Interview with Johnny Than, CEO and Principal at Appficiency
Mad Profit Podcast host Laurent Truc interviews entrepreneur Johnny Than to learn more about his journey of leaving corporate to start a NetSuite “Expertise as a Service” company that grew to 60 employees in 5 years!
Johnny talks about the opportunity he saw and the challenges along the way to meet demand and build the right team. He learned many valuable lessons about handling growing pains and weaknesses about himself that he needed to quickly overcome. He also provides advice to budding entrepreneurs to help them succeed.
| Intro: Welcome to the Mad Profit Podcast where we interview active investors entrepreneurs and experts who left corporate jobs to buy or start successful ventures and live life on their own terms. |
Listen to their stories learn from their experiences and heed their advice so you too can create mad profits and the life you’ve always wanted. And now here’s your host, Laurent Truc.
Laurent: Hello everybody and thank you. We are back with the Mad Profit Podcast and today I have a special guest with me Johnny Than from Appficiency. Hello John.
Johnny: Hey Laurent
Laurent: How are you?
Johnny: Good, good to see you again.
Laurent: Well I’m excited to have you on. We go back a long-ways and I know you’ve done a big jump into the Entrepreneurship world and so I’m very excited to hear how things are going.
A lot of our audiences, our audience members really are in that boat or they’re currently in a corporate gig and they’re considering jumping into something on their own and so you’ve been there done that. And what you do is work with a lot of entrepreneurs I think it’ll be really interesting to hear your side and take on what you’re seeing.
So would you give us a bit of your background? Tell us a little bit about yourself and how you got here?
Johnny: Sure thing, yeah. So I I grew up in Toronto. I immigrated to Canada when I was three. I came here with my parents and have kind of a unique immigration experience of going through the Dateline during my birthday. I had my birthday in Zurich, Montreal, Toronto all at once kind of thing. Kinda of cute, kinda cool. My dad tells me that story many times.
And then when we started in Canada we grew up in one of the worst neighborhood in Toronto called at the Jane and Finch area which has now become a little bit more gentrified. But it was a ghetto at the time. Anyways I got lucky I was accepted into the gifted program. We actually moved into a better neighborhood because my brother got into an arts program so a little bit of luck with the boys.
I went through high school pretty lost. I ended up doing an extra year of high school before I figured it all out. I went to university but I’d started school and wrote a book in education and took educational cognitive psychology. I finally got the book out 14 years later. And then after years of working, I figured out I really enjoyed sales, really enjoyed the software and getting deep into software and so I ended up joining Salesforce.com and then moved on to NetSuite
Actually from salesforce.com I started a consulting practice just a solo act for almost a year and won some really great contracts but just had my daughter and the biggest contract I won way bigger than me. I was partnered up with a large consulting firm but it required me going to the States for six days a week and at the time my daughter was just born. I just couldn’t do it.
So I got the corporate gig as well and but always knew I wanted to go back and start where I throught there would be a lot of success there. If you got the bug I think that’s a big part of it is knowing that you want to get there one day and then slowly putting in pieces in place.
I always kept the rolodex and that kind of helped.
Laurent: Very cool very cool. So you did a couple of gigs you ended up at NetSuite, how long were you in at NetSuite before you felt that it was time to really take an entrepreneurial stand?
Johnny: It was about six and half years in NetSuite and I was just having a really great time. It was a great team. I cut my teeth as a true manager for the first time there. I led teams as large as 20 plus staff with responsibilities of over at some point over 20 million in revenue kind of thing. So, tt’s great training but I was really having a good time. There’s was a great bunch of people I was working with, a great culture in the Toronto office and I didn’t want to let that go. Although I had the itch, it was there for a while.
When I had my 40th birthday that was it, I just had to do it.
Laurent: There something about that that 40 to 45 year old range.
Johnny: Yeah it’s like it’s now or never, right? You feel like it’s like the last chance to have kids because you’re gonna be too tired and too old after that. I think its the same with the business. After that I looked at myself and I said I don’t think I’m gonna want to do this when I’m 50. I’ll be more experienced and yeah I’ll be more ready maybe but I’ll also be more tired and energy is a big part of it.
Laurent: Absolutely, the age was a factor and you had now a number of years of experience with NetSuite, did you ever consider doing something completely different or was it about doing something entrepreneurial within this realm that you’ve that you built for yourself.
Johnny: Yeah so that’s a great question. I absolutely considered doing something different. I considered anything as widely varied as actually starting a school or opening a restaurant. Like a whole bunch of different things but it’s kind of like if you put the coat on it just doesn’t feel right. Same thing with business ideas. If it doesn’t feel like it’s a great fitting coat don’t do it but keep putting coats on and all of a sudden one day I was like oh my god this is it.
I saw a job posting for an expert admin which is someone who or it’s an administrator of NetSuite, someone who works with a single company and just manages their business system all day long and slowly improves it and works on special projects and all that kind of stuff. I saw one posting and I looked around for others and there was over 150 postings for this job in just the US on one site (it was Indeed at the time) and I couldn’t believe it. The salaries were great and I was like you don’t really need someone full-time to do this especially if they know what they’re doing.
You really shouldn’t be in the business system modifying it that much so. I said this is it! Just fractionalize (like a rented administrator) and provide a better service than normally you can get because you got a broader base of knowledge and over time you build out a team. Your administrator can do anything whereas a solo person only knows what they know and they don’t know what they don’t know. They don’t know if they’re doing things wrong or against best practice whereas if you can fractionalize it out then you have the opportunity to leverage the entire knowledge of the firm.
And of course, hilariously at the time it seemed like wow this is ground-shaking idea. I got to do this, the coat fits perfectly, let’s go. Later on I’m like yeah everybody does that. Ignorance is bliss.
Laurent: Walk me through those first few days of transitioning out and transitioning into your new gig because you didn’t go very far from your customer base right? It’s kind of unique it’s not like you jumped into a completely different industry where you had to start from scratch. So how was that transition. How did you leave your work and tell them “hey you’re probably running into me as we go along”, right? That could be uncomfortable.
Johnny: Yeah it was cool, I think. In all things in life I think it’s important to be a good person and to be professional and because of that I think I was lucky enough to have goodwill for many people when I left. When I decided it was time, the first thing I did was sit down with my boss said look, I think it’s time. I’m gonna tender my resignation. I didn’t actually do it right then and there but I said this is definitely happening and just let me know what the best timing. It doesn’t have to be today or tomorrow but it needs to be soon. I said maximum two months. So he asked me for six weeks and then I started as soon as that conversation happened.
I started talking to some of the customers that I had worked with in the past and that had postings up and stuff like that. And then as I was just looking for advice and I ended up talking to my friend of mine who put me in touch with… she used to be the administrator of NetSuite customer. She was the COO at the time and just administering the system, if you could believe it. And she said, “I’m leaving you can take my role”. So, I made the pitch got my customer and the rest is history.
When I told the wife that I was quitting my high-paying job and we just bought a big house and a big mortgage she wanted to kill me. But the first customer I knew would keep me afloat for about 3-4 months, even though it was a 12 month contract. I was prepared to spend it all in the first three months just to get by. I got the first customer about two weeks before I left. The timing couldn’t have been better. I was very lucky and then that was all she wrote.
From there I talked to as many people as I could. I told them I was leaving. I told our senior executives I was leaving but I’m not going far. I would love to stay in the community and just keep trying to do the good work I was doing in the company just in a different angle.
And it’s amazing how many people support you. Throughout the growth of our company we have had times when I didn’t know how to take it to the next level or get past a roadblock, definitely when times were lean and I remember that lesson. And I just talked to people and I told them this is what I’m up to, can you help and its amazing how many people want to just help you. You just feel so grateful.
Laurent: That’s incredible. Did NetSuite see you as competition as you left or did they see you as a partner… how was that relationship?
Johnny: It’s a good question and it’s what they call Co-opetition. In the software world there’s a lot of companies that do channel sales and channel services coming from partners of theirs even though they themselves have a services business within the company. So NetSuite was not that different that way. What was interesting was the sales reps referred a lot of business to us, to me originally. They would literally be giving up commissions to do that because they thought we would take care of their customers better. That’s humbling and there’s also a ton of stress because you’re like okay now I really have can’t mess up anything.
So that’s how it went. It was pretty good.
Laurent: Those first few months I can only imagine are super stressful. You’ve got all the weight on your shoulders of trying to make enough money. I know you pretty well so I’m sure you had visions of grandeur that you weren’t gonna be a one-person shop for very long. You’re probably thinking how do I grow this thing, how do I maximize it and you’re getting reps from another company sending you business that you probably can’t handle the workload. How did you manage those first first six months? What does that look like? Is that a 25-hour day?
Johnny: So that’s a good question. It’s a very good question so for anybody who wants to be an entrepreneur. I’ll tell you I’m a good deep sleeper but I had nightmares for the first maybe eight months. It was very stressful. It was hand to mouth. You get spoiled in a corporate job especially if you’ve done well. You forget what it’s like to earn a thousand bucks. You just take it for granted that you got a salary. At the time my salary was like I don’t know 20 grand a month gross, like it was good and I was like how the hell am I going to find people to give me that much money every month, right? That’s just to take care of me. I was like, there’s no way it’s gonna happen
After the first customer you feel like I did actually execute the strategies that I’d planned which is to go email all these guys are looking for administrators and say hey why don’t you try this fractional concept that we have. I had the website set up, I had some documentation I had some systems and process in place ready to kind of go. And out of all of those that I blasted in emails I got zero responses. Well I got zero responses in the first 6-months, I’ll say. Some, a few actually, ended up calling me quite a lot later like six months, twelve months later, two years later, like random very random. But overall it wasn’t successful that way but what did end up happening out of that because I really truly believe business, growing a business, is all about talking to as many people as you can. Once you make that declaration “hey, I am doing this and I am putting my entire life on the line on this”, everybody lines up to help you.
It’s just so weird and it’s incredible at the same time so by talking all these people I said “hey do you know anyone at this company. I know they’re looking, I could help them”. And by doing that, do how many people said I don’t know anyone at that company but I know someone over here. You don’t want to work with that company let me give you two others and all of a sudden, I had leads.
It was like it took two months and then all of a sudden and I’ve never been able to keep up with the demand since. I hired my first employee four months into the job. I called my old friend who had left NetSuite as well about a year ago because there’s a non-compete I couldn’t hire anybody from there but he had left a while ago and he I said “hey would you come over? Are you interested?” and he’s like I love the idea I’d be very interested. I showed him what the work was like so he did a little bit of moonlighting for a while and said yeah I’m ready.
I said okay. I gave him a big piece, I basically gave him everything I was earning and we were able to get two more customers because of the extra bandwidth. And then by 12 months later we had five employees.
I brought some money from a friend. I took some money from friends’ investment because we had always talked about starting business together. Just a little bit of money, not too much. I gave away way too much of the company for that money but again he took a flyer on me. I was nothing at the time so it was pretty cool.
Laurent: And that was money for marketing? It seemed like the flow was coming in that was more money for hiring?
Johnny: Right. The vision was always to hire guys and train them ourselves. The problem with that is they make you nothing for four months or 5 months. You got a you got a carry a salary with zero return for a while and even when they come out of that they’re only partially effective for a little while longer.
Laurent: And then they leave after two years? It’s always the risk.
Johnny: It is.
Laurent: You took that approach of training because you wanted to manage quality control or there really just wasn’t a program out there to train them in what you were doing?
Johnny: Correct there’s a couple reasons that I took that route one was that the skill set was rare in the marketplace so that made it easy for me to find work but hard for me to grow the company, so that was a strategic decision. It seemed obvious and but I lucked into it really. It has served us very well since and to this day we believe in grooming, hiring and growing our own.
Everyone else who doesn’t do that and tries to hire experience in marketplace doesn’t do as well as we’ve done. We’ve really done well by putting our faith in the next generation whether they’re young or old or skinny or fat it doesn’t matter to me. We give them our knowledge and train them up and it’s been it’s been really good.
Laurent: Very good. So now it’s what, four years…five years now? How big employee wise is the business?
Johnny: We are now about fifty people and will probably grow 50% again next year. This year was a very aggressive growth. We actually, 2018 last year we transformed. We shed probably 20% headcount, 25% almost and then replace them all and then doubled up on top of that so it’s very heavy turnover but it was just shedding a skin and putting a new one on.
Laurent: Was it shedding low performing talent, is that where you were trying to get rid of?
Johnny: Yes so I mean very frankly part of it was low performing talent and part of it was those people that didn’t believe in the same vision for the next level as they did at this level right. At one level you’re a family. You take care of each other, there’s a lot of room to be still figuring it out and growing slowly and organically but when you want to put your foot on the pedal not everyone can do that with you. And there will be casualties along the way and there were a few for us.
I could have done better as well for sure. That shouldn’t even be a question but that’s what it took. So we shed some folks. We kept I think the most important crew anyways and it was a good transformation. It was tough but it is good.
Laurent: Well it worked clearly.
Johnny: It worked yeah, it worked well. We blew our targets away. It is crazy, the targets we came into the year with we adjusted them up twice by me.
Laurent: Are you still focused word of mouth or are you doing active marketing at this point?
Johnny: We don’t do a lot of active marketing. I mean most of our marketing really in our channel to we’re just very channel driven. Our marketing is not a traditional… I think a lot of people think of marketing in like three concepts: 1) they think of it in the retail concept where there’s a brand and there’s advertising and there’s all that stuff and 2) then they think of it in the b2b concept where there’s emails and campaigns and you build a pipeline of sales but I think in reality there’s actually three modes of marketing. 3) The third mode of marketing that a lot of people don’t understand is is just honest-to-god networking and building the word-of-mouth in such a way that it’s a virtuous circle. So we’ve done well at that.
We don’t do a lot of the retail marketing. We do almost no retail marketing. We do a little bit of b2b marketing by doing trade show events, we sponsor a bunch of events and stuff like that but for the most part we do that only to be an active participant in the trade network that we’re part to give back in a way if you will. Really it all comes down to word-of-mouth marketing and the friendships you build, the credibility you develop and along the way I think we’ve done a lot of small favors for folks and they remembered that and that’s helped us get referred to the next thing.
Laurent: Very good… good advice. What would you have done differently along the way? When I look at what you’ve built you’ve kind of compressed what I see a lot of people do in a matter of a very short period of time. You went from startup, to rapid hiring, to evolving from a small start-up to 50 people and still growing so you’ve had probably more challenges than most in a very short period of time. So what were probably the biggest challenges that you would have done differently if you’d go back.
Johnny: For sure the top two are ones that if you’re kind of an MBA geek like I am you don’t put as much emphasis on it as you should but it would be HR and policies and procedures. A lot of last year in the third year business or fourth year business actually we had to overhaul our policies and procedures not because we didn’t have them but because they weren’t written down well and they weren’t accessible. Most of them are operational, none of them are really corporate and strategic because again you were small enough there was the family people. You knew everything going on all the time.
So for sure if I look back to scale I could have gotten here a lot earlier I think if I had known better and known what was the opportunity better in front of me. But with that said policies and procedures would have made a big difference. It’s surprising how important those are now. Are they important when you’re 10 people big? Probably not. But when you want to get to 20 and 30 and 40 and 50 and 100 you’ve got to have them in place and you can’t be making them up as you go.
They have to be there properly and formally and you probably want it to be on evolution two or three already by the time you get to the 20 and 30th person because then it’s tried and tested and everyone’s toeing that line already. So that was one thing I didn’t pay any attention to and I should have.
The second one was definitely hiring. There’s an art and a science to it of course but knowing what you want to hire and how to hire it. We got lucky. I told you with the MBA decision and hiring new graduates and trained them ourselves (not that there all new grads, some are experienced) but what I didn’t get lucky with was hiring senior executives. I churned through that a little bit more than I wanted to and that was all because I didn’t really plan out what I needed the senior leadership team to do. And if you think about it those are the people that I work with every day. Those are the people that need to be my right-hand on all those things. And because their leadership, their personalities will shape your company past 20 – 30 people after that you start to lose that daily touch with everybody. It’s just too hard.
So they’re the ones that shaped the company and if I had picked them out earlier and planned that earlier it would have made a big difference. We survived and figured it out but we had to make some corrections to do it.
Laurent: This actually dove tales well into my next question was around skill set right. You came in with a certain set of skill sets. Obviously you learn a lot about the business from working at NetSuite itself, you had a sales background, you had a management background, were there any gaps in your skill set? And it’s always a great question to ask confident entrepreneurs “hey how bad were your gaps?” but were there any gaps that when you were looking for that middle management / senior management levels you try to fill through hiring. And is that a policy you’re using to find good talent?
Johnny: So I would say that you could look at it two ways: you could look at it every bloody thing was a gap or you could look at it as you had a couple of good things going for you. If I take the middle ground approach so they had a couple of good things going for me.
I knew how to sell, I wasn’t afraid to pick up a phone. That helped a lot and that made a big difference. Funny enough I was afraid to pick up the phone originally right. You think it’s a big secret that you’re starting a business and it’s the opposite thing of what you should do. You should just announce it to the world open up, tell everybody what you’re doing tell them exactly how you’re doing it and don’t be afraid nobody wants to copy you yet. You’re nothing yet. Noone wants to copy you, don’t worry.
And then the other thing I think I had going for me was that I had the technical knowledge of what to do. I had enough credibility for people to put their faith in me right because ultimately you’re staring down at it and often you’re staring directly at the CEO. It’s not like you’re working with mid-level or low-level. At least not in my business. So they’re looking at you and saying like you better not fail me because my whole like the day-to-day operations is banking on you figuring it out. And they don’t expect you to know it upfront necessarily but they do expect you to hold the bag and figure it out.
So those skill sets helped me but the skill sets I didn’t have, oh my god there’s tons. I didn’t have nearly as good HR skill sets as I thought I did. My internal communication and leadership skills had to get ramped up in a hurry and to this day they need a lot of ramping up. They’ll continue to need a lot of ramping.
It’s one thing to command, it’s another thing to enforce, it’s another thing to influence and then it’s a completely fourth thing to enroll. Those are just very different communication things and you got to use them at a very different stage, at different places and different people at different times.
You’re a chameleon all the time as a leader. You never, you can’t be a certain way and that’s what you take to the table every time. No, you come to the table and figure out what’s needed and then you become that. So everything could use an improvement. I mean even as a salesperson I could use a lot of improvement. So I would say that thank God I had some skills but none of them were enough and you got to always be ready to grow.
Johnny: In our organization we always have a bit of a formalized process for the size that we’re at. Maybe too formal sometimes but what’s next for us is we’re looking to hit about 70-75 people next year. Most of our growth were going to count it in terms of headcount because for us to date so far our primary constraint has been supply of good people that we can apply to project that customers trust, that we trust and that deliver great work. So if you look at it that way if we can grow 75 and then 100 next year (by 2023) we’re looking good and then we’ll be also looking at multiple applications.
We’ve done a couple things uniquely besides the hiring piece. We make a methodology that’s application-specific so we turn IT on its head in the sense. It’s not a “here’s the way that we do our services and we apply that across many products”, it’s “what’s the product like, build a methodology correct to the product”.
Because these days a product is so well thought-out and there’s so much great software out there really that each one has a different look and feel and so we’ve always said if we do another product we will have a new methodology. And so by 2023 we’ll be doing another product and we’ll have another methodology. And we’ll have a splinter team that does that.
But definitely we got a lot of basics to cover ground on first. We’ve got international to expand to, we have a broader vertical penetration than what we have right now. We focus on three and so yeah I would say you we got a lot of standard stuff to go through still for the next few years. After that we’ll look at some more creative things, anything from M&A, to potentially splintering off things like the way we train or the library of knowledge and assets that we have even to software development. So all of those things are on the table. And they all have their own little skunk works project and let the best win.
Laurent: Brilliant, very good. So thanks for the background on you and your business. One things I wanted to plug away at as well is that you’re in the business of helping businesses really optimize their processes. We probably should have started with this but can you give a little bit of background around what NetSuite is because I think it’ll dovetails into some conversations around what you’re seeing with some entrepreneurs and some businesses and startups and things like that I think you’ve got a very unique view talking to all these CEOs.
Johnny: Yeah it’s pretty cool it’s definitely the best part of the job. We just engage with all these high-growth companies, most of time companies are looking to put a system in place to run their business like NetSuite when they’re in or ready for transformation and so they’re either in it or they’re ready for it. And so NetSuite is a system that allows you to run your entire business on one platform. It’s a single unique system. It’s not an integrated system per se some people will call it that but ultimately it’s a single codebase and it runs everything from your customer relationship management, to your inventory, to your order management, to your financials, financial reporting, internal operations and process control, it can do things like track HR and do marketing campaigns if you put some bolt ons on it.
It can do other cool things like track field service, in its core it has project management capabilities and it can be very tailored. The system is highly tailorable so you can turn it into a system that works for a media agency as well as a system that works for a wholesale distributor as well there’s networks for food and beverage manufacturers so you got all these different things that it can be and you just need someone to shape it that way for you.
And so that’s what the application does and that’s what our job is to interact with customers that want to take this system which is this platform which is somewhat tailored to what they need but it’s never exactly what they want and then turn it into exactly what they want or help them change who they are so that it fits exactly nicely with the software to which is I would say just as 50/50 both.
Laurent: Oh is it yeah? There’s that many companies willing to change their processes to format to the software?
Johnny: Yeah so in the software space for those that are thinking about buying or looking at implementing software, be ready for change. If you’re not ready for change don’t buy the software. It’ll be an ugly process and you’ll probably end up having to spend a lot of money and backing out of it entirely. If you’re not ready for change then software is not a good idea. It really does come hand in hand.
Laurent: Is NetSuite unique in the marketplace? Who does it compete with? Is it part Salesforce, part other entities?
Johnny: Yeah absolutely so although it competes with a lot of other applications, it is relatively unique in its own space in the sense that it’s the biggest broadest most mature SaaS (SaaS being cloud-based application) but there’s definitely good competitors out there.
There’s everything from a Accumatica and SAP, ironically Oracle itself can sometimes compete with NetSuite but most of time it’s going to be Microsoft the SAPs or there’s a lot of niche distribution software’s out there. There’s a lot of niche ones that service certain markets and business verticals and it will compete with the point solutions as well which again in the ERP space, (which is the Enterprise Resource Planning space), which is the big breadth, the granddaddy if you will.
They affectionately call everything else a point solution because it doesn’t solve as big a footprint as what ERP is trying to do but those are big software’s of their own. You’ve got Salesforce, you got everything from Kupa to Ceridian’s of the payroll world and Workday which would call this up an ERP but if you think about total footprint it’s not quite the same so again nuances of being in the space if you will.
But at the end of the day lots of competition, lots of people have a lot of interesting solutions on solving how you can run your business entirely through a browser.
Laurent: Very cool. I’m in the online space so I was looking at NetSuite and I think it does cover things like e-commerce. Anything else in that space that it would work well with?
Johnny: Yes so actually Netsuite does have a very strong and powerful ecommerce platform. It works well for AP processes / AR processes. Sorry when were you asking whether it can do more or were you asking whether there’s other bolt ons that work well with it.
Laurent: I guess both right. I mean for somebody who’s in the online space right now whether it’s ecommerce or whether it’s taking digital download orders, things like that, is NetSuite a viable platform for them to look at.
Johnny: Great question so from your kind of space, the MadX Capital space and the NetSuite space there’s going to be a broad swath but there’s a specific type of business that would fit well with it. Those that distribute a lot of product through e-commerce have always gravitated to NetSuite and done well with NetSuite. Anybody who’s got a dropship model where they barely touch product that will fit well on NetSuite too. Those that need a lot of customer interaction even after the fact can fit well on NetSuite too because its got a really powerful customer portal tailored to the nine and so if that’s needed then it fits well.
If you just want to publish a lot of content or only have a handful of e-commce products, it’s not the best solution out there for that. The backend to set up is just too big. To do small e-commerce you should go with one of the more standard ecommerce platforms of Shopify maybe the lower end Magento’s or even a WooCommerce or something like that. But if you have a big enough catalog and you’re a semi mature company where you got a catalog of SKUs that you’re selling or services a downloadable content is fine although there’s no DRM in that. No Digital Rights Management and all that digital management stuff.
But again if you have a catalogue of more than a hundred products and that’s it’s probably a viable option.
Laurent: Okay that’s the magic number.. hundred products or so?
Johnny: Something like that I mean that’s my rule of thumb. You’ve got guys on NetSuite that are ship five products but they do a lot of volume and they do a lot to retailers and businesses then it can fit but I think generally I’d say yeah if you don’t have a big ecommerce catalog and/or you’re not growing into one you’re gonna see a little less advantage in that suite over other e-commerce.
Laurent: From a business owner perspective what are some things that you’re seeing out there in the marketplace? Are business owners waiting too long to start implementing systems? You actually talked about that a little bit in your own practice right around putting policies in place. From an best practice perspective is really around having that rigor both on the accounting side as well as the material management side all that stuff? So what are you seeing? Do you feel that companies wait too long, are they too early in some of their decisions? When’s the right time they should be bringing in automation.
Johnny: That’s a very good question. That’s a powerful question I think. I would say that you want to settle down on your business plan a little bit. You don’t want to be in the middle of not sure whether your product has market acceptance or your services has found a good niche so if you’re still embryonic like that, it’s too early. Once you get past that and you start to feel any opportunity to scale and you think that the demand is there then that’s the right time for a system or anytime later.
But a system is for sure a lot of work. It took us we do this everyday and it took us a year to get our system in place and really working fairly well and now this year three years later we’re finally going to do the full renovation we always wanted to do.
I think if you’re like a real estate agent right you’re going to buy a house and not put a ton of time into it until that you can stay there for a bit then you’re maybe going to renovate enjoy the reno and then also make a sale with it later. It’s kind of the same thing with the business. I think you’ve got to know if this is the right neighborhood for you in the first place so once you do put the money into establishing how you want at least the structure of the house to be what you want make sure you got the garage there and some basics. So that is definitely the same for a business.
And yeah the system can support you but it can also get in your way. I mean that’s part of what we do is a living but it’s good to make that decision just it’s just like Goldilocks and the porridge right you want it just warm enough, not too hot, not too cold. Same thing in setting up systems you want enough to see the benefits of it but not enough that it you’ve come up with some Byzantine solution that you think everyone’s gonna love because you got it all written down in the Laurent Bible or the Johnny Bible and everyone’s gonna follow it to the T. That is never gonna happen clearly and so it’s important to leave room for others to take ownership within that framework.
You just want to publish that framework. You want to get that framework out and the system will help you do that in short order
Laurent: Perfect okay let’s change directions a bit so do you have general advice for entrepreneurs people that are currently maybe sitting at their desk in a corporate gig and are thinking about taking the plunge what would you tell somebody over coffee.
Johnny: Absolutely. The first thing I would tell anybody if they don’t know this they should is talk to other entrepreneurs and take their bloody advice. Don’t try to interpret it, it’s like wax on wax off just close your eyes and see what they say and see what happens right cuz you don’t know if you haven’t done this before. You don’t know and once you’ve done it you’re like oh my god if they just listened you.
Most entrepreneurs they are looking out for each other as well and they’re happy to bring you into the club if you just listen to them. So definitely talk to another entrepreneur and take care their advice. Don’t judge it, just find an entrepreneur that fits the mold that you like and take their advice. The one that I did that with was my friend who’s very successful, more successful than me, and he started a financial investment company and we were at graduation reunion party and I talked to him. I haven’t talked to him for years but this time he said something. He called me over and said Johnny let me just put it to you this way since you keep talking about this, let me just put you this way: would you quit your job if I wrote you a check for two million dollars right now, today, that you can’t cash for two years? I was like, yeah! If you put that way of course right.
OK that check is being written by you to you… that’s the only difference. So quit your job because if it’s worth it then do it and I was like okay and I took the plunge. But that was one of those moments. It is a great great quote and I think at the time he might have said ten million dollars but take whatever number will move you. I mean it definitely could be ten million and give yourself three years to cash it. What would you do for that? Would you sacrifice whatever salary you have? Would you make due with whatever car you got and whatever plans for private schools you got with your kids or whatever that is? Yeah, you’d make due.
Because it’s worth it and you close those doors and you’ll figure that out. That was great advice that was given to me. The second great piece of advice I got from another entrepreneur who she had a bookkeeping business, she had tons of employees and this is at about the three/four-month mark, she said “listen as long as you’re working for yourself you’re making a living. When you hire other people now you have a business.” Until you hire someone there’s no business, you’re just making a living.
So I said okay well then I just gotta go hire people and I had no idea how I was gonna pay them frankly the first three and then I kind of realize like they started producing and I was like oh, they kind of pay for themselves. Man, I almost feel guilty taking money. It’s pretty cool.
Laurent: Very good, good advice. Are there resources books podcasts that you leverage that you recommend other people leveraging as well from a he was learning or from an entrepreneurial perspective?
Johnny: Yeah so maybe I’m a little old-school in this way but I would say that most I mean now mind you I have an MBA so that helps that did help me a lot. When I first got it I thought it was most useless thing in the world frankly but when I was very start my business 10 years later or well 13 years later, I realized like this actually really helps. So that said if you don’t have that then you should definitely take some basic courses on how a business operates.
Once you just have some of the basics down pat it’s amazing how many people especially small businesses that have a great something, it could be a great little restaurant it’s got a great couple recipes but they don’t know or understand the very basics of a business. There’s profit, there’s revenue, there’s costs… if your supply is no good you can’t meet demand. Some of those are real basic.
If you have the basics then I would say that the next most important thing is actually to have books to manage yourself. The most important thing is your own psyche and your own and your own ability to keep your energy and your hopes up. You need two things to be a good business owner, I think to run a good business 1) one is you got to be able to be very honest with what’s going on all the time and adapt to that so you’ve got to be adaptable and honest about it but the 2) second thing is of course you have to be determined and high energy.
It takes a lot of effort and if you don’t manage your psychology it’s hard to find that effort. It’s hard to find that energy to put the effort in. It’s surprising how much that matters. It’s easy to put down on a piece of paper yeah I can wait six months for my first sale and I just need to call 700 people but around the 200 person mark and the two-month mark you can be like this sucks. It is not working, this is bad, I’m going to throw out the strategy. But if you look back the original document said wait till 700 calls and wait till six months so whatever that takes that’s a strategy, follow it through. But to do that there’s a lot of psychology / personal management you got to do.
Laurent: Very good excellent. I got one last question for you… if you were to start a completely new business in a different field today and I know throwing this out of left field because I have to for this one but if you had the jump ship start all over and it couldn’t be in this field what else would it be do you see something else interesting out there right now?
Johnny: There’s tons of interesting things out there… starting a software company or building software would be definitely important and good but also starting a like an actual physical product distribution company would be amazing. You can look around in your kitchen in your apartment and your house and your room whatever there are so many things that could be better. This headset could be better, just putting a shelf together could be better, it’s really not hard to make something better and then just get that product out there.
I would definitely be interested in doing that but I have the next three businesses already planned out. I’m just trying to get this one wrapped up so I can get to the next one
Laurent: Awesome, John any last advice for anyone?
Johnny: I think the most important advice I could leave anybody with really is gonna be keep your integrity. If your principle are violated consider that code red. Everything else is just style and don’t worry about the little things. all the little stuff doesn’t matter but if something violates your principle like if you feel like you’re cheating a customer, you are! Don’t do that. If you feel like someone just doesn’t fit with what you want to do but they have a ton of money, don’t do it. You have to make those choices but that’s important.
Laurent: Great advice awesome. John this was perfect. I can’t thank you enough for spending the time. I look very much forward to seeing the continued growth for Appficiency and I hope to have you back on the show at some point and just get a status check on how you’re doing..and with the three other businesses and all the moving parts and the plans. It looks and sounds exciting.
Johnny: That would be fun, thanks Laurent.
Laurent: All right, have a great one and took care.
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