Transcription
So, I'm Chris Kerner and I have a clinical addiction. That's my hook. I start businesses for a living. Not really great at managing them, not really great at selling them, really, really great at starting them. Zero to one, name of the game. And so, that means I have a lot of surface area for scars, scams, frauds, headaches, stresses, all the above, which gives me a lot of stories.
So, I'm going to kind of go through my career over the last 15 years. Talk about some businesses I've started and relate them to the role of a CEO as pertaining to each of those businesses at six, seven, and eight figures in revenue. Because I assume that most of you will be buying or starting businesses that will be in the seven figure range. If there were a distribution curve, I'd say some six figure, a lot of seven figure, and some eight figure. So, I want to cover the whole gamut.
So, this is just a quick screen recording of my phone of all the businesses I've started. And each one of them, I could talk for hours about any of these. I just kind of wanted to give you an idea of the scale uh of some of these. Some of these were very small. Many of them failed. Many of them abandoned. Some of them grew to be six, seven or eight figures in revenue.
So, I want to start with my first business. It was called Phone Restore. I was a student at University of Alabama and I needed my iPhone fixed. So, I went into this dorm room. I saw this guy fix my iPhone and I thought, "That's a cool business. I like that business." And then I read some articles about some LSU students that opened a store fixing iPhones that were doing 30 grand a month. And so, I signed a lease with a personal guarantee as a senior in college on a a business right next to a subway. It smelled like fresh bread all day. And I called it Phone Restore. We grew to four locations and sold it. But that was a very I learned a lot more in that business than I learned getting my business degree or my MBA.
So the first role of a CEO principle I want to talk about is the MIH gene. Make it happen. You just have to develop that gene if you weren't born with it. The make it happen gene is just the ability to say everything is figure outable. And the inability to ever just throw your hands up and just say I can't do it. You you just have to develop that muscle, the MIH gene, the make it happen gene, because everything truly is figure outable. Here's a couple stories to show that.
So, when I opened my store, I had never fixed an iPhone. That was a problem. People would walk in the door, say, "I've got this broken iPhone." It's like, "Okay, cool, cool, cool. Okay, give us a few hours. We'll figure it out." And they'd walk out and I'd go to YouTube and I'd learn how to fix their iPhone with their iPhone. that provided for a lot of stressful experiences that I set myself up for. So that was like my first kind of experience with the MIH gene.
And then April 27th, 2011, a swath of tornadoes went through Alabama. And that was our sign. Our store, part of our store is in that rubble right there. And this was right before students were about to leave. We had just opened a second store, but we weren't profitable yet. And so literally overnight, our revenue went to zero. We had no way of making money. I had a personal guarantee. I had a newborn son. He was now 15. And we had to make it happen. So, we went to Home Depot, put this sign up. People felt bad for us. We got some sales. And we had a bunch of iPhones that we had bought back from customers that we had never listed on eBay. So, we thought, "Okay, let's list those on eBay." And we ended up making it happen.
Another thing is right after I opened, I thought we were going to fail. People weren't coming in the store, and the haters were right. It turned out and it was a Sunday night and I was up in bed trying to sleep and I had this idea and I thought now I don't go to bars. I don't drink. I'd never been in a bar in Tuscaloosa, Alabama. But I thought, okay, surely college students go to bars. They get wristbands, right? Why can't I put my ad on a wristband? And so I pulled out my Dell laptop. I Googled custom wristbands. They were 2 cents each. I ordered a few boxes of them. I distributed them to bars. College students would go to the bar, break their iPhone, get drunk, wake up, broke an iPhone and a wristband with an ad on it. They would bring that wristband into my shop, and it changed everything. It completely changed the trajectory of our business until the tornadoes hit it. So, there's always something to to make it happen.
So, here's how this works. I make you free videos. I actually know what I'm talking about. I have no greasy sales pitch at the end. And if you implement what I talk about, you'll make a lot more money and have a better life. And all I ask for in return is that you hit the subscribe button and maybe even the notification bell just like that. Thank you.
Number two, the role of a CEO. Know the weeds. We talk a lot about do you want to be in the weeds? Do you want to work in the business or on the business? Is that worth my time? Is that not worth my time? You got to start in the weeds. You got to learn the weeds. You got to know what they are. Yes, that's AI generated. This was our fourth location. It was a kiosk in the Parkway Place Mall in Huntsville, Alabama. And this was a test and one of my principles in a minute will be test everything except drugs. This was one of the things I tested. I wanted to see could we have an iPhone repair kiosk. Is that a thing? I hadn't seen it which made me nervous but I thought there's a lot of walk walkth through traffic. You know it's monthto month so if it doesn't work out we can cancel it.
So crazy story. A customer walked up with an iPhone $600 iPhone. Just needed a battery. So I was in the weeds. I was learning the weeds. I didn't know how this whole kiosk thing would work. I had fixed hundreds of batteries at that point. So, I start fixing it. The phone is really hot. They've been playing games on it. I accidentally punctured it with my screwdriver and black yellow smoke started spewing like with a hissing noise from this phone in the middle of the mall, filling the mall up with black yellow smoke that just smelled like death. And everyone was looking at me. I was covered in sweat. I I had this like UPS box and I threw it in the box and closed it and it was just like and we had to buy her a new phone. She lost all her data and that's kind of one of the byproducts of having to make it happen. You screw up a lot but you learn a lot in the process.
Insulate. So you want to insulate your employees from all the stressful things that will happen. So, this is a Google Street View image of the exact gas pump where I was filling up my truck one night as a business owner. You're just one text or call away from your year being ruined. And I was right here filling up gas and my employee Ryan called me at Phone Restore and he said, "Something terrible happened. Someone threw a brick through the window and they grabbed all our phones in the cash drawer and they stole everything. It's all gone." And I was right there and I was like, "Okay, okay." Later I found out that Ryan, my employee who made the call, was actually the one who did that and he was making it seem like a break-in and he's the one that stole all the phones. So, as a CEO, you have to learn to insulate the others, your other employees, from any stresses that are happening because there will be stresses.
This is what a CEO's day looks like. top of funnel. You've imagine the top of funnel are employees and they're kind of encountering little stressful things here or there. And if it's if they can handle it, you'll never even know about it. And that's great. But this the most stressful things, the worst of the worst, only the worst of the worst will funnel their way down to you. And so you have to build a resilience towards that. And there's no shortcut. The only way to build that resilience is to expose yourself to all of those stressful things that will happen. That is the Caspian Sea right there. It's the largest lake by surface area. So, as a CEO or CEO owner, as I like to say, CEO of a smaller business, you have a lot of surface area for stressful, hard things. And it is your job, it is your role to insulate everyone else from that because they're W2 employees. They don't have the same upside. So, they shouldn't share the same amount of mental stress.
Cover your assets is a popular game by Grandpa Beck. We play it as a family. And I thought of this as I was making this presentation because that's kind of what you have to do as a CEO. That's another role of a CEO is to protect not just the employees but the business itself because if you're moving fast and breaking things like Mark Zuckerberg talks about those things you break could be your employees paycheck. Couple stories to illustrate that. These are all AI generated images by the way. So I will be speaking honestly about some of my former employees or business partners but I didn't want to show their real picture. So these are not real people but these are real stories.
Role of a CEO number four is invent a rival. You want to have a shared enemy a chip on your shoulder. Even if it's a manufactured chip and you place it there and it's silly. Sometimes even when I'm at home and one of the kids annoys me I'll be angrily doing the dishes. They'll have put a chip on my shoulder and it's the silliest thing, but it gets the dishes done. And my wife seated right there surely doesn't mind because that that silly chip on my shoulder is contributing to something productive happening. I've changed their names for their privacy, but that is Fandrew Fory and Fanny. They're all AI generated. And these were some business partners I had with these first businesses. And it didn't go well.
So, I had sold my chain of iPhone repair stores. I actually kind of merged it with another competitor and we had set up a deal where I would get one-third distribution checks in perpetuity and they would run the business. That didn't happen. That happened for one month and then they stopped sending checks. And the reason because I had just launched another business that was doing very well and they didn't think I really needed those checks. And so that was a rival. That became a rival. That became a stressor, but we channeled that with the employees. We became a team to help grow. And that became a chip on our shoulder to help grow that company. 2 million the first year, 4.8 the second, 8.8 the third year. And it probably wouldn't have happened if it weren't for this rival, for this terrible thing um that had just happened with my former business partners.
The other principle of of being a good CEO owner is to capitalize the business. Once again, if for nothing else, to protect these employees that have entrusted their paychecks with you. That gentleman's name is John Nolan. I went to church with him. I hardly knew him at all. I just heard he had money. He became a mentor to me. And when I started growing this second business called LCD Cycle that was growing very fast, I approached him for money and we didn't sign any papers. Um, he gave me money. Uh, I paid him back. He said, "I don't want any equity. I want you to just donate whatever you think is fair to my nonprofit. So, I'm very indebted to John Nolan for capitalizing my business because sales solve everything. Capital is fuel and if you run out of it, you run out of your business.
So, John Nolan also goes with this seventh piece of advice. Take advice from the right people because not everyone you take advice from will have your best interest at heart. People have pride. They have ego and they might give you advice that may prevent you from exceeding because of whatever issues they're dealing with. So John Nolan done very well. All of the advice I got from him was unbiased. So that really changed the trajectory of my business with regards to capitalizing my business.
This was a term sheet I got from a venture capital fund out of Birmingham. Believe it or not, there is venture capital in Birmingham, Alabama. And they gave me this term sheet and it was everything I needed to grow the business. John Nolan's money only got me so far. So, I went to this venture capital firm and they were very good and everything on paper said this was a great deal. It was a million dollars for 20% equity and it's what I needed to get through this growth phase. And so, I wanted to take advice from an adviser that I trusted that had my best interest at heart. So, I prayed about it and the answer was no. It was very clearly no. And I had no idea why it was no. It was it was the opposite of confirmation bias. I was sure I'd get a yes cuz these were good guys. And even 15 years later, they're still good guys. They didn't turn out to be crooked. And it wasn't until 8 years later that I relooked at that term sheet and I saw something very standard to a term sheet, which was liquidation preferences. And that business grew very fast and then it started shrinking. And had I taken that money, I would have had to give the first fruits of all my profit to this company, which is a standard clause in any agreement like this. And we would not have been able to move to Dallas to build our dream home, to do a lot of the things that got us to where we are. So it took a full decade to learn that I said no to that for a reason. But that was the product of me taking advice from people that had my best interest at heart. So that's a summary of my six to seven figure lessons of becoming a good CEO in a small business.
Now these are my seven to eight figure lessons. That's me with a big delivery of bread. So I go to church with a guy named Keith. He owned a business named Hartland Bread and it was some of the best bread you've ever tasted. Five ingredients only distributed to DFW. And I just thought it was a crime that this bread wasn't sold online. So I said, "Keith, I'm going to sell this online for you. I can do it. I'll do everything. I'll pay for it. If it works, give me a cut of everything I sell online. If it doesn't, no harm, no foul. He said, "Deal." So, I launched that revenue line for him. It worked. It luckily was right before COVID. His sales went crazy. We leveraged that into starting a business called Send Eats, which I will refer to in a minute. Send Eats was a logistics company for e-commerce food brands that grew very fast during CO.
And then this is my family seeing all 50 states in 60 days. This was in Oklahoma, our first stop. And I put this picture in there, one because I love my family, two, because it's an RV. And around the same time, I started a company called Better Exit that started acquiring RV and mobile home parks. So, when you have 75 businesses in 15 years, you've always got a handful going at a time. So, I'm going to refer to that in a minute as well.
So, escape the spreadsheet. Everything looks beautiful in a spreadsheet. We can manipulate it. We can make a pivot table. We can add colors to it. So we can highlight it, make it bold. Serif sand serif. You've got to escape the the spreadsheet. And I think of this famous Jeff Goldblum quote from Jurassic Park. Your scientists were so preoccupied with whether or not they could, they didn't stop to think if they should. That's a mistake I made for over a decade where I have an idea, business idea. Crunch my numbers, do my research, reverse engineering. Who else is doing this? How are they marketing? Facebook ads, billboards, what have you. this will work. I know this will work. Therefore, I should launch this business. I've made that mistake so many times. I'm still fighting the urge to make that mistake. But had I actually like taken Jeff Goldlum's advice, I would not have launched this bread business and I would not have have launched that business. That one became a sevenf figureure business. That one became an eight figureure business. I don't regret the lessons I learned from them.
But this was the Send Eats business. We signed a lease on a 10,000 square foot warehouse. We took on a bunch of customers. We were making 300 grand a month. Asterisk topline, not profitable. Didn't know it at the time. Sounds really sexy. It was a very, very stressful business. Very low margin. Basically, you're competing with Amazon. You either need a hundred billion dollars or you need to be the most expensive kind of niche service. We were neither. We were in the messy middle. So, it was a very, very difficult business. And then the same principle, just because you could, just because it would work doesn't mean you should.
We bought a Bitcoin mining facility that was kind of an acquisition, kind of a startup. We started the company from scratch, but we needed the facility to start the company. In this business, we went from 0 to$10 million profitably this time in three months. And in 12 months, it was like 0 to 15 million. Right place, right time, peak 2021, money printing everywhere. China had just banned Bitcoin mining. So, it all went to the United States. I lucked out. I found this facility offmarket, undermarket. We bought it. We felt like geniuses. Absolute geniuses. 10 million in 3 months. Bootstrapped. We should not have started it. Okay. It looked really good in a spreadsheet. It looked really good a year later. Hindsight is 2020.
Protect yourself. So, this is a Texas Children's Hospital in Houston. October 2021 was the craziest month of my life. I had Send Eats, this e-commerce fulfillment brand with a 10,000 square foot warehouse and 32 employees. I had this Bitcoin mining facility that was blowing up. I was on sales calls with like an 80% close rate. Wasn't me. Right place, right time. Everything was amazing. And in our personal lives, my daughter was very sick. She had a serious lung disease. We had to be medevaced from Dallas to Houston. And I took a lot of these sales calls from this hospital right here. And my daughter ended up getting a double lung transplant just a few months later. And that was what her setup looked like with downtown Houston in the background. And so late 2021 was the craziest period of my life. And remember this principle was protect yourself.
I had this customer here AI generated. He was my Sended customer. He accounted for 85% of our revenue. And it's funny because anyone hearing that I can hear you. I can hear you and you're saying that's customer concentration. You shouldn't do that. That's risky. And the funny thing is about customer concentration is like what do you do? You fire the customer so you're not at risk. No, you just take great care of the customer and you try to get more to drop the 85%. Right? So of course it was risky, but I was very grateful for a customer paying me 250 grand a month topline unprofitably. I didn't find that out until later. Anyway, the owner of this company, I don't know how to say this politically correctly, he was the worst. He was terrible. And something was wrong with him. And I was in the hospital taking sales calls for the Bitcoin mining business and taking customer service calls with this gentleman who was just berating me and my business partner and making my life terrible. And so, protect yourself. We had to make the very difficult decision to fire the customer which was difficult because it was 85% of our revenue and it was 85% of our employees. We had a fulfillment business. Our employees fulfilled orders mostly for this customer. So we had to fire all those employees and fire the customer and it blew up and it got ugly but I was in such an effort mode in the moment thinking of more important things like my daughter. It was actually pretty good time to do it and it worked out. It was a lesson to me that kind of like the airplane analogy, you have to take care of yourself and your own mental health or else your employees will suffer from you or they will suffer from your toxic customer that is making everyone's life miserable. So you have to prioritize yourself.
You have to protect the culture which is similar to what I just talked about. This is another AI generated employee of mine this time. I love her to death. Great person, terrible employee. Really made my life difficult. Your business will be the lowest common denominator of your most toxic employee. And you will know who that is. It will be obvious. If you're wondering if it is or not, if that person in your head, if you're wondering, it probably is. You're thinking of that person for a reason. So, it was awkward. I went to church with this nice woman. It was some weird personal dynamics at play, but we had to let her go. She was making my rockstar employees quit left and right. She was making everyone's life miserable. So as a CEO owner, it is your role to protect them, especially the employees that are positive uh contributors that are net positives to your business.
This is a rockstar employee. A principle that I learned over and over is if your rockstar employee has asked you for a raise, you're probably too late. Your rockstar employee should not have to come to you. You should come to them proactively giving them raises so they can stay enthused and grateful and so they can stay a rockstar employee. It's really difficult to turn around a rockstar employee that is already checked out in their head.
This is Nick Sabin. He coached for two years at the Miami Dolphins. Got a lot of crap for it. There was a controversial article that came out back in ' 06 or so where one of his players was convulsing on the field. He had he was throwing up. um he was having a medical emergency and Nick Sabin stepped over him and went to his office. That's what the headlines said. Later on, months and years later, they talked to the players. They talked to Nick Sabin and he stepped over him, went to his office, and called the paramedics, called the doctor, did what he needed to do. Whereas all the other players were freaking out, pulling their phones out. We got to do something. And he didn't even look at him. He literally stepped over his body cuz they they placed him in the hallway cuz that was the nearest place to put him. So, we had to step over him and went and called the paramedics. So, that taught me a lesson of you have to protect your culture and your employees. You have to be the captain of the ship that goes down with the ship. You have to insulate that. You have to be stoic whether or not you feel stoic.
Test everything except drugs. I love that. I say that all the time. As a CEO, you do have to find balance for this, but almost every good thing I've come across in my life has been at the end of the sentence, what if we tried almost everything. We're always testing. Mark Zuckerberg says, move fast and break things. I would say apply calculated pressure because sometimes you break things that are pretty priceless and it's pretty hard to reverse. That's more foreshadowing for you.
That's a Starbucks about 30 minutes from here, 20 minutes from my house. And I was growing this mobile home and RV park company very very quickly. And we had a term another term sheet on the table. No screenshot this time for a $50 million deal which was hundred times bigger than any other term sheet. That was a very big deal for us. And I had two business partners and it did not go well. They wanted more equity in that deal. And so one day completely randomly they sat me down at that chair right there and they said, "You're out. We don't need you. Too many cooks in the kitchen. The verbatim, we know this sucks. We know this is wrong. We know you're probably going to sue us, but we're going to do it anyway. That was a result of me moving fast and breaking things. So, I had partnered with these guys hardly knowing them. It was stupid. Hardly did any due diligence. I knew that they knew the industry. I didn't know their character. Looking back, I'm grateful for that experience because I've since gone on to buy more RV and mobile home and parks with better partners. But that could have been absolved by applying calculating pressure, calculated pressure by saying, "Let me let me dig into these guys a little bit. Do they have a history of this?" Turns out it did. I could have learned that beforehand, but I didn't even look.
This also goes into play with insulating your company because after that conversation, I went back to the office, got all my stuff, never talked to those employees again. I just called my lawyer immediately. And beware of pride. So many of you probably know Nick Huber. He puts himself out there on Twitter. We're all kind of here from Twitter, right? And I'm only saying this because he was on my podcast and he talked about this openly. I'm not sharing any secrets, but he tweeted this about 13 months ago and I read this tweet and I thought, "Oh man, I've been there." And so I like playing on words. Huberist, right? And he basically said, "Everything's awesome. I've got all these businesses. Everything is going great. I just can't miss. I want to be transparent. Here's how awesome is everything going." I had him on my podcast. I haven't published it yet. And we talked about this period. and he basically said without in so many words that was like the top the local top for him and things got really hard after that point and he he said I've been eating glass and staring into the abyss for the last 12 months and I like no shots thrown at him he's a great guy and a great businessman and I have had tweets like that but I just thought it was really interesting to talk to him 12 months later because I've I've been there the pride is like when you think that like nothing nothing can go wrong. You just hit your stride. Like, that's a signal. I don't know how to prevent what's coming next. I wish I could tell you. It's just a signal. Be aware of it. And conversely, when you think nothing could get worse, me at the Starbucks, everything's terrible. My life is over. The last two years were a waste. That's your bottom. Things are going to get a lot better. A self-awareness of that point will serve you very well.
Know the weeds, right? And I kind of referred to that earlier. You don't need to stay in the weeds, but you got to start in the weeds. For instance, in my we have we own a tree trimming business. I got to know how to quote these jobs. I got to know how to talk to the subs. I got to know like what price to start the quote at knowing that they're probably going to negotiate me down. I've got to know what our gross margins need to be. I need to know how to use jobber. I need to know all that stuff as the owner CEO, but I don't need to do it forever or we'll never scale. So find that balance between staying in the weeds, knowing when to get out and knowing what the weeds are.
So Michael Girdley, we all follow him. He's a great guy. I was at his conference yesterday. I'm going to show two conflicting pieces of advice. Hire smart people, leave them alone. Terrible advice. I would have disagreed with him a while back. And then you got another guy we all know, Andrew Wilkinson. March 5th, 2020. Your job is to do nothing as a CEO. CEOs who actually perform duties within their companies are failing. Your job is to set strategy and culture, delegate and incentivize. Same goes for executives. You are just more focused many CEOs who report up.
Let's use the extreme example. Elon Musk, boring company, SpaceX, Tesla, we all know them, right? I firmly believe if Elon Musk was working on one company, that company would be doing better. I don't think that's controversial. If he only had the boring company, it might be 50% bigger or better or 100% or 500%. Same with Tesla. Right now, he's still the greatest entrepreneur arguably that's ever lived. He's doing great. Richest man on earth. I would bet that each of his companies are probably at 60% of their potential because he's splitting their focus. And that's fine. The shareholders know what's going on. Everyone knows going into it, right? But you got to know that going into it. If you're splitting your focus like I've done for 15 years, you got to know the score. You got to know that you're not living up to your full potential with regards to fully maximizing one business.
So this was five years ago and this was Andrew Wilkinson's stock performance ever since then, which is interesting. I think the answer, I'm not saying it's directly correlated, but the right and wrong between these two is it depends. I think at the size of business we're almost all talking about here, that's the answer. In my opinion, that's my experience. If you hire a rockstar operator, GM, CEO, whoever it is, and you don't check in with them a lot, you will see them die on the vine. And at one point in the future, you'll think, "Man, they were a rockstar. What happened to them? You didn't invest in them. Like, you're not checking in. They don't think you care about them. They don't think you care about the business. You've got four other side projects." Right? At a publicly traded level, that advice might just be the best advice, right? I've never had a publicly traded company. That's just my opinion. In my experience, any rockstar employee, whether it's a CEO or a GM or your chief of staff, you just have to. It doesn't matter that they're awesome. You still got to touch base. You've got to know the weeds. That's kind of a summary of the seven to eight figure. Escape the spreadsheet. It all looks good in a spreadsheet. Protect yourself, the culture, calculated pressure instead of move fast and break things. Know the weeds, test everything, and beware of pride. And that's it. That's my message. All right. I hope you learned something from that.