The One Problem Every Entrepreneur Has... Ep 293

Summary Notes


In this episode, the host emphasizes the critical role of talent in scaling a business, particularly when operations become a key focus after reaching significant revenue milestones. He underscores that the primary challenge for entrepreneurs is not a multitude of problems, but rather a singular "people problem," which includes finding, hiring, recruiting, managing, and cultivating talent. Highlighting the distinction between 'A players' and 'B players,' the host shares a story illustrating the importance of ownership and excellence within a company's culture. He advocates for entrepreneurs to invest time in hiring 'A players' who inherently possess a drive for excellence and can significantly grow the business. The host concludes by encouraging entrepreneurs to honestly assess their teams and aim to foster a winning team culture that prioritizes quality and customer experience.

Summary Notes

Entrepreneurial Focus: People Problem

  • Entrepreneurs often perceive multiple problems, but the core issue is managing people.
  • The challenges include finding, hiring, recruiting, managing, and growing talent.
  • A pivotal point for business growth occurs when operations become central, especially when revenue hits around $10 to $30 million annually.
  • Talent becomes the primary focus after $30 million in revenue.
  • Understanding the importance of talent over personal ego is crucial for scaling a business.
  • The business should operate independently of the entrepreneur's constant involvement.
  • Jeff Bezos's stepping down from Amazon is an example of a business running without its founder.

"Every single entrepreneur has one problem. They think they have multiple problems, but they have one problem and it's a people problem."

This quote emphasizes that the singular, underlying issue for entrepreneurs is effectively managing human resources, regardless of other perceived problems.

Growth and Talent Cultivation

  • The growth of a business is significantly driven by new talent.
  • Entrepreneurs struggle with the entire process of nurturing talent.
  • Business operations become the main focus as revenue increases.
  • Recognizing the business's independence from the entrepreneur's need to be needed is a personal and professional milestone.

"After you get to probably about ten to 30 million a year is when ops really start taking over, especially at 30. It's all about talent."

This quote highlights the transition from entrepreneurial hustle to operational focus and the increasing importance of talent management as a company grows.

Ego and Business Independence

  • Entrepreneurs' egos can be challenged by the need to step back from being central to the business.
  • Personal needs stemming from childhood or other personal experiences should not interfere with the business's operations.
  • The business's success should not be dependent on the entrepreneur's constant presence.
  • Strategic vision can remain with the entrepreneur, but day-to-day operations should not.

"It's actually not about you. And that can be really hard for your ego because you love being needed."

The quote addresses the internal struggle entrepreneurs face when they realize the business must operate without their direct, daily involvement for sustainable growth.

Identifying A Players vs. B Players

  • Knowing the difference between top-performing "A players" and the rest is critical for a business.
  • Entrepreneurs tend to be overly optimistic about their teams, which can lead to a lack of critical evaluation.
  • Recognizing the value of team members who can independently drive company growth is a significant realization.

"And so what I want to talk about specifically today is how to find and know the difference between an a player and a b player, or really an a player and everyone else."

This quote introduces the importance of discerning between the most valuable employees and the rest, which is key to driving business growth.

Entrepreneurial Optimism and Reality

  • Entrepreneurs' optimism can mask the reality of their teams' performance.
  • Being able to critically assess team members' capabilities is necessary for improvement.
  • Witnessing team members successfully grow business divisions independently can be an eye-opening experience for entrepreneurs.

"If you can't look at someone on your team and be like, I think this person's kind of weak, or, I think this person could be better, then you really have rose colored glasses on."

The quote emphasizes the importance of objective assessment of team members' performance without the bias of optimism, which is essential for recognizing true talent and potential for growth.

Delegation and Business Growth

  • Realization that others can contribute to the business, not just the owner.
  • Witnessing team members growing the business independently is a significant breakthrough.
  • The importance of delegating tasks to allow for business expansion.

"And as soon as this girl did this, I was like, oh, my God, I don't have to literally make the money. Someone else can do this, and I can actually start running the business."

This quote emphasizes the moment of realization that the business owner had, understanding that delegation can lead to more effective business management.

A Players vs. B Players

  • A Players take initiative and ownership, while B Players do the minimum required.
  • A Players think creatively about solutions and show commitment to quality.
  • B Players may not take the extra steps to ensure the best outcomes.

"A players and b players. So what I want to do is tell you a quick story because I think it's perfect for illustration."

This quote introduces the concept of different levels of employee engagement and commitment, setting the stage for a comparison between A and B players.

Case Study: Promoting a Brand Manager

  • A brand manager was tasked with finding new revenue streams.
  • The manager took the initiative to start an apparel line based on social media feedback.
  • She demonstrated ownership by rigorously testing product samples and rejecting poor quality.

"So we just recently promoted a brand manager, one of our companies, and she was given the task of like, hey, why don't you think about other revenue streams that we could possibly bring into the company?"

This quote explains the context in which the brand manager was given a growth-oriented task, highlighting the importance of employee empowerment.

Ownership and Quality Control

  • The brand manager's refusal to accept low-quality products shows a strong sense of ownership.
  • Acting like an owner is a core tenet, reflecting the company's value of personal responsibility.
  • The manager found a solution despite the inconvenience, demonstrating problem-solving skills.

"She said, I'm not sending that to my customers. And it was because it showed so much ownership."

This quote illustrates the brand manager's commitment to quality and her alignment with the company's values, particularly the principle of acting like an owner.

Problem-Solving and Initiative

  • The manager didn't just identify problems but actively sought solutions.
  • She navigated logistical challenges to ensure a successful product launch.
  • This proactive approach contrasts with a less engaged employee who might not go beyond identifying problems.

"But I did find some manufacturers that don't do manufacturing and fulfillment...but their stuff is legit. It's awesome."

This quote shows the manager's initiative in finding a suitable manufacturer, reflecting her dedication to the company's success and her problem-solving abilities.

Contrast with B Level Employees

  • B level employees might only do the bare minimum, lacking the drive of A players.
  • They may not take the extra steps for quality assurance or innovation.
  • The hypothetical example illustrates the difference in approach and mindset between A and B players.

"That is what a B player would have done."

This quote succinctly distinguishes the actions of a B player from those of an A player, emphasizing the lack of initiative and ownership that characterizes B level employees.

Importance of A Players in Business

  • A players are essential for creating high-quality products that customers enjoy and repurchase, increasing customer lifetime value (LTV).
  • They focus on customer experience and constantly seek to improve it.
  • B players, by contrast, are dismissive of customer complaints and have lower standards for product quality.
  • The presence of A players can be the difference between a company that grows and one that fails.
  • A culture of excellence and high standards must be set and maintained from the top of the company hierarchy.

"The difference is with the a scenario, you have a high quality product that people buy, enjoy, and buy again, and that massively increases the LTV of the customer."

This quote emphasizes the impact that A players have on the quality of a product and the subsequent effect on customer satisfaction and loyalty.

"And finding people who think like that a player compared to people who think like the b player is the difference between companies that grow and companies that die, companies that barely compete and make it, and companies that thrive."

This quote highlights the critical role that the mindset of employees, particularly A players, plays in a company's success or failure.

Leadership's Role in Excellence

  • Leaders should have the lowest tolerance for anything but excellence, setting a high bar for the rest of the company.
  • A culture of excellence tends to get diluted at each level of hierarchy.
  • If a subordinate demonstrates a higher commitment to excellence than their supervisor, roles should be reversed.
  • The most passionate and dedicated individuals should lead.
  • It's acceptable for founders to step down if someone else is better suited to lead the company to success.

"It is my belief that within a company hierarchy, every person, the person who runs the division or the department or the company, should always have the lowest amount of tolerance for anything but excellence, which means you should be intolerant of anything that is not amazing."

This quote underscores the importance of leadership in setting and upholding standards of excellence within a company.

"And if there comes a day where you see two people and you see a supervisor, and you see someone underneath of that supervisor, and the person underneath has a lower tolerance for anything but excellence than their supervisor, those roles should reverse."

This quote suggests that positions of leadership should be determined by one's commitment to excellence, rather than hierarchy.

The Impact of Hiring Practices

  • Companies often hire individuals who are less capable than themselves, leading to a decline in quality as one moves down the organizational ladder.
  • Hiring practices have a significant impact on maintaining high standards within a company.

"Whoever you hire, most people only hire people worse than them. And so if you're one level removed or two levels removed, dear God, imagine what's being hired on the front line."

This quote warns of the potential degradation in employee quality due to poor hiring standards, emphasizing the need for diligent hiring practices to preserve a company's commitment to excellence.

Encouragement for Audience Participation

  • The host does not run ads or sell products, relying on audience support to spread the podcast's message.
  • Audience members are encouraged to rate, review, and share the podcast to help more entrepreneurs.

"You guys already know that I don't run any ads on this, and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers."

This quote expresses the host's reliance on the audience to promote the podcast, as it operates without ads or product sales.

"It'll take you 10 seconds or one type of the thumb. It means the absolute world to me. And more importantly, it may change the world for someone else."

This quote emphasizes the ease with which the audience can support the podcast and the significant impact their support can have.

Importance of A Players in Team Culture

  • A players set the standard and attract other A players, enhancing the overall team culture.
  • The presence of A players influences the team's vibe, practice ethic, expectations, and teamwork.
  • A strong culture is created by having the right people involved and removing those who do not fit.

"e, right? And so you have to carry this torch, you have to raise this bar. You have to set the standard so that a players will be attracted to you, and also so that you can have a team of a players, and then the entire culture rises, right?"

This quote emphasizes the responsibility of setting high standards to attract and cultivate a team of A players, which in turn elevates the entire team's culture.

"If you've ever been on a winning team, on a championship team, you know the difference between the vibe, how people come to practice, how they play, the expectations of one another, right? The speed of response, the teamwork, all of that. That's culture."

The quote describes the palpable difference in atmosphere and performance on a winning team, attributing these characteristics to the influence of team culture.

Recruitment and Talent Development

  • Companies often focus on talent development and management styles, but some individuals inherently possess the winning qualities needed.
  • It is worthwhile to conduct numerous interviews to find an A player who can grow and improve any aspect they touch.
  • Entrepreneurs need to be honest about their team's composition and seek individuals who take initiative and ask insightful questions.

"But some people just come with batteries included. There are some people who are just winners, right? And you just need to get out of their way."

This quote suggests that some individuals are naturally driven and successful, and the best approach is to allow them the freedom to excel.

"And I think that it's worth the extra five interviews, it's worth the extra 20 interviews to find the a player, because once that person is in place, they will grow."

The speaker advocates for the value of investing time in the recruitment process to find an A player who has the potential to significantly contribute to growth.

Entrepreneurial Growth and Team Evaluation

  • Entrepreneurs must be self-aware and recognize that not all team members may be exceptional.
  • Reflecting on one's own potential actions in another's position can help identify areas where team members may be lacking.
  • Experience helps in identifying A players, and this recognition becomes a template for evaluating others.
  • Entrepreneurship involves growing in various facets, including the ability to select and manage talent effectively.

"And I hope if you look at your team right now, you don't think, oh, they're all amazing, right? Because the reality is they're probably not, right."

The speaker challenges entrepreneurs to critically assess their team members rather than assume they are all exceptional.

"And as you grow in that awareness, so too will your selection of talent. So too will your recruitment of talent, your management and growth of those people."

This quote connects personal growth in awareness to improved talent selection, recruitment, and management.

The Value of Investing in A Players

  • Hiring A players is an investment that yields significant returns.
  • A Harvard study found that A players are five times more productive than average players.
  • Entrepreneurs should prioritize finding A players during the hiring process.

"If you're hiring people, only look for a players, put in the extra time to get the a player because it will pay you dividends beyond your wildest dreams."

The quote encourages prioritizing the search for A players due to the substantial benefits they bring to the organization.

"And there was a Harvard study that showed that a players are five times more than mute players."

This quote references a study that quantifies the productivity difference between A players and average players, highlighting the importance of A players in a team.

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