Transcript of Interview with Keith Cunningham
Dan: Welcome to another episode of Shoulders of Titans. This is Dan Lok, and today I have the privilege of bringing you another business titan, a successful entrepreneur, an international speaker, a best-selling author, an amazing individual who inspires and educates tens of thousands of entrepreneurs and business professionals worldwide, a person whom I respect very highly. Keith, welcome to the show.
Keith: Thank you very much, Dan. I appreciate it.
Dan: Keith, tell us a little bit about your background and how you got into what you do today.
Keith: My background is that I am a business guy, and I still am. I’ve got degrees from the university in business and an MBA, and I worked for years in the cable television industry. I started numerous real estate companies. I bought and sold a number of businesses outside of cable television and real estate. I’m really kind of a business entrepreneur. I’ve started companies; I’ve bought them; I’ve sold them; I’ve torn them apart and fixed them. Most recently, over the course of the last 15 years, in addition to the portfolio of businesses that we own, I’m one of the few people out there who teach and eat their own cooking. We own a portfolio of businesses, and I spend the majority of my time teaching business owners the business skills and tools, the fundamentals, that are required in order to be successful at business.
What I know from the last 15 or 20 years is that a lot of people are in love with their idea. They’re in love with their product. They’re in love with their business. The problem is being in love with your idea, product, or business is not the formula for being successful at business. It’s not a matter of how much you love it, it’s a matter of whether or not you have the skills and tools to throw the correct levers to enable your business to be successful.
Think about it this way: If you want to win a gold medal at chess, then you need chess skills and tools. There is no such thing as a “natural chess player.” In other words, the people that get really, really good at chess and win the gold medals are people who understand and have practiced the fundamental skills and tools that will allow them to be successful at chess. The same thing is true of business. There is no such thing as a “natural businessperson.” Instead, there are people who have learned the critical skills and tools, and if they practice those, it will enable them to minimize doing dumb things and maximize the probability of being successful.
So for the last 15 or 20 years, the majority of my time has been spent (in addition to running our businesses; I don’t operate our businesses, but I do run them) teaching other business owners these critical business skills and tools.
SKILLS FOR SUCCESSFUL ENTREPRENEURS
Dan: What do you think are the critical skills required to be a successful entrepreneur?
Keith: There are so many, not the least of which is luck. There’s some degree of luck that’s involved in being successful in business. To me, business is not a bathrobe. It’s not a one-size-fits-all. Too often, I hear people come and say, “All our problems would go away if we only had 20 or 30 or 50% more in sales or more revenue, more turnover.” The reality is that sometimes, the amount of revenue is the problem, but more often than not, the amount of revenue is not really the core problem.
There’s a certain amount of luck. There’s reading and understanding financial statements. No question that having optics about your business and the finances of your business are critical. If you go to the doctor, the doctor doesn’t just look at you and pronounce how healthy you are. Instead, the doctor will draw some blood or do an MRI or a CAT scan in order to figure out how you’re doing. A business owner needs to have a blood test and a CAT scan and an MRI in order for them to be able to know how they’re really doing as well.
The most important skill that business owners need in order to be successful is the ability to think. There’s a very famous book that was written about 80 years ago. It sold 75 million copies. Probably most of the people that are listening to this either have this book or have heard of this book. The book is by a guy named Napoleon Hill. Napoleon Hill wrote a book that everybody says is the coolest book. The name of the book is Think and Grow Rich. The name of the book is not Use Your Emotions and Grow Rich. The name of the book is not Dim the Lights, Hold Hands, Sing Kum-ba-yah, and a Sack Full of Money Will Fall on Your Head. That’s not the name of the book. The name of the book is Think, and most business owners don’t have this skill of critically thinking about what the core problems are, where the obstacles are, and what needs to be done to get over them.
Certainly, you need a skill of being able to leverage, to hire a team, and to have A players, to build the culture on your team, figure out what the priorities are. All of these are skills that can be learned. Yet most people who have a business think that the biggest skill that they need is how to get more customers. Again, my experience is that most of us are suffering with our businesses not because we have an inability to attract customers, but because we can’t keep them.
Here’s a question I want everybody on this call to answer. Answer it to yourself. “How big would my business be if I still had every customer who ever tried me?”
Let me tell you something. Your business would be two times, five times, fifty times bigger if you just kept half of the people who ever tried you. Our problem as business owners is not that we’re not adding new customers; we are. Our problem is that we suck at keeping them after we get them. We’re horrible at that because we’re so engaged with the idea of “How do I go out and reach more?” as opposed to “How do I do a better job of keeping what I have?” It’s a whole different way of thinking about your business.
Here’s another growth question: If 100% of your future growth was by referral only, how would you run your business?
Let me tell you something. Those are the kind of questions that will allow you to grow your business. Growing a business is obviously an important part of being in business, but most people have misidentified what the core levers are, the core strategies, that would enable them to achieve the growth they want.
Dan: Is it because as an entrepreneur or business owner initially, at the start-up stage, we’re going out there and doing everything, we’re selling, we’re trying to get the deal and get the sale, and very often, we’re locked in that mode? As the company grows, now we have more people, more teams, but we’re still in that hunting kind of mode. We’re used to that. But what you’re saying is, way more than that, look at financials, manage your people, manage your profit, and all these things.
Dan: A few months ago, back in October, I had the privilege of studying with Keith at his five-day workshop “How to Buy or Exit a Business.” The first two days, we spent reading and understanding financials and what you, Keith, were teaching us. So why don’t most business owners learn how to read financials?
Keith: What a great question. It’s a skill. It’s like, why don’t most people go to the gym and exercise? It’s not that we don’t know that that’s important. Everybody knows that if you want to live longer and have a higher quality of life, you should be careful what you eat, and you should go to the gym and exercise on a daily basis. Yet most people, like 85% of the population, doesn’t do that. You have to ask the question, “Well, why is it they don’t do that?” I think the reason is because it’s not fun. Most people are looking for “How do I get to where I want to get to and have it be fun?” or “How do I get to where I want to get to and not break a sweat? What is the easiest way? What is the path of least resistance?” Most people are looking for the easy way, and therefore, they don’t do what’s required.
If you’re going to be successful in business, then having financial and business optics is critical. Being able to identify and measure the critical drivers or the KPI’s. What are the core strategies that need to be prioritized? What are the standards that need to be set so that you have the ability to measure your performance against a standard? The reality is that being successful in business requires that you understand and use leverage, which is other people, and it requires that you understand and use measurement. Measuring is the key thing that tells you whether you are or are not making improvements. Measuring is the key thing that tells management what’s most important. What gets measured is what gets done. What gets measured is what gets managed.
Dan: Do you think it’s also because in the room, we have some pretty sophisticated business owners who have to run some pretty substantial businesses, and I’m shocked that when we partner up with each other, some of them actually have no clue about balance sheets, income statements, and then the cash flow statements. They have absolutely no clue. I’m just amazed. Are you saying that we have to take an accounting course or anything like that? You’re not saying that. You’re saying, “Spend a couple days, go to a workshop, learn the basics so that you can at least read the numbers.”
Keith: That’s it. You can learn the basics. I’ve written a book called The Ultimate Blueprint for an Insanely Successful Business. That book is really about how you understand the financials and use the financials in order to get optics so that you make better decisions. Here’s the thought: If you make better decisions, you make fewer mistakes. If you make fewer mistakes, you end up with more money. The reason most people aren’t rich is not because there’s a lack of opportunity. The reason most people aren’t rich is because of something I call the “dumb tax.” The dumb tax is where you do something, and it costs you a ton of money.
Here’s a question I’ll ask, and I ask this to thousands and thousands of business owners every year when I teach around the world. The question is this: How much money would you have if I gave you the ability to unwind any 3 financial decisions you’ve ever made? Again, thinking about it, “If I could have just avoided that dumb thing, I could have twice as much money.” In other words, the thing that prevents people from being rich is losses. It’s when they do something stupid and they lose money. That’s why I call it the “dumb tax.”
If you want to avoid the dumb tax, there are some things in business that you have to do. Just like if you want to be successful with your health or fitness, there are some things you have to do. One of the things you have to do is, you have to understand how to measure and what your numbers mean. If you don’t understand what your numbers mean, you’re going to be like–most people on this call have heard of the game Pin the Tail on the Donkey. You put a donkey’s butt up on the wall, and then you take some 12-year-old kid and blindfold him and put a donkey’s tail with a thumbtack through it in his hand, spin the kid around 20 times, and watch the kid stumble around to put the tail on the butt.
That’s what most people are doing with their businesses. They have one lever in their cockpit, which is “get bigger.” The problem is, not all business problems respond to “get bigger.” Sometimes, the problem is not how to get bigger. Sometimes, the problem is how to get leaner, who’s on my team, why aren’t we doing a better job keeping the customers we currently have, why is our attrition rate so high? Who on my team is a C player instead of an A player? It’s unlikely that you’re going to win this race with a bunch of C players on your team.
Yet most of us tolerate C players. Most of us have people on our team that we look at them and go, “Boy oh boy, why did I hire this person? I’m spending most of my time begging them to do their job.” Here’s my theory: You don’t have to beg me for your paycheck, and I’m not going to beg you to do your job. Let’s get busy and go to work here, and let’s perform at a very high level. We tend to get what we tolerate, and what most of us are tolerating is mediocrity.
Dan: In terms of performance or coaching, that’s one thing I’ve learned from you. Let’s say that within a company we have different types of players, and some of them are high performance but low coaching, and some of them are high coaching and high performance. How should we best lead and utilize our team players?
Keith: The key with anybody who’s on your team is to identify the standard or the level at which they must perform in order to be an A player. Identify the deliverables of every single person on your team. In other words, you want them on your team because they can deliver or accomplish this, this, and this. 1, 2, 3. A, B, C. Whatever that is, establish those benchmarks or standards for every single person on your team. Then, you go to every person on your team and say, “Here’s the standard at which you need to perform in order for you to get a raise. If you’d like to have more money, then perform at this level.”
Once you’ve communicated the level of performance, now your job as the owner or CEO is to become their coach. You coach them and help them understand what they can do to get better so that they hit your outcomes. People who are incapable of hitting your outcomes are not A players. Those are B players or C players.
I could have an A player CEO, or I could have a C player CEO. I could have an A player janitor, or I could have a C player janitor. What makes them an A player or a C player is how closely they can form and deliver on the standards that we’ve set. I have standards for a janitor. Here’s what you need to do in order to be an A player on this team. I have different standards for my CEO’s who run my businesses. I say, “Here’s the level at which you need to perform in order for you to be an A player on my team.”
My job is to help monitor how they do against my standard and then coach them in order to help them do better. Those that can’t do better probably need to find someplace else to work. Those that don’t want to improve definitely need to find someplace else to work. One of the components of the culture within our companies is this: Everybody that works for us, and there are hundreds and hundreds of people–everybody who works for us at least once a month raises their hand and asks this question: What else can I do? What coaching do you have for me? How do I get better?
Now think about your business. What would it feel like if every single person in your company once a month at different times raised their hand and said, “What else can I do? Where can I do better? What coaching do you have for me? Where are the opportunities for me to learn or to add more value to this organization?” If you had a group of people that were all performing at that level, you now have A players, and you have an A culture.
Dan: Then it’s not so much office politics. It’s, “You know how to please me as your boss. As long as you meet these standards and hit these benchmarks, this matrix, I’m happy, and you get what you want.” We just coach them. We’re not bossing them around or dictating. It’s just, “Meet this standard, and you get what you want.”
Keith: I love what you just said. It is spot on. If you don’t have a standard, the only way to evaluate somebody is based on whether or not you like them and how hard they’re working. Both of those are poor substitutes for whether you did or did not hit my benchmark. We do it with sports. Think about United States football, American football. There’s a specific line, and if you can get the ball over that line, six points goes on the board, and everybody stands up and cheers because you got it over a specific line. Everybody knows where that line is. Why don’t we do the same thing with our businesses? Why don’t we establish a line for every single employee and say to them, “Here’s the level. Here’s the performance that we need from you (be very specific) in order for points to go on the board. And if you put points on the board, you can make more money. You don’t put points on the board, then I’m going to coach you and advise you and help you figure out how to do it. And if you can’t, that’s okay, it just means that this job is bigger than you are.” That’s all it means. When somebody can’t perform, it means the job is bigger than the person.
TRANSPARENCY WITH NUMBERS
Dan: Do you believe in being transparent in terms of numbers? As a CEO, do we just share our numbers with certain team players, or just the senior management? Or does everyone in the company know how the company’s doing? What’s your recommendation?
Keith: This goes to my thought “business is not a bathrobe.” There’s not one right answer. One size does not fit all. I think if you’re going to show your numbers to your team, that’s a mistake unless your team has been educated on what those numbers actually mean. We have a number of people that work for us that are in a relatively low socioeconomic demographic. We’re not going to sit around and show those people our numbers, our financial statements, because it wouldn’t mean anything to them. They don’t understand all the nuances and variables.
Other people within our organization, on the other hand, who are the senior management, those are people that I’m more transparent with, because #1, they have control over a majority of what happens on an income statement or balance sheet, and #2, I’ve spent the time to educate them that this is what this means. For most people, if you show them a financial statement that says there was a bottom line profit of $3 million, they think you’re rich. The problem is, if you had to invest $100 million to make $3 million, the reality is you’re poor. But if you only invested $1 million to make $3 million, now all of a sudden you’re doing very, very well.
Most people don’t have the ability to make that kind of distinction, so therefore, we’re not going to be totally transparent with all of our financial information. Instead, we will be transparent with what you need to do in order to be an A player and get a raise. Everybody who works for me knows exactly what needs to happen in order for them to make more money. If you don’t know what needs to happen to put points on the board, you’re playing a very frustrating game.
Suppose there was a game of golf, only they didn’t tell you where the hole was. Instead, you just tee off some direction and start hitting the ball around until you finally bump into the hole. Let me tell you something, nobody would enjoy that game, because that’s a game of Pin the Tail on the Donkey. That’s a game of Whac-a-Mole. Nobody likes that game long-term. You have to have an outcome. You have to say, “Get it in this hole, and that’s when points go on the board.”
STRUCTURING A BUSINESS
Dan: I’m also curious how you structure your business. At the workshop, you actually shared quite a bit of this. So you have your portfolio of companies, and they’re all in different industries. Do you just have one operator within each company, or do you have a core team, then the core or executive team manages all these businesses? How do you structure this?
Keith: Every business has, in effect, a CEO or COO, kind of a president or a general manager, who runs the business. Also, every business has what I call a “mama.” And the “mama” is the admin/bookkeeping/office person who is the emotional and cultural glue for the company. I’ve got a CEO or COO that runs the business, and I have this “mama” who runs the admin and the culture.
The bulk of my conversations, when I need to talk to somebody–in fact, I just did it today; I went by one of our businesses because I had to sign some checks. I did not even talk to the COO while I was there. I spent all of my time with the mama, and she’s the person who is primarily responsible for interfacing with me. Both the COO and the mama report to me. I will tell you this: In all of our businesses, there’s always the COO, and there’s always the admin mama. If you gave me a choice, if you said, “Keith, you have to fire one of them,” I would in every case keep the mama and release the COO. The mama is, by far, the most important in each of our companies. She’s very, very well compensated. I have a whole set of characteristics for what I look for in these people. In every business, both the COO and the admin mama both report to me. I run the business, but I don’t operate it. That’s a huge distinction.
I think most people that have a business, as you said earlier (and I think you’re exactly right), they started it, they’re very tired now, they’re working their fingers to the bone, and all they have to show for it is bony fingers. They used to love their business, and now they don’t anymore because they’re kind of a one-man or one-woman army. They have to do everything. And it’s because they haven’t learned how to leverage. They haven’t learned how to hire, how to delegate, how to structure the business side so that they have the leverage that would enable them to do the most important things.
Check this out: Michael Dell is still in his business. He’s not on it, he’s in it. Larry Ellison is still in his business. He’s not on it, he’s in it. The most successful people on the planet are not on their businesses. Nobody has ever come to you, Dan, and said, “What business are you on?” You know why they’ve never said that? Because it’s a stupid idea. It’s stupid to say, “What business are you on?” Instead, you say, “What business are you in?”
Michael Dell’s job has changed a little bit from what it used to be when he first started. My job has changed a little bit from what it used to be. But I’m still in them. I’m still involved. I’m still engaged. That’s the “in.” And my job is not to operate it, my job is to run it.
Dan: What about the concept–I know you have a very interesting take on this–for workweek or passive income or lifestyle entrepreneurs? What’s your take on some of these concepts?
Keith: I think they’re stupid. I think they’re destructive. I think the concept of passive income is insane. There is no such thing. You can sell millions of books if you try to tell people, “Here’s how you can get rich doing nothing.” That’s really what passive means. The words we use are very, very powerful force. If something happens to me and I go, “Oh, my God, this is going to be a disaster,” then my experience of it will be a disaster. If the same thing happens to me, and instead of saying it’s going to be a disaster, I say, “Well, this is going to be challenging,” then my experience of it will be challenging. In other words, the label becomes the meaning.
When you have people out there trying to sell this baloney of passive income, passive means nothing. You do nothing. You stand with your hands in your pockets. That’s the definition of passive. Passive means you do nothing. How in the world can you have passive income or passive wealth? Look at the wealthiest people on the planet. Look at the Forbes 400. There’s not one person on the Forbes 400 who got rich passively or who is staying rich passively. It does not happen. They’re all active. Instead of using the word “passive,” why don’t we use the word “leveraged” income? I’m in favor of leveraged income. But if I wrote a book and it was called Passive Health, you wouldn’t buy that book. You’d look at me like I was crazy. If I wrote a book called Passive Relationships, you wouldn’t buy that book, either. If I wrote a book called Passive Sex, you’re definitely not buying that book. These are crazy concepts.
The four-hour workweek is an incredibly stupid concept. Think about what that means. The expectation that we have is that we’re going to be successful. Name me one person who got successful or who is staying successful by working four hours a week. You can find people who are average who work four hours a week, but you look at who’s standing on the gold medal podium in the Olympics. There’s not one of them that got there with four hours a week. The most successful on the planet at anything are doing more than four hours a week. But it’ll sell books.
People are drawn to the idea, “Maybe there’s a way for me to get rich and do nothing. Maybe there’s a way for me to get rich and only work four hours a week.” There’s not. It’s a stupid concept, and the reason I know that is, I look around and ask the question, Show me somebody who’s rich who got that way passively. Can’t be done. Show me somebody who’s won a gold medal. Show me somebody who’s CEO of a thriving, successful organization who’s only knocking out four hours a week. Can’t be done. But it’ll sell books.
All of us–and you need to do this with me and whoever you listen to–you need to ask the question, Does this even make any sense? Because a lot of times, people will write a book. They’re not experts. If they were experts, they would be out doing it. Instead, they made all their money by writing a book trying to tell people how to get rich passively or by doing nothing or doing the least and getting the most. Life doesn’t work that way. You don’t do the least and get the most. That’s common sense. Common sense is not common practice.
Dan: That’s very true. People may or may not know this, but one of your close friends and students is named Robert Kiyosaki. Share with us, Keith, how you actually inspired Robert to write the world-famous book Rich Dad, Poor Dad.
Keith: Robert was one of my students, and I taught him a tremendous amount of information. In fact, I wrote a course very early on in my teaching back in the early 90’s that I taught for Robert’s students. The course was entitled “Stop Wasting Time,” and the bulk of the concepts in Robert’s first two books–Rich Dad, Poor Dad and, subsequently, Cash Flow Quadrant–the bulk of concepts in those two books came from the work that Robert did with me. He decided to write those books. He doesn’t really like it that I know that there’s not really a rich dad. There is no guide in Hawaii that taught Robert all this stuff. Instead, Robert learned all this when he was in his mid-40’s when he was studying with me, and he wrote these books.
In fact, Rich Dad, Poor Dad, he originally published a thousand copies of it. He sent me 10 copies to sell in my car wash. A guy came into the car wash a couple weeks after we started carrying the books, and he bought a copy of Robert’s book. This guy who bought the book happened to be in Amway, and he was the down line, down line, down line of a guy named Dexter Yager. This guy who bought the books sent the book to Dexter Yager, who was a big muckety-muck in Amway, and Dexter contacted Robert and ordered several hundred thousand copies of the book. That’s really how the book got started, is Robert originally published only a thousand copies and didn’t really have a big plan for the book.
I’m glad he wrote the book. I wish he would do a better job of giving people credit who taught him, but nevertheless, that’s kind of the story of Robert. I haven’t talked to him in a long, long time at this point, and I wish him well. I hope he’s doing good.
STARTING A BUSINESS VS. BUYING ONE
Dan: Another big lesson I’ve learned from you when I attended your workshop “How to Buy or Exit a Business” is, I don’t want to start another business. That’s a big takeaway from the workshop.
Keith: It’s hard.
Dan: With the portfolio of companies that you have right now, which ones did you start, and which ones did you buy? What are the advantages or disadvantages of starting a business vs. buying a business?
Keith: The bulk of the business we own right now are business that we acquired. For the last 25 or 30 years, I’ve been actively looking for and acquiring operating businesses. Things like car washes and pest control companies and auto body shops, document storage, those kinds of businesses. An analogy that will kind of help explain how I view being in business and buying a business is: Suppose next time you go to the airport, you get to the airport, and you get to the ticket counter, and you say to the ticket agent, “I’m here for my 3:00 flight.” And the ticket agent turns around and points out the window to the tarmac, and there are 367,213 parts all laid out in a random order all over the airstrip. And the ticket agent says, “Okay. If you want to fly, then what you need to do is, you need to go out there, put this plane together, fill it with fuel, learn how to fly it, and take off.”
That’s analogous to starting a business. It can be done, and it can be very, very profitable. Unfortunately, it is also very, very risky. There’s another way to do it, which is, you find a plane that is cruising along at 20,000 feet, and you parachute into the co-pilot’s seat and sit down right next to the guy who’s been flying it successfully for the last 20 years. You get that guy who’s been piloting it to teach you how to fly this airplane. That’s similar to buying a business.
If you buy a business, you start off on Day 1 with revenue. You start off on Day 1 with customers. You start off on Day 1 with employees and employee manuals and processes and vendors and structure and systems. You start off on Day 1 with profits. You start off on Day 1 with cash flow. You start on Day 1, and here’s the cool part: The cool part is, the cycle of time that we’re in, which is that most baby boomers are trying to figure out what to do with their businesses. They’re in their 60’s, they’re in their early 70’s. They’ve been doing this for the last 25-30 years. Their kids don’t want it. They don’t know what to do with it. So there’s going to be the greatest number of businesses ever sold or come available for sale over the next 3-5 years. In the history of mankind, there’s going to be more businesses that come available. So finding a good business, buying it, is a lot less risky than starting one from scratch.
I’m not saying you shouldn’t start one from scratch. I’m just saying there’s more risk. So I’m in favor of reducing or eliminating the risk by finding a good business and vetting it, doing the due diligence, and figuring out how to buy it. That’s really what I teach in that 5-day course that you took, Dan, is, how do you understand the numbers and talk to the seller, and what questions should you ask, and how do you tell a good one from a bad one, and where’s the seller going to try to screw you, and how do you look at it, and how do you finance it. All those kinds of questions that everybody has, as you know, that’s what I cover in the 5-day “How to Buy or Exit a Business.”
Dan: I have to emphasize, it’s not a mere seminar, it’s a very intense, all-day-long workshop. You walk away with a manual that’s 500-600 pages thick with a ton of content. We role played, we did exercises, we played games. Keith makes it very, very interesting.
Another profound point that I’ve learned from you, Keith, is that you said that most businesses fail in the first 5-10 years. Some say 95%, some say 97%. Whatever the number is. So, just buy a business that’s been around for more than 10 years, and you’ve reduced the risk.
Keith: That’s exactly right.
Dan: You’re beating the odds.
Keith: Well, that’s it! That’s exactly right. Thank you for saying that. There’s not a way to totally eliminate risk, but what we can do is reduce it. And if most businesses fail within 10 years, and most businesses never make it to a million dollars of revenue, why don’t we simply skip that time period and all that brain damage and find businesses to buy that have been around for the last 15, 20, 25 years that have got more than a million dollars revenue and start there? It’s so much easier.
Dan: I can already hear some of our listeners thinking, “But Keith, I’m starting out. I’m transitioning from a job. I don’t have a whole lot of money. How can I possibly afford a million-dollar-a-year business. Where will I find the money? I don’t have the money.” What would you say to that?
Keith: I would say that most people are not successful in business not because of a lack of resources, but rather a lack of resourcefulness. The key is if you have an attractive deal, then I can teach you how to find the money. If you have an ugly deal, I can’t help you. But money is looking for attractive opportunities. What most people don’t know is, they don’t know a good one from a bad one. They don’t know how to present it. They don’t know how to structure it. They don’t know how to evaluate it. They don’t even know how to find it. But if I showed you how to find a good deal, how to tell if it’s a good deal, how to evaluate and do the due diligence, how to price it, figure out how much it’s worth, and if at the end of that, it’s a good deal, I can show you how to raise the money.
Dan: I agree. A lot of times the sellers are willing to do some sort of seller financing.
Keith: That’s right.
Dan: Then we can raise some of the money from investors. Maybe we put some savings aside. We can put a little bit of money in as well. But if you look through the numbers, compared to starting your own business, when you actually don’t know how much it’s going to cost, you might think it doesn’t cost a lot. But it might end up costing you a lot. This way, you know going in how much you’re paying for the business. It’s actually easier, I think, than most people think. But they have to know how.
Keith: No question about it.
BEING PASSIONATE ABOUT A BUSINESS
Dan: Here’s another limiting belief they might have. “But Keith, you have a car wash, pest control, but that’s not my passion. That’s not my purpose in life. I’m not interested in a car wash or automobiles or document storage. My passion is (fill in the blanks). That’s not the business I want to be in.” What’s your take on that?
Keith: There are certain businesses that I won’t be in. I’m not going to be in the internet business or building apps for iPhones. I’m not going to be in things that are really, really high technology. I understand that people have different filters for what they will and won’t do. I also happen to think that most people who want to be in business are looking for the thing that they’re going to do that they can be passionate about.
I’m going to give you a suggestion. It’s a different way to think about this idea of passion. The mother of passion is growth. The father of passion is contribution. Any time you feel passionate or excited, it’s because you’re growing, or it’s because you’re contributing. It rarely has anything to do with what you’re doing. In other words, you’re in a car wash, as opposed to pest control, as opposed to being a dentist, as opposed to being a plumber. What most people are doing is, they’re saying, “Well, I don’t really want to own a plumbing company.” And yet, if I told you that you could own a plumbing company and make $3 million a year net–net–in your hip pocket every year, how do you feel about owning a plumbing business?
Dan: Suddenly, it’s not so bad.
Keith: Now, you’re sitting there going, “Holy cow! Yeah, put me down! I think I want to own one of those!” What people are looking for when they say, “I have to find something I’m passionate about,” I always kind of question that and really want to know, “Are you looking for the thing to do, or do you need to find something and then start growing it and bake in some contribution aspect?”
Teaching is a way for me to contribute. I’m not passionate about getting bugs off of cars. I’m not passionate about killing cockroaches in some kitchen. That’s not my passion. I own those businesses because I can grow them and I make a lot of money. I make a lot of money owning those businesses. And those businesses give me the opportunity to have more choices. I learned a long time ago that the guy with the best life is the guy with the best choices. The woman with the worst life has the worst choices.
So the question is, How do we get better choices? Having financial flexibility by owning some businesses. I’m not passionate about getting bugs off windshields or killing bugs, but I am passionate about “Can I grow them? Can I do a better job? Instead of falling in love with our product, why don’t we fall in love with our customers? Why in the world would I want to love something that doesn’t love me back?
People that are looking for the thing they’re passionate about doing, they’re the only ones who care. The company or the product doesn’t care. The product ain’t gonna love you back. The company isn’t going to love you back. The only thing that can love you is the customers. So why don’t we be passionate about solving a problem or solving a pain for our customers? Let’s be passionate about getting our customers more than what they paid for. Let’s be so passionate about our company that we are asking the question, What would I have to do so that customers would say, “I’d have to be crazy to go someplace else?”
All of a sudden, those are the kinds of things that will get you excited. I think what we ought to be thinking about is, What is it that we’re interested in? That’s part 1. Part 2 is, what are we good at? It doesn’t do any good to be excited about something but not be any good at it. I might be excited about being a jockey, but I’m going to be a horrible jockey in the Kentucky Derby because I’m 6’2″ and weigh 220 pounds. Jockeys are not 6’2″. I might be passionate about the NBA, but I’m 6’2″ and weigh 220 pounds, and I’m 65 years old. I will never play in the NBA, and I will never be a jockey.
People have to figure out, What is it I’m excited about? What is it I’m good at? And number 3: What is the market, where’s the demand in the market? So here’s what I want you to do if you’re listening to me. Draw a circle on your piece of paper. Now, to the right of that, draw an overlapping circle. So there’s a little bit of overlap between the first circle, which is What am I excited about? and the second circle, What am I good at? Then, draw a third circle below those two circles. That third circle has a little bit of overlap with the other two. Now, all of a sudden, I have 3 circles. I have, What am I excited about? What am I good at? Where’s some demand? Who are the customers that are willing to pay money for this? If I can find the thing that overlaps with those three, now I have an opportunity to do something I’m excited about, something I’m good at, and something that I can make some money with.
That, to me, is how you think about this. I have people all the time say to me, “If I could just figure out what I’m passionate about…”
Dan: Or “my life’s purpose…”
Keith: “My life’s purpose.” Here’s what I would tell them. I say, “Pick something. Pick anything. It doesn’t matter. Your success is not going to be based on what you do.” I’m about to say something unbelievably important. Your success is not based on what you do. You can name me any product or service. It could be cheeseburgers, it could be chewing gum, it could be writing books, it could be being a lawyer, it could be being a dentist, it could be being a plumber, an air conditioning guy…but name me any product or service, give me one week, and at the end of one week, I’ll name at least one person who’s made millions and at least a hundred people who’ve gone broke with the exact same idea. It’s never what you do. It’s how you do it.
What is it that made McDonald’s successful? Is it because they had such tasty cheeseburgers? No. Their cheeseburgers are horrible. But that’s not how they made all their money. How does Southwest Airlines make all their money? Southwest Airlines has made more money than all the other airlines cumulatively since Orville and Wilbur Wright. How did they do that? Is it that they bought better planes? Is it because their seats are so much plusher? Is it because they have so much leg room? Is it because their food is so good? No! Is their safety record better than everybody else’s? No. Does their luggage get there better than everybody else? No. How did Southwest Airlines do it? It’s never what you do. It’s how you do it.
I love what a guy named Buckminster Fuller said. Bucky said this: Your life’s purpose will forever remain a mystery to you, but you may assume that you’re fulfilling your life’s purpose if you dedicate yourself to the highest advantage of others. Now that’s very smart. What we keep thinking is, that our purpose is going to be dictated by what we get. And what we need to do is, remember that our purpose will be dictated by what we give. Those are two different things. Success is getting what you want. Fulfillment is giving what you’ve got.
Dan: Keith, I don’t think we could have wrapped up the interview with a better ending than that. That is so good. I’ve learned so much from you. I have to say, just from my own perspective–and this is giving Keith an endorsement here–I’ve studied a lot of teachers and business teachers, and quite frankly, not a whole lot of business teachers impressed me. Keith is one of the ones I want to study from and whom I will continue to study from. I told Keith at the beginning of this interview that I’ll fly back to Texas again to attend his “4-Day MBA.”
So Keith, for our listeners here, what are some of the resources if they want to learn more about your courses? What’s the best way to do that?
Keith: The best way to do that is to go to our website keystothevault.com. We teach a course called “4-Day MBA,” which I teach a couple times a year. The most common question i get is, “Keith, how do I grow my business and make more money?” I can teach you how to do that in the 4-Day MBA. We teach the “How to Buy or Exit” course that you took one time a year. We teach one time a year, in December, a course called “Plan or Get Slaughtered.” You can find out more about me on my website, keystothevault.com. We have a couple books that I’ve written that might also be of interest. But candidly, the best way to learn from me is to come to Texas, spend 4 or 5 days, do a deep dive with me, and let me get you on the straight and narrow about how you can successfully maximize your financial results in your businesses.
Dan: Keith, thank you so much for inspiring us today with your amazing story and your generosity in sharing your thoughts and ideas and wisdom. I appreciate it. Thank you so much.
Keith: Thank you, Dan.