Build a $100M Dollar Company While Maintaining Optimal Executive Health
In this podcast episode, seasoned entrepreneur and author John St. Pierre shares invaluable lessons on business success and resilience from his experiences navigating the world of entrepreneurship.
St. Pierre, the author of "The $100M Journey: Your Guide to Growing the Business of Your Dreams without Going off the Cliff," dives deep into the crucial elements of an entrepreneur's journey, discussing triumphs, trials, and 7 vital principles for entrepreneurial success.
Here are three significant lessons and executive benefits gleaned from this episode on entrepreneurship and business.
Watch the Full Episode Below
1. Protect and Grow Equity
One of the central principles that John St Pierre, a seasoned CEO and chairman, stresses is the importance of protecting and growing equity in a business. As he recounts the story of a sports business that grew from a hobby to a $50 million global company, only to find himself ousted from the business after raising $20 million in capital, he underlines the need for entrepreneurs to safeguard their equity within their business.
He asserts that giving away equity is a decision that's nearly impossible to reverse and could result in the loss of control over the business. In his leadership role, St. Pierre advises entrepreneurs to start their businesses with full equity and bring people on board as the company grows.
John St. Pierre
John St Pierre is an accomplished entrepreneur with an incredible depth of experience from both significant failures and successes.
John has co-founded and led two companies he built and scaled to over $50M+ in global revenues. One of which he lost dramatically, while the other grew to $100M+ by implementing his entrepreneurial learnings. Empowering others on the Entrepreneurs United podcast, John is a trusted investor, speaker, and mentor to many entrepreneurs in the business world today.
And lastly, he’s the author of the book: ‘The $100M Journey: Your Guide to Growing the Business of Your Dreams without Driving It off the Cliff.’
2. Importance of Self-Financing
Another crucial lesson from the episode is the importance of self-financing in business.
According to St. Pierre, entrepreneurs should focus on generating their own capital instead of relying on external funding. This approach not only ensures that they retain control over their business but also minimizes the risks of premature partnerships and equity dilution.
He also highlights the significance of measuring a company's net operating cash flow as a more reliable indicator of financial health.
3. Embrace Adaptability and Resilience
The entrepreneurial journey is fraught with challenges, making adaptability and resilience vital traits for long-term success in business. St. Pierre, emphasizes that entrepreneurs must be ready to adjust to changing circumstances and bounce back from setbacks.
He further explains that during the 'messy middle stage,' where many businesses fail, having a strong support system as an entrepreneur (and CEO) is crucial.
Paying for the right advisors to protect your business is also necessary when reaching the high-performance stage, a point where executive coaching could become a valuable investment.
Conclusion
John St. Pierre's lessons provide aspiring entrepreneurs (and CEOS) with valuable insights to navigate the challenging business landscape.
By safeguarding and growing equity, focusing on self-financing, and embracing adaptability and resilience, entrepreneurs can set themselves on the path to success. Above all, St. Pierre emphasizes the need for patient ambition: a balance of perseverance and patience in achieving one's entrepreneurial and overall goals as a CEO (or high-level leader).
Connect with John St. Pierre
'100M Journey' Book — https://www.amazon.com/100M-Journey-Growing-Business-without/dp/1961098261/
Website — https://entrepreneursunited.us
Website — https://100mjourney.com/
LinkedIn — https://www.linkedin.com/in/johnstpierre
X — https://twitter.com/johnstpierre100
Transcript
John St. Pierre
(0:00) In terms of finding your true north, for me, Julian, it kind of related to what do I want my life to be about? (0:06) Not next year, not five years from now, 30 years from now. (0:10) And we can get to hell stuff later, but we may live a lot longer than we think, right?
(0:14) So what do I want my life to be like 30 years from now? (0:17) Let me vision what that looks like. (0:19) What do I want that to be and really visualize that and then work my way backwards.
(0:24) Okay, so if I want to do that in 30 years, what do I need to do in 10 years, five years, one year, this quarter, this week, today, this hour?
Julian Hayes II
(0:34) Welcome everyone to another episode of Executive Health and Life. (0:37) I'm especially excited about this episode. (0:40) I'm here with a good friend and we're going to talk about a subject that's near and dear to my heart and is definitely something that I'm in the midst of right now.
(0:47) And so before that though, I want to talk about this though, whether we know it or not, many of us have signed this invisible contract. (0:54) Inside this contract, it's not for the faint of heart. (0:57) It's a battleground where only the resilient survive.
(1:00) The line between success and failure is often razor thin. (1:04) There's a near guarantee of sleepless nights, a relenting pressure, countless obstacles, questioning our self-worth, sometimes unintentionally alienating those closest to us. (1:14) And not to mention the potential mental health effects that can come from this.
(1:19) The odds are stacked against this very much. (1:21) You can look at many stats out there. (1:24) And I'm talking about none other than entrepreneurship.
(1:28) And we typically see people at the finish line after the battle has been fought, they're cleaned up, they're smiling, they're happy, it's kumbaya. (1:38) But my guest is someone who has accumulated his fair share of business scars to say the least. (1:44) He's co-founded and led two companies that he's built and scaled to over 50 million in global revenues.
(1:49) One of those he lost in dramatic fashion while the other grew to a hundred million plus. (1:54) And my guest is a trusted advisor, a speaker, a mentor to many entrepreneurs in the business world. (2:00) I'm speaking with none other than John St. Pierre, who is also the author of the book, The 100 Million Journey, Your Guide to Growing the Business of Your Dreams Without Driving It Off the Cliff. (2:10) Fantastic title, by the way. (2:12) So without further ado, John, how's it going today?
John St. Pierre
(2:14) Hey, Julian. (2:15) Thanks for having me. (2:16) And thanks for that introduction.
(2:17) I appreciate it.
Julian Hayes II
(2:17) Well, I appreciate it. (2:18) A lot of those words were from your book. (2:20) I'm sure you recognized it because you probably looked at this book a thousand times by now.
John St. Pierre
(2:24) Absolutely. (2:25) And it was fun to hear them back because as you say the words, it resonates so true to me. (2:30) And I'm sure it resonates true to entrepreneurs that are listening as well.
Julian Hayes II
(2:32) Absolutely. (2:33) And so, just to start this off, I always like to go back in time and everything. (2:38) And just looking about your background and everything, it seems like you, they say there's two types of people.
(2:43) There's lifelong entrepreneurs where they were born with it. (2:46) And then there's people maybe more in my camp who stumbled into it or maybe felt there was no other options. (2:53) So my question to you, it seems like you're in the first category.
(2:56) So if we go back to your childhood, would that match up to kind of who you are today?
John St. Pierre
(3:02) Yeah, absolutely. (3:02) I do agree with what you said, that there are people that stumble into it. (3:06) There are people that kind of start and find a juice early.
(3:09) And even as I talk to other entrepreneurs and I ask them, how'd you get started? (3:12) A lot of entrepreneurs started when they were very young. (3:15) And for me, it was like selling chocolate bars for my school or going to cut lawns or trying to make money.
(3:19) Some entrepreneurs find other chores as they're young and they're youth and realize, oh, this is kind of cool. (3:24) I can run my own thing and build my own business. (3:27) But then there are others who are more entrepreneurs.
(3:29) They work within companies and then someday decide, you know what? (3:32) I want to be an entrepreneur as well myself and go out on their own. (3:35) So yeah, for me, it started very young and I always had that juice flowing.
(3:39) I did go work for companies as an entrepreneur out of college, but I always had that passion to get back to be an entrepreneur myself because I felt that's how I could control my own destiny and achieve the level of wealth and freedom I was seeking.
Julian Hayes II
(3:51) How do you think, do you think your environment played a role in that? (3:55) Because I'm always curious how these entrepreneurs are just made so early and they just know this.
John St. Pierre
(4:01) Yeah, I don't think so. (4:02) My father was a professor at a Royal Military College in Canada. (4:06) So he was very corporate kind of guy or professor academia type of person.
(4:11) And my mom certainly didn't have an entrepreneurial background on her own. (4:16) So I think for me, it was somewhat of people I hung around with. (4:19) And growing up in Canada, I must say this, I was really fascinated by American capitalism for one reason or the other.
(4:26) I lived about 15 miles from the US border. (4:29) And so I'd watch all these 80s and 90s US sitcoms and shows. (4:32) And I was like, man, that sounds really cool.
(4:34) And I was just inspired to really seek what was going on and see what I could accomplish in my life as an entrepreneur.
Julian Hayes II
(4:41) Okay, that makes sense. (4:43) Yeah, it's a very fascinating thing, just kind of how entrepreneurs are made. (4:48) And then some people just inherently know it.
(4:49) And no matter what they do, it's going to find them and they're going to come back to it.
John St. Pierre
(4:54) So, you know, you know what, I'd love to challenge that just for a second. (4:58) You said something like entrepreneurs are inherently made. (5:00) Wow.
(5:01) I mean, they're made, but it's as you mentioned in the early, it's a tough journey. (5:04) I think more specifically, it's the entrepreneurs that are resilient and have the grit to persevere through failures and ups and downs and peaks and valleys and stay with it. (5:15) That really ultimately makes entrepreneurs over the long hauls.
(5:18) You know, you and I probably know a bunch of people who started a business and said, you know what, this is not for me. (5:23) I'm going to go get a job somewhere and get a stable income because this is just not my cup of tea. (5:27) And likewise, the reverse people who start in a company and go, you know what, this is not what I want to do.
(5:32) I want to do something else and be more entrepreneurial. (5:34) So I think we see them going back and forth. (5:37) I don't think they're made initially.
(5:39) I think that as you go through the trials and tribulations of entrepreneurship, you determine for yourself, is this something I want to persevere through or not? (5:47) And I think that's really the difference ultimately between who becomes an entrepreneur and who doesn't.
Julian Hayes II
(5:51) Yeah. (5:51) I'm going to skip a little bit on the flow in my head that I had because since we're talking about this, because it sounds like we're diving into a little bit of the why. (5:59) And in your book, this is something along the lines of what you call the North Star.
(6:03) So I'm curious. (6:06) So we have, because I think a lot of times where sometimes you have that fork in the road moment, and I think it's there to really say, is this something that you really want to do? (6:16) It's almost like a test that's sent to you.
(6:18) That's kind of just what I feel at times. (6:20) Like, is this really what you want to do? (6:21) Because I'm going to give you the hardest test, the thing that you do not like the most, and I'm going to put it up to your face and see if this is true.
(6:29) So how'd you go about finding your true North?
John St. Pierre
(6:33) Wow. (6:33) Yeah. (6:33) That's very deep.
(6:34) What you just said is very true, right? (6:35) Things just seem to happen in life. (6:37) And you're like, okay, this is a test for some reason.
(6:39) I need to figure out what the test really is. (6:41) You know, for me growing up in my twenties and thirties, I had some mentors more senior to me. (6:47) They would say, John, one day you're going to figure out what your purpose is.
(6:51) And I'm like, I know what my purpose is. (6:52) My purpose is to build companies and achieve success. (6:55) And I didn't really, I couldn't figure out what they actually meant.
(6:58) It made no sense to me. (6:59) I was like, I think I know what I'm trying to achieve. (7:01) And it wasn't until I was truly tested and experienced a massive failure where I'm like, oh my gosh, maybe I don't really have a purpose.
(7:09) Like, what am I trying to achieve beyond myself in this life? (7:13) What are my goals and aspirations? (7:15) I was growing a company for growth sake.
(7:17) I really didn't know why I was doing it. (7:20) And you know, there's my favorite Ted talk is Simon Sinek's start with why book as well. (7:25) And every time I'd get my company together, I'd be like, we need to know why we exist team.
(7:30) What does our company exist for? (7:32) And I would do that strategic planning session with them trying to figure out what our why was as a company. (7:36) And I did that for more than a decade, Julian, but I never really did it with myself.
(7:41) And it wasn't until I had a major failure that I took a moment of self-reflection more than a moment. (7:46) I took quite a while of self-reflection and go, what am I trying to achieve here in life? (7:50) Not just in business, in life.
(7:53) And you can't really design a strategic plan for your business unless you know where you're trying to go. (7:58) And that was a really big moment for me.
Julian Hayes II
(8:01) That's a big one I hear because, well, I guess before even that, how do you know what's our actual true North and compared to what it is that we think we should want? (8:13) And where I'm coming at is, I think I used to go about when I think about goals, and I'm sure a lot of other people do as well initially. (8:19) It's like, they think they want this type of company, this type of revenue, this many employees.
(8:24) And maybe it's not really what they want, but maybe it's what they think they should want because that's what they see.
John St. Pierre
(8:30) Yeah. (8:30) No, that's exactly it. (8:32) That really is exactly to me.
(8:34) I was growing a company. (8:35) I had this growth vision. (8:36) I'm going to build this company to a hundred million.
(8:38) I didn't even know why. (8:40) I was diluting my equity along the way. (8:42) So I was owning less and less and less of this company I was building.
(8:45) I was working long hours. (8:47) I was stressed out. (8:48) Why was I actually doing it?
(8:50) What did I actually want to achieve? (8:52) And so you really need to figure that out. (8:54) But to your point, too many entrepreneurs are just growing because they think that's what they're supposed to do, or they're raising capital because they feel if I raise capital, then my business is more prominent, but raising capital may not be the right thing that just dilutes your equity.
(9:05) And so there's a lot of different things there. (9:07) But in terms of finding your true north, for me, Julian, it kind of related to what do I want my life to be about? (9:13) Not next year, not five years from now, 30 years from now.
(9:17) And we can get to hell stuff later, but we may live a lot longer than we think. (9:21) What do I want my life to be like 30 years from now? (9:24) Let me vision what that looks like.
(9:26) What do I want that to be? (9:28) And really visualize that and then work my way backwards. (9:31) Okay.
(9:31) So if I want to do that in 30 years, what do I need to do in 10 years, five years, one year, this quarter, this week, today, this hour, am I doing the right thing? (9:39) That's the one thing method from Gary Keller. (9:42) And so I really took that to practice and said, okay, what do I really want to achieve?
(9:46) And if I want to achieve wealth and freedom, what's the right way to do that in terms of the principles to which I should run a business?
Julian Hayes II
(9:53) I almost think it's almost mentally a relief when you think about so far out and you really get clear on this true north, because then your day to day, it's just not as hectic and chaotic because you know, ultimately where you're going and you know, this is such a long road that it's going to be fine, kind of where you are right now. (10:15) And I think a lot of times we have this, it's good to have urgency, but it's almost like a chaotic urgency. (10:22) And so that's, and that's just, I'm thinking at the top of my head and kind of before I really started seeking mentorship, that was me initially.
(10:30) It was just this chaotic energy that wasn't really precise in where it was directed. (10:35) It was all over the place.
John St. Pierre
(10:36) Yeah. (10:36) You know what I call that in the book, Julian, is one of my biggest learnings, patient ambition. (10:42) Do you have the patience for the ambitions you seek or are you just going to run off the cliff?
(10:47) Cause you're so aggressive and you're just trying to get there. (10:49) I mean, how many people do we talk to as entrepreneurs? (10:51) They just want to achieve success tomorrow.
(10:53) Next year, I want to achieve this level of success in my business or else it's a failure. (10:57) It's a long road. (10:58) What's the rush?
(10:59) Take your time. (11:00) And to your point between your health, your happiness you know, what you're doing in terms of your daily life, are you enjoying life? (11:08) Why stress yourself out so much to try and achieve a destination?
(11:12) That's just kind of a fabricated destination so quickly, as opposed to having the patience and the ambition, the persistent ambition to can you just make progress, make progress, try and achieve more of your goals that you want to achieve in life.
Julian Hayes II
(11:27) Man, I love that concept, patient ambition, because you have ambition and if you go about it just kind of the other way that you described, you might build something, but it's probably going to be built on very shaky foundation and it's probably going to all crumble down. (11:43) And you may not own it. (11:44) And you may not own it.
(11:45) Yes. (11:46) Cause you know, I've met venture capitalists and other people, investors now, and they, you know, have asked, Hey, have you thought about raising money or anything? (11:56) And I'm like, well, you know, I lose, I have less and less control and equity in the long run when I do this.
(12:03) Right. (12:03) And you're diluting it, which we're going to get to that as well. (12:06) Cause that's one of the principles of entrepreneurial success.
(12:09) And so it, but that's the thing of where like, if I do this now I can get to this thing quicker, but what am I sacrificing in the longterm? (12:17) And so that's the catch 22. (12:19) But I also think though that the trap is a lot of us, I'm speaking, I'm an adolescent entrepreneurship, so I'm still a baby, totally a baby.
(12:28) And so I think when we first come in, we have this edge that we just, we just want to prove something immediately to say, Hey, we made the right decision. (12:36) You know, if there's people questioning us in our lives, Hey, we made the right decision. (12:40) Look, look what we're doing now is that it's just being patient, like you said, but I think that's when you got to get a make some big mistakes.
(12:50) And so that leads me into your journey of building these companies and ultimately let's hear about the one that didn't go so well. (13:00) So what happened there?
John St. Pierre
(13:02) Yeah. (13:02) So this was a business that I started over 20 years ago with some friends as a hobby business. (13:10) It was in the sports industry and it was just, you know, a side gig, if you will.
(13:14) I had a full-time job, so did my two other partners. (13:17) And we were kind of building this side sports business for fun and it just started growing and growing. (13:22) And next thing you know, we had a $10 million sports business that we all did kind of on the side.
(13:28) Then we started hiring a couple of the partners and we all started coming on board. (13:31) And, um, I had a vision. (13:33) I was like, you know what?
(13:33) I think we can take this company much further than where it is today. (13:37) Uh, so let's 10 X this business. (13:39) Let's take it from 10 million to a hundred million.
(13:40) Let's go. (13:41) We'll go acquire other sports companies. (13:43) We'll raise some capital.
(13:44) We'll kind of build this great global business. (13:47) But as you started race cat, as I started to raise capital, uh, you know, obviously my equity would be diluted. (13:53) So, you know, our equity started going down and down and down and we were bringing other people into the business to help manage the business.
(13:58) And we successfully, Julian got to over $50 million in global revenues and things were cooking and we had a great culture, great business, great everything. (14:06) It was, it was, it was a dream come true. (14:08) Right.
(14:08) And I'm like, this is happening, but in order for us to get from 50 to a hundred, we needed to raise another significant round of capital. (14:15) And so, uh, I hired somebody to come help me raise some capital and they introduced us to some private equity firms. (14:22) We picked one of those firms who we had a good fit with.
(14:24) They, they came on board, they invested, I invested, the other partners invested and we raised $20 million of capital. (14:30) Well, the day that that signed the tide started changing and I couldn't figure out what was going on. (14:36) Uh, you know, things, things, the culture started getting a little different and things were, were, were going sideways a little bit culturally.
(14:43) And seven months later I was fired and I can remember driving home going, what just happened here? (14:49) Uh, you know, we grew this company from nothing, literally zero as a hobby business to north of $50 million and I was getting kicked out of my own business.
Julian Hayes II
(14:58) Yeah. (14:58) That's what I was getting ready to say. (14:59) Wait a minute.
(14:59) You just got, so, um, yeah, that's interesting.
John St. Pierre
(15:04) Yeah. (15:05) Well, you know, factually, if you say, well, well, John, why did that happen? (15:08) Well, it happened for a couple of reasons, right?
(15:09) Number one, I lost control of the business, meaning, you know, I had sub 10% ownership in this business that we started because of all the equity raises and the dilution in equity. (15:19) So number one, how did it happen? (15:20) Well, the board voted me out.
(15:22) Okay. (15:22) Well, how did that happen? (15:23) Well, because the private equity firm that came in has significant control over the board and they was, they wanted a new CEO to come into my role.
(15:30) Well, how did that happen? (15:31) The person I hired to help me raise capital was a person undermining me within the organization and the private equity firm that took the role as the CEO. (15:38) So that person took my role in the business.
(15:41) So, you know, there was a whole bunch of sequence of events. (15:43) And if you, if you boil it all the way down to my contributions, like I'm a very introspective person, Julie, like what were my learnings? (15:49) What should I have done differently?
(15:51) Well, I put myself in that position. (15:53) I diluted my equity over time. (15:55) I didn't earn, I didn't help.
(15:57) Our company did not build our own net operating cashflow. (16:00) We had to go get investors and banks to loan us money or to invest in us. (16:04) So over time, that's what happens if you put yourself in that position.
Julian Hayes II
(16:08) Wow. (16:08) That's a, that's a big lesson. (16:11) Wow.
(16:11) Down to 10%. (16:12) That's a lot of diluting. (16:14) Big time.
(16:16) Yeah. (16:16) But okay. (16:17) So with that situation, what lessons did you take with the other business from that?
John St. Pierre
(16:24) Yeah, well, that would speak to in the book, the a hundred million dollar journey, the seven principles of entrepreneurial success. (16:30) Those are the seven learnings mass, you know, massive learnings that I had. (16:34) I was like, you can't do this as an entrepreneur.
(16:36) You risk losing your business. (16:38) Uh, but if you do them and you apply them properly, you can grow the business that you aspire to build and, you know, execute really your vision of your true North life plan, if that's what you want to achieve. (16:49) So, uh, you know, we can go through those principles specifically, but those were exactly the lessons I learned.
Julian Hayes II
(16:54) Yeah. (16:54) I think let's, let's go ahead and do that. (16:56) And, you know, it's, um, it's a good segue because actually the first principle is about protecting and growing the equity.
(17:02) And so let's, let's dive into that a little bit. (17:04) So, you know, um, why do this? (17:07) And, um, I guess, yeah, so like, I think people will say, okay, of course I know why to do my equity, but then when it comes down to the actual heat of the moment, people still make the mistake.
John St. Pierre
(17:20) Yeah, no doubt. (17:21) I did it. (17:22) I did it.
(17:22) And I see it all the time, right? (17:25) Uh, somebody decides they want to start a business. (17:27) The first thing they do is who's going to partner with me, right?
(17:29) So they, they automatically just select a partner. (17:32) It could be a friend, could be a family member. (17:33) It could be somebody they met and instantly.
(17:35) Now they own 50% of the business or a third of the business where they find three partners. (17:39) They own a quarter of the business. (17:40) They start handicapped right off the bat, right?
(17:43) Uh, why not have the confidence to go start your own business and bring people on board as your company, as your company grows? (17:51) Maybe that's a smarter way and start with a hundred percent equity in your company. (17:54) You see Julian, the biggest thing I learned and somebody said this to me, I didn't quite understand what they meant is they said, equity is the one thing you can really never get back once you give it away, right?
(18:04) Whether you give it to an employee or even give somebody 10% of your business, it's very hard to get that back. (18:09) And so, you know, I truly believe that entrepreneurs should protect and grow their equity over time in a patient ambition manner. (18:17) And that's the smarter way to actually ultimately build the wealth that you're looking to create by having a business.
(18:22) Because if you're ever going to get, uh, wealthy from a business or create a nest egg for your family through a business, it's going to be your equity to which that will be that vehicle. (18:32) That's what you're going to sell ultimately to, uh, earn, earn that income, right? (18:36) So it's so important to safeguard, but then there's also the other element, which is control over what you're trying to create.
(18:43) And I think, you know, we see these stories all the time where entrepreneurs sell their equity, lose control of their business. (18:49) And ultimately the business changes, the culture changes, the people change their vision of what they want to create change because they wanted to sell their equity. (18:56) And the reason they wanted to sell their equity is they were scared.
(18:59) They wanted to monetize what they had while they had it and not lose it over time. (19:03) So, you know, I think protecting and growing your equity is the principle foundation that if entrepreneurs can master that, they can really control their own destinies for the long, long haul. (19:13) And the principles after number one, if you mess up, those can affect protecting your equity.
(19:19) So that's why two through seven are really important as well.
Julian Hayes II
(19:22) Makes sense. (19:22) So with the equity thing, say someone is, okay, I have my business plan. (19:27) I got my true North and I've identified say this person to bring you to the company, uh, for maybe a specific role.
(19:36) How would you recommend in terms of, uh, thinking about how much equity to give this person?
John St. Pierre
(19:41) Yeah. (19:41) So I talk about that, um, in one of the principles it's called Prince. (19:45) Uh, it's called the, um, uh, build a culture of entrepreneurship.
(19:49) And you know, when you, when you think about giving equity away way too much for us to give it away too loosely, what we don't do is calculate the terminal value of the equity you're giving away. (20:00) So what I mean by that is if you give someone 10% of your company to you, the 10% means nothing right now, your company may not be worth anything. (20:07) So it's, it's a free giveaway, right?
(20:10) Well, what if your company ends up being worth $10 million? (20:13) You just gave that person a million dollar incentive to come work with you. (20:16) Is that value they're adding to your business?
(20:19) Probably not. (20:20) Right. (20:20) So there are other ways to do that.
(20:22) Um, one way to do that is through a phantom equity instrument. (20:25) So, you know, if you bring on, you want to bring on a high powered person to your (20:28) business and you can't really afford to pay them what they're worth, create an instrument where (20:33) it's not real equity, but it's kind of set up as a phantom equity structure where as the business (20:38) grows, they can participate in the value creation that they're helping build at a certain percentage, (20:43) but it's paid out as a bonus.
(20:45) They have no voting rights. (20:46) They don't have equity in the business, but it's an incentive for them that is equitable to their contributions.
Julian Hayes II
(20:51) Oh, okay. (20:52) I just started that one. (20:54) I might have to keep, I'll have to keep that one back in my head.
(20:56) That's a pretty, that's, I've never heard of phantom equity. (20:59) Never heard of that. (21:00) I always thought just either usually when you're bringing people on board in those kinds of positions that you just have to give them a piece of the company or, you know, miss out on them if you can't just afford them.
John St. Pierre
(21:12) So. (21:12) Exactly. (21:12) And that's problem number one.
Julian Hayes II
(21:14) Yeah.
John St. Pierre
(21:14) I think especially today in today's workforce, it's hard to find good people. (21:17) So entrepreneurs feel like, oh, well, I should give them a piece of my business. (21:21) And then they give them a piece of the business, but what if things don't work out?
(21:25) What if it's the wrong partner you just brought on? (21:27) I mean, have you ever heard of partners kind of getting divorced in business and how ugly that can be? (21:31) It sucks.
Julian Hayes II
(21:31) It does. (21:33) Yeah. (21:33) We've, we've seen it.
(21:34) We have seen it. (21:35) It's probably magnified probably by 50 compared to maybe on the personal side, because there's, there's so many other loose threads that are going on. (21:45) And I think the business can, you know, if that's going through the divorce and being broken apart with all the friction, how much that just affects that individual mentally and then also into their personal life as well.
John St. Pierre
(21:58) Yeah. (21:58) But, but it's, but it's a great parallel, right? (22:00) Like, um, divorce in any way, business or personal sucks.
(22:04) Right. (22:04) And it's just not fun for anybody, but too many. (22:08) I mean, if you think about it, how many people partner together in business and think about the diligence they do as they go into a partnership relative to the diligence one does to get into a marriage, right.
(22:18) In a marriage, you date for a couple of years, you get engaged. (22:21) There's another year between that you start living together. (22:23) In some cases, you know, you, you really get to vet each other before you actually walk down that aisle in business.
(22:30) Way too many people are, Hey, I got a good idea. (22:32) You want to come with me? (22:32) Let's partner on this thing.
(22:33) And they end up partnering in business. (22:35) And, and what happens when's up happening is ultimately every business will end at some point, but way too many of them end too early because of the partnerships just really aren't well aligned.
Julian Hayes II
(22:46) Yeah. (22:47) My thinking of, you know, when I was thinking about this, cause this is something that I might think about in a few years or so. (22:52) And my thinking is that, and you let me know if this is the right frame or the right thinking that if I'm going to bring someone strategically on, it's usually something to really compliment me on maybe something that I'm not best at or something that needs work on that I don't even like to do or don't need to do that doesn't best suit my strengths.
(23:10) Is that kind of the right thinking?
John St. Pierre
(23:11) It is, but I would then challenge, okay, so hire that person or hire them with a phantom equity instrument. (23:17) So if your company grows in value that they contribute to, they can get a bonus for that as a bonus for that, right? (23:24) You don't have to make them a partner in the business.
(23:27) Okay. (23:28) Or there's other areas you can, you can get coaches that can help coach you in these areas that maybe you're weak in and need help in, or you can hire freelancers to come in as consultants and come help you. (23:36) I think way too often we just revert strictly to the partner and that dilutes your equity and that's principle one, don't violate it.
Julian Hayes II
(23:44) Makes sense. (23:44) And so let's go to the second one and that is build your own capital. (23:49) And so I guess this is what some people also know as used the word bootstrapping, right?
(23:56) Yeah. (23:56) And so why, I guess the first thing is why do you think so many people are just so quick to jump the gun to go seek capital instead of just building it up themselves initially, or even the whole time?
John St. Pierre
(24:10) I think it's glamorized. (24:11) I mean, how much, you know, you hear it all the time. (24:14) Oh, this company raised $20 million.
(24:15) This company raised $10 million. (24:17) When we raised the money, I was telling everybody, Hey, we just raised $20 million. (24:20) We're ready to go.
(24:21) It's a glamorized thing to say and do. (24:24) We look at these companies, these unicorn companies that achieve massive billion dollar exits and success. (24:29) They all had VC money.
(24:31) So we think that's the path to what I should be doing. (24:34) But unfortunately, raising capital dilutes principle number one, right? (24:40) If you build your own capital, you need less money from banks.
(24:44) You need less money from investors and you can grow faster. (24:47) And you know, the build your own capital chapter of the book, you know, gets really into deep finance language a little bit. (24:54) Like when you ask entrepreneurs, what is the number one financial report you look at monthly that tells you the health of your business, right?
(25:03) If you had a hundred people in the room and you said, who evaluates your financial health based on your profit and loss statement, 99 hands would go up. (25:12) And so did mine, right? (25:13) Oh, let me profit and loss statement.
(25:14) Of course. (25:15) No, not really. (25:16) You could be very profitable, but not be generating any net operating cash and you don't have any cash.
(25:21) You can't grow your business. (25:22) Right? (25:23) So, you know, one of the models I learned from the book scaling up and Verne Harnish and Alan Miltz was the number one report that business entrepreneurs should measure is their net operating cashflow. (25:35) How much cash are you generating? (25:37) Because as Verne Harnish would say, or Alan Miltz would say, revenue is vanity, profit is sanity, cash is king and queen. (25:48) And so when you measure how fast a company can grow, Julian, way too many companies, and this happened to me in a company that we had a failure.
(25:55) I was growing so fast, but I wasn't generating the cash necessary to support the growth. (26:01) So what would happen? (26:02) I get more bank loans.
(26:03) Why does it get more bank loans? (26:04) My balance sheet got heavier. (26:05) We had too much leverage.
(26:06) Well, that forces me now to go get private equity money to come in and deliver the balance sheet and get us back to square one again. (26:11) So the cycle repeats and principle one gets violated. (26:15) So the self-financeable growth rate is a calculation based on the cash you're generating, how fast your company can afford to grow.
(26:22) It's a percentage. (26:23) So if your company can afford to grow 10% a year, but you're trying to grow 20% a year, where's that other 10% coming from?
Julian Hayes II
(26:35) That's something to really think about, really to think about, because my hand went up on the P&L as well. (26:43) That's what I thought about as well. (26:45) But now that you just said that and it's opened my eyes, I mean, that makes complete sense.
(26:50) That makes complete sense.
John St. Pierre
(26:52) It smacked me too. (26:53) I was like, oh my goodness. (26:55) I even measured a little bit of our business based on the balance sheet, which is another level really good, but I never really managed it on the cash we were generating and how fast that would help us propel the growth.
Julian Hayes II
(27:07) And so let's move to the third one here. (27:09) This is reinvesting smartly. (27:11) And so I'm sure there's a lot of angles that people can go here when it comes to reinvesting and what we consider a investment.
(27:21) So I guess if someone comes up to you and they're talking about this particular pillar here, how do you go about explaining to them and what's your thought process?
John St. Pierre
(27:30) Yeah. (27:31) All businesses experience management influenced waste. (27:35) They start investing in different areas without beta testing, without really know if it's a good idea, just because they want to grow and they see shiny objects.
(27:43) So the big problem with entrepreneurs, right? (27:45) The shiny object syndrome. (27:46) Oh, look, that looks really good.
(27:48) Let's go do that. (27:48) Let's go do this. (27:49) Well, with the one business, I did that.
(27:52) We carelessly invested into new verticals, new business lines, startup costs, and manufacturing costs. (27:58) They started doing all these different things that were all sucking cash. (28:02) They were not helping us build our capital.
(28:05) They were sucking our capital. (28:08) And so by doing that, we had to go get more bank loans to help grow in the business and everything kind of went backwards, right? (28:13) But if you reinvest smartly in your business and really reinvest where and how you can generate more capital, you can then grow faster and grow the value of your equity.
(28:25) So everything kind of flows downhill, either positively or negatively amongst those first three principles.
Julian Hayes II
(28:31) Okay. (28:32) And let's move to the fourth one here and building a culture of entrepreneurship. (28:37) I like this one.
(28:38) Yeah, I really like this one because I think everyone pretty much is an entrepreneur in some form or fashion in terms of the mindset and how you go about things. (28:49) Or at least I think you have to be if you ultimately want to kind of reach whatever some of your high schools are, you kind of have to adopt this mindset. (28:55) So I'm sure there's a reason why you had a number four and to go along with everything.
(29:03) So let's discuss this one.
John St. Pierre
(29:04) Yeah. (29:05) So building a culture of entrepreneurship is essential to having a team that's fulfilled, growing, and someday may ultimately run your business. (29:14) I think that's one part we'll get to a little bit later, but is your goal to run a business or is your goal to own a business?
(29:21) And I think if you're going to own a business asset, you need to have entrepreneurs within your business that treat that business as if it was their own. (29:28) And so if you apply principles one, two, and three properly, where you really need to focus on here is building a culture where the people growing within your business can someday take over your business. (29:39) And so that's building a culture of entrepreneurship.
(29:41) And in this chapter, we talk a lot about how to lead situationally, how to be a servant leader, how to give people authority and freedom. (29:47) And Julian, we talked about this a little bit on the onset, but today's workforce want to feel like they're a part of owning something, right? (29:56) That's why the phantom equity instrument works for a lot of people.
(29:58) That's why if they have a culture where they feel empowered within the business, where they run their own profit and loss or their own division, or they have ownership, they can make decisions. (30:07) They can go to the doctor without asking for permission. (30:09) That's creating a culture of entrepreneurship where people can thrive and grow within a business because not everybody is going to go risk their capital to go start a business.
(30:18) That doesn't mean they don't have an entrepreneurial mindset. (30:22) Create that culture within your business.
Julian Hayes II
(30:23) That's a key distinction right there. (30:25) And so when you were looking to hire throughout the years and what are maybe, let's say two to three things that you notice that were commonalities with those that when you hired them and they really rose up the ranks and potentially, because I think you hired someone to become the CEO that was inside the company.
John St. Pierre
(30:47) Yeah.
Julian Hayes II
(30:47) Yeah. (30:48) So what I guess, yeah. (30:49) What did you notice even in that individual?
John St. Pierre
(30:52) Yeah. (30:52) So there's the situation where I hired a sales rep in 2005, who currently is the CEO of our business and grew the company to north of a hundred million dollars. (31:04) Right.
(31:04) Competitiveness, entrepreneurial spirit, former athletes, people who really have a drive to succeed is at the core of a lot of hiring decisions. (31:14) Right. (31:14) But what happened in this situation, Julian, is I didn't hire this person to be the CEO.
(31:18) I hired this person as a national sales representative who ultimately over the years, it took probably 10 plus years, became the vice president of sales, who then became the general manager of the business, who then became the CEO and president and partner with me in the business. (31:34) Right. (31:34) So through that journey was building that culture where they felt they could continue to grow within this business.
(31:41) So that's really that journey and what that looks like. (31:43) But in terms of character traits, I really feel if you hire people who have an entrepreneurial spirit to begin with, that's a good place to start.
Julian Hayes II
(31:52) And so let's go to number five, which is protecting the house. (31:56) And so what exactly is that, protecting the house?
John St. Pierre
(31:59) Yeah. (31:59) So you've done all this work, right? (32:00) You've protected your equity, you've built your own capital, you're reinvesting smartly, you've built this team of entrepreneurship, but then you don't have the proper insurance coverage for your business or you don't have proper HR policies.
(32:11) So you get sued by your employees for discrimination or whatever happens, right? (32:16) You experience a fatal event in your business where you're not properly managing the financial controls of the business because you don't have the proper checks and balances or things can happen. (32:27) I mean, I have countless stories, Julian, that almost put my businesses into the ground, right?
(32:33) We were a victim of wire fraud where we sent $250,000 to Beijing on a wire fraud scam. (32:40) We had a company go bankrupt on us for $225,000 during the 2008 recession, almost sank the entire company. (32:47) I hired a bad actor who came into the business and ultimately put me out of my own business.
(32:51) So you have to protect what you're building and you have to assess the vulnerabilities within your business on a continual basis. (32:58) But here's the trap. (32:59) They say entrepreneurs or business people should work on their business, not in their business.
(33:05) Well, I can tell you what, I know hundreds of entrepreneurs, they're working in their business today. (33:09) They don't have time to work on their business. (33:11) They just can't.
(33:12) They're so busy in the weeds trying to do things. (33:15) But if you don't work on your business, you're going to hit some vulnerabilities that could really sink the ship.
Julian Hayes II
(33:20) And this is a big example of working on your business. (33:23) And, you know, after you shared those examples, there's a book called Only the Paranoid Survive, and that really brings home to front what you were talking about here.
John St. Pierre
(33:32) Yeah. (33:32) And I'll touch on that for a second. (33:34) I mean, do you have healthy paranoia?
(33:37) Right. (33:37) Because there's also unhealthy paranoia where you don't trust anybody. (33:41) You're always looking over your shoulder.
(33:43) That sucks. (33:43) That's not good for your health or the health of anybody else. (33:46) Right.
(33:46) But if you have healthy paranoia, you trust but verify you're looking in every corner to make sure that everything's tied, everything's tight and everything's operating properly. (33:55) Right. (33:56) But you can't do that, Julian, unless you've built a culture of entrepreneurship.
(34:00) So people are running all the other segments in your business. (34:03) Right. (34:04) You're reinvesting smartly.
(34:05) You have the right capital and you're protected directly because you control everything. (34:09) So you can now oversee the vulnerabilities of the business.
Julian Hayes II
(34:13) And so let's go to number six now, and that's accessing the owner's liquidity. (34:18) And so, yeah, let's just dive into that.
John St. Pierre
(34:21) Okay. (34:22) So what happens is, you know, we talked about the different phases of business growth, right? (34:27) So there's a startup phase.
(34:28) In the startup phase, you're barely paying yourself, if at all. (34:31) You get to the struggle zone. (34:32) Struggle zone, you're just trying to make your way through.
(34:35) It's tough. (34:35) You're starting to pay yourself some, not a lot. (34:37) You're trying to build your business and you're really struggling to kind of get through.
(34:40) Then you get to the lifestyle phase. (34:43) In the lifestyle phase, you're earning a nice income. (34:45) Your business is doing well.
(34:47) You get comfortable, right? (34:49) Things are in good shape. (34:51) Well, how do you monetize what you've built?
(34:54) The answer for everybody would be either you stay in the lifestyle phase and you make good income, or you sell your equity. (35:01) And so entrepreneurs then sell 20% of their business so they can take chips off the table. (35:06) Well, that violates principle one.
(35:07) Why are you selling equity in your business? (35:08) That doesn't make any sense. (35:09) Well, I want to make money.
(35:10) I want to get some more return from my business. (35:12) Or you sell 100% of your equity. (35:14) You just got out of what you just spent 15 years building.
(35:17) Why'd you do that? (35:18) Because I wanted to get equity from my business. (35:21) Entrepreneurs do not understand how to access the liquidity on their business's balance sheet and move it to their personal balance sheet without selling equity.
Julian Hayes II
(35:30) Okay. (35:31) And so you mentioned something there about the different stages of the entrepreneurial journey. (35:35) And there's a chart in the book.
(35:36) And so I have just a couple of the stages. (35:39) We mentioned startup, we mentioned struggle, lifestyle, and you even have the revenue ranges, I believe. (35:45) And then the...
(35:47) So let's say startup right now, right? (35:50) You have it labeled zero to a hundred thousand and that's uninformed optimism. (35:55) So I found that's a very interesting word.
(35:58) Is that just where this person is just, they haven't really accumulated as many scars yet and seen the ugliness of business. (36:06) And it's just all excitement. (36:07) It's all Instagram, right?
John St. Pierre
(36:09) That's right. (36:09) That's right. (36:10) Uninformed optimism is from the transition learning curve, right?
(36:12) You start something new. (36:13) I don't care what it is, a new job. (36:15) You're joining a new sports team.
(36:17) You're starting a new company. (36:17) You're just excited. (36:18) You have no idea what's to come, but you're just excited to be there, right?
(36:21) That's uninformed optimism. (36:22) And that certainly happens in the startup phase.
Julian Hayes II
(36:24) Yeah. (36:25) That's like the new relationship, the new job. (36:27) It's just exciting.
(36:28) The new fitness program, I'm just excited.
John St. Pierre
(36:32) Exactly.
Julian Hayes II
(36:33) And so then we start to, you mentioned struggle and you have that label from 100 to 600K, right? (36:38) And that's the uninformed pessimism. (36:40) So is this where the new car smell starts to rub off on you and you're like, oh, okay.
(36:47) And the reality hits, right?
John St. Pierre
(36:49) Yeah. (36:49) I mean, most entrepreneurs are in the struggle zone. (36:52) They're trying to build something, right?
(36:54) They're trying to get their business success where they can pay themselves and get to the next level, but it's a long road. (36:59) They still don't know what's to come, but they're not as excited about it as when they first started, right? (37:05) They've seen, oh, maybe my product isn't as popular as I thought it would be, or maybe I'm not getting the likes I needed on Instagram to push this product forward or whatever.
(37:13) I'm running into cashflow problems, whatever it may be, you're still uninformed, but you're a little more pessimistic about you're coming back down to earth that this is going to be a tough road.
Julian Hayes II
(37:21) And then the next stage, which you labeled comfort, and this is the lifestyle. (37:25) And I'm looking at the revenue ranges, 600K to 4 million. (37:30) And I can understand why that's comfortable then, because you're able to pay yourself a pretty good salary and you probably have some good growth that you can still have and everything.
(37:41) So it's almost on cruise control to a certain extent, right?
John St. Pierre
(37:44) Yeah. (37:45) I don't know if I use the words. (37:46) Okay.
Julian Hayes II
(37:46) Not cruise control.
John St. Pierre
(37:47) Let's not say cruise control. (37:48) There's no business as cruise control, but once you get through the struggle phase, the thought process here is you just went through five, maybe 10 years of struggle and trying to get this business. (38:00) And finally you're paying yourself the salary you told your spouse or your significant other, you might be making for this point, right?
(38:05) And maybe you can afford to go on that vacation or buy that car or buy that house or whatever it may be. (38:10) And you're like, okay, this is getting comfortable now. (38:12) I'm finally got through this really tough period.
(38:15) I'm in this zone. (38:17) But Julian, that's the entrepreneurial trap because now that you're in this comfort zone, do you really want to take your business to the next level? (38:26) Because that's the most dangerous level of all, or do you just want to stay in this comfortable little zone, make good income, have a nice lifestyle, have a nice business, and that is perfectly okay.
(38:35) But you got to make that decision at some point in that lifestyle stage.
Julian Hayes II
(38:38) Okay. (38:39) Now let's say we want to take that next stage and we're going to be a little dangerous, right? (38:45) So we're moving to the next stage.
(38:47) This is the messy middle, right? (38:49) It's 4 million to 20 million. (38:51) It's the valley of despair.
(38:54) So someone would think, okay, well, I'm making, there's more money coming in. (38:58) So why is this the valley of despair?
John St. Pierre
(39:01) More money, more problems. (39:03) It's the growth paradox. (39:04) So you want to grow.
(39:06) So what do you need to do to grow? (39:07) Well, you need to hire more people. (39:09) As you hire more people, it costs you more money.
(39:11) As it costs you more money, you have less cash flows. (39:12) You have less cash flow, right? (39:14) You don't have as much money to invest.
(39:15) You incur bank debt and you have to do more sales to get out of it. (39:18) So then you start doing more sales, but then you have to hire more people to support the sales. (39:21) And it just keeps going around and around and around.
(39:23) It's called the growth paradox. (39:24) And it's a tough thing to get out of because the messy middle is that phase in your business where if you're going to invest the money to grow, well, you have to make all these other business decisions along the way that could impact your own income as well. (39:37) And that becomes a little bit dangerous.
(39:39) And as I talk about in the title of the book, your guide to growing the business of your dreams without going off the cliff, it's in that messy middle that you can fall off the cliff because you may get yourself in a position where you go a little bit over your skis trying to grow your business. (39:54) And now you've got to bring in investor capital or you need to go get a bank loan. (39:57) And guess what?
(39:57) When you go get a bank loan at this phase, they want you to personal guarantee. (40:00) They want you to put your house on the line. (40:02) So it gets a lot riskier at this phase.
Julian Hayes II
(40:04) So this is definitely where people probably give away a lot of their equity.
John St. Pierre
(40:09) Yes.
Julian Hayes II
(40:09) I would say.
John St. Pierre
(40:10) Well, I would say it happens at the beginning and it happens in the messy middle. (40:16) In the lifestyle phase, it's like, why would I give any equity away? (40:18) I'm making some good income here.
(40:19) I don't need to. (40:20) But the fault becomes, well, if I want to grow from this level to the next level, instead of using my own income and diluting my own income and going to tell my significant other, hey, I'm going to take a pay cut for the next three years as we go do this, they go raise equity. (40:34) And then they do with their equity as a result.
Julian Hayes II
(40:38) Now, I'm curious, those who decide to stay in comfort, which is sounds like a great lifestyle business compared to taking the next step up and going to that. (40:47) In your time, have you noticed that a difference between those people who are good at that lifestyle stage compared to those who want to go for the next jump? (40:58) In terms of like their psychological makeup.
John St. Pierre
(41:01) Yeah. (41:01) I mean, I think a lot of people aspire when they start their business to not stop at the lifestyle phase. (41:06) But they do after going through those years of ups and downs and struggle and they get there and they're like, okay, you know what?
(41:12) This is probably fine. (41:13) Then there are others who had that ambition to grow their business to a certain level that get to the lifestyle phase. (41:18) They take a little pit stop and then it's ready to kind of get going again.
(41:22) I think that really goes back to their drive and their desire and what they're trying to accomplish. (41:25) And I think part of the problem, we talked about this very early in the conversation, what are they trying to accomplish? (41:30) What is their true north plan?
(41:33) If their true north plan was to build a lifestyle business to support their lifestyle, they don't need to go anywhere else. (41:39) That's perfectly fine. (41:40) If you aspire to create a business, it's going to create an incredible amount of wealth and freedom.
(41:45) The lifestyle business may not be enough for you. (41:47) So it really depends on that personal interest and what your personal goal is, what you're trying to accomplish.
Julian Hayes II
(41:52) Okay. (41:52) I'm going to hit the last one here, but this is just a question out of curiosity, and I'm sure some people listening or watching in the future anytime will have this as well. (42:03) Relationships and doing this kind of thing sometimes can butt heads.
(42:08) Tim, I've seen it. (42:09) Now, I haven't experienced it yet because I'm still not in that stage yet. (42:13) But I'm curious, when you are building and there's so much uncertainty, there's not a typical guaranteed salary coming in yet, right?
(42:24) And you're talking to your spouse, you're still selling the dream to her and everything. (42:31) What do you see? (42:33) I'm trying to think how I want to work this.
(42:37) How do you think the people who successfully do that compared to those who don't in terms of having the business fracture the relationship compared to those who keep a strong relationship while in the build a business?
John St. Pierre
(42:47) Yeah. (42:47) I think that also goes back to what are you ultimately trying to accomplish, right? (42:51) If your goal in life is to accomplish not only business success, but also have a great family, have a great significant other or whatever it may be, you have to incorporate that into your plan ultimately, right?
(42:59) But there's no doubt that behind every strong entrepreneur needs to be a support element. (43:05) That support element could be a significant other relationship, could be family, could be business mentors, could be whatever. (43:09) You need that support.
(43:11) In my case, I was fortunate. (43:12) I had a wife who has a more stable career job and she was an engineer. (43:16) She helped support our lifestyle when I was trying to grow a business.
(43:20) So I had that support factor from her. (43:22) But on the same token, Julian, when it was time for us to go raise significant capital and grow the business, guess who was telling me, be careful, that's dangerous. (43:29) Maybe you shouldn't do that, right?
(43:31) So imagine the look on her face when I had to come back to tell her, hey, I just got fired. (43:36) You were right. (43:37) I'm sorry, honey, right?
(43:39) Those types of moments are really, really tough. (43:41) But to have that support factor behind you that believes in you and is going to help you accomplish your dreams and goals by supporting you is an important factor of a relationship in its purpose of a relationship, right? (43:54) So unfortunately, I think some people get in a relationship where they're being held back for their careers and goals and aspirations.
(44:01) And that can sometimes, you know, not be the best spot to be, regardless whether it be a business aspiration or another dream or aspiration you have for your life. (44:08) If that's what your true north life plan is, you better have the surrounding people to help you get there.
Julian Hayes II
(44:12) Yeah, I guess that's what that's, you have to be very specific. (44:16) And I guess that, you know, that comes back to almost the true north. (44:19) You have to know the true north first and foremost, because that's going to guide everything else.
John St. Pierre
(44:24) 100%.
Julian Hayes II
(44:25) And so the fifth stage here is the high performance stage. (44:29) And only 4% of companies achieved this level. (44:32) I thought it would be more.
(44:33) I really did. (44:34) So I'm shocked. (44:36) I was shocked at that number.
(44:37) That is only 4%, the 20 million to 100 million range. (44:40) This is informed optimism. (44:42) So they, I guess they know the realities of the world, but I guess their perspective is still to be optimistic in that kind of thing now.
John St. Pierre
(44:49) Yeah, exactly. (44:50) So in the messy middle, you start hitting informed pessimism, right? (44:53) You're like, oh gosh, now I'm, now I know what I'm getting myself into here and it's not pretty.
(44:58) This is going to be a real tough road. (44:59) But once you cross that chasm, once you get to the 20 million plus stage of business, hopefully by then things have started to stabilize, right? (45:06) You know what equity you have in the business.
(45:08) You know what you're trying to do. (45:09) You know, you probably have better support factor around your business. (45:12) You're paying for the appropriate advisors to guide you, which is a critical element that should not be missed.
(45:18) But you get to that high performance stage of business where you truly have something with strong equity value. (45:24) There's still a lot of turbulence at that stage. (45:26) Just, you know, your problems only get bigger as your business grows, but now you've created something substantial that you can actually pay for the right advisors around your business to help protect it.
Julian Hayes II
(45:35) And so the last, this, we, that was a long, that was still, we all included part of this on the owner's liquidity and went to this talk on the different stages of the journey. (45:44) But there's actually one more pillar when it comes to the principles of entrepreneurial success. (45:49) And that is moving from CEO to chairperson.
(45:53) And so why would you do this? (45:55) Cause I, I, you did this. (45:56) Why would you do it?
(45:57) Why would you? (45:58) Yeah.
John St. Pierre
(45:59) Why wouldn't you? (46:00) Right. (46:00) So I think for me, the premise Julian is, are you in business?
(46:05) Cause you like operating businesses or are you in business? (46:09) Cause you like being a business owner. (46:10) You want to own business assets and I'll bring it to a different level, right?
(46:14) A rich dad, poor dad, Robert T. (46:15) Kiyosaki was one of my favorite books when I was younger. (46:18) And he says, look, in order to create wealth in your life, there are four types of assets, business assets, real estate, stocks, and commodities.
(46:27) Those are the four types of assets you can have. (46:29) Well, no one really owns one commodity. (46:32) No one really owns one stock.
(46:34) They have a mutual fund of stocks. (46:36) No one really owns one real estate building. (46:37) If they want to be in real estate, they own multiple real estate buildings, but yet entrepreneurs, we own one business and we spend all our life, all our time, all our energy, all our guts, all our everything trying to build this business for 10, 15, 20 years to buy ourselves a job.
(46:54) And it's my favorite quote. (46:55) I can't remember who it is, but if you're in that situation, you're looking for a lunatic. (46:59) It's you.
(47:01) So if that's really what your goal is to operate a business, fine, go build a nice business, get to a lifestyle size business, have a good income. (47:08) That's perfectly fine. (47:09) And congratulations, there's nothing wrong with that.
(47:12) If you want to build business assets, you got to move yourself strategically up the ladder and replace yourself as a CEO of your business to become the chairperson of your business.
Julian Hayes II
(47:21) Okay. (47:22) And how did you personally know it was time to make this transition?
John St. Pierre
(47:28) Yeah. (47:28) So principle one, protected my equity. (47:32) Principle two, built our own capital.
(47:34) Principle three, we reinvested smartly to build more capital. (47:38) Four, we created a culture of entrepreneurship where there were people in the business that were ready to take on more. (47:43) Five, we protected the business along the way.
(47:45) Six, we accessed liquidity. (47:47) So in accessing liquidity, Julian, I was able to move money on the balance sheet of the company in tax advantage manners to my own personal balance sheet. (47:56) So instead of selling equity, I was able to get really good returns on this business that's being built.
(48:02) And so now I can go become the chairperson of this business. (48:04) So I can legitimately, for the first time, work on the business and oversee it strategically, but then go build other business assets.
Julian Hayes II
(48:14) I hope people rewind that or just go get the book and get even more detail on that because that makes perfect sense. (48:26) It makes perfect sense. (48:28) You're a lunatic because you do just sign up for a job that you're going to work even more for when you do it with that other paradigm instead of making this transition.
(48:39) And so also throughout this entire process, how did you go about protecting your mental and emotional health? (48:46) Because I'm sure there's a lot of journeys, especially when you get kicked out of your own business, you get kicked out of one of your own companies and everything. (48:52) So I'm sure there was some mental, emotional tough moments.
(48:55) So how do you kind of avoid this pitfall? (48:58) Or actually, you can't really avoid it, but how do you maybe mitigate it a little bit, manage it?
John St. Pierre
(49:03) Yeah. (49:04) Well, on the subject of health, right? (49:06) So in order to be effective as an entrepreneur, you need to have healthy relationships.
(49:11) You need to have a healthy body. (49:12) You need to have a healthy mind. (49:13) You need to have health around you, right?
(49:15) And you really need to surround you because then you need to bring your best every day. (49:18) And it's very difficult to do that if you don't have healthy relationships, if you don't take care of your body and mind and spirit and everything else. (49:24) So that to me is core and something that I think I was always fairly decent at in terms of taking care of myself.
(49:31) But then when you find yourself broken in a moment, you just didn't expect it. (49:35) And it could be anything. (49:36) It could be a failed relationship.
(49:38) It could be a death of a family member. (49:39) It could be anything, right? (49:40) You find yourself broken.
(49:42) You really need to find yourself again and realign back to your true north and be, okay, what am I trying to accomplish and who do I want to be? (49:48) And be very, very clear on that. (49:50) And I think, Julian, for me now, as I look at it, right, and you would be more educated in this area than I am, but with the advances of technology and, gosh, genome therapy, right, and everything that's going on, you know, 60 is a new 40, and 100 may be the new 65 by the time we get there, right?
(50:12) And so we're going to live a long life if we take care of ourselves. (50:16) And so that's great. (50:17) But that's why these principles are so important.
(50:19) Because if you build something with patient ambition over time, you can put yourself in a position where you have more freedom to enjoy what life has to offer you. (50:26) That increases your, you know, improves your mental health, improves your physical health. (50:30) You're not just, you know, waking up every day, going to the office, putting in a 15-hour day, coming back, you don't have time to see your family.
(50:36) That's not why we choose to live as entrepreneurs. (50:39) That's not the life we choose. (50:41) But sometimes it's the life we're given.
(50:42) So how do you get out of that rat race? (50:44) How do you get out of that rut to build the business of your dreams without falling off the cliff?
Julian Hayes II
(50:50) And I want to, these last few questions here as we get ready to wrap this up is, what does success mean to you?
John St. Pierre
(50:57) Well, for me, it's my True North life plan, right? (51:01) So in my True North life plan, when I think about, you know, in 30 years, what do I want to accomplish? (51:06) I want to experience everything that life has to offer me with fulfillment in my relationships, with wealth and freedom.
(51:14) What inspired you to write this book? (51:19) So a couple of things. (51:21) One is when I had to take this moment of self-reflection to find my True North.
(51:28) You know, one of the best diagrams I've ever seen in my life was called the Venn diagram. (51:33) It's from Jim Collins' book, Built to Last. (51:36) It's called the Hedgehog Concept.
(51:38) And it's the diagram, it's a Venn diagram, so it's three circles where they intersect. (51:42) And the diagram was first described to me as, this is what success looks like. (51:47) If you can find your three circles and how they intersect, where they intersect is where you should spend your time.
(51:52) And the three circles are, what are you most passionate about? (51:56) What can you be the best in the world at? (51:58) And what can drive your economic engine?
(52:01) And so as I looked at all of that, I said, okay, wait a minute. (52:03) I love entrepreneur. (52:04) I love leadership.
(52:05) I love helping people build their business. (52:07) I think I'm really good at training and developing and mentoring and coaching people. (52:11) I think that could really work for me.
(52:13) So to me, that fit, right? (52:14) I want to work with entrepreneurs. (52:16) But then I was like, okay, well, wait a minute.
(52:18) I just had this massive failure. (52:19) What did I learn from that? (52:21) And how can I go implement that somewhere else to prove out my theory that if you do things the right way, you can build the business of your dreams?
(52:28) So I went and did that. (52:30) And the resulting product through that period of time of building that business was the $100 million journey. (52:36) And so to me, it's about impacting entrepreneurs and helping make sure they don't go through the same pitfalls that I did.
(52:43) They're going to go through pitfalls. (52:44) They're going to throw ups and downs, but someone can be less drastic if you take the right measures. (52:48) You know, that's my goal and mission now is to give back to entrepreneurs in that fashion.
Julian Hayes II
(52:52) And if you had, let's say someone comes up to you and said, do you have like a one to five word philosophy that kind of serves as your compass to how you approach life? (53:02) What would you say? (53:03) What would you say?
(53:03) What comes to mind? (53:06) Maximize everything life has to offer. (53:08) I like that.
(53:09) And the last question here is if someone comes up to you at the cafe and asked you, what are one to three things that I could start doing today right now to create a more fulfilling and more abundant life while on my journey to building my $100 million company? (53:26) What would you tell them?
John St. Pierre
(53:28) Take the time for self-reflection to develop your true north life plan. (53:32) Number one, number two, align your true north life plan with your strategic business plan. (53:39) And number three, apply the seven principles of entrepreneurial success.
Julian Hayes II
(53:44) Awesome. (53:44) Awesome way to capstone this amazing conversation. (53:47) We went through a lot in this conversation.
(53:50) And the interesting thing is we've only scratched the surface of what's inside of this book. (53:55) And I tell you, this book is loaded. (53:58) It's like, it's going to be the textbook for me for so many things.
(54:02) It's a truly great piece of work. (54:04) I cannot wait to see this in the hands of so many people. (54:09) Thank you for writing this book for people.
(54:11) I say this, and I'm sure a lot of people are going to thank you really soon for writing this book. (54:16) And so where can we keep up with you more and get the book?
John St. Pierre
(54:20) Yeah, absolutely. (54:21) So on social media handles, it's John St. Pierre 100 (https://twitter.com/johnstpierre100), LinkedIn (https://www.linkedin.com/in/johnstpierre) or Instagram or the like. (54:27) My website is 100mjourney.com.
(54:31) So that's where you can go and get more information about the book. (54:33) And the book will be live on November 30th, 2023.
Julian Hayes II
(54:37) Awesome. (54:37) And we will have the links to all of that. (54:40) And in the meantime, everyone stay awesome, be limitless.
(54:43) And as always, go be the CEO of your health and your life. (54:46) Peace.
