? So I don’t know exactly where all you want to go with that question, but that’s the first thing that came to mind.
J: That’s great.
Carol: I love that. The consistency is huge. It sounds like a really big key to making that happen.
Jay: Just sticking with it. A small dose of it every week adds up to a lot more than you think.
J: That’s awesome. Okay. I want to get to the third thing that you did in that conversation that kind of really stuck with me. You said, what can I do today to help you? Do you have an ask for me? I don’t remember exactly how you said it but I wish I did. I wish I would have recorded it.
But you basically, you gave e permission to ask something of you and it was great because I had actually gone into the conversation asking could I invite you onto the show today? But you opened yourself up there, so how did you know or what would have happened if I made an ask that was something that you didn’t want to provide or something larger than you had the bandwidth to provide?
I imagine giving that opening to people, and I assume you don’t give that to everybody—I thank you, but how do you ensure that that opening that you give to people doesn’t ultimately infringe on your personal time and bandwidth?
Jay: So I’ll just confirm a couple of things. I don’t offer that to everybody. That’s something I kind of feel out. When I feel out, in these meetings, right? The calls or the coffee, that I’m in the presence of someone who is a pretty cool individual, right? I love the fact that ya’ll are a husband and wife team. I don’t find a lot of entrepreneur—in our industry, real estate is pretty common but outside of that, it’s not.
But I’m looking for other role models to learn from. So when I find enough dots there, I’m like, okay—I feel like I’m fairly in alignment. I’m willing to make a deeper investment in the relationship, I will set parameters on that, right? People say, will you write a foreword for my book? Will you give me a testimonial? And the answer is always going to be “no”.
We have 160,000 associates in Keller Willliams. You would not believe how many of them want to write books. And if I start giving testimonials and writing forewords for people who aren’t even in our business partnership, how do I say no to them?
So I usually offer different things. Can I give you advice on marketing? Can I bring you onto our podcast? I have a set series of things that are easy yeses for me. And by the way, if I invite you onto my podcast, who’s got to do that? It’s not me. It’s Jeff. Jeff runs my podcast. So I actually have got standing guests from him, if I think a person is of quality.
So I guess it comes back to, I kind of know in advance what I can say yes to. I’m open to other conversations but I don’t usually say yes on the spot if it’s new. I’ll say hey, can I think about this? And it’s real. Ya’ll have a great built-in governor for that. You know what? My partner is my spouse. Can I chat with them before I give you a firm yes? I would love to say yes, but can I chat with them?
So I have two people like that in my life. One is my wife, Wendy. Who is my business partner in all of my real estate businesses. And then I’ve got Gary Keller, who is my business partner in my publishing business. I have two people that if I’m investing my time outside of those relationships, could have a negative impact. So what’s good about that, you’re a real estate investor, right? This is an offer contingent on my business partner’s approval.
Jay: Right? It’s a standard practice. It allows you an out. It allows you to test the waters and still have an out. Same thing here. You can do that with everything you do. You just have to be aware of it.
Carol: That’s great. So yeah, so it’s not even that in negotiations. Like you were saying, just bring it down to your personal interactions and your daily life and how you relate to people. I like that a lot.
J: That’s great.
Jay: I’ve got some curves, right? The bowling lane has got walls up against it so I can know kind of what I’m going to say no and what I’m going to say yes to. There’s people in those relationships that I find interesting or beneficial. I mean, I’m in the publishing business.
Ya’ll have a podcast. That raises you up. You have a platform that can help my partners, right? You just have to know, what am I looking for If you’re wondering around with no notions of what you’ll say yes to, you’ll say yes to some bad things. So again, it comes back to, what am I willing to say yes to or do you have kind of some rough parameters for that?
J: That’s great. So before we move onto the next part of our show, let’s hear from one of our show sponsors.
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J: Okay, I appreciate you kind of taking that detour with us. I know on our discussion, when we were talking about this show and I think I asked you if you had a topic that you would like to kind of delve into, to help our listeners and you had mentioned hiring.
And so I would love it if you’re good with it. It’d love to spend the rest of this discussion, talking about hiring—we have a lot of listeners, I’d imagine, are on the cusp of hiring employees, have thought about hiring employees, maybe have hired their first employee and they’ve either had successes or failures with it.
And I think given your background, I know speaking with you previously, you have a tremendous amount of expertise and experience with hiring employees. So if it’s good with you, I’d love to take the rest of this discussion and talk about hiring.
Jay: I love it, and it’s actually, to me, the moment you begin delegating, it’s another way you’re saying no, right? It’s a way you’re investing your time. If I can teach someone over 30 hours to do my one-hour task as well as I do it, a lot of times, they’re going to do it better. As an entrepreneur, it doesn’t mean you’re better at all those things. It just means you’re very invested at making sure they get done.
You don’t have a janitor, you are the janitor. If you don’t have a call coordinator, you’re the front desk person, right? But you’ll do those because you’re the owner and at the end of the day, the buck stops with you. So it doesn’t even mean you’re better. You’re just invested. So getting those things off your plate so you can do really highly dollar-productive activities? I mean this whole conversation around hiring is what are we saying yes to or what are we saying no to? To me, it’s perfectly aligned.
J: That’s great. Love that. So can you take us through how many employees you currently have, whether it be at KellerINK, your publishing company, or within. I know you run a very large real estate team, on your real estate team, like give us an idea of scale of your businesses and how many people you’ve hired over the years.
Jay: Sure. Right now, I’m in charge of all content for Keller Williams. So I’ve got our publishing team. I’ve got our course-writing team. And we have a video team. So it’s about 34 people in all. That’s a recent development. I had a team of about seven that was focused on publishing and recently, I got the two new departments. And so, for me, that’s all about do I have the right interim leadership or leadership in place so I don’t have—I can’t have 34 people reporting to me. That’s untenable.
But I can have five or six people, ideally three to seven is the range where you can have really great managerial leadership relationships. If I had those people in place between me and the larger group, we’re all good. So that’s what I’ve got in my day-to-day. My wife runs a real estate team. We have about 20 agents across five cities and five full-time admin in that group. And I don’t know. Hiring. It comes in spurts, right?
You have like, right now, I think I have five open positions. I didn’t have one open position for the previous six months. The thing I’m committed to doing, because it’s something that you learn, is you know that there are some core critical positions, right? Admin talent. Sales talent. Creative talent. And all of my networking activities, right?
First and foremost around, do I have a bench of people I can reach out to, either to fill those positions if my people leave, or who might know the people that will fill those positions? So when you think about building your database, we say around here, your business is your database. There’s a database that you get your business from and there’s a database that you get hiring from. And talent. Whether it’s contract or full-time, and so making that a discipline is huge.
So I would say, gosh, probably about 50% of my hires over the last five years have come from my singular networking activity, that coffee. Either it was that person or they knew someone that they could connect me with. A referral is a great way to fill a spot on your team. I have no idea how many people in the last 18 years, I’ve actually hired. It’s not hundreds, though, right? It’s probably less than a hundred, but it’s up there. I’ve had a lot of those conversations and it’s something I try to do regularly just to stay in the practice.
Carol: Right. Following up on that with your coffee conversations and the interactions that leads to, would you say that you have found a lot of people overall that you just know they are a good person for your company, or they’ve got a great talent, and you create roles for them? Or would you say you more intentionally fill specific roles and seek out the person to fit into this role?
Jay: Both. Every year, my wife and I do a goalsetting retreat. We get out of the house. We spend at least one night, some place without our kids, without our dog, without any chores. Sometimes we just get a hotel downtown off Priceline. Sometimes we travel.
And one of the things that we look at, at speaking events, people ask us about it over the 12 years we’ve been doing it—we have an annual event that we host. A goalsetting retreat for couples. Because so many people wanted to learn from us, we just made it an event.
One of the things that we always identify is who are we missing in our lives? And we call it a “Missing Persons Report” and that’s stolen straight out of our KW book. This year, I know my wife has got a personal assistant on her list and we talking about who is it that we’re looking for? What are we looking for?
I was looking for a writer and an editorial director. And those were things, whenever we have a new position, we sit down and say, who is this person, and who are we looking for so we can both have our eyes set on the streets. So if that person shows up, I have my “Missing Persons Report”. Oh, wow. This person might be a match.
So I’ll give you an example. One of our team members, Kailyn, who works on our podcast training team, her partner moved to Austin to be on our team with us. I never really spent a lot of time with him but he always volunteers for our events. He just shows up to help out. Like, super helpful guy. He said, I hear about your coffee thing. Can we have coffee? I was like great.
Well, for almost a year, my wife and I have been wanting to start a new business and we were missing the “who”. We wanted to start a construction business around maintenance and home. She sells about 300 homes a year—how many of those home sales before the sale or after the sale have work to do? A lot of them.
Yeah, so it’s just a natural extension and we pretty much have made one contractor—we just start 50-60% of his business, period. So why wouldn’t we naturally think about that? But we didn’t have the right “who”. And we interviewed a few people. So I’m sitting down with Brent. We start talking and I only know him as a guy who helps people with their internet marketing, setting up websites. He’s like a tech guy in my mind. And he works with some big people.
Like, we’re getting together—I have no agenda. Tell me a little bit about yourself. Oh, well in California, for 12 years, I was a carpenter. I was like, oh. That’s interesting. And then he starts walking me through this journey of getting tired of being so tired on the weekends when his friends came back from their internet jobs, right? He was exhausted and just wanted to lay on the couch. They wanted to go out and go surfing in the afternoon.
He’s like, okay, I need a new job. So he lived in a van, taught himself programming outside of a programming school, actually got on the news for it. And then went on to do this internet marketing thing with a whole bunch of people. I was like, wow. That’s a really weird set of skills to have together—craftsmanship and internet marketing and business consulting? And so he immediately became the candidate and we ended up hiring him to start this business.
But it wouldn’t have happened if we didn’t have a “Missing Persons Report”. Who are we looking for in general, and what’s our ideal skillset? Right? It just happened to show up. But if you’re always on the corner looking, you’d be surprised how often it does show up. We had a list. We knew we were looking for it, and we were always looking for it.
Carol: Very cool. When you and your wife, when you do identify these people in your “Missing Persons Report”, do you go through and really hammer out what the details are of not just that role, but the specific types of things you want those people to do?
Jay: A little bit of both. So this is Gary Kellerism. If I say something really smart, just assume Gary Keller or my wife taught me. And we wanted to say this again and again. I don’t like to get credit for things I didn’t come up with. But when we talk about job descriptions, a lot of the time, it’s pretty sterile stuff. A long list. And Gary taught me many years ago to flip that.
He said, what are the three things, if they don’t do well, you’ll have to fire them. And that’s—you’re flipping a whole conversation. There’s all the things that you would love for them to do. Now, what is it that if they don’t do well, you’re going to have to fire them. It gets you very clear—we usually rank those three things one, two, three. And that gives us a sense of who we’re looking for that would have those core skills.
And that becomes a big governor. We also sometimes, if we’re really active in the search, I will literally muse about what kind of background this person might have, right? You know, when I was looking for my editorial director, I was pretty clear. I would love for them to have actual publishing experience. Not self-publishing experience—maybe they’ve worked in New York or Chicago in one of the big houses. They understand that process.
And you just kind of muse through those things. And I keep those very private. You can’t say I’m hopefully looking for a single person who never wants to have kids. Well, that’s great as an employer but that’s completely illegal, right? You can’t screen for that. Right, so what you’re thinking about is, what does the ideal candidate look like? What do they talk like? But that actually becomes what you share with a friend.
Hey, I’m looking for someone who knows a lot about construction. Maybe they’ve been a project manager on a construction team. Maybe they’ve had their own carpenter business or had their handyman business, but we also need someone who is a business person, right? They understand what a PNL is and are willing or interested in learning.
That dialogue was shaped by the “Missing Persons Report”. But when you ask for something fairly specific, that’s how your network knows how to respond. Otherwise, they would just be looking through the Yellow Pages and sending me a bunch of names of handypersons and that might be at all a good use of our time.
I want someone who is good with construction and has the potential to be a businessperson. And that little thought process narrows and screens a lot of the candidates out.
Carol: It becomes your little elevator speech, like you said, to your network to find those right people rather than using that as what you’re specifically looking for when you’re interviewing that person, right? Like you said, that is your little pitch when you’re looking for that person.
Jay: Well, if you have a good pipeline of candidates, like all right, here’s the thing. I’m not a great manager. I am a better coach than a manager. I don’t like all the details. I don’t like project management. There’s a lot of the stuff that I’m not particularly good at. And you look up and you say, what fixes all of that?
If you hire a great, talented individual, you can be a crappy manager because they are going to be self-managed. Right? They are going to be self-motivated so you don’t have to motivate them. So investment on the front end and having a great pipeline to have the opportunity to attract great talent? That’s 90% of leadership right there, is getting the right person on board.
J: So that is, I love that. So I’d love to delve a little bit deeper into that front loading of ensuring that you have great candidates. So for every position, you’re going to have a list of technical questions that are specifically related to does this person have the skills to do that job?
But then there are going to be a whole bunch of other questions and information that you’re seeking about the person in general. The level of motivation, their level of ability to take initiative, things like that. Are there specific strategies or even specific questions that you will ask potential employees to kind of gauge whether they fit in well with your team or whether they’re going to take that initiative on their own, whether they’d just make good employees outside of the specific technical skills that you might be looking for, for that role?
Jay: Yes, yes, yes. So probably before I started at Keller Williams in 2000, I bet Gary had already invested $5-6 million dollars in trying to perfect the hiring process. We called it recruit select. Today, it’s called recruiter vision. We have, I want to say, a five-interview process. And there’s a lot of screening up front. So again, let’s take that three-part job description.
If your number one is, I don’t know, writing—that’s like for a writer. If they can’t write well, then why would we even be considering them? We don’t just talk to them about it. We have a test. So, we gave every person who’s ever applied for a writing job a very similar assignment. So every job position, we change it a little bit, but it’s the same assignment for every candidate. And now we compare all of their products side by side.
And believe me, when you have a hundred people submitting a five-page essay on how to do a 1031 tax-deferred exchange or whatever it was. That was literally one of ours. Let’s pick something really detailed and boring because they might think this is a sexy publishing job. I want them to know that there’s hard work involved and if they can’t do it right, then they don’t even get to the phone screening. So some people will say, I’m a published author. I don’t need to do that. Awesome. You can apply elsewhere.
J: So great. You basically are giving people the opportunity to self-select themselves out of the process.
Jay: I’d rather say no to ten good ones than hire one bad one. The same principle of investing, right?
Jay: There’s no way to avoid that house with a nasty surprise if you invest in enough houses. But you want to do everything in your power to avoid it. You’ll walk away, walk away, walk away so that you can really get the great deals, not get a bad one. Same thing for people.
So it starts with a test. One of the things we do very late in the process, we call it the group interview. We have the core team show up and we just have a lunch. And get a chance to hang out with that person and get a sense of who it is that they might be working with, and they get veto power.
So we do that. We do kind of a biographical interview where we go all the way back to their last education. And we ask them, what would you do? What was their job? What did you learn? The positives and negatives, and what did you earn?
And so, we just walk through that chronology. It’s a different way of going through their resume, basically. But now I have them at the whiteboard. Or the flip chart, and they’re drawing it out and I get to sit back and listen to how they talked about their previous interviews. What did they learn? To me, it’s very valuable to have a learning-based person. So are they learning on their journey?
What is their career trajectory? Tell me what they earned. I usually annualize it, right? If they make $15 bucks an hour and work 40 hours a week, that’s about $30,000 a year. So we can annualize it. Is their trajectory going up or is it going down? I like to catch people on the way up, right?
If at all possible, so we have that and we have another one called the motivational interview where we try to say what’s really important to you—it’s too long to explain here. But it’s what’s really important to you. Why is that? What does that mean to you? How does that make you feel?
I mean, people will sometimes will even cry in this interview. But my whole goal is, if they are looking out five years in their life, tell me what they think is most important to them right now. If the job I am offering them is going to prevent that from happening, they’re going to leave me. So we need to exit the process today.
So they don’t know it but we have a built-in process that allows them to interview us. And if the alignment is not there, why are we going to do all of the hard work of training someone, getting them a computer, getting them set up—all of that just so they’ll leave us in two years? I want people that are going to be around. So we’ve got a very involved process.
I would say involve others. Ya’ll are a husband and wife team. So you could take anyone in your team, give someone on your team veto power. Absolute veto power. And it sucks to have to go back to the drawing board. But again, if someone else comes in and you can’t convince them that this is a yes, then you shouldn’t be hiring them, right?
Carol: No, that would be a big time waster for everybody. It’s a time waster for that candidate. It’s a time waster for you. It’s a time waster for the entire team because you’re going to be right back at it doing it all again, like you said, two years from now and that’s no good for anybody, right?
Jay: Oh, it sucks.
J: It reminds me of the advice we give the contractors. People don’t realize that the worst case scenario with the contractor isn’t that they slow things down. And that they have no impact. The worst case scenario obviously with a contractor is that they have a negative impact. They cost you more money. They cost you more time. They take you backwards. They destroy the quality.
It’s the same way with a bad hire. A bad hire isn’t just a waste of time. It’s potentially a waste of money. It’s potential bringing down the morale of the entire team. It basically sets you back. So it’s not just a bad hire. It is something neutral for your business. It is something that can actively be negative for your business.
Jay: Oh, it costs you goodwill with your customers. Really good employees will leave because of the bad employee that hasn’t been caught being bad yet.
Carol: That’s right.
Jay: We do an exercise call “The Cost of a Bad Hire” where we created about 15 different categories and we ask people to add it up. And one of the times I taught that, I taught it to Alamo Drafthouse. It’s a theater place where you go in and you watch a movie. They have a bar. They have a restaurant. Whatever. And one of the guys in the audience did the exercise and he said, I can tell you very factually that I hired a waiter that cost us $350,000 minimum.
When people do that math—oh yeah, they just don’t—the stakes are high. So again, there’s no infallible process. Right? Just like in investing. There’s no way you invest in enough houses over time, that your process will be utterly infallible. Like sometimes you are going to get a nasty surprise. But hopefully you’ve made so many good decisions, you can recover from it. It’s the same with hiring.
Invest in the process that minimizes your chances of bringing someone bad on board and maximized your change to bring someone good on board. And then live that process. Be faithful to it. Give someone veto power. We have a defense. At the very end of our process, I walk in, I have Gary. I have like, right now if I hire a writer, I’ll have Gary, our lead writer at the table and maybe one other person. And their job is to say no.
And I have to convince them otherwise. Their default answer is no way. We’re not hiring this person. And Gary laughs. He goes, you’re looking defensive, Jay. And I go, I’m feeling defensive. Good. That means the process is going right.
Carol: It’s working how it’s supposed to. It’s working how you mapped it out and you’re following it along so you’re finding those good employees, right? You’re saying no, no, no, no until you find that one that is just the perfect person.
So once you get that person, the best employees, what you do to retain that, what you do to strengthen your team together with that person—what are some tips you have to make sure that you keep that person as long as possible so you’re maximizing your investment with your people?
Jay: I love that. It’s a great person. I would say, the first thing is you’ve brought them on board. Congratulations. You’re up now for a 90-day interview. Remember those three parts of your job description? One of our disciplines is the first hundred or 90 days, depending on who you ask. It’s 90 but a lot of people call it their first 100 days like a presidency.
Can you test for those three things? Can you create assignments to make sure that the person you thought could do those three things can actually do them? And at the end of that 90 days, you get to celebrate. So I think one of the first things you can do to ensure longevity is inspect what you expect right off the bat.
Say hey, I love Carol. I love the fact that you joined our team. I’m so flattered that you would join our team. So our first 90 days is our extended interview process. Here are the three things that I want you to be able to do at the end of the 90 days. I’m on the hook for training you how to do it, making sure that you have the time and resources to do it.
You’re on the hook for doing it. Or, failing is such a way that I know that you can do it. Either way, it’s a win. But if you look up and say wow, these three big objectives—I’m going to hate doing my job and you’re in the wrong place. We can very quickly eliminate it. Sometimes we don’t know until we do the job. But this now becomes our exploration.
So first off, right off the bat, select a period of time. Don’t start bonding with them and inviting them to your house for family dinners. Keep some emotional distance. The number one mistake people make is we fall in love with our candidates. So step back for a little while longer and see if they are a good fit. I’ve had people who looked awesome show up and were absolutely a cancer on the team.
You know those people who are great at managing up? But the moment you leave the room, they are nasty to the waiter or the hired help or just to the people they perceive to be less politically powerful. I’ve hired those people. They are really good at hiding it. But they can’t hide it for 90 days. Most people can’t do it.
So beyond that, you just need to make sure that people have a career path. If people—do you understand what it is they want from their occupation? What is the reason they are here? What are they hoping to fulfill? Are you helping open those doors for them. Because if your job is closing doors in their personal life, they will leave you. So how do you earn the right as a manager to know what’s really important to them?
Maybe they’re training for a marathon. Maybe they want to have a baby and they need the security to know their job will be waiting for them. How do you know that level of trust so they tell you what’s actually important in their life, not just their job? So that you can make sure their job is fulfilling that. And I don’t do that for everybody. I mean, I don’t want to be a barrier to people’s lives.
But the people who report directly to me, those leaders, I need to be in their business. I need to know where they are going, where they want to go. And if their expectations are way off, I need to reset them. But if their expectations are fair, then I need to be willing to answer the question, “Hey boss, what would I have to do in order to earn the right for x?” It’s a script. What would I have to do in order to earn the right to x?
That’s a test of whether you got the right employer. If they can’t answer that or say I need time to think about that, but everything should be earnable. And it could be a crazy task but you have to put it out there. And so, you have to allow them to feel like they are making progress in their life. I don’t want somebody who just wants to hide in my job and feel security. I want someone that feels like they are progressing because guess what, if they are progressing, who is getting progressed, too? Me.
Carol: Everybody. You got it.
J: That’s great. There was an implication there in your examples of maybe you have an employee that runs a marathon. Maybe you have an employee that wants to have a baby. There is an important implication there that this isn’t just a conversation that you want to have when you hire somebody. It’s not even a conversation you want to have once a year at a performance review.
This should be an ongoing conversation you’re having every month or every month or every week or every two months, whatever it is. Because people’s lives change and we get so wrapped up in ourselves as managers, that we’re focused on the business, the task, driving the business forward that we lose sight of the fact that these are real people that we’re dealing with.
And it may be that somebody on your team, since last week, they’ve had a major change in their life. Maybe something’s happened with their family. Maybe something’s happened with their spouse or their children. And so, as a manager, it’s our job to have these conversations constantly.
Jay: I would agree with that, and again, we haven’t formalized it. So for 18 years every week, I create what’s called a 411. I have mine right here. I do it electronically and I carry with me as a bookmark for my notebook. So I always can have my goals in front of me. My annually and weekly goals.
Well, I meet with my key staff members on a weekly basis and we make sure their priorities are aligned with the company priorities. So annual reviews, like if I have to wait until the end of the year to give you the bad news, I am doing a horrible job.
What we get is a weekly rhythm. It’s a short quick meeting. What are your big rocks for this week, right? What’s your 20%, your one thing? What do you need? Do you have the training? Do you feel like you’re empowered to do it? Well, you learn very quickly is if you ask what are you going to do this week and the next week, they know you are going to ask, how did you do?
People will know that you’re paying attention. And if they are not actually accountable and they are not actually wanting to do the work, they will self-select out. You don’t even have to be a bad manager. So J., you said you were going to do another FI podcast last week. I see that you do two. How do you feel about that?
I’m not putting any judgment on it. But if over five weeks, you’re happy doing less than 50% of your goal, I’m going to comment on that. I’m going to say look, for the last five weeks, you’ve been doing two out of five. Our goals are way off. How are you going to make up that ground? And we get to have that conversation. And hopefully, it’s not you being the mean boss, the thumb on the head, all of that.
You are there to mirror their performance and either that gets uncomfortable or it’s very comfortable. And it’s in those conversations where we also find out, well Jay, the reason I did two is because I just had a baby. I didn’t tell you this. But you know, she’s not sleeping through the night or she is calling for you or whatever. It’s like, oh. Well, gosh. Okay, that makes sense.
When do you think you can get back on track? How can we support you? But if you’re not having those regular conversations, you’re probably not building trust and you’re not building accountability.
J: And I love your point about no judgment because we all take business very seriously and sometimes it can be easy to take an employee that’s not meeting his or her goals, to take that personally and think, okay, they’re not helping me meet my goals and again, without having that discussion with them—maybe there’s a good reason for it so instead of judging, just having that factual objective conversation.
Jay: I do judge. Like, I’m human. I do judge. But our rule is to come from curiosity. So I’m going to ask you before I judge you. If you said, oh man, I’ve been catching up on Game of Thrones. I’d be like dude, I love that show, too. But your priorities are messed up.
We’re not here to pay you a salary for you to watch Game of Thrones. So we need to get back on track today, right? But I’ll start with curiosity because what if there is something legitimate that I don’t know about? And I think a lot of times—there’s a great book by Shane Parish. It’s only in Audible form now. It’s called the Great Little Models. I can’t remember the name. It’s not Aucom’s razor, it’s another razor. But it basically means, don’t prescribe to malice what could also be prescribe to ignorance.
And a lot of times we are walking around thinking people are just being really mean to us. Oh, that person cut me off. You know how hard it is to actually cut someone off in traffic without having a wreck? It would take really good driving skills and a lot of premeditation. They just didn’t see you. But we go straight to the emotional place.
So as a manager, as a leader, can we first come from curiosity instead of judgment? You can judge later. And it’s actually appropriate. One of the ways we get people that aren’t really pulling their weight out of the organization is to bring accountability there. But start with curiosity, just to be perfectly clear.
Carol: Start with curiosity. That’s just a great tenet right there. Start with curiosity.
J: I love it. Okay. I could honestly have this conversation for the next four hours but I want to be respectful of your time. So I’d like to jump, if you don’t mind, into the last segment of our show. We call it the Four More and it’s where we ask you four quick questions and then at the end, we give you an opportunity to tell us a little more about you and where we can get in touch with or find out more about you and what you’re doing.
So Mrs. Scott, would you like to take the first question?
Carol: Oh, I would love to. Okay, Jay Papasan, what was your first job ever, or your worst job ever? And what lessons did you learn from it?
Jay: So the first job was also kind of my first business. I first started earning money by mowing the yards. And we wrote about this at the end of The Millionaire Real Estate Agent. Most people don’t get to page 400 though. It’s not a spoiler for anybody.
I remember I was going out of town. I had about four lawns. And I needed someone to mow them while I was going to be gone on our two-week vacation. So I think there’s a kid named Larry. And I got him to mow the yards. And he said, how much do I get for this? And I told him $10 bucks a yard. And then I went home and I started feeling really guilty because I was getting paid $20 a yard.
And I went to my dad and I said, was that wrong? And he goes no, that’s a business. You did the work of having the opportunity and now you can—it’s a win for him because he was getting no income. And if it’s worth it to him to say yes, it’s his decision. So you don’t need to feel guilty about that at all. It took me many years to appreciate that.
But later in life, I remember we spent two weeks in the French Riviera with my extended family. Every three years, we try to do a big family trip. My sister’s family, my mom and dad, and our family. And my wife was in a great place with the real estate business. So for almost two weeks, she just virtually didn’t work at all. We did a few e-mails in the morning because we were the first people to get up.
And I remember on the plane ride back, I said, how does it feel to be a business owner for two weeks? Instead of someone who actually has a job in their business. And she goes, it felt amazing. I said, you got a choice. Do you want to go back to being in your business or do you want to stay on it? And at that time, she had to think about it. She goes, you know what? I think I will go back into it. I think there’s more growth that I need to be involved in.
I wish there had been someone there back at 13-years-old to say, Jay, now that we’re back from Florida, do you want to go back to mowing those yards? Or do you want to go hustle for more yards and go find more Larrys to mow them for you? Aw. You know, what that would have done for me then. But that was my first job and I learned so many great lessons, and one of them was, wow. This is what succeeding through others can look like and it’s amazing. It’s so amazing you feel guilty when it happens.
Carol: That’s cool that you learned it—you didn’t even realize you learned it but at the age of 13, you learned that. So that’s awesome that you got to carry that through in your life.
J: Okay, next question. What’s an opportunity either in your personal life or your business life where you had to say no, and in retrospect, you’re glad you did? It was a difficult decision at the time but in retrospect, you’re glad you did?
Jay: I had an opportunity to take a C-level position, or I perceived an opportunity to take a C-level position here at Keller Williams. Gary was talking to me about the position. I was asking questions around it. And I remember going back home and talking to my wife, and I said, this will be a big jump in my income but I don’t think I would love the job. You know, I said if I don’t jump at this, they might perceive me as not being ambitious.
And I remember saying no to that. I did not put my hat in the ring. I gave recommendations for other people. And I knew at the time, it was like, this could be a dead end. But saying no to that executive position allowed me to stay in the publishing lane. If I hadn’t have stayed in the publishing lane, we wouldn’t have written The One Thing. And that was a life-changer for me.
So I’m very happy with that decision to stay in my lane and my core competency and my big opportunity now, which is just as big as that one was, is because of the success I had by staying in my lane and building my skills.
J: That’s fantastic.
Carol: I’m grateful you said no, personally, because I don’t know what we would all do without your book. So thank you for saying no to your C-level gig. All right, I’m going to take the next question, okay? So what is the worst advice you’ve ever been given or the worst advice that’s common in your industry? And what did you do with that advice?
Jay: Oh, gosh. And I had an answer. Oh, gosh—there’s so much bad advice. I think it’s not even so much per se advice. I think there’s a cult out there of, I can do it better or this only works because I do it and I just think it’s an argument people make so that they can feel like they’re in control. They are riding on their white horse every day but it prevents them from actually enjoying the business.
So I’ll go back. I said earlier, when we talk about business, it goes from I do it to we do it to they do it. And business ownership is they do it. You have a job until you get to that place. And I just think, whether it be—I just see a lot in real estate. The energy it would take to raise up the people around us to replace ourselves systematically is a skillset that most people don’t have or are unwilling to learn. And because of that, they’re going to have jobs for the rest of their lives.
Whether they call themselves business owners, I call them self-employed. To use Robert Kiyosaki, they are very self-employed and if they stop working, their business stops, too. So being great at what you do is awesome. At some point, to run a business, you have to be great at succeeding to others. And I don’t know why people buy into and they feed this idea of, oh, Carol—you are so good at this.
How could you ever be replaced? They think they’re creating a compliment. But what they’re doing is perpetuating a system where we have to have our hands on things versus succeeding through other people. So that’s probably very much a product of this call. But that’s definitely the number one mistake I see people make.
J: That’s great. Love that. Okay, final question—what is something again, either in your business or your personal life that you’ve splurged on and that was totally worth it?
Jay: Oh, gosh. The things where we spend the most money—and we’re pretty good at being investors, right? Experiences and food. And so I’ve look at it. We do our budget annually and we always say we’re out of budget when it comes to our—we have a Wednesday night date night, a standing date night, and we’re very much consistently out of budget there. And our travel. But I have no—I’m an experiences kind of person so that time with my wife, that regular time, and we just got back from New York with the kids.
Those experiences with our family, never regret them and some of them, like we took the kids to the Galapagos Islands I guess three years ago, and that was a crazy expensive investment. Like, it was an investment property we didn’t buy, and I think you and I know—when you go out 30 years on those kinds of investments, we might have spent x amount of dollars.
But over our lifetime, if we had the opportunity cost of that decision, it could be hundreds of thousands. Still, no regrets. Magical, magical experience. And I know, if I am willing to overpay for experiences I get to pay with people I love, I’ll do it every time.
J: That’s great. And I love the fact that—I’m not going to presume to have any idea what your net worth is, but you made a point that even people that are high net worth individuals and again, I’m not presuming anything here, but you still do budgets. You do budgets for date nights.
You do budgets for experiences and that’s really important in any family regardless of what your financial situation might be because it’s just an indication of what you value. You value having that money to pass onto your kids or for other things in the fuure.
Jay: I’m not good with budgets. I don’t like budgets. What I’m good at is, if we invest x dollars out of every paycheck, out of every month’s income. If we’re consistent in how we invest our money, everything else takes care of itself. All we have to do is live within our actual boundaries, for the money that’s left over. So invest first, pay yourself first, set aside money for future investments. Live within your budget. Those are just the two disciplines. I don’t like tracking money.
I’ve done it, way back in the beginning. We got rid of our credit cards. We did everything on cash. We did that until we understood and could track mentally so we didn’t have to physically track anymore. It’s kind of like counting calories. You do it long enough that I know that Lagunas IPA has got like 550 calories. It’s much better for me to take that lager than to go for the awesome IPA.
Guinness. Oh, my gosh. Who knew Guinness was like 70 calories. It’s like right up there with the super light beers and it’s got flavor. You get a sense of what is costly and what’s not costly and you try to live within those boundaries. But yeah, we set goals every year for our net worth and how much we wanted to grow. That’s why we’ve been able to grow consistently.
J: That’s awesome.
Carol: You have to stay on top of it. Awesome. Okay, Jay, here is the more question—where can our audience find out more about what you’re doing and connect with you?
Jay: Sure. Everything that we’re talking about, we’re currently focused on, is on The1Thing.com. So that’s with the number 1. You can link to my social media accounts. Like, I’m actually active on Instagram. That’s my guilty pleasure. It involves pictures, not words. So I can do that.
But all of our activities, we have goalsettig retreats. We have midyear retreats. We have 411 training. I talked about how our rhythm is. We have a whole community that’s dedicated to goalsetting and how we stay on top of our goals. So all of that is on The1Thing.com.
J: That’s awesome. And I’m embarrassed to say, I was going to hold up a copy of The One Thing, literally my favorite book of all time. And we’re in the process of moving—we’re moving to Florida in about two weeks.
Carol: Packed already?
J: And I literally—
Jay: I can see it behind me.
J: There you go. I literally packed it last night. Anybody that hasn’t read The One Thing, I would love to invite you back in a couple of years—again, I want to invite you back in a couple of years. I’m going to give you some time again. I want to respect your time. But we can talk about that book into perpetuity.
So Jay, thank you so much for all of your insights today, both on communication, networking, hiring—this has been absolutely fantastic. We really appreciate you taking the time.
Jay: Thanks for having me. I’m glad to be in relationship with ya’ll.
J: Thank you, Jay.
Carol: Thank you so much. It’s been awesome. Thanks again.
Jay: Thank you.
J: Okay, I think I’m in love. I want to be his best friend. What did you think of that show, Carol Scott?
Carol: You don’t want to be just his best friend. You want to be him. Let’s be clear. It’s pretty obvious. You are wanting to be Jay. The other Jay. You are wanting to be Jay.
J: Every time I talk to him, he changes my perspective on communication and how I should be managing things in my life. And he makes me a better person. I really mean that. As a business owner, he makes me a better business owner. He makes me a more effective business owner. He makes me a better person. So I loved that conversation. I loved that interview and I can’t wait. Hopefully he’ll talk to us again in a few months or a year or two.
Carol: I know, right? He’s just amazing. I’ve got to tell you, my most powerful takeaway was that whole nugget about creating consistent events. No matter how introverted or extroverted you are, right? Just figuring out something that really suits your personality and you can do over and over and over, and that builds over time to create your network. And that it just works in so many different ways for you. I think that one tip was just magical. I’m thrilled that we got to hear from just directly from him and we can start doing that. It’s awesome.
J: Alrighty. Okay. I think we’re good. Do you have anything else to add?
Carol: Let’s just wrap it up, baby.
J: Okay. She’s Carol. I’m J.
Carol: Now, go create an event to start your networking today. Have a good one, everyone!
J: See ya, everybody.
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J: Okay, go out and support our show sponsor. Now, let’s jump into our episode with Chris Bossio and Daniel Santana.
Let’s welcome to the show Daniel Santana and Chris Bossio. How are you doing today?
Daniel: Doing great, doing great. Happy to be here.
Carol: Thanks so much for joining us. Have been really looking forward to talking with you. We’ve watched a lot of videos on both of you. We’ve learned a lot about your shop and we’re excited to hear it from your perspective.
J: I’ve learned a whole bunch of stuff about cutting hair the last two days.
Carol: That’s really cool.
J: So Daniel, Chris, first let’s start with a little bit of background about you guys. Can you introduce who you are and where you come from and how you got into the barbershop business?
Chris: Yeah, I guess I’ll start. So, I was playing college basketball. And I had a roommate who was cutting hair in his dorm. And when you play basketball in college, you can’t get a job so you’re like broke. So this was during the recession. This is ’08. So our parents lost their businesses and I didn’t have any money and I was in the middle of nowhere Kansas. And I just saw my roommate cutting hair, making a bunch of money while I’m starving.
You know, I got homesick. I transferred over to a school in Florida. And you had to sit out a year when you transfer. So I decided I was going to go barber school and learn how to cut hair. Fell in love with it. This was around the same time, it’s funny, that I signed up for BiggerPockets, the website. I was working at Arby’s and I was just trying to figure out a way to change my life around and not struggle financially anymore.
And I started doing some self-development stuff and I told myself that if I was going to do this barbering thing, I needed to own the businesses. I needed to start the business within that niche, within that industry, and so that’s how I got started with barbering and meeting up with Danny.
Daniel: So yeah, my side, it’s interesting. Not the profile you would expect to be in the barbershop world or in the barber world. But after something in the area of 14 years in the business world, expatriate from Argentina, almost two million miles flown on a single airline by the time I was 32, running multimillion dollar teams, multimillion dollar deals.
I had a friend I had met since before puberty and he was struggling as a barber. His barbershop owner was a stereotypical barbershop owner, if you will. And we set up a shop together. Originally, it was just a loan and then I kind of enjoyed it. I met Bossio that was the first barber that came over to that shop. I was still doing some work in the corporate world.
Had a gig with a couple of VCs and ultimately what I realized is, this industry is full of extremely driven, extremely intelligent individuals who just didn’t have a formal education. I wanted to jump on their wave, man, because they were helping me out.
So I was very lucky to fall into it and ultimately, that’s how I got into the barbering world after starting my life off as an engineer, a systems engineer on the techie world, business development in the corporate world, airplane Joe for many, many years, suit and tie and now it’s sandals, t-shirts, and hair.
J: So that’s awesome. So you guys teamed up as a partnership where Daniel, you brought the business side of the equation, Chris, and I guess you have a third partner, it sounds like? And Chris, and the third partner, you guys brought the operating side of the equation. It sounds like a match made in Heaven.
Daniel: It is definitely a nemith circle, a full circle there between different teammates. A lot of growing pains, just as much on Bossio’s side coming over to this side and he’s an extremely quick learner, willing to read or listen, depending on if it’s an audiobook or paper book, as needed, for us to sync up. While I have not cut hair—I feel like I could after watching many of his videos at this point.
J: That’s awesome.
Carol: That’s very fun. So I’m wondering, you mentioned, like you said, we have the operator side, we have the business growing person side, and you mentioned there’s a loan in there somewhere. So talk to us a little bit about you decided this might be a good business to start. Did you think you were going to start with this one shop, or did you have a bigger plan from the getgo?
Daniel: It’s really interesting because in reality, the shops are called Headlines Barbers. At the beginning, we used to joke that we were like the barber rehab. We were bringing in barbers that were working at stereotypical barbershops with owners, it was a complete lifestyle situation.
When I built up a business case, I tried showing our third business partner, who isn’t here today, Perez, how he can go get an SBA loan. He went to a couple of different banks, tried to get an SBA loan off of the business case I had built in with my experience. And unfortunately, his credit wasn’t good enough. We have a lot of barbers in this industry who don’t have good credit and would never be able to get qualified.
But after some talk, he said he had a partner. He came to me with what the potential partner was offering him and it was just one of those bad deals. And me being a friend and being in the corporate world for years, I decided, you know what? Here’s the money. I’m just going to loan it to you. We’ll start there. There was no paper between us. It was just a handshake. I wrote a $50,000 check and we opened the first barbershop. And I think it was like 30 or 60 days in and I sat him down, I sat Bossio down, which was the first barber that I had met outside of my friend, Perez, and we put something together and we said, let’s do five shops in five years.
So I expanded the business case where we rolled over 100% of the revenue that came into the business. None of us took any draws and 100% of the money went back into the second shop. But of course, at the time you build your third shop, you’ve got the revenue from the first and the second shop doing it. Each business case showed the negative cash flow up from and you know, the ramp up and stuff like that.
There was a lot of learning curves on both our sides. Because we started as a lifestyle company and because we positioned ourselves as lifestyles—it was always lifestyle over profits. So we don’t have the most profitable business case but we have the deepest culture business case and that’s what really has helped launched Tomb45, which is our product line and that’s really what we’re hoping can actually make us some money as well as maintain the culture as we scale.
J: That’s awesome. So I know there’s a lot of stuff to unpack there, but I want to start with something we talk a lot about on the show, which is partnerships and a lot of times we see partners come in and they have the exact same skills. They have the same strengths, they have the same weaknesses, because you guys made the perfect partner because Chris, you, and it sounds like Perez, you knew how to operate this business, this specific business.
And Daniel, you knew how to grow and scale this business. So between the two of you, basically you had everything in place to build a business and then eventually grow and scale it. But the thing that struck me was that, Chris, you said earlier in the discussion that you kind of had the same goals moving forward.
You didn’t just want to build a small business that you kind of go to. You didn’t want to build yourself a job. You were looking to build something bigger. So you both had this vision. So before we get to the building it bigger, take us through a little bit about how you started that first shop. What went right? What went wrong? How did this partnership really start out with that very first shop?
Daniel: Let me jump in really quick here. I think we took a lot of the stuff from the corporate world, when you’re hiring somebody, when you’re hiring Type A business development sales guys and the idea was, why are we doing this? We answered a lot of ‘whys’ up front before we decided five shops in five years, before we put the effort in, before we started deciding on how to focus on customer acquisition and who were our—defining our customers and market and all that.
Before we ever got to any of that, we didn’t worry about the colors, we didn’t worry about what logo we were going to use. We worried about, what is it that he wants to do, and more importantly, why? Why is it that you want to do this? Why would you jump into a five-year plan where you’re going to work your butt off and not get a single dollar? You’ve got a day job and a night job and an evening job and we’re going to be counting everything in dollars and pennies, not in hundreds and thousands.
The answer, ultimately, was lifestyle. And then when we sat there and we thought about it and the other partners, all of us got together, we ultimately decided that we were all willing to make the same sacrifices for the lifestyle, first and foremost—
J: I’m going to interrupt you for a quick second, because you’ve used ‘lifestlye’ several times and I love that. But can you define, in your words, because everybody has a different idea of what a lifestyle business is. In your words, what were you trying to achieve with a lifestyle business?
Daniel: Basically, as a barber, the hours that are put in as a barber are 10AM to 6PM or 7PM or 8PM on a daily basis. That’s five days a week, plus you’ve got Saturdays. That’s not a 9 to 5 where you can pick up your kids at work and go. You’ve got some flexibility because you can make your own schedule, but a lot of barbers like to say, I make my own schedule—no, they really don’t.
It’s really a lifestyle in the sense that, from the corporate world, a lot of us that are listening, consider our 9 to 5. Our after-hours. Our kids go to sleep, we jump on our laptops and we put in some extra work. That’s typically what we see but in this blue collar world, it’s really a matter of putting in those hours day in and day out on the weekends, and sacrificing so much family time.
That if you don’t thoroughly enjoy going to the barber battles, if you don’t enjoy going to the barber shows, if you don’t enjoy going to the get-togethers, if you don’t enjoy doing the events for the cancer societies—that’s one of the things that we do, cut hair for free. That’s one of the questions that we ask all of our barbers that are coming on board, would you cut hair for free?
If you can’t enjoy that part of it, then that’s not the lifestyle. The lifestyle is thoroughly enjoying the part where you realize the impact you’re giving to anybody who sits in your chair, the conversation you have with anybody who sits in your chair, that’s what I interpret as a lifestyle. What about you, Bossio?
Bossio: It’s funny because I feel like in the barber culture, we like to say that the barber culture is hip-hop. It’s cutting hair. It’s all the same culture. It seems like the popular belief is just grind. You’ve got to grind. You’ve got to put your head down and you’ve just got to work. You’ve got to work all day, every day. And one of the things that struck me early on as we were building this because that was my mindset.
One thing that struck me with Danny that he would tell me is, it’s a process. We have our destination but we have to enjoy the journey as well because we only have one life. So when we put lifestyle as a priority, it’s you know, are we really able to spend time with our kids? Are we really able to enjoy this? So many barbers, they work so much that they work themselves to the point where they don’t have a passion for what they do anymore.
It was like, the best analogy I usually give is when I play basketball in high school and AU, I loved it. It was so much fun. But once I got into college, they tell me every day, earn your scholarship. This is your job. And it got—I hated it. I started to hate basketball and that’s a feeling I never want to have in business or in barbering or in life in general.
Carol: That’s great, and I love that it sounds like the two of you have proven that if you do business right, that in a business that is typically not amenable to this type of lifestyle, where you can’t have passion and love what you do, but still be with your family and do the other things that are important outside of that. You have managed by making the right choices, by growing the right way that you don’t have to choose, that you truly can do both, right?
So it’s like you’ve really kind of changed. You’re starting to really change the way that the industry is working by the way that you’ve put things in place. That’s a really cool accomplishment. Okay, so back to, you decided you need to open a store. Your very first one. How’d you go about doing that?
Chris: So, it was scary in the beginning. A lot of it, we didn’t really know. Like, you know, he’s a businessman but a lot of the stuff that we needed for the shop, we kind of overlooked. So one of the ideas that we put together was tabletopping. That’s something Danny introduced and it was really eye-opening because I remember sitting down with Perez in the office at the first shop that we were at, and he was like, what do we need for the shop?
Open the door and look around. What do we need first? And things like floormats, things like garbage cans, you don’t really think about. So we didn’t realize how much money we were really going to spend to open up this shop. A lot of barbers, they just think it’s barber chairs, the station, and we’re good to go. So that was eye-opening, going through that and seeing, damn we’re running through this money pretty quickly.
Carol: Really quick.
Daniel: Yeah, it’s easy. Like let’s say you want to open a ten-station shop, a lot of barbers won’t put a power strip in their business case or in their concepts, even if they don’t write it down per se. But you’ve got to buy some pretty high-end power strips. You’re spending $60 a power strip, you just spent $600 that you weren’t expecting. That’s just one of many of the things.
So we definitely tabletopped to walk through the process several times of what you do during the haircuts. So I can come up to speed, identify the individual components. I try to write them down. Of course, we totally messed up our business case but we did put a 10% variance on our cap ex. We were pretty darn close at the end of the first shop.
Carol: How did you choose that location for the first one?
Daniel: So we looked at several locations. We were actually very scared. We got a very high rent place, but ultimately, we knew we wanted to get somewhere where our customer acquisition cost was low. That’s something that I go after repeatedly. That’s something that’s on my mind for everything we do. Customer acquisition cost.
Coming from the corporate world, we’ve spent thousands of dollars on flights and entertainments with our customers and all that, and we put that to the budget center, so we decided at the end of the day how much it costs us to sign this contract. Well, for us, customer is getting them in the door. And then the barber’s job is to retain them.
But getting them in the door, for example—we wanted to be next to high schools, next to junior high schools where the customer acquisition cost is low. We wanted to be as close as possible to a gym. And this is a very large L.A. Fitness. The same plaza we’re in has a very large L.A. Fitness. And we said, you know what? We’re going to bite the bullet and I’m going to sign us up.
Chris: And it was very scary with that location. I think that was our fifth choice because the plaza is actually not facing the main road. It’s actually the back of the plaza, facing there. So that was super scary.
Daniel: Sure, the demographics were, the street traffic was something that was advertised by the landlord but it was definitely not something that would affect us. But the demographics in the area were good. The L.A. Fitness plaza was good. And ultimately, it’s a model we kept as we expanded.
Chris: Yeah, I think four of our locations are in an L.A. Fitness plaza. You think about gyms, people who want to look good, they go to gyms. So it was a priority for them. It’s a priority.
Carol: Yeah, it kind of just fits together, right?
J: I love the fact that, and Daniel, I was on your Instagram earlier today so I’ve noticed you posted some things like spreadsheets for how, for barbershops for other people that might want to start a barbershop how they can do the numbers to create a profit and loss statement and kind of model out what it would take to open a barbershop.
So I love the fact that you guys like, from the beginning, it wasn’t just, let’s open a barbershop and see what happens. You actually sat down and thought about this. You thought about your location. You thought about the demographics. You thought about customer retention. You thought about the cap ex, which is capital expenses, all the big equipment that goes into the store.
You thought about all those costs. I assume you actually created a budget, a spreadsheet that said, if we have this many people cutting hair and we get this many customers per day, and they pay this much, and our costs are this much, at the end of the day, week, month, year, this is what our profits are going to look like. And you actually did all of that before you went out and you started building your first shop.
Daniel: Oh yeah, I mean I calculated MPV. My first spreadsheet, I sat down with Perez and Bossio and they just scratched their head and I realized that you know, this was going to be a journey. So we dumbed it down and built it up and at this point, I’m pretty sure Bossio can build his own fairly complex business cases.
It’s one of those things where, as a barbershop owner, we started defining different things. I define our customers as both the barber and the person getting a haircut, which was a different concept. And it took a while for us to sync on that, if you will, but the barbers ultimately pay us.
We took the, again, going back to the lifestyle term, the lifestyle method where we wanted to give the individual barber an opportunity to make more money as long as we made our rent, basically. If we can recover, our business case showed a 36-month breakeven point and we weren’t getting a real ROI until month 48. So we built out 48 months and at that point, we stopped. I think we had been in business for six months so yeah, it’s been fantastic to actually build that out.
Bossio has been trying to convince me to do the business classes per year so we decided up front, maybe not up front, but once we decided to focus on the expansion, that we needed to provide value up front through education. And again, customer acquisition costs. We defined it as barbershop owners that our customers were also the barbers.
And the barbers, we needed to acquire them just like we would any other customer. And we wanted to attract a higher level of barber, a higher caliber of professional, and we did that by putting out education and increasing our pool of addressable market and the addressable market grew quite a bit because they knew who we were and they wanted to come work for us. And that’s where we were.
Carol: That is huge. I swear, you read my mind, because I was going to ask you about this. You’re on your first shop, right? And you figured out customer acquisition, but clearly, you need people to serve those customers, so how would you go about getting them? And it sounds like by providing education, that you were able to do that. So how many barbers did you draw into your shop and how did you set up their payment structure or their shared rent structure and can you talk to us about how that worked out?
J: And also how you guys differentiate. Because I know a little bit about reading your story. I know a little bit here, I’d love for you to talk a little bit about how you guys basically changed the way you do things compared to much of the rest of the industry.
Chris: Yeah, I think it was just putting the barber first, like Danny was saying earlier. We started doing a whole lot of YouTube videos and putting content out there and it was a blessing because we started getting barbers who probably weren’t the best at cutting hair. But they were moldable. They were teachable. They were ambitious. And with our channel, we didn’t just educate but we also inspired and motivated barbers to step their level up, of barbering.
Because I think a lot of barbers, they think of barbering as kind of like a hustle. They don’t see it as a real career. And so we wanted to change that mindset for the upcoming, the new generation of barbers. And that’s been amazing for us because just like when I read Rich Dad, Poor Dad and it changed my entire mindset about how I think about money, I think we’re doing that a lot for the new generation of barbers and that’s what helped us get all these new guys in.
But you also have to invest into them. You also have to spend time training them and teaching them how to cut hair and teaching them how to save their money. And teaching them how to make more money and we’ve set up a pay structure that pretty much amplifies that. And elevates them to be able to do the best that they can in our environment.
Carol: That’s cool. And even, I can tell from the language, simply from the language that you’re using when you talk about your barbers. You want to elevate them. You want to educate them. You want to amplify their careers. I think that’s a very different mindset, if you will, than how the industry is. I mean, I think that in most women’s hair salon, for example, it’s simply booth rental.
You come in and it’s a salon professional. You rent booth space. You pay a certain amount of dollars. You keep the profit. End of story. But it sounds like you’re doing it completely differently.
Chris: Danny jokes all the time that we’re terrible businessmen. Because businessmen would see what we do for our barbers and say you guys are crazy, right? And that goes back to the whole lifestyle thing.
Daniel: It’s long-term vision, right? Short-term vision, we turned down so many barbers that would walk in and want to work for us. And I mean, we would ask them some pretty horrible questions over the barbers and insult them. If that was an issue, then we knew that was going to be a problem. If you couldn’t answer why you wanted to work at my shop other than we have great traffic, other than I hear you’re the up and coming shop, then that wasn’t—they weren’t listening to what we were saying.
What we were saying was we want to not dominate the industry. We want to elevate the industry and by elevating the industry, they will follow us. There’s a lot of fake leadership in this industry, a lot of guys that say they are leaders. But the thought leadership is only from a few different people. And those people are respected and thought of as in the industry as true leaders.
And you know, sometimes we give it up. It was nice to be able to say, for a couple of years, that we didn’t need to manage the income. These guys were living off of their haircuts. I was living off of my previous money from the corporate world. And of course, that was nice, the two or three years where we were able to completely reinvest 100% of everything worked really well for us.
And being able to say, no, I’m giving up my $1600 a month in free cash flow because I’m not hiring these two guys because they don’t fit our vision. That was really nice and I think that if you built that into your business case and you built that into your concept and into your vision, and then you stick to your leadership thoughts and you don’t give up for it—you don’t sell your moral and your thoughts for the cash flow, then you can ultimately reach your destination, whatever that may be, right?
J: That’s awesome, and another thing that I saw and it struck me that you guys are doing is, you’re aligning incentives amongst everybody in the business. Like Carol said in a typical barbershop, it’s not just women’s hair salons but also the barbershop I go to, everybody is renting booths and so all these barbers are competing with one another.
So if I walk up and I say, I want to get my hair cut by Jane, Mary is over there saying, okay, I just lost his business and there’s that competition there. And competition is good, but it doesn’t, to use your words, it doesn’t elevate the business.
And what you guys are doing is more of a, hey, we’re bringing in people and I don’t know if they’re technically employees or not—that doesn’t matter but basically you’re bringing in people and saying, this is a family. This is a business. And we’re all striving for the same goal. We’re all striving to make the business successful, not ourselves as individual successful. And that’s great. That alignment of incentives is good for the business.
Daniel: Well, it’s that gig economy, right? So, in the gig economy, everybody’s out for themselves. They want to catch the next ride. They want to catch the next customer. But in reality, what ends up happening in the barbershop world specifically is barber owners will over-expand because their rent is their rent. And of course, there’s all kinds of analogies that you can use that you have to pay your rent regardless if you’re there or not, which is the situation for many barbers. So that’s really where the downfall in the industry is, if you set up rent without providing any income to the business, then the business can’t strive and the individual barber is a business and we want them to survive so that we have longevity.
We have barbers that have been with us for seven years. Five years ago, we built a flyer that said we have six or seven barbers going on to open their own barbershops and then in big parentheses, and we’re proud of it—even though they opened across the street from us.
That’s not going to affect me, per se. They’re not going to affect us. They’re just creating more of the same culture where the barbershop world can be seen as somewhere I can take my kids. I’ve got a 13-year-old daughter and a 6-year-old boy and I want to be able to walk into any barbershops and make it happen.
Carol: How did you know? What was the tipping point for the shop, where you said yeah, this is working. We’ve got something good figured out here and it’s time to move onto another.
Daniel: So the first couple of days, we thought we were going to go out of business.
Carol: What? Share, please.
Chris: Everything that could go wrong went wrong. I’m in the middle of a haircut, the power goes out. My clients had to call out of work. Like, we were scared like crazy. But I would say we started attracting some barbers like we said earlier, that were abused in the barbershop that they were currently at, and they came over and they brought clientele with them and their passion with them, and then from there, just start snowballing and I would say, by the end of year one, we felt like we had something.
Carol: How many barbers did you have at that first one?
Chris: I would say we opened the second one when we had ten barbers?
Carol: At ten. So you had ten. Go ahead, J.
J: I was just going to ask, did you have a plan for when you were going to open the second one? Was it we get ten barbers so we open the second one, or we get a year in where we open the second one, or is it just natural organic growth?
Daniel: No, it was the cash on hand row on the spreadsheet. So when the cash on hand was enough to justify the next business plan and still provide a cushion for the original business shop and all that jazz—once we felt we had enough cash on hand, as I said, it was rolling over month to month. That’s basically when it went in.
For some reason, we decided to put in a cash injection, and by cash injection, I’m talking like $2000 each. We’re not going to put in $15,000 to $20,000 each. If something happened, then we would do that at different times for different shops but for the most part, it was the rollover from Shop 1 to Shop 2 to Shop 3 into the cash on hand account. And then once that cash on hand was enough, we would jump to the next one.
Carol: That’s cool. And when it was time, and you do have enough cash on hand to do that next one, were you able to apply a lot of those initial things that you did from the first shop so did you find that you made significant changes when you went to Shop 2?
Chris: Shop 2, we got creative and we tried something different. We wanted to—we did so good with the first shop and it worked but then we deviated from that and we decided we were going try to change, be innovative. That’s always our thing. We want to be different. We wanted to bring in complimentary beer and have the barbers dress up nicely. We wanted it to be a higher end barbershop. And our customers just didn’t want that. We found that like after six months of trying that, we had to change it up and go back to what was working.
Carol: So were they just like—what did they say? How did you know? Were they polite about it? I’m so curious how it went down.
Chris: They loved it at first. But we knew when no one wanted the complimentary beers. No one—you could tell that it just wasn’t working with our customers.
Carol: It wasn’t worth it but you experimented and you were innovative and you tried something, so kudos to you for doing that. That’s cool.
J: So from an operational perspective, obviously Chris, you can’t be managing shop number one and cutting hair and at shop number two, and at the same time, be watching shop number one and at the same time be over at shop number two and managing that one or shop number three, so at some point, did you have to transition from cutting hair into a manager role or how did you cover the management of each of these shops?
Chris: The second shop, I definitely had to be a leader in the shop and I learned a lot through managing other people who believe that they are their own bosses and they are independent contractors and it’s really hard to manage those different personalities as well. I definitely had to change up the way—they used to call me Hitler because I wanted everybody to do everything the way that I wanted it.
I had to learn that there’s different ways to lead people, to get them to do exactly what you want and do it in a different way. The way that it worked out was Perez stayed back and he managed New Tampa, which was our first location, and then I managed Northdown. And we learned from that and we found our leaders in each of those shops and they ended up being the ones that would go out to three, four, five, six.
Daniel: Yeah, from a macro perspective, from my perspective in not being in a day-to-day operations. Trying to teach my management model to these guys of hands-off macro was interesting. I’m the kind of guy that says we go north, and if we’re going northeast, that’s okay. Try to nudge more towards the north. So I’m definitely not that sniper. I’m much more of a shotgun, if you will. A lot of my pellets and shots miss but then you’ve got the managers that are very sniper but they take three months to make a decision.
That’s definitely not the style and the concept that I was after. I left the corporate world specifically to get away from some of that and you know, from that perspective, when you’re looking at the business case, you’ve got to put—I’ll use the Spandex CEO’s term here, “oopsies”. Right? You’re going to have some oopsies and you’re going to talk about them and you’ve got to put some money aside for these oopsies and know that they are going to happen and remember Bossie and I had a heated discussion one time about how good this direct mailing was going to work, that we were going to do and you know, we were going to do it the least expensive possible way.
We went out and sorted all of the postcards. We did the rubber band on them and we dropped them off ourselves and all that, but sure enough, it didn’t work. But what you learn there and what you learn from allowing your individual managers as you scale to find themselves and then nudging them in the direction of the vision. And losing some barbers. Some really good barbers along the way because you’re invested in that management team, no different than the corporate world.
You’re going to lose some employees but you’ve got to invest in your managers and you’ve got to invest in your partners so that they can then realize the confidence that they have in their leadership and their thought and it’s okay to lose some money. It’s okay to lose somebody. It’s okay to lose a resource if you will. Make some mistakes and then learn from them as long as they are all going north.
J: That’s great. So it’s always about the business and the long-term vision, not necessarily about what’s easy in the short-term. Sometimes it’s easy to deal with employees that don’t see the same vision you have in the short-term by just saying, okay, well, we’re just going to disagree. But that’s not good for the long-term viability and health for the business.
Daniel: Yeah, you can’t just veto your management team and your leaders and what you’re trying to build. If you just veto them, you’re blocking their personal growth. You’ve got to realize that there’s a cost to that. I mean, some of us went to school and had that cost. Others sent out some mailers.
Others lost an employee that would have brought in some revenue for a couple of months and you lost that revenue for two or three months. And that personal growth ultimately I think is what built a team that has become you know, kind of where we are, not just in the barbershops but with Tomb45, the product line.
Chris: Yeah, we’ve done the flyer thing four times knowing that it wasn’t going to work. We’re still doing it.
Carol: Doing it anyway. Well, you mentioned your flyers and your track mailers and that type of thing. I’m curious, it sounds like so far we’ve talked about the leadership that you have at every store. On kind of the more corporate level though, have you brought in other people like in addition who aren’t barbers, who their main expertise isn’t barbering? So if you brought in or considered bringing in or even consulting with other marketing people or PR people or other types of leadership? Is that a road that you have explored yet? Or how does it work?
Daniel: So we do have, oddly enough, we’ve got a meeting set up where we’re flying in a few different guys. We do have a guy that we call our acting CTO. Mostly not into the barbershop business but into the Tomb45, into the products business.
So he’s our Acting Technical Officer. And then we’ve got a couple of other guys that we do bring in, into the software side, we’ve got a COO. Pretty penny there but he’s definitely a business guy and helps us manage and run that. And bring some brain power and thought process to our vision and helps us implement it. Not even enough hours for the rest of us to do a lot of that.
Carol: That’s great.
Daniel: Between the software and the product company, we have brought in marketing, technical, and executive support.
Carol: That is awesome, and again, that is, I think, completely unheard of in your type of industry. So you are really so innovative in this. It’s really cool. Now, before we move onto the next part of our show, let’s hear a word from one of our show sponsors.
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Carol: What other marketing efforts do you have in addition? I know you have a YouTube Channel. Do you think that is drawing a lot of customers as well as barbers? Are there other channels that have been really effective for you in gathering those people?
Chris: We have a team that we call Tomb Squad. It’s a group of influencers that we’re friends first. We all have a very common vision and common ideas of where we want the barber industry to be. But we also happen to be influencers. And you know, the name came out—I don’t know how it came about but that’s what they call us now. It’s probably me and maybe four or five other guys that we like to say, we influence the next generation of barbers.
So I think that’s our biggest draw as far as customers and followers and supporters. And then we do other things, too. We’ve tried Facebook marketing and things of that nature, but I would say influencers is our biggest draw.
Carol: Influencers. All right.
Daniel: For Tomb45, that’s definitely true. So for the barbershops, it’s a little bit different as well. On the barbershop side, what we’ve got—again, focusing on the acquisitions side, we talked about some acquisition as an owner, acquiring a barber as a customer, right? Somebody is going to process that. But getting people in the door is very interesting. So when you have your barber, unless your barber leaves or you move, a lot of the people who you want as customers are pretty faithful to their barbers.
So to get them to change is rather expensive. So what we did is we focused on the young crowd. Basically when your child tells you to stop taking him to SuperCuts, when the kids stop letting mommy and daddy take them to SuperCuts and wants that fresh cut from the barbershop, that’s who we went after. So we went after the middle school kids, the high school kids—it got to the point where the sports directors for two different counties in our region knew us by name.
They would call us and say hey, get us some more Gatorade. We know how much Gatorade you can fit on a palette because we would buy it by the palette, put our names on it, drop off two bags of Gatorade at each high school in the area. At this point, we have seven shops and quite a few high schools and middle schools and say hey, if you want more, here’s my business card. Call me. We would love to support you.
Instead of dropping off a whole box, that way we generate our conversation, we met the football moms, we met the basketball moms. We used our relationships from the people who sit in our chair, Beef O’Brady’s, these other restaurants, and said hey, this football team needs a meal sponsored on Friday. You know, we’ll pay half of it or give it to us at a really good deal and then we bought the meals and we took them the gameday meals. So by influencing the middle school and high school kids in these sports and the band and stuff like that, that gave us the expansion, if you will.
We never gave discounts. We’re not a big fan of discounts for acquiring customers. Groupons and stuff. No Groupons ever. I hate them. I think it’s horrible. I don’t want that customer who is chasing the discount. I want that customer who sees the value. And so what we did was we gave the coaches free coupon codes and we told you, listen, we want you to give this free hair coupon code to your MVP for the week.
Don’t give it to your quarterback. Give it to the guy who got good grades, to the guy that had to walk home because he didn’t have a ride. And that really worked for us. That really helped us generate a relationship with the community and to different middle schools and high schools.
J: Love it.
Carol: That’s awesome. That’s a really humanizing touch that really builds relationships and ultimately drives your business at the same time.
Daniel: For Tomb45, it’s definitely Tomb Squad. For the barbershops, it’s much more local and micro.
Chris: You know, at the barbershop, we say it all the time. It’s the community hub for a lot of areas, a lot of communities. And if our barbers aren’t giving back to the community or aren’t creating a relationship with the community—and it starts with schools. It starts with parents. It starts with kids. If we’re not doing that then you know, what’s the point?
Daniel: And if I may, I’m going to give a shout-out to True Hair Culture. It’s run by this guy, Tony Suarez. He is a manager at our St. Pete location and after spending I think 15 years in jail, turned his life around. And is now running this True Hair Culture, which basically uses all of its profit to help at-risk youth. And sometimes he goes to the schools, he finds the kids that can barely make it, he gives them rides to and from school. He buys them tools as needed. And that’s definitely something we’re happy to support. And I think that level of community interaction is definitely helping us.
Carol: Absolutely wonderful.
J: Awesoe. Okay, let’s jump ahead. We’ve talked about the first store. We’ve talked about expanding to the second store. I assume at this point, you guys have gotten this down to a science. You have a spreadsheet. You know what it’s going to cost. You know where to find your locations. You know how you find your barbers. You know how to find your customers. And so, I assume over the last few years, you’ve just kind of grown this and grown this.
So I’d love to hear a little bit about where you are today, how many stores you have, how you’re expanding geographically. But you guys have also started, and we’ve kind of touched on this a little bit but I wanted to save it until the very end here. You guys have also started your own product line where you’re going out and you’re manufacturing products to help barbers and help the industry, so I’d love to hear about that as well.
So I guess break that into two questions. Where are you now with your scaling of your shops, and tell us a little bit about the product side of your business.
Daniel: You want to start by telling them how we accidentally opened our last shop?
Carol: Yes, please. We have to hear that now.
Chris: So, we actually, we got on this you know, in this mode where we opened three barbershops, I think in a year?
Daniel: A couple of years, yeah.
Chris: And then we opened those shops but then we told ourselves, we weren’t going to open anymore shops. We were going to focus on the product line. And then we get a call from one of our landlords, who is an amazing person, that she was opening a plaza and she wanted us in there. So we said yes and ended up opening this barbershop. I’ll let you explain kind of the details of it.
Daniel: Yeah, so basically we established a relationship with a couple of different landlords who would basically call us and that’s how we ended up opening, going on a rush there at the end. I think like at the end of year three through year five, we went on this crazy rush where the cap ex wasn’t as intense. The tenant allowance wasn’t being provided.
It was much better—they weren’t used to barbershops that paid the rent on time, that elevated the traffic to their salons, that got good responses from the neighbors, that didn’t allow, if you will, a riff-raff of clientele to hang out in front of the door and stuff like that.
So because of that, that relationship was established with the landlords. They came to us and provided a lot more, tenant allowance, gave us much more favorable lease terms.
Chris: Offers we couldn’t say no to, right?
Daniel: Build-outs. Complete build-outs. So yeah, I think there’s one lined up for 2022 that they wanted us signing and even though we’re not really looking, we’re going to go ahead and do that because hey, if it’s not going to cost us any cap ex to open it, we can definitely run it.
Chris: We literally sat down and said, no more barbershops. We’re done for a while. And now we’re opening—
Carol: They can’t stop. They need you. They need you in their space.
J: That’s awesome. Now, tell us about your product line. I think it’s called Tomb45?
Chris: Tomb45, yeah.
J: How did that get started? What’s the goal? Tell us a little bit about that.
Chris: One of the things that I was doing because of YouTube was educating a lot. And I started touring. I started doing my own tour, put in a list of cities and people would book me to go to teach their classes. And I started going to these shows and these expos and seeing the level of education that was being provided and like Danny was saying, earlier, it’s almost like the same thought leaders for so long, and they were really I feel like old school with their education.
Daniel: Selling out.
Chris: Yeah, that too. So we wanted to go to the shows and start teaching but the we found out that there’s a cost. And that when you go to these expos, you’ve got to pay them to do free classes. So we needed to figure out a way, how to fund this. So I talked to my subscribers and I told them what I wanted to do and how I want to help them physically, not just through a video, and they told us, why don’t you just start making product?
And the first product they asked us to make was the shave gel. And we made that shave gel in our kitchens in a bowl with a hand mixer. Literally.
Carol: You did not.
Chris: Yes, we did.
J: Has the time expansion passed for the FDA to still come after us?
Daniel: Hopefully not but like literally hand labelling, hand pumping, hundreds and thousands of bottles of shave gel.
J: Hundreds and thousands?
Carol: Wait a minute. From your kitchen? Hundreds and thousands of bottles?
Chris: No, thousands.
Daniel: So I sat my wife down and I mentioned to her, babe, I need you to understand that these boxes are going to be in the garage for the next five years, okay? This is something your boss really wants you to do. I think it’s something we need to support. It’s one of those things that you’re going to invest in your leadership and invest in your management.
And you know what? This whole training situation and education team, is it even going to get us out so we can get more barbers? And my wife is like great, so what’s going on in this kitchen? What is all this stuff everywhere?
Chris: So we thought of a name and one of the things I wanted to do was stay true to what we were about and so barbering started during Ancient Eyptian times. It’s one of the oldest professions that’s still around. Back then, you weren’t given a tomb or a proper burial unless you were royalty, a priest, or super wealthy. But there was a barber named Barber Meryma’at, who was actually given a tomb. His tomb number was 45.
And I found this guy because I was trying to find the most successful barber ever. I couldn’t point to you. There’s no one to look up to in the barber industry like there is in any other industry, right? And so you know, this guy has a statue in the museum in Pennsylvania and it showed me that were barbering started, it was respected, it was a real profession. And the culture that I wanted to build was bringing that back. So that’s how we came up with a name Tomb45.
Carol: That is so cool. That is such a good story. While we’re on stories about naming things, I think I got a little glimpse of the story about how the name Headlines came about and I think our listeners would love hearing that. Can you share it?
Chris: Yeah, that’s a funny one. We were in the barbershop and Perez wanted to name it some name that we’re embarrassed to talk about. He doesn’t like people knowing about it. But we’re coming up with names and we hear the song that Drake made, Headlines, come on.
And I’m like, you know what? That would be a really good barbershop name and we talked about it for a little bit but I didn’t think he was actually going to go get the logo made in a couple of days later, and I’d be looking at a logo that said “Headlines”. So that’s how we came up with the name for the barbershop.
Carol: Very cool. And I love how your logo, you mentioned earlier, it kind of all comes full circle now when you’re talking about who your target market is, with all the middle schoolers and the high schoolers and the whole community. It really looks like your brand very much reflects that. It’s almost very comic-book like. Kind of just, it’s cool and hip and fun. Yeah, it’s still very professional, all at the same time, and it really reflects like raising people up in those communities. It’s a really good fit.
J: I’d love to hear more about where you’re planning to go with the products. Are these products that you are selling out of your own stores or are you trying to sell them through retail or at other trade shows to other barbershops and what types of products are you looking into expanding to? Is this going to be a key part of you business or is this just a secondary thing to try again to push your education side of things like it originally was?
Chris: I think the company has grown way, way bigger than we ever anticipated. Again, we started with shaved gels and making it in our kitchen then in our backyard and then when we talked about scaling up and Danny, he’s a great businessman. Two million miles flown. Scaling up wasn’t the normal typical scaling up. Scaling up was going from a bowl to a five-gallon bucket to a drum to backyard to a garage. That was scaling up for us.
Chris: But we got so much support from our followers and subscribers and stuff—
Daniel: So just for the record, we buy containers from a real factory today. Everything is done legit. FDA-bottled.
Carol: I wasn’t questioning you. Of course it is.
Chris: But it was definitely humble beginnings. Now, like I said, it’s crazy the growth we’ve had and where we’re at today with the product. We didn’t think it was going to be our focus like it is today. Today, it is our focus.
Daniel: So, we are focusing on distribution and I think that when you launch a new product line, regardless of how you’re doing it, a lot of our listeners are probably looking through Amazon podcasts and how their people are building their businesses on Amazon and one of the ways you can build it is through your own product line.
But the pull-through is something very interesting. Amazon has opened a direct distribution like to many, many customers. You’ve got direct access. The direct consumer model, if you will. That does not mean that B2B is dead or business to business and the distribution concept and the distribution value chain is not there.
What it means is we have a different line and a different vertical for attacking those customers directly. So when we launched a new product and we started putting it on Amazon and we put our own label on it, we had to pull through because we had the name recognition. We had the name recognition because we had the online presence. We had the online presence because we provided value first.
So unbeknownst to us, we were building this trend of a culture where the industry was hungry for something along those lines. And it kind of worked out. If I was to go back and say I was going to do that purposely, and I wanted to build my own product line and be able to launch it, I would say, you can do it in the same way. You can follow all the rules that they tell you to follow with advertising your product and trying to build up the clientele.
You can go after influences but buying influences is not the same thing as syncing with influence. The synergetic view of the influencers and the team that we call our core team that actually have the same vision, that is actually what creates the strength for the brand. So we do have a direct line distribution to the consumer, either direct through the website, which we have a decent amount of volume through.
I would say today that it counts for 50% of the business. And the other 50% of the business is probably through distribution. We are opening international distribution, which has been a logistics nightmare and an extreme growing pain for us. How do we do it? Especially when you consider that our strategy is both to direct consumer as well as distribution. Old school B2B distribution. When you got direct consumer, you’ve got to worry about opening all your taxes, opening all your VATs in European countries and Canada and South America.
Yeah, so it is all of that. The main thing with our growth and our growth strategy is through innovation. When you look at our shaved gel bottle, which is we’ll start with the first product. Bossio brought me the shaved gel bottle and I’m like, this doesn’t look good on a shelf. There’s no way that this is ever going to sell. But when a barber sees a shaved gel bottle and they’ve never seen it before, they’re like, this is fantastic. Why didn’t somebody think of this before?
So obvious to them. You can see it’s clear when they are running out as opposed to opaque, which when you know you ran out is when you pump it for the last time and there’s nothing there, kind of like a shampoo bottle. That’s when you know you ran out so you have to go out and buy something. Here, you know when you’re running out. You’re good. It’s got an applicator nozzle so you hold it upside down and shake it and you can get 100% of the product out.
Because you can get 100% of the product out, you’re not cutting the bottom of that pump so that you can scoop it out with your fingers because you’ve run out at the last minute. And there’s so much innovation in a very simple package that I was just blown away. We even colored the gel green because green means ‘rebirth’ in Ancient Eyptian times. So everything we did was on purpose.
When we looked at the next product, you want to talk about the razor handle, our second product?
Chris: Yeah, the razor handle was interesting because we see things in different perspectives. I’m in the shop working and he comes in and he looks at our behavior in the shop. And one of the things he noticed was, we have these razor handles and you put cartridges in them. But barbers, they want the razors that sits in the cartridges to be exposed or non-exposed or medium-exposed. Why don’t we just include all the cartridges in one package? No one has ever done that before.
Carol: There you go.
Chris: It’s like one of those things, like TV products where you’re like, why didn’t I think of that? Nobody thought of that. So that was our second innovative product that I thought was really cool.
Daniel: And so the same business model, when you look at the spreadsheet that we built for Tomb45, it looks very similar to the Headlines business model, especially with the cash on hand. It’s a rollover month to month. There’s a learning curve when you talk about somebody’s—myself and the rest of the team. Nobody on the team had managed inventory and the logistics and online shipping and none of that.
So there’s been a learning curve with that. And we still mess that up quite a bit. Fortunately, we’ve never run out of product for long periods of time. We’re out of gel right now and backordered and we’re going to be out of gel for ten days. So I think we’re going to survive this one as well.
And that’s happened a couple of times where we’re running right on logistics. But I think that as we look at the real fun part of what we’re doing and where the money is coming in and what we’re looking at down the road, it’s definitely through innovation that fixes a problem.
So it’s not a commodity. Even though shave gel is a commodity, we were able to add that value. We were able to find somebody that was value add, market the value add, define the value add to the market, ad get it going. When we had the razor handle, we did the same. And of course, now, we’ve just launched this week a product which we’re really proud of, which is a wireless charging mat
So we’ve got three patent-pending innovation on this one and basically what it is, is we’ve got a device that connects to the clipper, trimmer, or shaver that converts a wireless clipper shaver trimmer that does not charge wirelessly into wireless charging.
If you’ve ever charge wirelessly into wire charging—if you’ve ever been to the barbershop, there’s a lot of wires everywhere. And when I walk into the barbershop, it’s just like, oh, God. All of these wires everywhere. But they need it because they plug in. Because at the end of the target—your battery is dying down. They’ve got this rat’s nest. They’re cutting hair with the crazy rat’s nest rattling around everywhere.
But if you can charge throughout the day, it would work so we innovated an input device, a conversion device. We were able to get a patent on that. Or a patent pending on that.
Chris: I would have brought it if I knew it was going to be on video. It’s beautiful. It’s a mat that lays on your barber’s counter. He puts the attachment to his clipper, lays his clipper down, and it’s charging. He’s never going to have any issue running out of battery. It stays on—it’s a game-changer for the industry.
Carol: That’s just so cool listening to all these stories. Did you bring a lot of outside consultants or did you really just realize by operating your shops that these are just things you need? And so you just kind of figured it out.
Chris: We do like crazy stuff, the whole shotgun theory. We didn’t know how to get things started, but Danny, I remember one day we just bought flights to China.
Daniel: Jump on a plane and go. Because in reality, none of us had been a product of the element, like true product development. Like R&D of a product. None of us had defined a product, engineered a product, and managed that. I had done some product management in the corporate world but it was all business intelligence software stuff. It was never anything physical.
Right, so when we look at something physical, you’ve got to physically draw it. You’ve got to draw it in Autocad. You’ve got to create tooling for it. Then the tooling has to go through, you’ve got a source component. And we basically jumped on a plane, went over there, wasted a lot of time on our first trip—and money. Actually, we took a big step back with the amount of money. We bought a product that we were going to launch the product guide here, and it was so horrible, we had to throw it all away.
And cash on hand, we spent the cash on hand for this next product. And we literally opened the dumpster and threw it in there because we weren’t putting our name behind that. We were not putting our name behind that. The manufacturer was not backing it. They weren’t going to replace it and we were done with it.
So then we built the cash on hand back up. We jumped on the flights, went back out there again. And you know, by the third or fourth time, we realized that we didn’t need a consultant. We have a team in China now that helps us out quite a bit. We land. They pick us up. And they’re with us until we take off.
All of a sudden, the food is so much better. All of a sudden, I can take a taxi. We don’t have to fly everywhere. We can jump on the trains because getting a train in China, if you don’t speak Chinese, that’s fairly difficult. And our airports and our hotels are much cheaper, too. To the point where if you’re going to spend ten days in China and you can hire one of these consultants, he will probably be cheaper than what you’ll spend on your learning curve.
Daniel: And a much better experience.
Carol: That’s a great tip.
Daniel: And then of course, we launched a product, an air compressor last year in September and we were told that this was going to be exclusive to us. We helped them finalize the design of it. We launched it, and two weeks later, we saw a competitor with it. And now two and a half months later, we saw it on Alibaba for a fifth of the retail price.
Chris: It was one of the products that we made the market for, we developed it, and yeah—they screwed us over.
Carol: Ouch, that’s painful.
Daniel: But we learned from that. We moved on.
Carol: You learned.
Chris: We learned and we recently launched our newest compressor, a cordless compressor. It’s got double the power of anything out there, wireless charging capability, it’s another game-changer for the industry. But if that wouldn’t have happened, we wouldn’t have come up with the new innovations we have now. So I guess you’ve got to fail.
Daniel: But I’ve got to say, the coolest part of launching that was when we added wireless charging to that device. So we launched it on December 9th and what we did was, I wanted to fly in our influencer friends and we realized, wait, that’s a big ticket item. Why don’t we associate with the training thing?
So we did the training class where we did some education and then from there, we also had the influencers and we basically launched this product. We tried to do an Apple Steve Jobs thing. As we learned, we’re going to get better at that. But when we launched it, we launched it and we had this wireless charging capability built into it.
We could not tell anybody because if we told anybody, they would obviously put two and two together. They would start thinking of wireless charging additional tools. So we launched it, sold it. People were receiving these devices and not knowing that it charged wirelessly until we launched.
Carol: That’s awesome. What a great—if that’s not icing on the cake, right? We’ve got this great tool, and oh, P.S., you can charge it wirelessly. Boom. That’s amazing.
Daniel: Value up front, right? Lifestyle.
Chris: We launched and then, they’re like wait? My compressor charges wirelessly? Wow.
Carol: That’s so cool.
J: So I think the thing that stands out to me so readily is you guys have really been innovators in this industry that’s been around forever. You’ve innovated on the business model. You’ve innovated on the marketing. You’ve innovated on the employees or the contractors in the business and now you’re innovating on the product side. And I absolutely love that.
Again, this isn’t a new industry where there’s always a lot of change going on. You guys took over an industry or jumped into an industry that like you’ve said have been around for thousands of years. Tremendous credit to you guys for what you’ve accomplished.
Daniel: Thank you, yeah. We’re definitely looking forward to a post-September or December maybe follow-up. We’ve got a software as a service product that we are launching and again, I think that innovation is because it’s looked at how to make life easier. We’ve identified problems, not problems, but challenges inside the barbershop from the individual barber and from the barbershop owner’s perspective. And how can we make life easier and more efficient?
Not just from that perspective but when you look at a charging mat, it’s a modular growth, if you will, because of the economics behind it. You can start off slow and then you can add modules to increase the capacity. So everything we’ve done has been from that concept where it’s—we’re conscious of the cash flow available for many of these barbers. We’re consciously of the cash flow for the barbershop owner and we’re conscious of the individual growth that they can have.
And I can’t wait until we do some software stuff, which is our next one. Because as much success as we’ve got going on now, we’ve got some products that are launching June 2nd. We are going to be introducing the additional adapters for more hardware that will allow that hardware to charge wirelessly. But that’s done and over with.
Chris: The next big thing is our software bit.
Carol: That’s so cool. I think it’s fair to say that you’re not only innovating, I think it’s fair to say that you’re revolutionizing the whole barber industry. Because the way you’re talking about this is clearly just stuff that hasn’t been done in a many thousands of years old industry and you’re just changing this whole thing up and it’s amazing. So much fun to listen to.
Thank you so much for all of that. So now we’re going to jump into the part of our show that we call Four More, okay? So we’re going to ask you four rapid fire style questions. You can take turns answering them and then at the end, you’re going to tell us about where we can find out more about you. Sound good?
Daniel: Let’s go.
Carol: Okay, J, you take the first question.
J: Okay, and this is for both of you. I want to hear answers from both of you. What is your first or your worst job that you’ve ever had, and what lessons did you take that you’ve used in your industry today?
Chris: Dishwashing at a buffet. Worst job ever. And my dad used to pick me up and laugh at me because I took the job because I was upset about him. Or upset about the job he was giving me. And the thing that I learned from that is, take control of your life. You’re not going to be happy with everything that you receive, but look at the cup half full, not half empty.
Daniel: I was thinking about it while you were answering. I’ve only really had one bad job. And it was just micromanagement hell. I’ve been lucky enough to be upper directorship level management, executive level management in the white collar world for most of my corporate career and then working for myself, I get to call the shots and that’s pretty much my personality.
And when you’re managing a group of such talented people, kind of like I am, I got really lucky with the Tomb45 group and the Tomb Squad with the talent they have and the drive and passion that they have, you cannot micromanage that personality. I mean, I realize that it’s doing really well for Elon Musk, apparently, but not me. I can’t do that. I can’t be managed like that. It was micromanagement from hell.
It was very late in my career. It was a gig that I was looking forward to. I’m a nerd at heart and I want to do some cybersecurity stuff and I wanted to play with it. So I took a job and three months later, I had to tell them I had to go. And what I learned was basically reinforcement from that. Yeah, I’m definitely macro in my style and my beliefs are much more micromanagement styles than micro.
Carol: Love it. Okay, next question. What’s an opportunity along the way that you’ve said no to? And do you think it was the right decision?
Chris: A lot of sponsorship offers with bigger companies. I didn’t sell myself out. I wanted to be able to give an unbiased opinion on all the products that I use. And then what I was doing and not taking these sponsorships. I feel like a lot of people would or the culture, in the barber industry, they kind of look up to that and decide no, we’re going to build our own thing. We’re going to do it ourselves because we can. We can create our own platform. And I think that was the one thing that I turned down that I’m happy I did.
Daniel: Yeah, I think for me it was basically, I married my middle school sweetheart and somewhere around 34 years old, my wife came back. We were expatriate in Argentina. We came back to our home in Tampa and she didn’t pack. She was done. She wasn’t going to expatriate. And I think most of my peers would have just kept their career. I gave up my career at that point for my family. And I’m thankful I did, obviously. Everything’s worked out.
J: That’s awesome.
J: So what is some of the worst advice you hear in your industry or some of the worst advice you’ve been given, and how do you turn that into good advice?
Daniel: There’s so much bad advice in this industry. There is so much bad advice. In this industry, we hear a lot of people talking about hey, I’m going to go get my LLC. Okay, so who are you partnering with? What do you mean who am I going to partner with? It’s just me. So you’re just going to do a single-member LLC. Why are you doing a single-member LLC? Well, I was told I have to have my own business.
And there’s no context and understanding that an LLC is designed in order to protect him from me and me from him. It’s limited liability from your partner, not from your customers, people. They’re piercing the corporate veil. Come on, you still need insurance and all that. So there’s this misinterpretation of business setup which is the very first conversation. And unfortunately, from there, it goes downhill.
I would definitely say sponsorship is the second one. A lot of people say, go and try to get sponsorship. But then you’re selling out. You’re not standing for everything. There’s no why. It’s just a what. There’s so much what to do. You need to get a company. You need to go get a sponsorship. But nobody really asks why do you need to do that? And does that flow with my mentality and my vision and destination?
Carol: Great. Okay, so fourth question—in your personal or business life, what is something that you’ve splurge on that’s been totally worth it?
Chris: For me, I don’t know if this is splurging but I went on like a year where I spent a lot of money on self-development, on education. Like, classes in our industry for continued education are pretty expensive. There’s been times where I’ve spent my month’s income on taking a class because I wanted to better myself and be able to share this information with other people. So I splurged a lot of money on that and cars that break down.
Daniel: He won’t let me buy him a nice car. This is a true story. Bossio drives a $1000 car. His car broke down. We went and I find him a $15,000 car and I’m like, I’m going to buy it. Let’s buy this car with the company money and stuff, and that way we’ve got a reliable car. He says, no way we are spending that much money on a car right now.
Find me a cheaper car. So I found him a $7500 car and he says, no way. So I jokingly showed him a $1000 car, which he says, that’s the one I want. So now we manage—we define every expense on the number of Bossio cars. So if we spend $3000, we spend three Bossio cars. When we spend $10,000, we spend 10 Bossio cars.
Chris: I just have really bad luck with cars so I’m not putting more money into it.
Carol: That’s a true entrepreneur right there though, who is proud of their car if it costs next to nothing. That is like entrepreneurship wrapped up in a nice package.
Daniel: I splurge on my home. I live on the water and it gives me no excuse to not pick up my six-year-old son and go fishing three times a day. Because it takes me five minutes on my boat, two minutes to get on the water where I can fish. I sat next to a lot of what I call airplane Joes where we are obviously workaholics.
We obviously put in 60-hour work weeks. We’re listening to this podcast and every other podcast that can feed us information and we’re not present when we’re home. I try to leave my phone at the dining room table when I take my son fishing. I try to put my phone down when I’m driving 99.9% of the time in the car and talk to my daughter.
And I sat next to so many airplane Joes for so long that have told me, don’t let your kids’ life go by. And you wake up and they’re gone. So for me, I splurged on the house and being on the water and I do a lot of fishing with my six-year-old. And he swears, he’s caught 15-pound bass. He swears he’s gotten this close to catching alligators. And that’s perfect.
Carol: Of course he has.
J: Awesome, awesome. Well, thank you guys so much. Daniel, I think you wanted to mention a little honor for Chris.
Daniel: I am super excited. This weekend, we attended the world’s largest barber expo dedicated to barbers, known as Connecticut Barbers’ Expo. It’s put on by a fantastic person, Jay Majors. He’s definitely elevating the industry. We’re very proud of where it’s going. And we did the first ever Barber Grammys, which is just put on fantastic.
I mean, it was done right, it was elevated. It’s something that the industry is going to look forward to. The cosmetology industry already has something like this and now we’ve got something like this, too. So the first ever Barber Grammy was won by Chris Bossio for Educator of the Year.
Carol: Congratulations, that’s amazing.
Daniel: He almost got emotional on stage. He was right on the edge.
Chris: I almost cracked but I held my composure. It was just amazing to get some recognition.
J: I can imagine—do you know how many people are in this industry?
Chris: We don’t, but there’s a barbershop on every corner here in Florida. I don’t know about you guys.
J: It’s got to be a ridiculous number of people. I mean, that is a huge honor. Congratulations, Chris.
Carol: Congratulations. It’s wonderful.
Chris: I appreciate it, guys.
J: That’s awesome. Okay, we’re going to take this last piece of the show and I want to give you guys an opportunity to tell us a little bit about where we can find more about you, how we can follow you on social media, how our listeners can get in touch. And most importantly, how we can buy your products and visit one of your shops.
Chris: So for me, I’m all over social media. I’m on every platform as Chris Bossio. You can just look up my name and I’ll pull up, especially YouTube. That’s where I spend most of my time and Instagram. And the website, you can find us at Tomb45.com. All of our products are there. And then we have an app.
We didn’t even talk about the app. But we have an app, Headlines Barbers that you can go and see all of our locations as well. And then Danny just started becoming an influencer. He signed his first autograph the other day at the Expo. And so he’s on social media now.
Daniel: Yeah, so our industry is in need of some basic education so I’ll be putting out some very basic stuff. And then hopefully building it up. The more complex we get, the more we’ll lose people so we need to keep it basic and eye-opening. But yeah, Tomb45.com. I’m on Instagram at @TombDoc. But Tomb45 is spelled as Tomb Raider, but Tomb45. That’s where you can find us.
We are on Amazon as far as North American markets go and we are expanding internationally at this point. Hopefully in the next couple of months.
Chris: The Tomb45 Instagram is @OfficialTomb45.
Daniel: That’s right.
Carol: Official Tomb45. Excellent.
J: And all of your shops are in—I don’t think we even mentioned. You mentioned New Tampa at one point, but all of your shops are down in Tampa, Florida?
Chris: In the Tampa Bay area, yeah.
Carol: Awesome. Can’t wait to come see you guys. Thank you so much, you amazing barber revolutionaries. You’re inspiring people, for sure.
Daniel: Thank you for having us. It was fun talking about this stuff. It had been a while since we told anybody. Actually, I think we kind of kept it under wraps though. We actually did the actual product in our kitchen for a little bit. This may be the first public time that we tell people that we did this product in our kitchen for thousands and thousands of bottles.
Chris: I’m proud of it, though. To be where we’re at today.
J: The Origin Story. I love it. Cool. Well, thank you guys so much. We appreciate having you here and we will talk to you soon.
J: That was an awesome show. I love those guys. What did you think, Carol?
Carol: They are such the real deal, right? They are so completely authentic and I love how they immerse themselves in the community and they talk about elevating the industry. It really shines through in every single thing that they do. I love talking with them.
J: And I love the fact that they make such a great partnership. So Chris, he’s the constant operator. He knows the business like nobody else. And then you have Daniel who, he’s the business guy. Between them, they figured out how to scale and grow this thing tremendously. I love it.
Carol: Me too.
J: Okay, are we good?
Carol: Let’s wrap this up, baby.
J: Okay. She is Carol. I am J.
Carol: Now go do something small but figure out how to make it big today. See you later, everybody!
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