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Play Episode Listen Later Jun 18, 2024 52:56

In this fast-paced world, managing our emotions and understanding those of others is more crucial than ever. Emotional intelligence (EQ) is about recognizing and managing your emotions effectively to reduce stress, communicate, empathize, overcome challenges, and defuse conflict. With high EQ, you can improve relationships, excel at work, and achieve your career and personal goals. Today, Jonathan Youssef is joined by Clay Kirkland, a returning guest with over two decades of coaching experience and a rich background in staff development at the University of Georgia Wesley Foundation. Clay is certified in emotional intelligence and includes EQ as a vital coaching component. Clay breaks down the concept of EQ into four crucial quadrants: self-awareness, self-management, social awareness, and relationship management. This episode isn't just theoretical; it is filled with practical advice, from managing personal emotions to enhancing interpersonal relations in various spheres of life, such as parenting, the workplace, and within the church community.Listeners will gain insights into how emotional intelligence intersects with spiritual maturity, the practical applications of EQ in everyday scenarios, and strategies for developing emotional resilience. Clay's explanations bridge scientific understanding with theological perspectives, making this a must-listen for anyone seeking to enhance their emotional skills and lead a more fulfilling, empathetic life. Join us as we explore how mastering emotional intelligence can lead to profound personal growth and significantly better interactions in all areas of life. This episode is for you, whether you're a leader, a parent, or simply someone looking to understand the emotional dynamics of the human mind.To ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidFacebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 254: What is Emotional Intelligence and Why Does it Matter?: Clay Kirkland [00:01] JONATHAN: Well, today we have a repeat guest. We like having repeat guests. We like to build up some relational collateral with our audience and so we've brought back Clay Kirkland. Clay has spoken on a number of topics, including calling, with us on Candid Conversations, and today we are talking about emotional intelligence. Clay is a life coach with twenty-plus years of experience. He served for eighteen years as the director of staff development at the Wesley Foundation at the University of Georgia in Athens. He has a Master of Divinity from Asbury Theological Seminary and he is a Gallup-Certified Strengths Coach. And so I will say, “Welcome back, Clay.”[00:51] CLAY: Thank you. I appreciate it. Glad to be here. [00:55] JONATHAN: Well, this is a topic that has always been of great interest to me, and obviously to my team as we were having this conversation and your name came up pretty much immediately, and it's this issue of emotional intelligence, EQ, right? That's our abbreviation. So this is not IQ, a measure of general intelligence. This is EQ, emotional intelligence, and so maybe help us define emotional intelligence. Why is it important? What is it? Kind of step us through a little bit of that process.[01:37] CLAY: Sure. Yeah. So it's a great topic. I'm very excited to be here to talk about it. And it's gone through a lot of iterations in terms of its understanding. Probably in the last forty years, really, it's been around and I'd say probably the last fifteen or twenty it's become a major player in conversations both in the business sector and also just in general. If we wanted to really boil it down to probably its simplest form, you would want to think about emotional intelligence in four different parts. Do you know yourself? Can you manage or read yourself? Do you know others? Can you manage and influence others? And that's about as easy as we can get it. We're leaving some things out, but across the bow, that's what we're looking for those four quadrants. There's a self-understanding, there's a social understanding, then there's a self-leadership or management, and there's a social leadership management and understanding.[02:55] JONATHAN: Even in just giving the categories I feel like I'm picking up on the necessity of being able to understand yourself and know yourself, being able to manage yourself, right, self-control—it's a fruit of the Spirit. And then on the relational spectrum, being able to relate to others, are … How do you lead? How do you interpret people's body language and cues and things that are being given off? So let's talk about the importance of just those four categories that you've given us.[03:45] CLAY: Sure. Well, you can, if we start with knowing yourself, right, and then think about that, as it relates to knowing others, we say things in life to our family or things are said about us that lead us back to what we're really talking about when it comes to emotions. So you'll hear people say things like, “He doesn't have a clue what's going on.” Or “Do you realize how angry you sounded when you said that?” And that immediate defensive posture. So in interpersonal relationships, it's pretty much there on a consistent basis, that idea of do you know what's on the other side of you? And that's the self-awareness, right? And then do you know what's happening with the people that are around you? So that's the first part, right; it's just this knowledge. And the great thing—I didn't mention this earlier, but the great thing of this kind of understanding emotional intelligence that plays into a lot of the definitions that people are putting out these days are that these are a set of skills that can be learned. This is not a—[05:09] JONATHAN: You're not born with it.[05:10] CLAY: —personality trait that, you've gotten and you're just stuck there. This is dynamic in a good way, but also in a sobering way in the sense that you can be really good at these and then stop being good at these, or you can be not good at these and then [05:31] CLAY: —they slide. But then outside of that awareness and knowledge, it's what do you do with it? Do you know how to manage yourself? And again, it's an interplay. It's always going to blend with the knowledge. Do you know what's appropriate for the moment either for yourself, coming out of you, with others, and then, can you apply this? So when we think about the brain, we're thinking about this process of your limbic system where the seat of your emotions are, and your prefrontal cortex, where you're making your rational decisions. So do you have understanding of both of those? Do you have control over both of those? And can you manage that—when you're alone—or can you do that also when you're with other people?[06:34] JONATHAN: This is very scientific but also very practical. Let's bring in the world of theology. How do you differentiate between spiritual maturity—or do you differentiate between spiritual maturity and emotional intelligence? Are they one in the same?[06:56] CLAY: I think you have to differentiate between the two, simply because someone who has no spiritual/religious anything—[07:09] JONATHAN: They're capable of growing.[07:13] CLAY: And being very emotionally intelligent. So you're not automatically emotionally intelligent because you have some type of spiritual maturity in the sense of you have a relationship with God or you do certain religious disciplines that make you, in the eyes of other people, highly religious or devout.There has to be a difference there. But when we look at the practical applications of emotional intelligence and you look at them and the practical applications of spiritual maturity—so probably the easiest one to go to is in the New Testament, to look at the fruits of the Spirit. You start talking about love, joy, patience, kindness, goodness. You get all the way down to self-control. And then you pull those back into the outcomes that emotional intelligence is supposed to create, there's a lot of similarities, right? Obviously, self-control is one. Optimism is a massive one, which we can really link to joy and hope. The kindness piece would clearly cover those kind of interpersonal relationships. So it's not a perfect overlay, but that's where you see it.[08:32] JONATHAN: Yeah, lots of connectivity there for sure.[08:34] CLAY: Yes, a lot. [08:38] JONATHAN:You mentioned the limbic system, the prefrontal cortex. Talk me through a little bit of that to give some clarity here.[08:52] CLAY: Sure. And again, let's make it real simple.[08:56] JONATHAN: Thanks.[08:58] CLAY: Yeah, for all of us. You're going to have your reptilian part of your brain. That's your fight, your flight when you're in danger. That's just kind of that aspect. If we get past that, we're typically going to put our neural functions into two other categories. That's going to be your limbic system, and that's the “I feel” place. And then your neocortex, that prefrontal cortex, where you're going to think rationally and you're going to make decisions, you're going to process them.So what we're trying to say is, because you get this a lot when I go around and talk to people about emotional intelligence, you'll typically hear someone or a group of people identify and say, “I don't have a lot of feelings. I'm not very emotional, so I don't know if this is going to help.”[09:59] JONATHAN: “I'm a thinker, not a feeler,” right?[10:01] CLAY: That's correct, which just means that they're leaning much more heavily into one area of their brain than the others. That doesn't mean that they don't feel. It doesn't mean that that limbic system is depressed or deformed or anything else; it just means that they are not as aware that that part of their brain is functioning and can function for them in positive, neutral or negative ways.Again, if you were to describe me and say, “Hey Clay, on a scale of 1 to 10, how emotional are you,” most people then link that to when's the last time you cried? Do you get chill bumps when you watch a video, or a commercial at Christmas, or whatever? And I would say, no, that's not the type of person I am. But that still doesn't mean that that limbic system within my brain isn't an active part of the brain. Because it is. For all of us it is, we're just not leaning into it.[11:14] JONATHAN: So is there a way—I'm sure we're all thinking of a person that perhaps is not leaning into their limbic system, and we're thinking, How do you exercise that? And I'm assuming that your goal with clients and that sort of things is to try and help find balance. I assume you want a balance between being in touch with emotions, right, because emotions can be good indicators. They can also mislead, but they can be good indicators. And then you need a rational side to help navigate that. So how do you sort of exercise—and we can do both sides of that—how do you, for those who are very much a feelings-generated person, how do they exercise their thinking and vice-versa?[12:10] CLAY: All right. So let's start with the person who typically is not necessarily a feeling-type person. I'll give you an example. I had a client several years ago, and he was a CEO of a company and I got brought in to work with him. We were meeting in the lobby of the hotel, like in the restaurant, and I asked him, I said, “Tell me a recent story about something that went wrong at work.”So he tells me the story. And after he finishes, I said, “How do you feel about that?” And he said, “Bad.” I said, “Try something a little bit more deep, descriptive.” And he just stared at me and said, “I don't know, it just made me feel bad.” So I said, “Have you ever heard of the ‘emotions wheel'? It's a very common graphic, you can google it.”So he pulled out his phone and said, “Siri, Google,” and here comes the emotions wheel. It pops up on it and he stares at it. He stares at it for probably seven minutes. I was like, “Wow, I don't know if he's going to be able to do it.”And he finally said, “Angry.”And I said, “All right! Great! This is good. This is good.” So we spent several months with that wheel, using exercises that would help him start to recognize that he has feelings that are coursing in and out of his brain that he just wasn't giving airtime to. So again, people who aren't touchy-feely or aren't kind of the emotional types, they typically won't feel anger. They're aware of that frustration, but what they typically do, they're guarding themselves. And this is where we're going to get off on a rabbit trail, so I'm going to pause myself, but they are typically guarding themselves from certain emotions they don't like or they don't believe are good or not the type of person they would be. Or pain, or whatever, again, can't go there. But that's typically what you see. So we just started to do exercises that caused him to become very aware of the emotions that were coursing through his brain and body and it became helpful. Again, it's not necessarily the end product, but we just needed to at least give some recognition.On the flip side, someone who's highly emotional, again, the way they would describe themselves, and they would say, “Well, I don't really think that much,” they do think a lot; they are just thinking primarily through their emotions. And you said it earlier: they can be great indicators, but they can also be misleading. So that's where we kind of do some exercises for people in that kind of space to really pause and start to learn where they're making their decisions from. Why are you doing this? “Because I feel like it.” What do you feel? “Well, I feel …” and they can just tell you.And so that's when you have to do some exercises where you pause and put them in situations where you say something like, “If your friend was about to do this, how would you tell him or her what to do? What kind of advice would you give them?” That gives them a pause to consider. Or it's a common kind of way that we would do it, but we would debate our emotions. So your classic, classic example for this is—and this just happened recently, so this is a true story, here in this office—I got here early because the fire company told me they needed to come and do a test on the fire system. So 6:30 in the morning I walk through here, only saw one other person in the office and said, “Hey, there's a fire alarm test.” He said, “Okay, great.”So what I didn't notice was that someone was parking and then they were coming into the front doors about ninety seconds after I warned the one person that the fire alarm would go off. And this woman came running down the hallway in panic and scared, because she and I both heard the same fire alarm, but because I had certain knowledge, I had zero panic and fear, and had no emotion towards the fire alarm whatsoever. And she had incredible emotions towards it, and therefore, she was running, she was trying to save people. She was looking for people to save because she thought that we were going up in flames, and she just couldn't believe it.So the point of that is to say when you have something that triggers emotion, you can debate it. If you know that you need to learn something about your emotions, you can debate it, again, to say, “Is there a reason for me to feel any other way? Is there a trigger or consequence that I'm concerned about? Is there any context that I could give myself that could perhaps change the way that I feel currently?”And again, they are all methods. Those are all different ways—and we can get into those exercises if you want to—but the point of those exercises is to pause yourself before you push whenever that limbic system is pushing into your vision, near the forefront of your mind, to make that the only way that you can make a decision. We're just trying to pause you enough to give you an option to have your other parts of your brain work.[18:31] JONATHAN: This sort of happened recently—I should be careful; I should use third-party examples. But my wife and I were at the beach, and our son was playing near and we were talking with friends. And we were keeping an eye on him, and then all of a sudden he was gone. And so we went into full panic mode. And we're looking in the water and it's just like it was emotion-driven. There's very little rational thought process and the panic mode strikes. He's not where he was; something terrible must have happened.And I remember after panicking for a while I finally just stopped. I did the pause, kind of what you're talking about, and I thought, “Okay, we've been here before. He knows this place.” So I told my wife, I said, “Go back up to where we're staying and check for him there.” And then I thought, “There's a little statue that I know he likes. Let me go see maybe if he's gone over there.” Because we hadn't thought, “Well, he ran past us,” because we would have seen him. But I thought, “Well, we might have been engaged in conversation and missed him.”And sure enough, as I'm running to the statue, there he is, playing in the sand. And he had run past us, chasing a seagull or something. And it was like, okay, if I just took a minute to think, all right, what are the logical things that could have happened here? But at the same time, God has given us those panic senses to where if something terrible had happened, your body is in that sort of fight, hopefully not flight, but fight mode of I need to do … I need to, as the example of the lady in the office, she's trying to save people. That's a good thing if the fire alarm is going off. But I see what you're saying in terms of just taking a minute to think, “What information do I have? What am I …?” Because I think your mind probably shuts down, you get into tunnel vision and that sort of thing.Let's talk a little bit about IQ versus EQ. And in terms of the way that we look at people, the way we consider talent, children, workplace environment, hiring, all that sort of thing. How do you see the consequences of prioritizing one over the other kind of play out? [21:04] CLAY: I'd say in the last twenty years or so there's been a push to raise the importance of EQ. Not to diminish IQ, because it's important to learn, become smart, develop that part of your brain. But this isn't a choose one over the other. Now, right, is to say we probably missed it when we were only pushing get smarter, get this score on a test, get this acceptance, then you'll be successful. Harvard Business Review came out and said that there is … the differences between good leaders and great leaders, that gap. If you were to look in that gap and see what's in there, they would say 80 percent of the contents in that gap are in the emotional intelligence sector. So that's what they would say. Daniel Goleman, who's one of the most popular voices on emotional intelligence, wrote Primal Leadership and several other books about it over the course of the past thirty years, he would say that if you're looking to define success and what's going to make you successful in this day and age, he would say 80 percent of the contents of that recipe would also be in emotional intelligence.And I think what they're saying—this is me trying to interpret a little bit—again, it's not to say, “Well, that means only 20 percent is IQ.” That's not what it's saying. It's saying we pushed, “Be smart, be smart, be smart, be smart” so hard, that's almost like a get it. Like when you look at people who work hard in high school, go to college, get really good grades, get a competitive job, I'll bring Google up in a second, but that's that pattern. We said, “IQ, IQ, IQ, IQ.” And here's how you're going to be measured on that, you're going to get rewarded. You're going to get awards, you're going to get plaques, you're going to get acceptance letters, you're going to get scholarships, and you're going to get a job.” That's the way we measure IQ. We pushed that so much, it's almost like you have to do this. But if you also add extra, what is that extra? Well, 80 percent of that extra, I would say, would be emotional intelligence. So that's where I think that those figures are coming from. You can google these things if you want to, but they did two what they would call projects where they studied their employees, one almost around 2000, and then twelve to thirteen years later. And they were very surprised, as was everyone else, because they had kind of the best of the best, the brightest people, the Ivy League schools and so on and so forth. And they were trying to differentiate why some teams were doing better than others and why some individuals were doing better than others. And that's when they started to find out that their term was “soft skills” were trumping hard skills. And they were trumping them in the sense that everyone came almost with the same hard skills—the STEM degrees that they all came with—but then why were some doing really well and why were some not? And that's when they started to see qualities like coachability, curiosity, emotional intelligence, empathy, listening. Those things were what they saw in both individuals and teams to see where people really are being successful.So as a parent and vocationally and all those kind of things, it's not that we should depress one in order to elevate the other as much as you're both working on our ability to become smarter but also your ability to be more emotional.[25:18] JONATHAN: We see this in Scripture, apart from just fruit of the spirit. What are some of the areas? Certainly there's a high level of EQ that we would see, for instance, in the Psalms, which maybe explains why David was a good king and others probably were maybe lacking in those areas. I'm trying to think it as it relates to us in the Christian life specifically and it's interesting that you bring up Google. I would think coding or something in the technology field, I wouldn't think there's as much relationality in business versus like sales or pastoral ministry or something where you really need those muscles exercised. But at the same time, it's interesting that what they're finding is that even in the technology field, your success has a balanced element to those who have the soft skills, who have elements of emotional intelligence and empathy and all those sorts of things are actually helping in that plus area, as you described it. Help us detangle some of that and just thinking like from a scriptural perspective. How does something like emotional intelligence equip you for being better in all those different areas?[27:21] CLAY: Sure. Let me stab that one real quick and then come back to some of those biblical things. You know it's interesting. If you look at statistics back when Millennials were in the limelight, I'd say about ten years ago, they would say at that point that 80 percent of them wanted to work in a place of collaboration; that is what they were desiring in a workplace. Those statistics have only gotten higher as Gen Z's are infiltrating now the workplace.So you see that push for now over half of the workforce, so regardless of what industry you're going to find, you're seeing that desire for camaraderie, teamwork, connections. So even post-COVID where a lot of things have gone hybrid, work models, it's still you're on a Teams meeting, you're on a Zoom meeting, you're still interacting. And so I have several clients, current and former, in that tech space, really smart people, and they do have to code a lot by themselves, but it's when they have to talk to the customer, when they have to talk to the teammate, when they have to interact with the boss that that's where the skills either put them into a place of advantage or [unintelligible]. So it's going to be very difficult for almost any job to be a job where you're not going to need some type of emotional intelligence skills in order to make yourself successful. Can you find it out there? Sure, there's just not that many. So most of us are going to find ourselves in positions where if we have emotional intelligence, we will succeed, stand out, excel.[29:18] JONATHAN: And we're relational beings. I mean, even by our very creation.[29:23] CLAY: Yes, absolutely. So that's that little vignette there. So I would say—you mentioned the Psalms. I mean, the Psalms are great. I love the rhythm of Psalms. I had to take a class in the Psalms when I was in seminary, I chose to, and it was fantastic. But there's almost like this general rhythm of David in the Psalms because most of them from what we understand, or at least at the onset, privately written. And obviously, some of them were more for the tribe, the songs, but typically they were private.So there's this process of raw, honest emotion about the good, the bad, and the ugly of life (I mean, not all of them are sad) and then some possible outcomes that either were happening or could happen. And then there's typically, almost in every psalm, this point to which David or the other psalmists get to where they then recognize who they are and who God is, what God might do compared to what they might do, and then there's a surrender of those things that they've felt and seen and wanted and they let go. And so that in and of itself, you could study that for a long time.Psalm 139, right, it's almost like a classic for emotional intelligence, especially the end, “Search me and know me,” right? So there's self-awareness, I want to be known. “See if there is any hurtful way in me.” That's I want to get better. But this is my favorite part is that at the very end he says, “And then lead me in the way everlasting.” The reason that's my favorite part is because of how it's saying the self-help movement gets it wrong when it puts navel-gazing and self-awareness as the end. Just become aware and the longer you can stay aware and the more that you can stay aware, you're good. It doesn't mean you're good.[31:47] JONATHAN: There's no way forward.[31:50] CLAY: That's correct. Right. So David there it's like, “Hey, I want to be aware of myself. I need to be aware of myself.” The whole psalm is basically saying, “You're absolutely aware of me. I'm pretty much under the spotlight.” I want that awareness and I want you to continue to have that awareness, not so that I can be aware; so that I can then go the ways you want me to go.When I was at Wesley, we had this phrase we would do first-year time, second-year time, third-year time [unintelligible] our second-year term. And this was the phrase that I took there. It said, “We're going to focus on you so that then we can get you out of the way.” So we wanted to have some quote/unquote navel-gazing time. We did strengths finder for them, we had emotional intelligence for them. Again, where there's a lot of awareness. But it's not just so that they can know themselves; it's so that they can know where they need help, where they need to get better, where they are doing well so that we can get all that out of the way so that we don't have to be in the limelight. We can actually then serve others [overlapping voices] and give ourselves over to the things that God wants us to do.And that's why I [unintelligible] [33:21] JONATHAN: That's right. No, you're right on, and that's a helpful sort of thought process through that. I mean, even through that lens of emotional intelligence. We live in a day and age where everything is volatile, people are triggered by anything and everything. And then you add in a layer of social media or anonymity through the computer, which sort of exacerbates our problem. How do we develop greater emotional resilience and self-control? How do we as believers navigate that terrain.[34:11] CLAY: Huge thought there for sure. I'll just take one swing at it, because that's—[34:20] JONATHAN: We'll do a five-part episode.[34:23] CLAY: Yeah, that's a big one. I'll go real technical in terms of emotional intelligence [unintelligible]. In the assessment that I'm trained in and I like to administer to people, it's got subsets. So it's got fifteen of them. Two of them, I think, speak to some of this. One of them is flexibility. And flexibility and that subset is when things change, like you've decided something is going one way but now something out of your control has changed it, how do you respond?On the other side of that coin, the next thing we administer is stress tolerance. Stress tolerance is you want things to change desperately and they're not. They're stuck. [unintelligible] And so in those two, when I look at volatility of our current culture and social media, it's you see a plan so easily in those two regards. Someone has an opinion, someone has the other one, you can't change their opinion, so what are you going to do about it? Nowadays, we just trash the other person.[35:52] JONATHAN: Ad hominem, yeah. [35:54] CLAY: That's our response. On the other side, when we had a plan and now everything has changed and we didn't get to choose that, how do we respond? We blame everybody. We have to find someone to blame because we think that that's going to make it better. Right now we look for someone to blame instead of moving into that place of resilience and grit and realizing that not everything is going to go our way. So part of that emotional intelligence, when you look at how you become flexible, become better at stress tolerance.A huge part of it is just accepting the fact that things are not always going to be good; things are not always going to go your way; and that is everybody's life. You want to take it to a biblical place, then you go back to the words of Jesus where He said, “In this world you'll have trouble.” He's already told you. And everybody's response to it. He gives you the clue, if you're doing it from a Christian perspective, He says, “But I have overcome the world,” meaning that your perspective is going to change how you respond to those situations. If the weight of the world is on that moment, you know, it'll crush you. But if you realize that that's not the weight of the world, regardless of the situation, even if it's going to hurt, those kind of things are going to take a bite out of you, it gives you the ability to realize that you can recover, you can make it through it.And that's a key part, I think, in all of that. I'll give you an example, a real practical example. I use this with my kids, but I also use this with adults for sure. I use it with myself. Ask myself this all the time. I can't remember where I came up with this, but so this is the question when you're faced with a situation that's hard, heavy, frustrating, whatever it is, and you have the option of choosing an emotional, unintelligent response, is this. This is the question I ask. Is this going to be in your book?I can say that to my kids, and they know exactly what I'm talking about. If they don't know what I'm talking about, then I give them this context. At the end of your life, you get two hundred pages to write your autobiography. This situation right now, is this a chapter? Is this a page? Is this a paragraph? Is this a sentence? Or is it on the editing floor? And almost always this will be on the editing floor. And so if it's on the editing floor, then why are we treating it like it's a chapter? And that's the context. So that's the question I ask myself, and I give it to my kids as well and that's what I tell my people at my office. Again, it gives you pause. That's the whole point of this is to pause. But the whole idea of emotional intelligence is this, and how they came up with this, I don't know. People smarter than me. I would say this: that you have six seconds to choose your emotional intelligence response, meaning that your brain likes to default to habits, and so you'll habitually just respond. You think about traffic. Any time I see traffic, I get angry, so shoulders go up, eyebrows go down, my tone changes, whatever, it's just your habit. You're choosing it, you just didn't realize that your brain is in default into the choice. You're really not giving yourself that option.But the six seconds comes into play in the sense of you can actually choose to go a different path. We're talking about neural paths. You can choose a different neural pathway. Your brain would prefer to go the habitual route because then it doesn't have to work that hard. So in all of these things, what we're trying to do is to give ourselves pause enough to alert ourselves that we're probably about to choose a default that is not the best choice, and can we train ourselves to a point where we say, ah, not to do this, probably should do this. It's the train tracks, shifting from one track to another. That's really what we're trying to do in any exercise that we do in emotional intelligence is to pause and then give that new skill an opportunity to get some [unintelligible] and get some legs [unintelligible] [41:18] JONATHAN: And it's funny, because in order to get to that position, you have to have self-awareness. You have to be aware that what's going on is—and I'm just even putting myself in situations where I'm like, oh, that is absolutely my mental state goes to a default position. Oh, this happened and I know that this is my reaction. And you're right; sometimes it's like I don't even think about it. It's just this is just what I do.It makes me think of sort of the enneagram thing, well, that's just who I am. I'm a fill-in-the-number, but there's no, okay, so is that your paradigm? Is that who you are and that defines you? Or are you at a position to where you can challenge yourself, and to your point, take a pause and consider, okay, do I have other options here? I absolutely do. Which is really, if you think about it from a gospel perspective, it's like do I have to keep choosing law over injustice for people over whatever situation? Or at what point do I choose to show grace and mercy, which by definition are undeserved for those people? And that's really where the gospel message comes in, because if God operated under our own default paradigm, if He was created in our image, then it would be law-justice, law-justice all day every day. But grace and mercy are so alien to us, and that's the beauty of Christ's work and what He has done.You've shared a lot of really great and helpful stories, but could you give us some examples of applied EQ principles in—and I'm going to give you three different things, and then I'll remind you of them if you can't remember. So one for parenting, two, the workplace, and three, the church. So we'll start with parenting. [43:32] CLAY: I'll be as practical and as vulnerable as I can. What we're trying to teach—we've got six kids, a major focus for us right now is just empathy, how to put yourself in someone else's shoes. A funny but revealing story is several years ago my wife was crying about a certain matter. One of my sons—[44:02] JONATHAN: Name redacted.[44:05] CLAY: We'll keep it redacted. One of my sons came in and saw her and immediately started crying. And then another one of my sons came in and looked at his brother and said, “Why are you crying?” And he said, “I'm crying because she's crying.” And then that brother who was not crying was like, “That's the weirdest thing I've ever seen.”[44:28] JONATHAN: That doesn't make sense to me. Yeah, yeah, yeah.CLAY: In general, we all have starting points, and those starting points have been formed and fashioned by our personality, our family systems, I mean all of these things. So that's why I love taking these type of assessments, because they show you where you're starting from. Then you get to know where you need to go. So again, take Son A in that story. Empathy is already off the charts. I mean, just his starting point is he's probably at an A-. There's one little uptick and he's perfect.The other son probably at a D or F in that area. He really needs to work on it. And that was me when I took my first assessment of emotional intelligence ten years ago, very low empathy. I've spent several months, almost half a year, keeping an empathy log so I can start to train my brain to think about someone else's emotions. And it got much better, but it's something I really had to learn. In parenting, we're saying regardless of your starting point, this is something that matters. It matters biblical standpoint, it's truly what Jesus did and still does. It, from an interpersonal standpoint, if you can't put yourself in someone else's shoes, that's going to be very difficult for you to have compassion on someone and serve someone to even care when they're not in alignment of what you want.So we have just said this matters. So we are consistently asking our kids when they say something about one of their siblings, “How do you think so-and-so feels about this? Where are they in this story?” So that's our skill right now, so it's above any other skills that we're trying to get. One, as a family of eight, we're hoping to do that well. If we can, have empathy, so we're working on that. When I think about our kids being released into the wild, and if they carry that skill with them, it will carry them a long way, regardless of what they do. And I don't need them to get recognized for it in the long way in the sense that they will do well if they do right by people.[47:29] JONATHAN: They'll be a good friend.[47:31] CLAY: Absolutely. So huge piece in that one, and that's what we've worked with there. In terms of business, I would say the really big piece of business is if you can listen, understand, and then reinterpret what you've heard to other people, you can't help but be successful, because people will flock to you because of your ability to do that. I call it the meeting after the meeting in business. And that's someone, we have a meeting and then something is lost in translation and something's then misinterpreted and then that person is, “That's not what is said. That's not what I meant at all.” And then now they have to go have a meeting about that meeting.[48:29] JONATHAN: I've been in those.[48:30] CLAY: You've been in those. We've all been in those. So now you're having a meeting about a meeting and then you're going to have to leave that meeting and have another meeting in order to let everybody else know what happened in that meeting after the meeting that should have happened in the meeting. And so that differentiator of active listening, being able to communicate empathetically, being able to communicate clearly. You know in emotional intelligence we would talk about emotional self-expression, to be able to clearly say what you're feeling, right? You can see that every day almost in practical experiences in yourself where you've got your typical passive-aggressive, bless you heart type who's lying through their teeth. They don't have any blessings for you, but that's what they say. So that type of differentiator in the business sector is massive, it's just huge, huge.Tell me the third category.[49:40] JONATHAN: The church.[49:42] CLAY: The church, yes. The church, the church, the church. Oh man, this one and a lot of different other places for this one. I'll pick one, and maybe it's probably not the most popular one, I was in ministry for, well, ran it for eighteen years and was in almost twenty years, for nineteen years. Had a lot of friends in ministry. And to see where they are now, I would say that ability to handle emotions, not just their own but other people's, burden-bearing perhaps the more specific term, and then to be able to handle the stress of that, to have mechanisms to keep that at bay. The primary term you're hearing these days is burnout. Burnout to me is when someone and they have had a moral failure, they've stolen money from the church, they've ripped their kids' lives apart, that's not good. But typically what you see before burnout—when we say burnout, like “Hey, I just can't do this anymore,” now they're completely unhealthy and that's going into sexual improprieties, that's going into financial improprieties, that's going into the idea of power and where you're getting your validity and things from. So that's what you typically see before the engine hits failure and we get to see it.And so from that emotional intelligence standpoint, you're thinking about really self-control. In emotional intelligence it's called “impulse control.” Can you have a desire, and understand it, and then make the right decision? That's one of the fifteen subsets that we look at. And if you look at people in ministry, it's so easy to get away with so many things for too long of a time, and it really comes back to [unintelligible] Scripture because [unintelligible] until it's too late. So I think impulse control is real big, again in EQ, for the church to say, “Hey, you can spend time alone with this person, you could charge this to the credit card, you could do a lot of things [unintelligible] and they're going to believe what you say.” [Overlapping voices][52:43] JONATHAN: So even in thinking about each of those ones you've just given us for children (or parenting, rather), workplace, church, it's interesting because all of those, I'm just thinking on the side of this in terms of protecting yourself—not protecting yourself in terms of I want to get away with this, but I want to prevent not having empathy. I want to be able to listen to someone and interpret and relay it back correctly to them. I want to be able to have impulse control. Those all involve, I mean, they are skills of the individual, but at the same time, it requires the assistance of others, I think. It's a very communal—which, of course, emotional intelligence is about relating with others and self. And so it's interesting in thinking about the way you've described or given those examples how much, if you're setting up safeguards or even beyond safeguards you're actually wanting to grow and develop in those skills, it requires community, it requires other around you who are committed to the same goals, so to speak. So in your work, do you—sorry, this is like bucketing rain our here. A hurricane is coming to Athens. Are you—do you encourage people to work these things out, to develop these skills, within a communal setting, accountability levels? And my power's just gone off. We're still connected, so we'll just keep going.[54:42] CLAY: Absolutely. I think the—I would encourage every person to have a communal component to every phase of emotional intelligence [unintelligible]. The assessment piece, you can take one by yourself on your computer and get a score and never share it with anyone what you scored and it would never be as effective as if you shared it.[55:05] JONATHAN: It's the navel-gazing example you gave earlier, self-help.[55:09] CLAY: We're trying to gauge our self-awareness and we're our only judges, and what have we done? So that's why when I do these assessments, my favorite one to do is the 360, because then you've got different people from all different parts of your life that are assessing you. So the assessment piece has to be in community, right? The understanding the good and the bad has to be verified in community.One of the things that we do when I take people through this coaching, especially when they come in for the 360, is to look at what we call the gap analysis. And the cool thing about the gap analysis is you'll see it on both sides of the coin. So when people say they have blind spots, what they typically means is let's say I'm a person with a blind spot. I almost always say that person thinks that they're here and they're actually here. They think they're better—which could be a blind spot. On the slip side, a blind spot is that this person thinks that he or she is here and actually they're much higher, they're here. So they have a lower self-awareness or self-image of themselves in this area than actually what's coming out of them. So you get to see both sides of the gaps. Where are you doing better than you're actually aware of and where you actually do worse? So that has to be in community.And then as you work them out and work on the skills, you're going to have to have people to work them out with and then people to let you know how you're doing. Every phase has to be in community.[56:56] JONATHAN: I'm sure people are listening to this and thinking, “I know someone who needs help with this.” Is it a subject where it's like, “Hey, I sent you a little questionnaire you can fill out to see all your blind spots”? How do you broach the subject with—is it like, “Hey, I'm working on some self-improvement stuff. Would you want to do this with me?” How do you find that others engage their colleagues, friends, family members, whatever, to see this, to have some self-awareness and bring it to the forefront without crushing them or coming across judgmental, etc.?[57:42] CLAY: Yeah, it's if you're trying to inspire—I'll use that term—someone else to do it, yeah, that's … There's not just one way, because you can have a relationship where you can say—[57:56] JONATHAN: And it depends on the person.[57:58] CLAY: Depends on the person. I will get called in to work with people who their bosses are saying, “You have to do this.” They have no choice. And then there's other people who would say, “Hey, I want to bring this up to my husband. How should I do that?” And they have to do it in a much more nuanced way. So I would definitely encourage people to get to that point where they can be honest. If you can be honest with that person, and this isn't to say, You're wrong, you're broken, you're damaged,” as much as to say, “These are skills that both of us or all of us should learn, can we do this together?” Because it's not, again, I'm certified in emotional intelligence and I teach it and coach it, but I still have to live it or I won't be emotionally intelligent. So no one arrives. You learn it, but you still have to do it. So everyone can join in. And that's what I would say the best approach to other people is to say, “Hey, let's do this together.” Because no one can say, “Hey, I hope you get to this point.”[59:13] JONATHAN: When you're like me, then you've arrived. Well, Clay, this has been such a big help for me just even in understanding the neurological things, the neurological pathways and thinking about my own mental habits that have come in play, thinking about self-awareness, other awareness. I think these are just such important factors. We see them through Scripture. We know the heart of God. We see the sovereignty of God over all things. We can have hope in Him. And just having an awareness of this, I think, helps us to serve the body, to serve the lost in such helpful ways. And so I'm grateful for your training and your expertise in this area, and I'm just grateful that you were able to take the time to join us on Candid Conversations.[01:00:13] CLAY: Glad to have done it. Thank you so much for the opportunity.[01:00:15] JONATHAN: Of course. God bless.

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Episode 252: How 20 Minutes Can Impact Your Child's Spirituality: Tyler Van Halteren (Reprise)

Play Episode Listen Later Jun 4, 2024 30:47

In this episode of Candid, Jonathan welcomes Tyler Van Halteren, a man with a deep-rooted commitment to enriching the lives of children and youth through the power of Christian faith and storytelling. Tyler, a Master's Divinity graduate from the Master's Seminary, has dedicated most of his life to sharing Christ's teachings and the Bible's wisdom through storytelling.From serving as an Associate Pastor at Gorrie Bible Fellowship in his home country of Canada to teaching at Phnom Penh Bible School in Cambodia, Tyler's journey has been one of service and exploration. But the profound impact of 20-minute bedtime stories on his son sparked an innovative idea in him - why not blend the charm of bedtime stories with enduring lessons from the Bible?Taking up this challenge, Tyler founded Lithos Kids in 2020. His venture was no less than a mission to transform the world through biblically faithful and beautifully illustrated children's books. The launch of his first book, Little Pilgrim's Big Journey, on Kickstarter was a resounding success, exceeding its funding goal by 500%. It quickly became a treasured children's book, and Little Pilgrim's Big Journey, Volume 2, and Volume 3 was released shortly after.Now, as a father and an author, he continues his mission from southern Ontario, Canada, where he resides with his growing family. Join us as we dive into this inspiring journey with Tyler, discussing the importance of spiritual mentorship, the creative process behind his illustrated books, and his vision for instilling Christian values in young minds.This is an episode you don't want to miss, especially if you're a parent, an educator, or anyone interested in spiritual growth and innovative approaches to faith-based education. Be sure to tune in!Books by Tyler Van Halteren:Little Pilgrim's Big Journey Volume 1Little Pilgrim's Big Journey, Volume 2Little Pilgrim's Big Journey, Volume 3Kingdom of God Storybook BibleTo ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidFacebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 252: How 20 Minutes Can Impact Your Child's Spirituality: Tyler Van Halteren (Reprise)JONATHAN: Tyler, thank you so much for taking the time to be on Candid Conversations.[02:28] TYLER: Yeah, thanks, Jonathan. It's a joy to be here.[02:31] JONATHAN: Well, tell us a little bit about your background, upbringing, and then we'll transition into how you got into writing and producing kids' literature. [02:43] TYLER: By God's grace, I came from a Christian home. But one of the most significant moments, and I guess most relevant moments to this interview, was when I was beginning to explore the faith more seriously, not just walking in my parents' shoes but actually considering the weight of eternity, heaven, hell, my own faith, my own walk with God, and in that time I found an old 1975 version of Pilgrim's Progress, paperback, 95 cents, that was given to my dad when he was about that age, about 15, and it just sat on the shelf. So I picked it up, read it, and that's the first memory that I have of understanding the Christian life and wanting to follow Christ. That's the first book I remember reading in that season.So that led, by God's grace, to a hunger for His Word, for sharing His Word, and then through various camps I had a great experience in high school. Our Christian high school was connected to a children's camp. And so I was able to teach there and saw a measure of gifting, a desire to teach, and then went on to Master's Seminary and then to youth pastor Cambodia. In the midst of all that, had some kids along the way and then started brewing some of these book ideas.[04:07] JONATHAN: Tell me ... You just sort of lobbed Cambodia into that history. Tell us a little bit about that. [04:18] TYLER: Yeah, for about 10 years before that, my goal and desire and prayer was to go into missions. And so we set the course for that through seminary, and then even as I joined my church there was a sense of telling them we're going to be here five years and then we want to be sent out to the mission field. So we went. The goal was to teach the Bible at a Bible school there to college students. Had some other cool opportunities, like with some friends had started children's programs, so I'd go to villages and there would be 30 kids that would just show up, 30 or 40 Buddhist kids would just come. And they listened to some English teaching, some Bible teaching, and just really neat.But in the midst of all that, COVID happened and that shut a lot of missions down. But thankfully I was able to finish the Little Pilgrims book during that time. And then also during that time, I started having some significant health issues and that sort of ended up—a variety of numbness and extreme fatigue that kind of landed us back in Canada, but trusting God's providence in all that and encouraged now to see there are some of our books being translated into already in Spanish, but some being considered for the Cambodian language, Khmer language. So there is French, Vietnamese, so encouraged to see how God's continuing that missionary desire through these books.[05:44] JONATHAN: Unbelievable. Okay, so you've shared with us that it was Bunyan's Pilgrim's Progress that set you on a particular path. I'm assuming that's the connection to wanting to retell it through a child's perspective. Tell us a little bit about how those pieces came together.[06:08] TYLER: Yeah, it was a neat few things that came together. So I've always had an entrepreneurial bent, always a desire for that. Buying and selling, doing different things. Little businesses on the side. And that gave a skill set that when my son was about three or four I started looking for, oh, is there a good children's version of Pilgrim's Progress? And at the time when I looked around, the only version was a 1985 one, Dangerous Journey. I bought that, opened it, and it was the first time I've opened a book and my son has sort of screamed and cried in terror at the illustrations. The illustrations were so—[06:53] JONATHAN: I have been there. Especially for a three- and four-year-old.[07:00] TYLER: Yes, absolutely terrifying. [07:01] JONATHAN: Here's the Christian faith, my child.[07:05] TYLER: Yeah, I saw that, and I thought, Okay, there's got to be a way to do a better version, especially for younger kids.[07:13] JONATHAN: I will say, I have seen one of the—I think it's more for teenage readers, maybe, and it is very graphic. Apollyon the dragon is very scary and menacing. And you're right, there's a lot—I mean, that's the way Bunyan wrote it, right? I mean, it is dramatic, very. But when you're thinking about little ones, you've got to tone some of that down so they're not actually terrified but wrestling with the core issues. And I feel like your book does that so well.[07:46] TYLER: Yeah, that was a real delight and surprise. I was writing with my son, three or four years old, in mind. And we read it 20, 30 times together in the process of writing it, and that was all super fun as we got new illustrations and as we pieced things together to see his excitement and to see things, Gospel truths click for him in that journey. But I'm coming into this somewhat naïve in a sense. I had no real understanding of the publishing industry and just had this goal. Write this as well as I can, with really great illustrations, for my four-year-old son. And then for whatever reason, the Lord's taken that, and it seems to have hit that target with a lot of families who say similar things, that these truths are connecting in a special way.[08:40] JONATHAN: Well, and let's talk about that. So as a parent, it is hard to find really good—and I know it's out there and I've got a lot of them. But there's not a lot of really great Christian children's books. It's either for an age up, as we just talked about, or it's kind of delves into more of a moralistic, you know, do this, behave this way, obedience—which are true things, but there are so many better, deeper truths that we need to expose our kids to. I think there's a longing of parents—I mean, I hear it from moms all the time, “Hey, if you can think of a kids' book and write it, like go for it.” Because there's a real need for that, especially at those young, really vulnerable ages, age category.[09:44] TYLER: Yeah, and we've seen a growing hunger in people, and through our social media and connecting with different people that there is this real longing for those kind of resources, and that's been an exciting part, too, seeing how much this has resonated with parents, this kind of idea. And there's other publishers that are doing some really great, like probably in the last five years really there's been almost a resurgence of good, solid books, Gospel-centered books. But before that it was pretty dismal, and that was about the time I started writing was when I was looking around and saying, “Okay, how do we get really good Gospel-centered books that hit the core of these issues for kids?”And the fun part of that has been the allegory idea of Bunyan's allegory and seeing how much that's resonated with people.[10:30] JONATHAN: So let's talk about just the impact I mean, it's obviously a tradition within ... it's been around forever, right? Either storytelling with your children before bed, or at a particular time, and just the impact that that has of, one, reading, just reading comprehension, storytelling, kids' abilities to have an imagination and picture things. Have you done any kind of research into that I mean, even in your own life and seeing the way that it relates with your own children?[11:09] TYLER: Yeah, that's one of the cool things, I think, for a lot of families, the question of family discipleship, family devotions, those kind of things come up, and it's challenging in our day and age. Generally, we're pretty busy people and probably more busy than we need to be, so it's hard to set aside a time. And sometimes it's hard to get kids that aren't wiggling during that time, or moving around, or asking, “Okay, when is it over? When is it over?”[11:36] JONATHAN: You need to draw them in, right?[11:38] TYLER: Yeah. So for my personal life it was bedtime. They kids knew, okay, we can read. It became part of the routine. And they are also glad because that time they're winding down and they know they're not going to bed yet, so they're getting a little extension. And so that just became a very simple, practical tool for me. Hey, maybe I can't do X, Y and Z with my kids, but 15 minutes before bed, that's a pretty easy thing to do. And I'm seeing how that impacted my son was a real treat and a joy.I'm thinking of our book, seeing Christian by the cross, his burden falling off, and him saying to me, “Yeah, God ...” Or “Dad, that's what God does. He removes our burden of sin.” I remember reading David Helms' Big Picture Bible, and him seeing Jesus on the cross and saying, “I want to follow Jesus. I want to be saved from my sin. I want to know Jesus.” [12:42] JONATHAN: That's an iconic scene, isn't it? Bunyan's ... I mean, even people who haven't read the book are at least somewhat familiar with the scene of his burden falling off his back as he stands at the cross. It's such a picturesque scene. You have talked about how he's recognizing some of these things. What are the other things that are coming through the eye of the child as parents and grandparents are probably listening to this and thinking about we're trying to help formulate in our children and what they're getting from those 15 minutes before bed.[13:23] TYLER: Yeah, I think a big one I've seen, and I've heard from a lot of families, is the reality of death and eternity. And I can't think of many kids' books that hit that on the nose.[13:38] JONATHAN: Yeah, it's not coming up with regularity, that's for sure.[13:40] TYLER: Yeah, yeah. So that's not been dodged or snuck in. But reality is ... Yeah, people die. Kids are wrestling with some of these hard truths. They have some of these hard questions and they want answers to them. And so having this, again, the beauty of allegory are these spiritual truths told through images. The River of Death, the idea of someone crossing the River of Death, the sorrow of that and yet the joy of that for believers who enter the king's city, the celestial city.I've heard some very, very sweet stories from people and gotten emails that have brought me to tears where someone's reading this with their child. Their child is going through cancer and facing death, and that River of Death bringing such a comfort both to the child, the parents, siblings. And for us, when we were in Cambodia, my son would bring that up often. Because we'd left family behind and now we're going on this journey, in a sense, and that's all done in light of eternity. So these metaphors of the celestial city and living for the king's kingdom and things like that were all very helpful.And then one other story from Cambodia, which was seeing the surprise in Cambodian parents, and especially dads, that I would read to my kids for 15 minutes before bed. To me, it seemed like an obvious things. To them, it was very foreign, in literally true sense. But they were surprised. “You do that with your kids?”And I said, “Oh, you don't?”[15:20] JONATHAN: Culture shock there.[15:21] TYLER: Yeah, and they said, “No, no. They go to bed when they go to bed, and we're not too involved with that.”I said, “Oh, you should try it.” And some of them... one of the pastors could speak English, and I gave him some copies of the book. And he read it and I remember since we've left he messaged me saying, “We still do that every night. We still read to our daughter before bed. And we've gone through these books these many times and thank you for this.”I just thought that was a neat way the Lord used that.[15:53] JONATHAN: So you started with a Kickstarter fundraiser and you blew through your numbers on that. Tell us a little bit about that.[16:02] TYLER: Yeah, so again this was all kind of a leap of faith and partly the way God's wired me, willing to take a risk in that sense. So let people know this book was coming out and just kind of asked friends and family to share as widely as they could on social media and kind of leading towards this Kickstarter. So we launched, and then I was just absolutely shocked as it was within the first hour we far surpassed our initial goal. And just watching the numbers just sort of fly in was a shock and delight.[16:43] JONATHAN: It looks like you got about 500 percent of your funding. So if you were wondering if that was a need for people, that certainly made its case.[16:56] TYLER: Yes, it was awesome to see. Okay, we put all this work in and got it ready, and then, oh yes, this does resonate with other people. Other people are hungry for this kind of thing. And we've seen that tenfold since then.[17:08] JONATHAN: You've talked about how Bunyan's use of allegory helps bring forth great truths through imagery and picture. Parents are always trying to communicate the Gospel in a way for children at different ages and stages to understand. But sometimes we parents can sometimes if they don't have theological degrees like you and I, they can be overwhelmed—though having a theological degree doesn't necessarily help you in this category. It's not like how to teach children is one of the classes we get.But how do you take complex truths and break them down for children? This is one of the primary ways of doing that. But just for you as a dad of young ones, what are some of the other methodologies that you use for breaking that down for kids, big concepts that come, whether it's through Scripture or spiritual conversation or whatever it is. What other methodology do you use in an effective way?[18:21] TYLER: Yeah, yeah. A lot of at least homeschoolers talk about living books, like this idea of living books being an engaging way to teach ideas. And that's for anything—science, et cetera—to children. And allegories present this idea of a living book, which means truth is coming through in a very natural sort of conversational way. And again, I feel like Bunyan is just the master of that. So what a privilege to follow in his footsteps and to—[18:50] JONATHAN: And a good thing he was in prison, right?[18:53] TYLER: He had a very vivid imagination, and the results of just certain scenes ... And he had such a deep theology and understanding of God's Word. So I love in Part 2, which is less known (his original Part 2) there's a scene where they're walking by the cross with Great-heart, and it just goes into four or five pages on pretty technical like substitutionary atonement. But he does it in a way that's so helpful and clear, and so I loved when I was going through Part 2 to take a piece of that and just simplify it. They just go at the cross and it's a very clear explanation of what it means that the King's Son died in our place. He took our sin. He gave us his righteousness. And then that, combined with different images of Christian's filthy clothes are removed, his burden is removed. So things like that I found super helpful. And then another big piece is that kids, especially in this generation, are visual, becoming increasingly more visual learners, so that's our big slogan, Biblically Faithful, Beautifully Crafted. And the idea is to have these really vivid, beautiful illustrations that draw kids in.[20:19] JONATHAN: But they aren't too graphic.[20:20] TYLER: Yes, yes. That are age appropriate. And then also to have text that's sort of clear, deep but simple and not overwhelming, and to pair that up well. We visited a friend's house, and they had their range of kids from two to seven, and they had all the books out. They said, “We swear we're not just...”[20:44] JONATHAN: Not for you.[20:45] TYLER: “... because you're here.”[20:48] JONATHAN: It's normally like this. Well, you'd find that at our house, too. We've got both book 1 and 2 wide open on some page.[20:55] TYLER: That's awesome. And I will see them, just the kids were flipping through the pictures. Like they couldn't read yet, but—[21:03] JONATHAN: But they can remember the story associated with the picture, yeah.[21:08] TYLER: And they just loved flipping through it and looking. And they stare at all the details. And so I think that's another aspect that I found very helpful is just these vivid images in books.[21:18] JONATHAN: Apart from story time with your kids, are there rhythms or patterns or activities that you try and work in to family time that you've found successful at your home?[21:34] TYLER: Yeah, I wish I could have more to say. The story book has sort of been my big main one. The other was—[21:42] JONATHAN: And your big emphasis for sure.[21:44] TYLER: But the other has been sort of the Deuteronomy type of while you are going, while you are walking by the way to instruct your kids in these things. So where he's just saying, “Write it on your doorstops. Write it on ...” Like everywhere you're going, just have these moments. So where kids are inquisitive, kids ask. It's a crazy amount of questions per day, I think when you actually ... when you've done studies of that, I'm sure.But if you're feeding them these biblical things, then they're going to have questions about biblical things that come up naturally. Which was another little piece. I mean, like maybe my dad [unintelligible] or something. We'd always have at nighttime, it would be like, “Oh, you can watch a show, but it's going to be a Bible show.”I know different families have different rhythms and some don't like shows and some like shows. But first it was an easy switch to just say, “You want to watch Paw Patrol. Instead, let's watch something else.” And a lot of those ended up being moralistic, as we kind of said. But at least it's touching on biblical things.[22:51] JONATHAN: Well, and you're able to elaborate from that and helpfully redirect them towards a cross-centric faith instead of a duty sort of centrism.[23:07] TYLER: Yeah, definitely. And so those have led to a neat where they're just thinking about things and things are resonating. And so my grandma had died last year, and my son said, “Can we call her?” Like after she died. “Can we video call her because I want to see God? Because she's with God.” And so I was like, oh, that's such an interesting ...[23:33] JONATHAN: He's got a deep truth with some confusion.[23:38] TYLER: “She's in the presence of God, why wouldn't she have her cell phone? We used to call her. Now can't we call her now?” So then you just have these neat opportunities when you're just there. There's the input, intentional biblical input, and then they're going to be inquisitive, asking questions through the day as we experience ... “Why does this family do that? Why does my friend have a mom but no dad around?” Or “Why does this cousin not believe in Jesus?” and things like that.[24:12] JONATHAN: Yeah. Having kids keeps you on your toes. And if you're a believing family, then there's a lot of questions that I think even the greatest of us could stumble over and so you really need to be filling your own mind with helpful resources. You need to be in the Word and seeking to grow in understanding and knowledge and faith and bearing that fruit of the Spirit. There's, you know, as we kind of laughed about, I mean, kids ask a ridiculous amount of questions. And there's times where I think sometimes I'm like, “I'm done. Done answering your questions. I don't want to do this anymore.”And that's typical selfish mentality of this is about me and not you. But you know, you kind of flip the script a little bit and start thinking, Okay, this could be a really great opportunity for them. And in all their questions there's usually something underlying all of that. Fear, doubt, whatever it is. Or sometimes it is just curiosity. So it's important, I think, for parents to be as available as humanly possible, and really thinking through those things.And I think sometimes people are afraid. What if I don't know the answer? Then I'm going to fail my child, or whatever it is. And it's like, you know, kids don't think in that category necessarily. I think it's actually quite biblical to say, “You know what? You're asking really good questions. Why don't we look at this together? Why don't we kind of use this as an opportunity to show that mom and dad don't know everything, and they're seeking to grow just like you are?” So tell us a little bit about the Kingdom of God story books. This is another project that you've done. I don't know if it was before or after Little Pilgrim, Big Journey, but tell us a little bit about that.[26:12] TYLER: That was after the Pilgrim book, so that was six or seven months ago those landed. And that was a big project, and an exciting—[26:22] JONATHAN: Yeah, taking Old and New Testament, that's a big undertaking.[26:28] TYLER: That was the most challenging book I've written, obviously, because you want to do honor to God's Word and to be faithful. And initially it was going to be bird's eye overview. So I thought 70 pages and we'll touch on seven different kind of key moments that highlight the kingdom through the Bible. And then as I got into it, I said, Oh, it's still missing ... like there's something ... [26:53] JONATHAN: It's always something.[26:54] TYLER: ... in between these. And so that grew to 140, and then 280, and then all of a sudden it's—[27:01] JONATHAN: It's summer reading.[27:03] TYLER: Yeah, suddenly it's a 600-page fully illustrated 45-chapter thing. And the two big goals were one was to incorporate biblical theology, which was to have these themes that are tied through, woven through from Genesis to Revelation, and so the kingdom is one of those big themes. And there's many others. So that was an exciting challenge. And then seeing prophecies of the King to come in the Old Testament. There's so many of those. So to highlight those in a very vivid and helpful way was an exciting piece of that. And then just to give a clear understanding of God's kingdom. As Jesus said, “The Kingdom of God is now in your midst.” He said, “I have come for this purpose: to proclaim the Kingdom of God.” So if that's His understanding, He's saying, “For me to come and fulfill what God has promised is to display myself as the King of God's kingdom,” which He saw as clearly foreshadowed and set up in the Old Testament. So doing that in a kind of full way that knits. The goal was to sort of be seamless between each chapter and between each kind of scene or book. And the summary of it was God's presence, God's people, in God's place, through God's promise. And each chapter kind of has a summary in that way to connect those things.[28:28] JONATHAN: Ah, that's great. Books on the horizon. I think you have a third Pilgrim's Progress book coming out. Little Pilgrim, Big Journey, I should call it. I keep calling it Pilgrim's Progress. [28:38] TYLER: That's okay. Yeah, Part 3, which I'm excited about, it's about the two brothers, Christian's brothers. They saw their sister cross the River of Death and the king said it was not time for them to come yet. And I thought that was kind of a neat way to extend the allegory. Because some kids have viewed it, okay, we're going across this journey and then we get to death and then it's done. And there's this bigger picture of mission and evangelism and service. So kind of a follow-up to that. This idea is the king, instead of calling them to cross the River of Death, calls them to go back to their hometown, back to the cities, to proclaim the Gospel and to proclaim that the kingdom is coming. And so these brothers go and they experience the ideas of the Great Commission, missions, evangelism.[29:29] JONATHAN: Yeah, they've taken the mantle from Evangelist.[29:34] TYLER: Yeah. Yeah, so it's kind of an exciting. As even Evangelist and Great-heart pass, they say, over the River of Death, they say, “You take my sword. You go on.” And so I think that's a neat challenge and call for kids that have professed faith in Christ now to go back to serve, to spread the Gospel to their friends. And so I'm excited about that book.And then there's also. Our tribute to Bunyan was a legacy edition of the Pilgrim's Progress, so just a full, unabridged version more geared towards adults or older kids, teens. And has kind of 150 of the vintage illustrations and it's just a real treat to read.[30:17] JONATHAN: Well, my son will be excited for the third. Because he did ask why are Christiana's brothers stuck on the other side of the river. And so I can give him good news that the third one is coming. This is great. What a helpful conversation. We're going to put links for your website and all your books in our show notes. So those of you who are listening, I do recommend these. These are just fantastic. The illustrations are beautiful, they are age appropriate. The story brings through great truths and you'll have great questions. You do have questions that you ask. My son loves asking questions, and he loves answering questions as well. And so the fact that each chapter has questions that are asked—and they're not just recalling information, but there is some application in there as well, which really kind of speaks ... You know, because kids want to have understanding and then kind of relay that back to you. So I think that's been a great tool that you guys have put together on that.[31:24] TYLER: Yeah, that's been exciting. Initially, again, God has been gracious in this whole process. Because the first book, I was getting ready to print it, and then I just kind of asked on social media, “Would anyone find questions helpful?” And there was just a ton of response, “Yes, yes, please, please.” So I put them in.[31:40] JONATHAN: 500 percent again.[31:41] TYLER: Yeah, yeah. And a lot of parents have told us, yeah, these questions at the end of every chapter is such a help in our discipleship.[31:48] JONATHAN: It's so good. So helpful. Tyler Van Halteren, I am so grateful to have met you now that I've read through your books. And I hope that they continue to be a blessing for generations, just as John Bunyan has been for many centuries. And again, thank you so much for taking the time to come and chat with us on Candid Conversations. [32:09] TYLER: Yeah, thank you.

Episode 251: Broadcasting Hope: Farid Garas

Play Episode Listen Later May 28, 2024 46:38

Have you ever considered the miraculous power of the Gospel message as it transcends borders, languages, and opposition? In this episode, we talk about the profound influence of Christian media in the Arab-speaking world through the compelling experiences of Farid Garas, the Senior Director of THE KINGDOM SAT satellite television and internet channel – a media outreach of Leading The Way with Dr. Michael Youssef.Farid's narrative is not just about spreading the Gospel; it's a journey of overcoming adversity, embracing his identity in Christ, and changing lives in a region where broadcasting Christian content can defy expectations and alter eternity.Embark on a captivating journey with Farid, a man who once questioned Christianity but now plays a pivotal role in shaping Christian media in a region where such content has often faced significant obstacles. His encounters with authorities, far from deterring him, only reinforced his commitment to his faith and mission, making his story a testament to the power of unwavering faith in Christ.Through this conversation, Farid highlights the strategic use of drama, film, and satellite television to spread the Christian message, reaching out to believers and those searching for Truth in tumultuous times. He discusses the growth of THE KINGDOM SAT, its impact, and the continuous efforts to foster a connection with the audience through live broadcasts and digital platforms.This episode not only delves into Farid's personal and professional life but also provides a deeper understanding of the challenges and opportunities in media and ministry. Through their resilience and dedication, Farid and THE KINGDOM SAT team offer hope to millions in the Middle East, demonstrating the transformative potential of faith-based media in the face of adversity.To ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidFacebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 251: Broadcasting Hope: Farid Garas.[01:28] JONATHAN: Today we have a special guest, an in-house guest here at Leading The Way. Farid Garas is the senior director of the Kingdom Sat. The Kingdom Sat is our 24/7 satellite channel for the Arab-speaking world, taking biblical teaching and different types of programming through satellite television and internet to the Arab-speaking population. He has become a good friend and I am so honored to have him joining us on Candid Conversations. Farid, thank you for joining us.[02:06] Farid: Thank you, Jonathan, and I would say congratulations. This is the first podcast after being Dr. Jonathan Youssef. So congratulations. It's an honor to be with you.[02:16] JONATHAN: Well, it's an honor to be with you. And you are doing some doctoral work yourself. And we can get into that a little bit later for those who are listening, you're from Egypt. Tell us a little bit about growing up and your life story and then we can transition into how you got into broadcast ministry. [02:39] Farid: Yeah. I feel I am a minority of the minority, an evangelical Christian in Egypt. And that was a great blessing. I didn't like it in the beginning, feeling that minority I'm not like everyone else, but it was great. My father was a scientist. He studied science, and he didn't like all the Christian religious ideas at that time, talking mainly about the traditional Coptic traditions or Christian traditions. And he always thought that those Christians are cheesy and he didn't like that. So his two sisters invited him to a Christian conference, and he said, “Okay, I'll go. But after the first day I will not like it and I will go back home.” So he tried to flee from the conference three times, and those good Christians would go after him and bring him back.[03:42] JONATHAN: Kicking and screaming.[03:44] Farid: Yeah. So God grabbed his attention through Bible study, and also because of the witness of those Christians that went after him. He discovered that those Christians are really good people. They are professionals. They are not cheesy. They are very intellectual, they are funny, they are successful. So he was attracted to God by the witness and the Bible study. The following year, after studying the Bible for one year, he became very excited about this paradigm shift that God allowed him to go through just by knowing the Lord, and he led the conference the following year. He invited eighteen people from his family, young people, and long story short, they all became Christians. They confessed … they gave their lives to the Lord.[04:36] JONATHAN: Were they from a Coptic background? [04:41] Farid: Yeah, they are nominal Christians, mainly. And many of them are leaders in the Christian ministry now. And he played a great role in my life, not just by the Christian teaching, but by his example to me. And he showed me it was a balance between unconditional love and discipline. And it's like your father played a great role in your life, and that prepared me to know the Lord more and to be ready for ministry.[05:14] JONATHAN: Yeah, yeah. So tell us a little bit about your upbringing. Your father's obviously grown into leadership roles within the Christian community, the evangelical community. You're grown up in a covenant home, where you've heard the Word taught. Tell us a little bit about your faith journey.[05:37] Farid: Yeah. So my father and mother brought us in a church setting and in a covenant environment, and they prepared us to hear the word of the Lord in house and also in church. But as a teenager, even a kid in an evangelical church, you get to hear the salvation message more than one time. But one time I remember, and the teacher has related with me, it was a play about the end of days. And the last line in the play, the main character talks to the audience and says, “What if Jesus came today? Are you going to be here or there?”And of course, it was so dramatic. And so I went home and couldn't sleep. I was thinking of all the events of that day. Is my life really Christian? Am I up to the standard that God accepts? And do I enjoy His redemption just because I want to get released of the … get out of … get out of hell?[06:50] JONATHAN: Yeah, sure. Get out of hell.[06:53] Farid: If only that reason, not relationship. So I couldn't sleep, thinking about all these things, and I had to go to the school the following day. I was so tired. So I came back after the school, had a nap, woke up, found I'm home alone; nobody's home. So I thought, “Uh, oh.”[07:14] JONATHAN: It's happened.[07:16] Farid: Yeah. So this was one of the times that God not only grabbed my attention I think He was preparing me for how media ministry could be a tool in evangelism and in Christian life.[07:34] JONATHAN: So the impact of that performance left a mark on you that you wanted to continue to build upon that.[07:44] Farid: Yes. After that, I was becoming like a dedicated Christian. Okay, I need to study the word. I need to practice all these things. And as a result for that, I was invited by the Christian religion teacher, in the middle school, to talk. We have those Christian classes. They separate Muslims and Christians, each group in one class, and there is a curriculum, but he would finish the curriculum and then ask me, “Okay, Farid, tell us what you think about this.”Mainly, I'm the only evangelical. He wanted to know what those evangelicals say, so I would share. And then mostly it went all right, apart from one of my colleagues who was very rigid, very extreme, and he would say all those things, “Oh, you evangelicals say this.” “Oh, you say that.” And long story, but it ended up that we became best friends and he gave his life to the Lord. We used to study every night together and so on. And after he became Christian, he has these leadership qualities and he became also excited. And together we started this evangelistic drama team. This drama team grew very fast because it was very effective. We wrote our own plays, we performed in churches, in youth meetings. Even we started our like independent Christian theater festivals. Like we would do three plays in three nights, and it was very well received. Like most of the nights we find that we have double the number of audience, so we need to perform twice and so on. And we even came here to Atlanta in 1996, during the Olympics, to help in evangelistic campaigns for the Arabic speakers.[09:59] JONATHAN: Wow. I don't know what to call it. The drama bug had been captured and you're seeing this as a tool for evangelism, for outreach even internationally., I think you start to recognize that this is only a small stage. Explain to us how the doors opened up to having a bigger reach and a bigger audience.[10:30] Farid: Yeah, the drama bug is only like a tool in evangelism. And in the Christian media I've been for many years, you would find like two extremes. One extreme you would find some very interesting, exciting but shallow content. On the other side you can find very good, deep teaching, very sophisticated, spiritual, biblical but sometimes boring. [10:57] JONATHAN: This is through television medium.[10:59] Farid: Yeah. And the theater and radio. So, I mean what was special about this team that God showed us how He could use the good content, because the gospel is the core. And when we started presenting the gospel in the drama tool that would communicate to people in our age, we found that it needs to be like this formula. We cannot let one play to be just popular because it's funny. And we found that God is growing the work.So it started with theater, then we started to do some radio with TransWorld Radio, like doing drama on radio and so on. And we went to television. You know in Egypt in those years, early, until early 90s, there's no Christian content available for public audience, even Christians. We are 10 to 15 percent. But the national television would allow a Christian Mass only on Christmas, so it's like one hour per year.So we said, okay, how can we break into television? And it was hard. There was no way. So we tried to read books, practice, and we started like drama schools. We don't know anything, but we start inviting people to teach us. And I wanted to study more about media like in a professional way, so I saved money, worked for eight years, then came here to the States, studied digital filmmaking school, did some internship. Then went back to Egypt, completed more studies, did the diploma in film production and directing in the American university.[13:00] JONATHAN: So your heart was always to go back to Egypt. Yeah.[13:03] Farid: Yes. I mean, it was very good over here. I studied in Hawaii, then internship in San Diego. The goal is to do ministry, so I went back to Egypt and completed this study, which allowed me to be part of the cinema syndicate and also to have my own production house. So it all started from just the first play that introduced me to the Lord, and then it continued to do more. Now I have to do more work for the mainstream media and the Christian. And this production house was very successful. God gave me favor in my vendors and producers and it went fast because mainly I learned here in America a different style than the Egyptian national television. Minimum crew doing quality work in a different way. Of course, technology and so on. And I got the hands-on experience. So I had still the main goal was to do ministry using media, but I was able to fund the Christian work from the secular work I used to do—mainly corporate videos, advertisements and documentaries and so on. So they complemented each other. And it grew like for 2003 to 2009 like for six years.[14:44] JONATHAN: Wow. Wow. Sort of paint a picture for us. What does it look like, up to that point, before there's television broadcasts, evangelistic broadcasts being allowed in the country? What did sort of radio and drama team, what does that kind of penetration into the population look like? [15:07] Farid: I mean, you could easily say there is none official media for Christians. They would allow some official magazine or newspaper from the Coptic Church and some from the evangelical, but mainly they would be accepted only in a church setting. So there is no mass media, no radio. So we had Christian radio, TransWorld Radio, that was being broadcast from—[15:40] JONATHAN: South of France, yeah. Monaco.[15:41] Farid: So you could only receive it at like 10:30 PM to 11:30 PM, and you have to be in an area where there's not a lot of buildings and so on. It was a great blessing. Many people knew the Lord from it. But it didn't serve the mass, those true seekers—Muslims, Christians, nominal Christians. So that was the case until '96 when Christian satellite was there as a technology. The government didn't allow it, but it was there.[16:16] JONATHAN: So that's kind of your introduction into the television world in terms of Christianity.[16:24] Farid: Yes. I mean, it's now available. Can we break into that? After the study and this production house, I was able to share in lots of production. And before that, God had prepared me with working in dubbing Christian media, like Jesus Film, VeggieTales, Super Book, as an actor. And it was a great experience.[16:55] JONATHAN: And where were those being broadcast?[16:58] Farid: In one of the production houses that actually it's like a Christian place but also recognized as a production house. So I got some training in that, and when the satellite started, I was one of the first ones that were ready to do a part.[17:19] JONATHAN: So let's kind of move the timeline forward as Christian media is now being produced. And at what point does the government allow satellite broadcasting?[17:35] Farid: You know they didn't allow it because satellite is broadcasted from abroad. So in order to stop it, they had to stop all the bouquet of channels, so they couldn't do that. So it first started on one of the satellites that was Europe-based, but if you have a big satellite dish and receiver, you could receive it at home. And it's different than here in America. I mean, satellite in the Middle East is free to own. So you just spend maybe $15 or so to have a device recorder and you receive about two thousand channels. So among them are one Christian channel, so if the government wants to stop, they have to stop everything, so they couldn't. [18:31] JONATHAN: Right. There'd be too much backlash. [18:48] So let's fast-forward. It's 2009. You're very busy. Tell us a little bit about what's going on in that year.[18:57] Farid: Yeah. It was a very important year. At that time, I was busy doing production with different now-Christian satellites. They are more than one now and I already started as a part time in one of the satellite ministries out there and at the same time I was having my production house. And I read a book in one of my visits to Europe and America about Muslim testimonies. You never read those in Egypt, so I thought maybe I should film some. I was naïve. I didn't know everything is like under surveillance. So I had this studio in my production house. I was doing lots of projects, but this one I said, okay, I need to be careful just in case, so I'll do it in a secret environment.But it wasn't. So I filmed those testimonies and the following day I started to get visits from the national security. And the way it was done, it wasn't like—they didn't come and say, “We are the national security. WE want to investigate those Christian projects.” No. First they would send like one department of some kind of police, checking the social security or checking the telephone or electricity.[20:40] JONATHAN: They were spying on you.[20:42] Farid: They were—I mean, in Egypt, I mean, not all the businesses would have all the papers right. So the plan was to find something wrong to make a case against this office without saying it's religious, just to keep the face for the media in the West. So they didn't find anything wrong. It took like five weeks, several visits. So the last one they said, “Okay, there is a censorship case against you.” Usually, those are copyrights or not using original software, which is very common in Egypt. But my software was original. I had no violations. But the case was still there. And then the national security officer called me in his office. I mean, before all that happened, God prepared me. I had this shooting day with kids at 9:00 AM. [21:45] JONATHAN: Filming, yeah.[21:46] Farid: Yeah, it was prepared and everything is in place and I had a dream or vision that I woke up early, like 5:00 AM, very alert with this impression that an officer or someone from the security will come and ask about me. And I knew this was from the Lord because it came with a sense of peace. It should be scary because I know what could happen.[22:17] JONATHAN: Yeah, right. And you've got a wife and kids and—[22:20] Farid: Yeah. It's … So I started praying, like reading the Bible and committing the day to the Lord, and I met my friend and production manager at 7:00 AM. I said I had this dream, so I smiled and he said, “What do you want to do? Do you want to cancel shooting today?” I said, “No, no. But if the officer came, please call me outside not to scare the kids.”And we started at 9:00 AM filming. Everything went all right until 3:00 PM I got the visit. They mainly told me “There is a warrant against you. Come to the national security office at 11:00 PM” at night. That's like usual part of the environment you're put in. And at that meeting, the officer confronted me. “Why are you filming those infidels?” according to the apostate law, they were Muslims, now they are Christians, they are supposed to be under this apostasy law. Apostasy law in Islam if someone left Islam he's supposed to be executed. It's not applied in Egypt, but the concept is there, so it's not allowed by the families or by the regime or—[23:45] JONATHAN: Right. It's an intimidation factor, yeah.[23:47] Farid: Yeah, for the what they call the public peace and so on. And he said, “Why did you do that?” I said, “I'm a professional director and filming what they have to say.” And he said, “Yeah, but tell me how much would you take, I see you produce a lot of Christian content.” I said, “Yes.” He said, “Okay, this Christian music video,” it's all like a lot of content from my production house. “How much do you take like to produce one?”I said, “Yeah, like one thousand pounds.”“Okay, what if you do like a music video, secular, mainstream one?” He said, “How much would you take?”I said, “I will be like about fifteen.” “Fifteen thousand to one thousand. So why would you choose to do the Christian work?”I said, “I'd like you to watch one of those music videos, secular ones. Would you be happy to show them to your family, to your kids? I want my family to be proud about what I present.”And he said, “Okay, why did you film those testimonies or stories. For them it's like disaster.”I said, “They … I mean, according to the constitution, we have freedom of speech, right?”“Oh yeah, okay.” And he said, “Okay, do you have license for the production?”I said, “Yes.” And he started asking questions, and we ended up having a case of censorship. And I asked the lawyer at that time, “Okay, why is it censorship. I had nothing wrong.”He said, “Yeah, because it's national security, it's classified. They cannot declare it.” And this lawyer was a Muslim. He said, “We're going to win this.”So God placed that lawyer after like four different lawyers, and that lawyer took maybe five months to one year, I think, until the case was resolved. And it was what was so-called Arab Spring, the revolution.[26:00] JONATHAN: Yeah, the people will remember watching that footage back at 2011 and the revolution in the streets and the overthrow of Mubarak and then somewhat of an election that took place afterwards, yeah.[26:18] Farid: Yes. And during that time, the case was released. And actually they had confiscated two of my editing machines. One of them had my first Christian evangelistic feature film footage and the other one had the backup, so it was unfortunate. I have many other agents witness, but then God really gave us favor in getting those back after all the police stations were burned and somehow God kept those editing suites and the footage, and this film was released and it was even screened here in America. It's an evangelistic movie about an immigrant who thinks that he's persecuted because he's Christian. He doesn't know that his problem is he doesn't have this relationship with God. So he comes here to America and finds that there is another set of challenges, and then he gets to know the Lord and then his life starts to take a positive turn and that film was here in cinemas in I think 2012 and it was shown in five states who have heavy Arabic-speakers population. [27:46] JONATHAN: Well, this wasn't your only run-in with the Egyptian authorities. You continue to produce content and then you find yourself in a similar situation—a worse situation. [28:02] Farid: Yes. Now I have a file. [28:06] JONATHAN: That's right.[28:22] Farid: Yeah, during those years, God made a great awakening in Egypt after the revolution. It was both religious, ritual, biblical and also political for young people especially. And there was not a lot of control at that time, so a lot of ministries were able to go out and do more. One of them was this Christian satellite that I was part of, and God gave us a chance to do things we never were able to do before, like this prayer night, twelve-hours prayer gathering, around 35 thousand. That's like first time in Egypt. And they were gathered at the Cave Church, praying from night to morning, because police were not there. Usually, police does not allow this in the name of security and also—[29:25] JONATHAN: I mean, just for context, this is after the election of—remind me his name.[29:34] Farid: Sisi?[29:35] JONATHAN: No. Before Sisi. Morsi. So this is after the election of Mohammed Morsi.[29:41] Farid: No, this was in 2011.[29:42] JONATHAN: In between. Okay, so this is after Mubarak has been sort of deposed.[29:52] Farid: Yeah. I mean, the army was in control at that time, but there was no president, so there was some more freedom.[29:59] JONATHAN: So there's these all-night prayer meetings taking place in this Cave Church.[30:04] Farid: Yeah. This was 11/11/2011, and it was a great night because it was from all non-official Christian leaders gathering together. And a lot of people, a lot Christians—and Muslims—gathered. Because of all what was happening, people were praying, “God, we need you in this country.”And the satellite ministry I was in broadcasted that live. We experienced a lot of trials for interruption, but God miraculously allowed us to be alive. And a lot of the mainstream media were shocked to see what was happening with the number of people, the prayers for peace, including Al-Jazeera channel. So they called me and said, “Can we have your feed?” And I said, “Sure, of course.” [31:01] JONATHAN: You said 35 thousand people gathered.[31:03] Farid: Yes. [31:04] JONATHAN: I mean, that's just hard to imagine.[31:07] Farid: So a lot of these events took place, a lot of production, a lot of live programs on satellite, and people were all the time looking at news and they really were looking for hope. They lost trust in the government, they lose trust sometimes in their religious leaders, and they were looking for Jesus. And we presented the hope of Jesus Christ through satellite ministry. So the regime came back in 2014 and another case was—I mean, the same scenario happened again. They came to the satellite ministry office, confiscated the machines, like a lot of people, I think there were eleven, twelve people, and they were looking for me. It was the weekend and I wasn't there, so they called me. I went there and then direct to jail, to a case of five charges, very serious charges.[32:12] JONATHAN: Each of them carried the penalty of fifteen to twenty-five years.[32:15] Farid: The minimum. The minimum one of them. And of course, they were false accusations, but in those cases, it doesn't matter.[32:29] JONATHAN: Justice may not prevail.[32:30] Farid: Yeah, it was serious, but the team members started praying, and actually many prayers around the world started because this time it was this Christian ministry, so it was well known. When this happened in 2009 in my office, nobody knew because it's like my private thing. But now many people started to pray. But it wasn't the only case at that time. I mean, the regime started to be back and there was a message through different things. Okay, the regime is back, everything needs to be back now in law and order according to our system. So those who took more freedom politically, they need to go back to their borders, to their limit. Christians who have been talking and doing a lot of ministry, no, they need to stop.[33:25] JONATHAN: Restricted freedoms, yeah.[33:28] Farid: Islamists need to do the same. So they closed a lot of Muslim channels and they had many cases against activists and the revolutionists. And this was the biggest satellite ministry, so this was like a statement that no one needs … everyone needs to go back to the original setup. You should know your limits. Don't evangelize Muslims, don't get too involved in politics and so on. So this case was very serious, and I got very scared. Just I remember in jail that night just thinking. I read the law, and it seemed like I'll not go out. And just thinking of my three kids and my wife and said, “Lord, what is going to happen?” I got really … it's like a panic attack what would happen.And the other prisoner that was in the same cell had smuggled a cell phone, so he said, “Yeah, do you want to talk to your family?” I said, “Yes.” “Okay, I'll give you a call. Let them transfer $15 for each minute.”So I called my wife, and she said, “We're praying for you.” And my eleven-years daughter said, “We're praying for you and I want to share with you the verse from Joshua, ‘Be courageous and be strong.'” And it communicated to my spirit.In the first case, my wife was afraid. She used to walk in the streets with the kids, holding her passports in her case because it was so scary with all those visits. But this time, I was scared, she was confident, and she encouraged me. And my daughter, my kids, at that time they were very young, but somehow God gave them peace, although I was in jail.And miraculously, God resolved this case. And you won't believe this, Jonathan, but all the cases that were initiated at that time are not resolved till today.[36:02] JONATHAN: Except for yours.[36:03] Farid: Yeah. It was a miracle. I can tell you details, but it was a miracle by the hand of God. And yeah, so I—Actually, it was a very special testimony for me during those times. I was released from jail, but the case was still there, so I had a conversation with God. And I said, “God, I am scared. I think it's time to flee the country.”And I felt in my spirit God is saying no. I said, “Why, God? There are biblical escapes. Joseph and Mary and the baby. Could this be one?”[36:46] JONATHAN: Peter, Paul.[36:47] Farid: Yeah. Can you let me go? How do I face those charges? There was no way this case is going to be resolved. And God asked me one question. He said, “Do you believe what you present on screen, or this is separate from you actually?”[37:08] JONATHAN: Is your faith in the thing that you stand behind as a broadcast, yeah, yeah.[37:13] Farid: “Is it only for commercial or is it real? Do you believe I can resolve this no matter what laws are there, no matter what situation?”And I met with my mentors, I prayed with my wife, and I spent time with the Lord the same night, and I ended up saying, “God, I'm yours and I have peace to stay and I am not afraid but I trust you will take care of this, whatever happens.”And I returned the flight ticket I had booked. Actually, my wife said, when I said that, she felt like I'm under a lot of pressure. She said, “Yeah, you can buy a ticket and we have twenty-four hours to return it for free.” And I returned the ticket and it took those five months of investigations, visiting court and all that, but it was resolved. And I spent a few more months in the same ministry and I felt it's time to move on and I felt, okay, I need now some time to pray and see what is next. I had confidence through prayer and through checking with my leaders that it is time for me to move on. But I stayed until God said yes and got the blessing of the leaders and family and all that. And I became independent now, not knowing what to do, and spent some time to pray and ask God what's next.[39:02] JONATHAN: And what was next? You had a special introduction, you read a book, you read another book.[39:12] Farid: Yeah! You know I was in a trip in 2014 while being very busy with my production house and our satellite ministry, so in that trip to Lebanon, I had some free time at night. I finished meetings and I selected a book from the library, and it was Dr. Youssef's book, Trust and Obey. And I couldn't stop reading it until I finished it, because I could resonate with him. And now I know Dr. Youssef from satellite, I know his faithfulness to the Word of God, but I don't know him as a person. I mean, I know him as a minister, as a speaker. So his testimony in Trust and Obey was very fascinating for me. I could visualize what he was telling in his book about his upbringing and all his stages he went through, because of course, my journey was much shorter, different, but I could understand a lot of what he was saying from being there in this culture that he was brought in.And I said this book should be filmed sometime, I mean this testimony. But I have no way of doing that. And so it took two years, and now I am free after 2016. I now have no job. I went to Germany, where my wife's family are having ministry there, and we stayed there a few months to pray and seek God, and then I got an invitation from Joshua Youssef. “Why don't you come to help us at the Kingdom Sat?”I said, “I just moved from Egypt to Germany. I'm not sure what's coming.”He said, “Yeah, pray about it and maybe you can start on a contractor basis, as a consultant.”So I said, yes, that seems good. I prayed about it, of course, and I started coming here to the Kingdom Sat, Leading The Way, and started coming every month for one week or so. And after six months, I had total peace about it and I said, “Yes, Joshua, if you still feel there is a place for me.”He said yes. I met with Dr. Youssef, of course, and they took around one more year to do the visa work and so on, and then I came and joined Kingdom Sat. That was in 2017.[41:46] JONATHAN: Tell us about Kingdom Sat. For our listeners who maybe aren't familiar, broadcasting started in 2009, you joined the team in 2017. Who does it reach? Where does it go? What's the fruit that's being borne from it?[42:07] Farid: Yeah, the Kingdom Sat is a vision of Dr. Youssef. God gave him the vision in 2004, and it took five years in the making because he wanted to have a solid, biblical channel that broadcast the best of the east and the best of the west in terms of Bible teaching. And God used Maged Atalla, my colleague, to start this. He's an engineer. He made a great foundation following the vision of Dr. Youssef and a lot of partners who came together with Dr. Youssef to present their content on the Kingdom Sat that's being translated into Arabic. So this was a big part of what's being broadcasted on the Kingdom Sat, along with selected Bible teachers from the Middle East as well.So it was a great foundation. So I came on a great foundation on a time where social media was coming, live broadcast was being introduced more and more, and when I joined, Joshua asked me, “What proposal do you have for the Kingdom Sat? What do you think?”And I presented a proposal and mainline I met with him and Dr. Youssef and said, “This is what I think. I think Kingdom Sat is a great channel, but it's more like radio. If you turn the screen off and only listen, you don't lose anything. We have a great tool. We can present visuals. We can do more. So I think it's great, but one of the things that we need to do is doing more formats, more genres. We need to reach more people—especially those who are underprivileged like women, kids, young people in the Middle East. And we need to reach out to the non-Christians. He said, “Yeah, this is our vision.” And actually Dr. Youssef said, “Yeah, actually we made a survey and this is what we reached.” And he quoted one of the friends in Egypt. He told them “the Kingdom Sat is like a big, huge, elegant department store, but you enter and you found only navy blue suits, size 42.”And he laughed at that and they said, “Yes, we want to do more.”And I started working on that, like different lines like having broadcasting live, like have live broadcasts, especially from Church of the Apostles. And this was a continuation for the people in the Middle East to know what's this vision. Who is Dr. Youssef? Who is Jonathan? Who are those singers in the Church of the Apostles? And I think that made a great connection, especially with those who don't have churches, like in Nigeria or those places—[45:25] JONATHAN: Where you're isolated and—[45:27] Farid: And they write on Facebook when we broadcast live. For example, when you're preaching they would say, “Oh Jonathan, God bless you and God bless your father. God bless the church,” as if they are there in the church. And in the communion time, they will talk “We don't have a church, so we're taking communion with you now. We're praying.”And the first time in Easter 2018 it was the first time to do live, God encouraged us by two Arabic speakers in the Middle East giving their lives to the Lord. So it was encouragement so we started that once a month, then during the COVID time, we started to do it on a regular basis. So it's a great blessing to have these live broadcasts. And we started to introduce a lot of digital platforms, like Apple TV, Roku, Smartphone application. We updated the website and streaming. So we started to add more genres, add more partners from the west and east, so a lot of things happened.And today the Kingdom Sat reaches 260 million households in the Middle East, and they receive this ministry for free. And anyone with an internet connection can receive the content of the Kingdom Sat.[46:47] JONATHAN: And let's talk a little bit about the follow-up process, because you have people that are standing by phones to answer calls. What are some of the questions and feedback that you get from the broadcast?[47:03] Farid: A lot of viewers are very true seekers, even those from Muslim background, and they are faithful. They really seek God. So they send questions, sometimes in a provoking way, sometimes attacking, but they keep watching. They will attack one time, and then the field team would respond to them in a graceful way and helping them, so they would come back, watch again, and raise another question. And we have great testimonies of those viewers that only watched by chance the Kingdom Sat, they watch some program, and they would keep interacting with us until they become Christians, they commit their lives to the Lord, and they get baptized. Then they join an online study group for discipleship or we would connect them with a local church. So this is one type of persons, those true seekers. And as I said, it changes from very extreme attackers to true seekers that are ready to accept Christ.And the second persona we serve is the new believers. Some people knew the Lord through the Kingdom Sat or online or somewhere else but they don't have a place to grow.[48:37] JONATHAN: They need discipleship, yeah.[48:39] Farid: Yeah, and not to compare, but the Kingdom Sat is very distinct about presenting biblical teaching, solid. Other ministries would present this shallow content that we spoke about. So that's the second persona, like new believers. Third persona is mature believers who are in ministry, for example, and they want to grow, they want to learn. And some of those viewers would write, for example, in YouTube, “I am watching the series so-and-so for Dr. Youssef. Where is episode number 15? I want to finish it tonight!”[49:19] JONATHAN: We're on top of you. That's right.[49:21] Farid: So they are the three main personas. There are subcategories, but we have a great field team that is dealing 24/7 with any viewer who has a question or he wants a prayer request or they ask even other, general questions.[49:39] JONATHAN: And what's the risk for those people that are on the ground, field team workers? I mean, you're working in a hostile environment. It's not like you're in Oklahoma fielding calls. You're in the thick of it.[49:54] Farid: That have the same risk I faced. And yeah, I mean, but again what I experienced. They are also in the protection of God. But they could be charged, they could be persecuted, detained, or all this could happen in an indirect way by the community, by their families. But this doesn't stop them. Most of those in the field team are coming from a Muslim background, have theology degree, so that's their life goal, their vision.[50:39] JONATHAN: Well Farid, your story is just … it's fascinating to me the beginning with the drama, you coming to the West, coming to America, then going back, facing the adversities, then coming back here and now you're presenting on a global stage the very thing that led you to the Lord. And we're just so thankful for the work that you do and the work of the Kingdom Sat. And we're so grateful that you took the time to sit with us and share your story here on Candid Conversations. Thank you for being with us.[51:13] Farid: Thank you, Jonathan. It's an honor to be here, and it's great to be in the kitchen how things are done here. And I see the hand of the Lord every day in this, in your family, in the ministry of the Church of the Apostles, Leading The Way, and it's God work and I'm very grateful to be here.[51:35] JONATHAN: Well, we're grateful for you. Thank you, Farid.[51:36] Farid: Thank you.

covid-19 christmas god america jesus christ american church trust lord europe bible france olympic games gospel germany west truth christians christianity san diego hawaii middle east oklahoma states muslims islam nigeria apostles egyptian smartphones apple tv sort explain senior director lebanon freedom of speech obey identity in christ arab broadcasting arabic monaco minimum embark roku candid al jazeera apostasy candid conversations arab spring leading the way youssef veggie tales farid mubarak coptic christian media morsi superbook michael youssef jesus film ltw coptic church mohammed morsi jonathan so jonathan yeah jonathan that jonathan youssef

Episode 249: Recovering Our Sanity: How the Fear of God Conquers the Fears That Divide Us: Dr. Michael Horton

Play Episode Listen Later May 14, 2024 41:15

In this profound episode, Jonathan is joined by esteemed theologian and author Michael Horton to discuss his latest book, "Recovering Our Sanity: How the Fear of God Conquers the Fears that Divide Us." In a world teetering on the brink of chaos—from unsettling politics to the lingering effects of the global pandemic—Horton's book offers not a typical self-help guide but a deep theological exploration of how a proper fear of God can liberate us from our myriad earthly fears.Dr. Horton, Professor of Theology and Apologetics at Westminster Seminary, explains what it truly means to fear God—both biblically and theologically—and how this reverential fear can effectively drive out fears of the future, others, and even death itself.Throughout the episode, Dr. Horton discusses the different types of fears that plague our society—from cultural anxieties to personal struggles—and how these stem from a lack of genuine fear of God. He emphasizes confronting our earthly fears with the hope found in Christ, rooted in the Gospel, and the shift from self-preservation to a Christ-focused life.This episode is a humbling, thought-provoking, and hope-igniting journey that challenges listeners to replace false securities with the profound joy of knowing Christ, who commands us, "Do not be afraid." Join us as we explore how cultivating a healthy fear of God can recover our sanity in these turbulent times.To ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidFacebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 249: Recovering Our Sanity: How the Fear of God Conquers the Fears That Divide Us: Michael Horton. [00:01] Jonathan: My very special guest is Mike Horton. He is a professor of systematic theology and apologetics at Westminster Seminary in California, and he is the author of many books, including The Christian Faith Ordinary and Core Christianity. He also hosts the White Horse Inn radio program. He lives with his wife, Lisa, and their four children in Escondido, California, and it looks like he's on his back patio, having a conversation with me and being very gracious with his time. Mike Horton, thank you so much for taking the time to be on Candid Conversations.[00:45] Michael: Thank you, Jonathan.[00:50] Jonathan: I do thank you for your time. Now Mike, I've read your books, I have subscribed and I do recommend all of our listeners subscribe to the White Horse Inn. If you could just give us a quick, whirlwind tour of your story, we can talk a little bit about the podcast and some of your books as we progress through the interview.[01:19] Michael: Well, thank you, Jonathan. Yeah, I was raised in a Christian home and came to understand the doctrines of grace partly through my older brother. Kind of had my own little, not little, my own Romans revolution and then started digging deeper into Church history and theology and biblical studies, and eventually went to Biola University, Westminster California, then to Oxford for doctoral studies and then post-doc at Yale and came back to teach at my alma mater and have been here for 25 years. Blessed to be able to have a hand, with my colleagues, in training pastors; pastors training pastors.[02:17] Jonathan: I've been a recipient of many of the students of Westminster Seminary who taught me at Reformed Theological Seminary in Atlanta, and I've been really blessed by your work. You've got a very jovial, friendly, California vibe to you, but when you speak, you're like a double-edged sword. It's so penetrating. And I think there could be a theological issue that I've been struggling with for months and you'll say it so concisely in a few sentences, and I'll think, Where was that when I needed that?[03:09] Michael: You're too kind. Thank you.[03:11] Jonathan: Tell us a little bit about the White Horse Inn. It has been on for something like thirty years.[03:17] Michael: Yeah, thirty-plus, almost thirty-five years now. It has been such a fun thing. I've learned so much from my colleagues on the program. I still learn from the new team. We produce a magazine, too, Modern Reformation Magazine, which is really—I encourage people to subscribe to that. It's a good digest of topical theology related to culture. The umbrella organization is called Sola Media, and one of the things that we do that I'm so excited about being a part of is called Theo Global, where we host theological conversations (like we do on the White Horse Inn) between Baptist, Lutheran, Reformed, Anglican traditions and bring people together from a particular region. So we've been doing it for eleven years in India and also almost that long in Nigeria or in Kenya, in Nairobi. And then also Cairo for the Middle East. We just did one in Thailand that Pakistanis and Indians were able to come to, because they're not able usually to see each other. And then we are, Lord willing, starting another one in Southeast Asia, probably Singapore.So these have been so rich. Out of them are coming, a series of theology books from the global church to the global church. And so instead of having just regional theologies or theologies that pretend that they're not culturally contextual, we want to hear the voices of people from different locations testifying to the same Gospel, and that's just really been lots of fun.[05:42] Jonathan: Well, having ministered near that area of the world in Australia, you're right, there can be a disconnect between the cultures. We read each other's books and that sort of thing, and those are Western cultures, but I think we miss out on hearing about what is happening in Southeast Asia, Because they do face similar obstacles but also some quite different. As one of the points of your book is, there is still the one true God and the one Gospel that reaches across those cultures and reaches across so many of those things that we would consider barriers. And I think that's wonderful. I pray the Lord would bless that.[06:30] Michael: Thank you. One of the things I find, Jonathan, is there is a sweet unity around the Gospel that binds us when I go to these other places. Wherever I am in the world, I don't feel like I'm a stranger because I'm with my brothers and sisters. I wish I felt the same way in America. It's very different here.[06:51] Jonathan: Yeah, I was going to say it's interesting that what you're doing is you're unifying and uniting across denominations, across cultural things, and yet that's working almost in the opposite direction of where we see things here, which is there's division within denominations; there's division within small regions. You're undoing what is happening on a bigger scale in some of the Western parts. It's exciting to hear that's not happening everywhere, that there's actually some unification taking place and that's encouraging. And I know that's going to be an aspect of what we talk about in our conversation about one of your new books.Now, I know that you had some health issues with your heart a couple of years ago. Maybe for some of our audience who didn't know or having heard any updates, are you healthy?[07:54] Michael: Thanks for asking. Yes, what it was was a valve that just exploded in my heart, so it was an emergency open-heart surgery. But they said—they know my arteries and my heart better than anybody, they said, you'll die of something, but it won't be of heart disease. You have a good heart; you have good arteries; this was just a fluke.[08:24] Jonathan: Unbelievable.[08:25] Michael: So—yeah. I'm fully recovered. They said I could go bungee jumping again if I want to.[08:32] Jonathan: Again. I'm glad that you were already doing that—I picked up your book a while ago and I've been wanting to have you on the podcast ever since reading it. And the book is called Recovering Our Sanity: How the Fear of God Conquers the Fears that Divide Us. And my goodness, what a perfect title for everything we see. Give us a little bit of the reason for writing and the timing of the book.[09:18] Michael: Well, it had been percolating for years now, actually. I wrote a book many years ago called Beyond Culture Wars: Is America a Mission Field or a Battlefield? And this is in a similar vein, but really in light of the fears that really divide us today. And the center used to be the Bible, the Gospel, getting the Gospel right and getting the Gospel out. We have our doctrinal differences across the evangelical mainstream, but basically we had different political views and those political views didn't divide between brothers and sisters and churches.And what I've seen lately has just been like a food fight in a cafeteria, and political issues and social issues raised to the level of the Trinity. And it's like, okay, well, we can argue about that over coffee, but we don't bring it into the church. That used to be kind of how people thought about things. These things are important, but they're not as important as our unity in Christ. But I hear people attacking pastors, pastors attacking their flock, back and forth over these issues. And I think people don't get this heated over the doctrine of election or justification or the Trinity. Does it suggest that these issues are deeper in our hearts than the truth of Christianity, so what really binds us?And I looked at it and I said what really binds us is salvation, what we think we're saved from. If we think we're saved from the people over there who are threatening our values, or the people over there who are different from us ethnically, or the people over there who have a different view of economics and social justice? What are we really afraid of? What are our ultimate fears? And I argue that we have all these secondary fears. The real fear deep down, the mother of all fears, is the fear of death. And none of the solutions that can be offered by FOX or CNN, there is no solution to that. But we have it. Why isn't that on our dashboard as central, getting it right and getting it out?[13:01] Jonathan: In the book you cast a broad net in kind of what you've just said up here, picking out a few of the issues that you're seeing so much division over. But then you lay out some of the theological framework to reorientate your reader to where fear should rightly be placed. And it's away from the fear of one another and having a right fear of God.And you use the word sublime in the book, which I found really helpful as an aspect of God. I wonder if you could give us a little bit of explanation and walk that out for us.[13:52] Michael: Sure. I love that word. Sublime is really, I think, what we're talking about when we talk about the fear of God. Some people will say, “Well, it's not really fear. It's reverence, awe.” Fear is a big part of it, but it's a kind of fear that attracts. Think of what happens if you've ever stood at the mouth of a volcano, looking over it, watching the lava flow. Or I live in Southern California, so we have fires, and there's a kind of weird attraction to going to the fire and seeing it. Or you're out on the ocean and you're terrified. A squall comes up you're afraid, but you're also kind of your heart is racing not just because you're afraid, but also because you're kind of in awe of what's happening. In awe of the waves.God, you know whenever an angel shows up in the Bible, an emissary of God, what's the first thing? You know the number-one commandment throughout Scripture? The number-one command is “Be not afraid.” Because when even the mailman of God shows up, people are terrified.[15:31] Jonathan: Yeah, or Moses's face is a little too bright.[15:36] Michael: Yeah. Hey, put a napkin over that or something… That's what, really, is the basis for all sublime events, encounters that we have is really the fear of God. And so it's … A Jewish writer, John Levinson, puts it well. He says, “In the Hebrew Scriptures God beckons with one hand and repels with the other.”So there's a kind of don't get too close. Even Jesus in His Resurrection, “Don't touch me. I'm different.” God is different from us. And that sense of awe, of majesty, of even terror. Think of the disciples in the boat with Jesus. They were afraid of the storm, and then Jesus calmed the storm and they were afraid of Jesus. Who is this who has control over the winds and the waves? They were terrified. And that's the kind of Who is this? What am I dealing with here? The kind of shock and awe, the surprise is something that is missing, I think, from a lot of our experience as Christians today.[17:11] Jonathan: Well, and I know in the book we've seen a lot of the statistical evidence that comes in support of what you've just said, which shows that evangelical Christians really don't know what they believe. They have a complete misunderstanding of God, of the nature of Christ, of their roles.[17:51] Michael: If the fear of God is not the beginning of our wisdom, then something else will be. We'll fear something else. We will fear other people who are different from us and we'll fear cancer, we'll fear losing our job, we'll fear environmental collapse and catastrophe, we'll fear these other people taking over. It's not that those … that there aren't legitimate concerns of a political and social and cultural nature. But we have a disordered fear. And if we have disordered fears, we have disordered loves.God is not only the source of our greatest fear, legitimate fear; He's also the only one who conquers our fears and says, “Welcome home, prodigal. Welcome home, here's the feast.”[19:22] Jonathan: And deals with our, as you refer to it, the mother of all fears.[19:27] Michael: Death. We're dying. In California, people aren't allowed to die; they pass away; and we put these cemeteries out, far away from view, or we turn them into parks and things. And it used to be every time you walked into a church there would be headstones, and it reminded you as you walked in why you're going in there. The Gospel is for dying people, and we're all on that road. And so the question is, How do we face death? … How is that ultimate anxiety relieved? We mourn, but not as those who have no hope. So what does that mean for my daily life now? I could be twelve years old and I'm dying. I could be eighty and I'm dying. So what … Let's talk about that. Let's talk about the dying and the resurrection of the dead and being attached to Jesus so that what He is in His humanity right now, glorified, we will be. Let's talk about that. That's a lot better than anything on CNN or FOX.[21:00] Jonathan: I love it. I think in the book you tell the story of when you went to a debate with, I might be messing this up, but I think it was with an atheist and you sort of said, “Yep. Great. Can I talk about Jesus now” and kind of put him off, and he sort of like, “I wasn't prepared to debate that.”[21:22] Michael: Yeah. This was years ago. Bill Nye the Science Nye.[21:24] Jonathan: Bill Nigh, that's right.[21:25] Michael: He was talking about how religion is based on false fears and so they develop myths and so forth.[21:37] Jonathan: And you were like, “Well, that's true.”[21:39] Michael: Yeah. I don't disagree; that's a pretty fair analysis of religions. I guess you'd have to take one by one and analyze it, but as a generalization, now can I talk about Jesus and His Resurrection? Let's keep getting back to the main business here.[21:59] Jonathan: The main issue. Yeah. In the book you draw this distinction between naturalistic and hyper supernatural, but then you sort of carve out this third option of ordinary. Can we talk a little bit about that and how we see that playing out in our world today, particularly in the Church?[22:23] Michael: Sure. Often what you see today is a naturalism underwriting the progressive agenda and John Lennon's “Imagine.” On the right, you tend to have a hyper supernaturalism wedded to a conservative agenda. And so what do I mean by that? Well, a naturalistic worldview says, of course, God isn't involved. If God exists, then He's not involved in this world. He didn't create it, it's self-evolving and so forth.A hyper-supernatural worldview says that God works miraculous. You know, to say that God did it means it's a miracle.[23:34] Jonathan: Yeah.[23:35] Michael: Whereas in the Bible God does all sorts of things. Mostly, He doesn't perform miracles. What about all the times when we cut our finger and it heals after a week? What about that? What about a child [who] has a brain bleed in NICU and it resolves in 24 hours. How about those? Those aren't miracles. People say, “the miracle of childbirth.” There's no miracle of childbirth; it's just a spectacular example of God's providence. That's part of our problem is we're looking for God only in the spectacular, only in the extraordinary, only in places where we can point to and say, “Oh, God did that.”So we can't explain how somebody recovered from cancer; we say, “Well, God did it, not the doctors.”[24:46] Jonathan: Right.[24:47] Michael: Well, how about God did it and the doctors did it. God did it through the doctors.[24:52] Jonathan: How much control does God have here?[24:55] Michael: Right. He has control of everything. It's not just supernatural events; it's not just miracles. God's in control of every second, every breath. Every breath that you and I take is under His dominion.[25:11] Jonathan: That's right. He holds all things together. You know, I hear that phrase a lot, “That was a God thing. That was a God thing,” and I always have to stop and say to them, “Everything is a God thing.” I mean, conversations. The fact that your brain works. The ability to read. The ability to understand and reason. It's like I hate when you get that narrow scope, as you're saying. We've lost the sublime. We've lost an understanding of how much—you know, it's almost a deistic view that, you know, God sort of—[25:42] Michael: Yes![25:43] Jonathan: He's put some things in place and then He occasionally steps in and—[25:47] Michael: That's why I argue that actually naturalism and hyper supernaturalism unintentionally conspire with each other against Christianity—[25:57] Jonathan: Right.[25:58] Michael: —you know because, you know, we get to the place where we don't see God in our ordinary, everyday existence, but only in these punctuated events, and we've got to raise things. I think we do a lot of pretending. We pretend that things that have an ordinary explanation are miracles because we have to have God in our life. These large swaths of our lives where there are no miracles are upheld by God's marvelous providence.[26:40] Jonathan: Right. Amen to that. In the book, one of the fears you mentioned is fear of losing your job. And I think in the book you helpfully distinguish between calling and vocation or job and helping us understand and distinguish the two things. I wonder if we can talk a little bit of bringing clarity to that, because we're longing for something to put our identity in. Is it a football club? Is it a university? We're currently, I don't know when this will air, but we're in the middle of March Madness. Who did you pick? What's your university? What's your background?And vocation is very much one of those things we can put our identity in, and yet I think you talk about the ultimate and the penultimate between calling and vocation. I wonder if you could bring some clarity to that, and then we'll turn to some of the practical outworkings of the division we see after that.[27:53] Michael: Yeah. Well, one of the things I try to maintain throughout the book is, look, the things I'm talking about are not unimportant. They are legitimate fears. There is a legitimate anxiety. The question is, where do we go with that? But yes, let's affirm it. It's real, it's a deal, but penultimate not ultimate.For example, if I am in a circle of people I've never met before, we're having breakfast, and I ask them, “Tell me about yourself,” very ordinarily they'll say, “Well, I'm a dentist. I'm a …”Now okay, there's an example. That is part of our identity. Vocation is a gift of God; it's a calling. So to say, you know, we shouldn't place our identity in our vocations, well, not ultimately. That's the problem. It's a part of our identity, just like being a father is part of my identity. That's a calling. And we have to realize, as Luther said, we have many callings, many vocations during our life. We're parents, we're spouses, we're children, we are extended family members, we're dentists, and cleaning movie theaters. We have all kinds of callings/vocations. Sometimes we have a vocation to suffer, to carry a cross. Sometimes we have a vocation to be a friend. We have lots of vocations, and keeping them in balance is very important.Keeping them penultimate, not ultimate, is my point. My ultimate identity is chosen, redeemed, justified, being sanctified, will be glorified, in union with Christ. That's my identity and that's really who I am. Paul talks about himself as if he's almost collapsed into Jesus. His identity is so bound up with Christ that he can even say his suffering is something he glories in because it shares in Christ's suffering. That's my identity; that's where I really find who I am. The other stuff is not just stuff I do, that turns it back into a job. It is part of my identity, but it's penultimate, not ultimate.[30:57] Jonathan: Well, as we said at the beginning, we see division in so many different places. We're, of course, as you know, we're in another election year, and that—fear is going to be used as a … it's going to be weaponized this year, particularly this year, in America. And we have an international audience, so I want to be sensitive, but I know that internationally also they see a lot of American news as well. I think you talk about how, in the book, two sides to the fear coin. You mention both in the book. One side, fear is easily exploited as a motivator. On the other, fear is a weak motivator in the long term. Why is that? Let's kind of unpack that a little bit.[32:07] Michael: Yeah. I use the analogy of deer who are … there is this fight or flight that God gave us and the animals as well. It's purely instinctual, instinctive. You don't … Whether you're a deer or a human being, you don't really think about, you don't contemplate, you don't calculate, you don't explore what … You have a car coming towards you, you flee. You get out of its way if you can. But what happens is—That's adrenaline. That adrenaline rush is just a marvelous gift of God's providence. The problem is what would happen is deer had this disease of constantly being afraid, every crack of brush of another deer drove them wild running in fear? That's what I see us doing now, and what happens is it works in the short term. If you're going to cynically use fear to get a herd of people to do what you want them to do, that might work in the short term, but long term, people can't live like that. Long term, people actually become cynical. They won't participate at all. They'll just turn it off because “I've had this scare a thousand times and I'm not going to have it anymore. I'm tired of it.” It just runs out.And that's what I think a lot of people are feeling right now with American politics. So I'm not an analyst of American politics by any stretch of the imagination; I'm simply looking at it on the pastoral side. What is driving us to be like the deer in the headlights every five minutes? And it's exhausting us.[34:33] Jonathan: Yeah.[34:34] Michael: Each side whipping up the other side against each other. If I don't win this election, dot, dot, dot. If the other person wins the election, dot, dot, dot. It's apocalypse not. I especially find offensive any use of God or the Bible or Christ for that fear. Anyone who does that, particularly cynical leaders who don't even go to church, aren't professing Christians really, but they use the lingo to gain the nomination of particular groups. When Christians participate in that, they carry crosses to the U.S. Capitol to storm it and talk about hanging the vice president, and they're carrying crosses with Bible verses, this is the sort of thing that must just aggravate our Lord and Savior whose name is taken in vain.And yeah, is that a critique especially of evangelical political conservatives? Yes, it is. Because they are my brothers and sisters closest to me. The secularists aren't really invoking the name of Jesus and Bible verses and carrying crosses. I'm more worried about evangelicals distorting the gospel than I am about who wins this next election.[36:54] Jonathan: What is that doing to your testimony to those people who don't know the Lord? What message is it giving them?[37:10] Michael: That Christianity is about power.[37:11] Jonathan: Right, exactly.[37:12] Michael: It's not about a cross with God who has all power becoming flesh being spat upon and then being crucified upon a cross, bleeding for our sins. It's about basically choosing Caesar over Jesus, making Pilate our hero rather than Jesus.[37:45] Jonathan: I found that chapter, I can't remember if it's the Christian nationalism chapter or the one before, but it was really helpful the way that you walked out American history in a way that probably a lot of the readers might say, “I don't know if I understood that.” Or “I don't know if I fully understood Thomas Jefferson and his letter to the Danbury Baptist Church in Connecticut.” Understanding separation of church and state, understanding like how we got to where we are and the creating of even thinking between the British … French revolution and those different paths that were laid out before us. And even just understanding our own history and how we got to where we are, I think a lot of it is just cast as Christian nation. And I found it helpful the way you distinguish that.Because I hear this a lot in the church in terms of America being the new Israel, are there blessings that have come with certain things? Sure, fine. Our Constitution is well put together. I love the history of Witherspoon, the Scottish Presbyterian, and you can see some of that in the language that comes out through the Constitution. Again, I think it's helpful to have your historical understanding rather than this reinterpretation that we have now that it's, as you said, it's this feeling like someone's come in and taken this from us. And now, to use the title of your other book, now we're at war, right? It's not a mission field, it's a battlefield. We're fighting for the honor of our country. And all that's done is create us and them division and a lack of clarity and a lack of what we're called to in a mission sense as Christians. Where was I going with that? Who knows? Anyway, I found it helpful.[40:10] Michael: You said it better. Preach it, brother.[40:16] Jonathan: Just random thoughts. Just reading your books and regurgitating it to the people. So later on in the book you sort of walk us through the areas where division has come in. So we have Christian nationalism has certainly seeped into churches. Then you have some really helpful, short chapters with issues with LGBTQ+ community, cancel culture, racism. Let's just kind of walk through some of these and help Christians who are listening to this who are saying, I thought this was the right way to handle that situation but you're saying something else. Let's kind of walk through maybe even just one or two of those. Again, you had a really great illustration under your LGBTQ+ chapter of the young man whose family had sent him to you and you were pastoring him and what happened with all that. If you could tell us a little bit about that, just to help kind of encapsulate what we're talking about here.[41:35] Michael: Sure, this brother struggling with homosexuality, his dad was on the board of a prominent evangelical organization, and his pastor had told him that we basically don't want your influence in the church, so he was considering leaving the faith. But then he read Putting Amazing Back Into Grace, a book I wrote a long time ago, and came out to work at our organization as just a pretext for just hanging out and shepherding this guy. He became a part of our church and a lot of people looked after him and we got a lot back from him.He went back home, and his pastor said that all this reformed teaching he was getting was heresy and so forth, and no, you've lost your salvation. Romans says that He gave them over to a depraved mind. So he committed suicide and …So what is it? Why do you do stuff like that? Well, you do it out of bad theology, to be sure, but also out of fear. There are a lot of churches that just don't want to deal with it. They don't want to have this problem. They don't want to say that they have people in their congregation who are really, really suffering. If you're a secularist, you don't suffer from homosexuality. You don't suffer with gender dysphoria. Only Christians do. And only Christians suffer with greed and envy and malice and other sins that are listed in these same sin lists in the New Testament. You don't lose your salvation over those.The key is repentance, right? We're called to a life of repentance. Whatever our tendencies are towards particular sins, we're all corrupt in heart. We're sinners and we're sinned against and we are in a sin-cursed world. And so where do we go with that fear? And then once that fear is solved objectively in Christ, having been justified through faith, we have peace with God. That's an objective fact. With that now as an objective fact, how do I respond to this brother or sister who's justified just as I am, and who is being sanctified just as I am, but has propensity toward a particular sin that I think is particularly serious, particularly great? How do I love this person? How do I respond to this person?John Calvin said a pastor needs to learn how to have two voices: one for the sheep and one for the wolves. And what I've seen in some very close cases to my own experience, what I've seen sometimes is pastors confusing the sheep for wolves and treating them as apostates or as people who, you know, if you really were a Christian, you wouldn't be suffering with that. Well, they're not saying, “I have a right to this sin.” They're not saying that it's okay. That's why they're struggling with it—and they're struggling with it in your church.So one of the surveys, actually a couple of the surveys concluded that about 80 percent of people in the LGBTQ+ community were raised in conservative Roman Catholic or Protestant churches.[46:39] Jonathan: Give that statistic again because I think we need to hear it again.[46:42] Michael: I don't know exact, it's in the 80s, 80 percent.[46:46] Jonathan: Over 80 percent.[46:49] Michael: Right. And what's even more striking is the same percentage said that they would come back to church, even if they didn't change their rules, but listened to them and cared for them. That's what I found amazing. I was glad that they asked … they added in that survey even if they didn't change their beliefs but they were kind and they listened and they cared for me.So if I'm fearful, here again the adrenaline, the deer in the headlights, that's a gift God gave us for fleeing something that is imminently threatening. This is not imminently threatening. If I come to understand that, then I'm not a deer in the headlights; instead, my brother or sister, my friend, parent, I'm someone who is looking out for the best of this person and now I can actually get ahold of myself and think and make judgments and articulate things. And ask questions and get information. That's a big part of it. It's not all spiritual. People are suffering from mental health disorders, and that's physical, that's brain chemistry. All kinds of things.People are suffering from sins that have been committed against them in the past. A lot of this is very complicated, and it's not all that person's direct fault. Again, we're all sinners, sinned against, and live in a sin-cursed world. And all those factors play into what we have to consider when we're not the deer in the headlights but can sit down with people over a long time, be willing to walk with them over a long time, be willing to read up on things, ask them questions, we're that interested in them and understanding what they're going through, understanding their pain. It's like if they have cancer we'd be at their house with casseroles, but if they have these things, you know … So let's … fear of the Lord drives out the fears of everyone and everything else. This is the beginning of wisdom.[48:52] Jonathan: Exactly. Well, I think we could probably have this conversation for probably another four more hours, which we might do just because we're having so many technical difficulties. You know, I can't recommend this book enough. Mike Horton, Recovering Our Sanity: How the Fear of God Conquers the Fears that Divide Us. I told my team I want to re-air this as we get closer to November so that we can all be reminded once again of what we're called to. Mike, what are you working on at the moment?[50:35] Michael: I've been kind of obsessive compulsive about a project, three volumes with Eerdmans. First volume is coming out in May, titled Shaman and Sage. This is a very different project. It's the history of spiritual not religious. Where does this come from? You have this divine self within trying to break out of all constraints. And so I trace it all the way back to ancient Greece and to the Renaissance. And then the second volume, Renaissance to the scientific revolution. And then the third volume is covering Romanticism to the present.[51:31] Jonathan: Oprah.[51:32] Michael: Exactly.[51:35] Jonathan: That's going to be a massive help for believers, because that's the one we see a lot in those statistics. Yeah, I hear that from quite a few people, spiritual but not religious, or whatever the phrase is. But well, Mike Horton, it's been such a privilege. I'm so grateful for your time and coming on to Candid Conversations and sharing with us.[52:10] Michael: Jonathan, thank you so much. It's been a pleasure.[52:14] Jonathan: Thank you, brother.

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Episode 248: Parenting with Hope: Raising Teens for Christ in the Secular Age: Melissa Kruger

Play Episode Listen Later May 7, 2024 51:50

You're sitting across from your teenager at the kitchen table. Now that you finally have their undivided attention, you want to talk about an important issue they are facing. Unfortunately, things get tense quickly. Their eyes roll, you get frustrated, and soon they are looking for an escape from this conversation. You sit dumbfounded thinking, "How do I raise my teen to love Christ in a world that is doing everything possible to pull them away?"In this episode of Candid Conversations, host Jonathan welcomes back Melissa Kruger, Vice President of Discipleship Programming at the Gospel Coalition. Melissa is also an accomplished author, having written multiple books, including “Growing Together,” “Walking with God in the Season of Motherhood,” and the popular children's book “Wherever You Go, I Want You to Know.”During this conversation, Jonathan and Melissa discuss her latest book, “Parenting with Hope: Raising Teens for Christ in the Secular Age.” The book provides practical guidance and biblical insights for parents navigating the challenges of raising teenagers in today's culture. Melissa shares her personal journey and the inspiration behind writing this important resource.Listen to this Candid Conversation as Melissa Kruger sheds light on parenting teens with hope, faith, and wisdom. Whether you're a parent, grandparent, or youth leader, this episode offers valuable insights for nurturing the next generation.To ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidFacebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 248: Parenting with Hope: Raising Teens for Christ in the Secular Age: Melissa Kruger.[00:06] Jonathan: Well, today I have a repeat guest. It is Melissa Kruger. She is the vice president of discipleship programming at the Gospel Coalition. She is the author of multiple books, including Growing Together; Walking with God in the Season of Motherhood; and the popular children's book, Wherever You Go, I Want You to Know, which we have gotten for our son, and then we've had his teachers write inscriptions each year, whoever his teacher is. And I think you have a special book that allows for that.Her husband Mike, who has also been on the podcast, is the president of Reformed Theological Seminary. And they and their three children are in Charlotte, North Carolina. Melissa, thank you so much for coming back onto Candid Conversations.[00:52] Melissa: Great! Thanks for having me back.[00:54] Jonathan: Okay, you've got a new book out called Parenting with Hope: Raising Teens for Christ in the Secular Age. Now, I imagine this book is flying off the shelves, and you've probably shattered sales records.[01:12] Melissa: I don't think so, right?[01:14] Jonathan: It should. I think this is something the church hears a lot about and it's always so helpful to have books that are written from a helpful, biblical perspective and giving people the foundations and the equipping and the reminders that we can often forget.So tell us a little bit about the journey on Parenting With Hope. What got the start of the book?[01:48] Melissa: I was approached by a publisher who had read my book, Walking with God in the Season of Motherhood, and they said, “We'd really like you to take some of these principles and apply it to parenting teens. And we want it trade book form, Walking with God in the Season of Motherhood, is a Bible study for women, I wrote that one for a friend, for her baby shower. It wasn't intended for publishing; I was writing it for her. So this one really they came with the question and I was very unsure of myself. I've raised three teenagers, and so it was kind of that, ooh, and I was just out of the season. But what I realized when I did Walking with God in the Season of Motherhood, I couldn't write that book now, I think, because I'm not in that moment. The teen years are very fresh to me. I saw tons. I still have one teenager, she's 17. I have a 17-year-old, a 20-year-old, and a 23-year-old and so still it's fresh to me. But I also realized no one's sixty who can write about what they did about cell phones because they didn't exist. They can't talk about what did they do with social media. They can't talk about some of these sports and activities because it was totally different twenty years ago. And so I realized, okay, it's probably a good thing to have someone fresh on the season. And I also realized, the second thing, I was a high school math teacher in I always say my other life, and so I had taken a lot of teen development classes. And I realized this really did help me in the parenting of teens, like there's a lot of common grace insights by people who have studied just what works and what doesn't, and I've realized I had those things in my back pocket. And we do that a lot with young children, we read all the developmental milestones, we know what your 2-year-old should be doing, what your 3-year-old should be doing. When's the last time you read a developmental milestone about your 9-year-old or your 10-year-old? And we stop being learners of what kids are able to do and what they should be doing and so I wanted to put some of that in the book as well.[04:15] Jonathan: Okay, so I love how you break down the book. So it's broken down into three parts. You give the basics, which you call “The Foundations of a Christian Home”; The Battle: Fighting for the Better Portion”; which we'll get into that. And then “The Blessing: Cultivating a Home Where Teens Thrive.” Talks us through a little bit of the Part 1.[04:44] Melissa: I might come off as, well, we all know this, right? [04:48] Jonathan: Right. If you're in the church, you should know and understand that. But—[04:51] Melissa: Exactly. Exactly. And in a lot of ways this is being a Christian 101. But I remind parents of it because I think sometimes we get so bogged down with all the things we're not doing as parents that I want to remind them the most important thing you do as a human is be in God's Word, be in prayer, and be in the church. Doing that is going to already set you ahead of parents all around the world. I mean, that is such a gift to your child to be a parent who is regularly in-taking from the Bible. Why? Because the Bible is not just another book on the shelf; it's actually divine wisdom. We have the ability to tap into divine wisdom. And then secondly we have not just divine wisdom, we have divine help because we can call on God to do what we cannot do, we cannot save our child, we cannot change our child. We cannot make them do really much of anything, but God can work in ways that we can't understand.And then the community of the church is just something that, I mean, I think we're seeing with the epidemic of teen loneliness and anxiety and isolation, all these things. The church is this institution that, guess what, it answers that. It's this welcoming place where you have 80-year-olds and you have 8-year-olds. And so I don't think we can talk about parenting without talking about what's the foundation of our hope. It's actually that God's Word is true, and living in light of God's Word is hopeful, and we're not left alone on the journey. So that's the Battle. The battle really talks about our battles. And again, this is a book about being the parent of a teen. It's not a book about how to make your teen perfect. If that book exists, that's the—[06:54] Jonathan: If it does, you should burn it.[06:56] Melissa: Yeah, that's the Holy Spirit's job is to change us and make us different. And so the second part is the battle, I think we often think is sex, drugs, rock and roll or some other things we're trying to prevent our teen from. I would say it's actually good things robbing us of the best things. The battle is with our own idolatry. As parents, we are all coming into this game with hopes and dreams for our kids, and sometimes those dreams turn idolatrous. I focus on scholarship and achievement, on sports and activities, and then on social acceptance. I think those are the cultural idols we have in the West that are pressing upon us as parents, and we have to battle about all of those.[07:38] Jonathan: And that's what I love about the book is that it's not prescriptions, right? When people are struggling with their kids, what do they want? Just tell me what to do so that this will stop or so I can take this away, right? And I think the way that your book is written is that it's not about if you do A, B will happen. Now, there's a little bit of element of that because you just mentioned the foundations earlier, which is, well, you really need to be doing these practices, but you don't necessarily think, oh, being in church and being in the Word and being in prayer, you don't necessarily feel the direct correlation to your parenting, but it is there.I have friends who have raised their kids the exact same way and one rebels and the other one is a blessing to their family. And then it's like, what did we do wrong? Your husband was speaking yesterday about the paradox of God is sovereign over all things, and yet we're still called to be good parents. And so there's that. We don't fully understand the mystery of that, but we know what we're called to, and so we have to walk it out.[09:14] Melissa: That's right. As a parent, I am called to fight my idolatry. I'm actually not called to control my child. And so often what you see if we go into control mode when we're fearful, and the Bible says trust and obey. And I would say obey and trust. And so you follow God's call and then you trust. You trust that you're doing everything you can to walk in a manner worthy of the gospel in front of the Lord and in front of your kids, and then you have to trust. And you will only have the ability to trust if you're building on the foundation. So this is where it always goes back to that foundation. And I'm talking about how to be a human, honestly. I mean, if you want to know how to succeed in your place of work, oh, you need the Word, you need prayer, you need the church. If you want to know how to be single in the life of the church, you need the Word, you need prayer, you need the church. But I think I say it again and again because it's Psalm 1. Yeah, I mean, “Blessed is the man who doesn't like in … who doesn't sit …” all that stuff. Oh, what does he do? “His delight is in the law of the Lord, and on it he meditates day and night. He is like a tree planted by a stream. Whatever he does prospers.” This is wisdom for life. And so I definitely think we have to start there, and then we have to be battling our own idols.And then the last section on the blessing is how do we create homes of acceptance, availability, and affection? Those words have to be in our world today. Acceptance does not mean an acceptance of sin, but it means an acceptance of who they are. And what I mean by that is we see a lot of curated children. And what I mean by that is parents trying to make the perfect child who plays the sport, who plays the instrument, who has an amazing GPA, who gets into the Ivy Leagues and all this stuff because that's a representation of me is what we're really trying to do.[11:12] Jonathan: Right. It's a reflection, yeah.[11:13] Melissa: So rather than saying, you know, my kid's not that great at school, but I can teach hard work. Even if they're not going to be a lawyer or a doctor, that's okay. And so that's what I mean by acceptance, accepting who the Lord is creating them to be and letting that glorify Him, whatever it might be. [11:33] Jonathan: Yeah, there's a lot of this element of caught versus taught, right? So especially as you think about the idolatry and what you prioritize in your life, your kids are by default looking at you, watching you. You're one of the greatest sources of influence on them, and so they are going to model themselves after what mom and dad prioritize. And the funny thing is that when parents look down the track they say, “Why are they like this?” And it's like, sometimes it's a little bit of look in the mirror. You know, what were they catching, even if you were teaching in a different trajectory and direction. Okay, so acceptance. What about availability?[12:17] Melissa: Yeah. I talk about this. I say you want to be available but you want to understand your limitations. Look, I mean, parents cannot be at everything. And I actually believe it's helpful for our kids to know that they are not the center of our universe. They do not have the gravitational weight to bear us, I like to say. Like the Earth cannot support the Sun revolving around it, it was never intended to, we are not created to revolve around our children. We are created to revolve around God, and we are helping them do the same. And kids who grow up in a home where the parent is rooted and grounded in the Lord, that takes an amazing burden off of them. You've heard the phrase “You're only as happy as your least happy child.” I think that is like poor least-happy child. No. My contentment and joy, where are they supposed to come from? They're supposed to be rooted in the Lord. Why are we supposed to be content with what we have? Because He has said, “Never will I leave or forsake you.” That's where our contentment rests. And we have to be people fighting for that as parents, to free our kids up from our own maybe tendency to put our hopes and dreams in them.[13:36] Jonathan: And then affection. A home of warmth.[13:39] Melissa: I read an article somewhere recently. I can't remember where it was; it was in the secular paper, and they said, really what you do as a parent doesn't matter, but if you love them, that makes a difference. And I was kind of like, huh. That's really interesting because I do think there's a lot to that. I think, you know, it's a little bit empty because I think love—[14:03] Jonathan: Well, one's usually reflected in the other, right?[14:05] Melissa: Yeah. Exactly. And you need truth to guide what love is, so there's that. But I did once hear—this was on the Oprah Winfrey Show a million years ago when that show was still on—she was interviewing I believe it was Toni Morrisson. And Toni Morrisson said one thing she had learned when a child walks into the room, she said, light up when that child walks in the room. And she said what kids tend to get when you walk into the room is your critical gaze. They tend to get, huh, your shirt's not tucked in. Hey, make sure you're getting ready for this. And this gets even worse in the teen years, because look, they're cute when they're walking in at two, so you might light up just because they're so cute.[14:50] Jonathan: It's worn off, yeah.[14:52] Melissa: Yeah, when they're walking in pimply and smelly and dirty, and they haven't showered in a week, you still need to light up when they walk. And I think there's something about that that will translate for the rest of their lives. That they know “I am deeply loved.” Light up even when they've done something wrong. Our correction should not be coldness. Our correction can still be full of warmth. And so we want to light up when these people walk in the room because they're made in the image of God. They have been given to us for this time to raise, and so we want to shower them with affection. And there can be wrong views of affection like trying to buy them. There are wrong ways. But I'm just talking about genuine love and interest in a person; that's always going to be a great basis for a child to go into the world with.[15:42] Jonathan: Okay, let's talk a little bit about how the gospel shapes our approach in parenting. What are the biblical principles that should guide us as we're raising children?[15:58] Melissa: The first is that I'm the oldest sinner in the room usually, so I'm expecting my 12-year-old to have their whole act together at twelve. Wow, that's pretty ungracious of me, right, because here I am at fifty and I don't have my act together. And so I think that one of the ways that parents can lead is to be the first to apologize. I always say my response is my responsibility. And so if I—let's say a kid's done something wrong, but I manage their wrongness by yelling and losing my temper and being impatient and unkind, I've got to own that. That's on me. I can still hold them to a standard while holding myself to a standard, and so we have to do that.And so I say one way grace-based homes begin is by being the chief apologizer in your home. Own it. And you know what? The kids will learn. They will learn from that and they will be able to give good apologies in their life. And you will benefit from it. I've had all of my kids come to me and be like, “Hey, I'm sorry I acted that way about that.” They did it on their own accord. I think it just became the conversation of the household that was safe to do. It was going to be met with love; it wasn't going to be met with the silent treatment, all of those things.And so I think a home with grace is going to be a home with apologies. It's going to be a home that accepts that failure is going to happen. I mean, the Lord's Prayer presupposes, “forgive us our debts as we forgive our debtors,” so there's going to be sin. We're living flesh on flesh in these homes. And so it presupposes that we're going to need grace, but it also presupposes that there is a standard. So we do not lower standards. We keep the standards, but we offer correction when the standards has not been kept, and we offer love and grace in those moments as well.[17:57] Jonathan: Well, and it's a requirement of being a disciple of Jesus is being a forgiver. And yeah, why not start at home—not just forgiving, but asking for forgiveness. And I think you're right, it sets the tone for the family. But I think we can get caught up in, well, I'm the parent and I've got to be the one in control and in charge and I'm just giving directives to the little ones. It's hard, right? I mean, it's hard to admit to a little child that you've wronged them. Because you just want to say, who are you? Who are you to hold me accountable? But it's the Lord's holding us accountable.Let's elaborate a little bit on principles of prescriptions. We've talked a little bit about that, but as that relates to parenting.[18:52] Melissa: Yeah. I definitely think your principles in parenting can stay very much the same as kids go from two to twenty, meaning certain principles like, oh, my child is a sinner in need of grace. That's a principle. My child's a sinner and needs correction. That's a principle. Now, how I go about the practice of that correction is going to change greatly when they're two from when they're twelve, and if we don't make those changes, we're going to find ourselves with very frustrated teenagers.And so one example I like to say is when your 2-year-old makes a mistake, normally you need to offer correction right away, so if they do something wrong, they need it immediately because they're not going to remember tomorrow what you're talking about.[19:36] Jonathan: That's right exactly.[19:37] Melissa: They're in a different little universe where every moment is a new moment. Whereas with your 12-year-old, when they come in hot, and you know we all see 12-year-olds come in hot, they're slamming doors, they're in a mood, their hormones are going whatever. Right then is probably actually not the best time to offer correction or even confront them with, hey, you were really rude to me.I like to say if my friend came in and slammed the door my first question would not be like, “Hey, that's disrespectful to me.” My first question would be, “Hey, how are you doing? Is everything okay?” Or if my husband came in. Like I'd ask a question. And I think our teens need that from us. They need us to live with them in an understanding way, and often we're real caught up in our pride and how we deserve to be talked to. And that's just very us-centered versus, “Hey, is everything okay?” And maybe even to just say, later in the day, like 6:00 PM, 7:00 PM, when they've had some time to cool off, to go in and say, ‘Hey, you came in, you seemed upset today. Do you want to talk about it?” They may say yes, they may say no. And then later on, things will soften. They will soften to be able to say, “What would have been a good way to come in today?” That's a better time to have that conversation. And it may even be the next week. That's a better way to have that conversation than right away. So I think we had immediate kind of discipline when they were young, and it's really about applying wisdom to how and what we're going to correct. Thankfully, we do not have someone following us around all day correcting every little thing we do. I think sometimes parents of teens think, I've got four years left. I've got to get this kid all sorted.[21:20] Jonathan: To be ready for the world.[21:21] Melissa: You don't. If you saw my teen's bedroom, you'd be like, “Wow, she's a terrible parent. They are a complete and utter wreck.” And I just chose that was a battle I wasn't going to fight. But certain things, I wanted them to be truthful with me, I wanted them to have character, I wanted us to be able to have conversations. And if that meant I had to deal with messy floors, I was going to deal with messy floors on there. And they are. They lived up to that low expectation.[21:48] Jonathan: I'm sure they love hearing that. So you've introduced a topic that I wanted us to discuss, which is those stages of development and how do we parent differently when they're children versus teens. At what age is there a transformation? So when your child is little, you're really in kind of a protection mode in terms of what they consume media-wise or literature, whatever it is, right? We have a responsibility for protecting them and not just exposing them to all the horrible things out there.But as they get older, you and I talked about this in the beginning, but parents can tend to lean into one or the other camp, which is keeping the hyper bubble wrap around their child and never letting them be exposed to anything, or essentially letting them go out to the wolves at twelve, thirteen, whatever, and they are kind of almost drowning in “I need help. I wish someone would have kind of held my hand a little bit here.” That's a nuanced question, I know, but if we could talk about it in some generalities—and you can even use your own children as an example. Help parents who are at the tween period in their kids' lives. How do they navigate that helpfully?[23:21] Melissa: Yeah, I think that transition is tough and it's full of bumps and bruises. I called it in the book, I likened it to driving a stick-shift car. You have to be letting off the clutch the same time you're pressing the gas, but as you're learning, we're all going to stall and that's pretty normal. But I would just say as they're heading into these years, teens still need our involvement, but they do not need our over-involvement. And so as a parent, I think we really have to step back and say, “Okay, I'm going to be involved. I'm going to make sure they're not out drinking; they're not out doing illegal activities that could actually harm them. But I am not going to check their homework online.” Okay, see this was not even an option when I was a teacher—I don't know why parents are doing this. So I always think back to when I was teaching the parents never saw the grades until the grades came out. We had a midterm grade thing. I have people in my life who are checking their kids' grades constantly, and I'm like—[24:36] Jonathan: I didn't even know you could do that, actually. I've got little kids, so I'm, yeah, we're not in that camp yet.[24:41] Melissa: Well, come the teen years, they're finding out their kid missed one homework assignment and then they're all over them about it. I'm like, just let them bear that consequence. Let them bear the consequence of a zero. [24:52] Jonathan: That's a little bit of the helicopter/lawnmower parent mentality, right?[24:57] Melissa: That's right. And what happens is then that child never knows what it's like to deal with failure, and they actually need what I call safe failure. Because guess what? We all fail at things. Like we all make mistakes, we all do dumb things along the way. You want to protect them from huge failure, like you're going to go to jail for this. But even things that we know are particularly damaging for their souls. So we want to protect them as best we can and have good rules in our home; we don't want rule-less homes; but the over-correction of being so over-involved.If you have teenagers, they should be packing their own lunch. They should be getting themselves—I don't wake any of my teens up, never have. They get themselves up, they knew to be at the family table for devotions at the time we always met. They could be responsible for them. And I never regret letting them be responsible for them. And so some of that is letting go of control and letting them, like again, like their room. Their rooms. Sometimes they did have to clean them.[26:09] Jonathan: You've got to live in it. They're the ones who have to live in it, right?[26:11] Melissa: And they have to … And they really will own it if we let them. Another big thing was we started early with our kids having them do chores and clean up the kitchen every night. But what Mike and I had to do, we had to leave the room, because yes, they would argue. Yes, they would get mad at one another. Yes, they would say, “I don't want to do it this way. Yes, it was excruciatingly slow and not well done. And I'd come in and I'd look at the counter and I thought, yeah, you'd feel the grit still on the counter, kids, and then do it again. Y'all get it right. And then we'd walk out because I couldn't handle the slowness at which they did it, but if I had not given them the space to do it and fail and not do it perfectly, they'd never learn. Where now they come home and they all know how to clean the kitchen. They know how to—and that's a gift when they go to college because they [overlapping voices] because my kids are like, “My roommates”—[27:04] Jonathan: And their future spouses.[27:06] Melissa: Yeah. “My roommates don't know how to clean the kitchen.” [27:09] Jonathan: Yeah. Yeah. Okay, let's steer into some of the battle things that are taking place. We, without having to explain, we live in a secular culture. How can parents maintain hope and raise their teens to follow Christ in just the age and day in which we live where there's the social pressures on sexuality and defining truth and those sorts of things. How do you kind of help navigate that water?[27:53] Melissa: Yeah, I think the earlier you can begin, the better. And some of this starts by having conversations about faith with your kids as young as you can. Mike and I were big believers in the catechism. There are different versions. We use the children's catechism. And every night at the family table we did it. What I love about a catechism is the kids talk; it's not just the parents talking. So it's about who made you? God. What else did God make? All things. Why did God make you and all things? For His glory. Okay, you've already set their framework in such a better place than most kids walking into elementary school just because they know they're made in the image of God and that they're made to glorify Him. So these things can start early. I think having those conversations along the way, and just, again, this is what we valued in our homes. We have to start valuing them young because if you start coming to your kid with, “Hey, God's Word is important” at age fifteen by you haven't modeled that by the way you live your life or by how you've been in it yourself, it's going to be hard to convince them that they should follow this ancient book. So I would say the best way to combat culture is to have the culture that Scripture encourages us to in the home. And to really know that what's happening in your home is actually what has the greatest impact on your kids, not the world, not their teachers, not their friends. Actually the studies show over and over again parental—what we do, which is kind of terrifying, we all should own it—what we do in the home is the biggest impact on how they are going to view certain things. It does not mean they will all come to faith. You can do everything right. We know it's the Spirit only that awakens people's hearts. But that—[29:48] Jonathan: Which takes a little bit of the pressure off in that category.[29:52] Melissa: Yes, exactly. But there are things we're teaching them like hard work and doing a job, knowing how to do a chore. Those are things that even non-Christians know how to work hard, and even non-Christians can live in certain outwardly moral ways that we can be trying to shape and mold our kids into, in prayer that the Spirit would make their hearts alive in a lot of ways.So I think we can be really fearful of culture. I think there's a lot to be concerned about. But what I will say is that when the Spirit opens our eyes, they can see, wow, culture is really empty. So my kids, I think they grew up in Christian school, but they've both been at large secular colleges and they just haven't been attracted to some of the worldly things because I think they know that, hey, the fellowship, the friendship of true believers is way better than this false, oh, I have to be drunk and do all these things for you to be my friend. Yeah, I don't think it's been as enticing because they've actually experienced good fellowship with believers throughout their lives and they've seen the benefit of that. So I always try to say fight the bad by giving them the better.[31:09] Jonathan: Yeah, I love that. Okay, two more areas I want us to just quickly dive into. One is navigating technology and social media, which again is one of the battles. And the other one is dealing with doubts. And so let's talk about, I mean, technology is everywhere. Social media abounds. How do we navigate this? Maybe some practical tips, setting boundaries, that sort of thing. How did you and Mike do it?[31:41] Melissa: Yeah. I mean, the first boundary is yourself. If you're glued to your phone, okay, your kid's going to be glued to their phone. So that's the first one. Let's just go ahead and say it. And I will say this: I think it's a lot harder for you raising kids now. When I had young kids, I didn't have a smartphone. I mean, can you imagine the difference? I could not, at a restaurant, just take my little cell phone and say, “Here, watch whatever show's popular.”[32:07] Jonathan: Yeah, keep ‘em busy.[32:08] Melissa: Yeah. And so I'm so thankful. We had to deal with those awful restaurant moments when they're losing their minds and having a fit.[32:20] Jonathan: That's why we don't go to restaurants.[32:22] Melissa: Or just not go. Sometimes it's like fast food because that's where you can easily…[32:28] Jonathan: In and out.[32:29] Melissa: And so I think to be aware that what you're doing with your phone and devices in the young years is greatly going to impact the older years. And then the other thing I would just say, as the statistics have come in—And the hopeful thing I have for your age, I think by the time your age, those kids get to high school, I think there will be new rules in high schools. It's hard right now. I view the cell phone and social media like smoking. The high school that I went to had inner courtyards, and you were allowed to go out and smoke during the middle of the day. Not when I was there. By the time I was there, inner courtyard, there as no smoking. I mean, think about it you know, airplanes, you used to be able to smoke on them, right?[33:11] Jonathan: I've been on one of those planes, actually, when I was a kid.[33:13] Melissa: Exactly. And now they've realized, oh, these aren't innocent—[33:19] Jonathan: It affects everyone in the plane, whether you want it or not, and the curtain's not going to keep it back.[33:24] Melissa: Exactly. And they would no more let a bunch of kids be sitting in the inner courtyard of a high school smoking now. Well, I believe, I really do believe what the studies are showing us, how bad it is for kids and their mental health. I believe one day cell phones are not going to be allowed in school—hopefully by the time your kids get there. I think they will not be allowed in middle and high school, so it might help parents.But today, parents have to navigate those waters without help from culture, and it's really hard. And so what I would say for every hour your kids spend on their cell phone or device, they will be less happy, and you have to reckon with that. The studies are in. Every further hour they spend on a device, they will be that much less happy. They will be more lonely, they will be more depressed, they will be more anxious. And so we've got to deal with that reality as we parent, and the most loving thing we can do is to help our kids not be glued to their phones all the time.[34:21] Jonathan: Yeah, I would imagine it fosters more of that comparative, yeah, right. My friend's picture's on whatever social media platform and I'm comparing myself at a constant rate, versus when I was a kid or teenager, it was like just what you could see in front of you.[34:40] Melissa: Right. You didn't know that you were actually left out of the party until a week or two later. Now instantly you're sitting home on a Friday night and you see the party that you weren't invited to.[34:54] Jonathan: I can only imagine navigating that. Okay, doubt. That's … This is a period in kids' life where doubt is more prevalent, more frequent. How should parents be dealing with questions—and I heard Mike give a great answer to some of this yesterday. But how do we address the question without dismission it, but also not wanting to just give the answer straightaway is kind of what Mike was saying yesterday.[35:37] Melissa: That's right. I think so often we hear a question and we jump to fear. Fear leads to control. So rather, the kid says something like, “Yeah, I'm not sure I believe that.” And then we hyper jump on that and give them a three-point outline of why they should believe what we believe. That is not a conversation and that is not what your teen needs. What I would say when they say, “Yeah, I'm not sure. It's seems really … That view of whatever seems really mean,” “Okay, tell me why you think that. Tell me where you hear that. What do your friends think about it?” Be curious about them. You already know actually what you think about whatever the thing is, but what they need to hear from you is that you actually are willing to listen as they're trying to sort it out. And it's going to make sense. Kids have really small perspectives on things. I did. When I was that age, I had all sorts of bad ideas about things. They're working through it, so work through it with them but don't … I just don't think it's very helpful to lecture them at that point. I think it's good … We want to have a conversation is what I keep saying. A conversation will allow more availability to give your opinion when you are curious about what they are thinking rather than just jumping in. And the reality is, again, me lecturing them is probably not going to prove my point. But as we have conversations, I'm going to start to understand where they're struggling, what they're struggling with, and we can keep having that conversation and it makes them a lot more receptive.[37:26] Jonathan: Yeah. I found that helpful. Mike was saying yesterday his tendency was to just give the answer straightaway. He's got the PhD and all of the qualifications and credentials, but kids don't really care. It's like, “All right, Dad, just chill.” And I get your point. And I think he said this yesterday, which is about let them kind of sit in the doubt for a little bit. Rather than just giving the quick, immediate response, let them wrestle with it, because this is probably the early formations of them moving out of the family faith and into a personal faith. And I think you've hit it on the head there with opening the dialog so it can be an ongoing conversation so that when they do go off to university or whatever it is and they are presented with ideas and philosophies, they can say, “I've already talked about that.” And I realize here all the fallacies or issues that come up with that, I think that's really helpful. But you're right, I think we do, we tend to go to fear and we start thinking down the track what could happen if I don't resolve this immediately. [38:43] Melissa: And to realize that conversation continues. It doesn't—[38:45] Jonathan: Yeah, right.[38:46] Melissa: All of our kids have called us. They normally call Mike, and they'll Facetime. I mean, Emma has been on the Facetime with like ten of her friends, and they're like, “We have a Bible question for you, Dad.” And I think because it felt like a conversation they actually continued the conversation.And I'll also say this. It's okay to not know. Because I get it. Like, look, it's really convenient when you have a husband who is a New Testament scholar and can answer some of these questions.[39:14] Jonathan: We all just need Mike's phone number.[39:15] Melissa: Exactly. But I will say this. There are plenty of times he's like, “Yeah, that's a really confusing passage. I'm not sure what that means.” I mean, they are wildly unimpressed with his knowledge base sometimes, and so it's always nicely humbling.But he's very comfortable saying, “I don't know.” And I think we all should be comfortable saying, “I don't know,” and saying, “Hey, let's find out together.” Look, there are pastors out there who are waiting for calls like this. They have to deal with really hard issues sometimes, but they went to school to answer your biblical questions, and so a lot of times pastors are really eager to say, “Oh, I can help you with that.”[39:52] Jonathan: I get those from time to time, and sometimes there are the ones where, especially from little ones, and I think, how do I take what I know and put it in a way that you'll understand it. That takes some work.[40:07] Melissa: That's the best theological classroom you can ever be in right there.[40:10] Jonathan: Exactly. So we've asked some parents of teens to submit some questions that they're wrestling with, so we'll do a little lightning round of questions here. [41:06] Jonathan: This ties us back to what we mentioned earlier. This is kind of a newer thing. I mean, it's always been around, but it's more prevalent probably post-COVID, post-invention of the iPhone where kids are isolated. They are less relational than you and I would have been because that was all we had was relational collateral, personal interaction. Now kids can interact digitally and immediately and so there's probably a heightened level of self-consciousness, and that includes just appearance through social media and that sort of thing.So now going into a new setting with real people and real interactions must be a challenge. So what is some advice for the parent who's struggling with a teenager who's going through that?[42:08] Melissa: The first thing I always say is it's good to offer sympathy to them, “Hey, this is hard. I can remember what it was like to go into the lunch room and it be super awkward. Like who am I going to sit with?” We all have that. I still have that feeling sometimes. I'm in situations many times where I'm the only woman in a scenario, and I'm like, hmm, which table of all men … am I going to sit at? And it feels awkward.And so sometimes just them knowing that you feel it too is helpful. But I think it's also helpful to equip them and to say, hey, when you're in a situation like that, other people are probably feeling nervous too, and so it's good to go in with three questions so that you have them on your mind when you're walking into an awkward situation. It can be a question like, hey—let's picture the school lunchtime—what's your next class after this? That anybody can answer. It's pretty easily, yeah, whatever.Second one, you know, hey, where do you live? Or something like that, maybe something I'm thinking as I'm thinking in a business context, where are you from? But just some easily accessible questions that kids can answer. It could be, Are you going to the game this weekend? Whatever it might be so they feel equipped to actually reach out to someone else with a question and that can help conversation start.[43:27] Jonathan: This one's sort of on a similar vein but on a different level. “How do our teens manage the social rejection when you are following Christ?”[43:44] Melissa: Yeah. I think it is really helpful to put before our kids that we are stranger and aliens in this world. And you know my kids go to a … they were blessed to go to a Christian school, so they did not have to feel it at the level certain kids are going to have. But they did still get teased. All, especially, for being, oh, you're the professor's daughter. When she's in Bible class, even the teacher looks to her. “Well, would your dad agree with this?”[44:14] Jonathan: Oh dear. I had a little bit of that, too, with my father being a pastor. What would your dad say?[44:18] Melissa: It's the awkward … you have to be the super-spiritual one in every instance. And we just talk some about feeling a little bit like you don't belong is actually a good sign. And that means we're not home yet.[44:36] Jonathan: Great reminder.[44:37] Melissa: Yeah. When we talk about home is heaven, it makes sense.[44:43] Jonathan: Oof. “How do you parent a child that doesn't realize their friends are unhealthy for them?” These might all have a little bit of a sigh.[44:54] Melissa: It's tough. I'm a big believer in question-asking rather than telling. So hey, it seems like John did this and this and this. Do you think a good friend would be like in this scenario? What would you want him to do in that scenario? And then sometimes they can start to uncover, hey, this isn't the best type of person. But it always good to maybe pause and ask why are they turning to this kind of friendship? And I mean, yeah, again, praying that the Spirit would waken their hearts to see the destructiveness. Always be praying. In every one of these scenarios, let me just say—[45:37] Jonathan: It starts with prayer.[45:38] Melissa: It starts with prayer. [45:39] Jonathan: I'm with you. This is good, and this question actually comes into one of your chapters in your book. “How do you prevent sports from becoming an idol, especially in regards to travel?” [45:58] MELISSA: Yeah, it's tough. I would manage it very carefully and just remember as good as your kid is, they probably will not play in college, and even more likely are they to create a career out of this. But you do want them to create a career and a life out of being a church member. So guard your church time. It doesn't mean you never miss. We've all missed church for various reasons, whether it's travel or just vacation. You couldn't get to church for some reason. You could say if you're traveling it's a great opportunity to take your kid to other churches. My kids really benefited from seeing other church traditions when we traveled. So it was great for them. One Sunday we went to a Baptist church, and they had grown up Presbyterian, so they only saw babies get baptized. It was Easter. It was spring break, so we were traveling, and they had this full-immersion baptism. Well, my kids were on the edge of their seats, and they were like, “what is happening here?” So for them it was great. It was a great conversation to say, “Oh, this is how they do it.” Those are great conversations to have. [47:05] Jonathan: “Courtship dance. How to handle it now.” There's not a lot of Scripture on dating. How do you all navigate that with your kids?[47:59] Melissa: We have had very little experience in this, not because we have had rules, not because of any other reason than our kids have just not dated. I think the benefit of maybe going to a small school is they're like, we've known these people since we were five. I'm not going to date them. My daughter is getting ready to get married, and she is marrying a guy she knew all through college. They met at Chapel Hill and were friends for three years and their senior year starting dating. I will fully admit, it was as easy as it could have been, and he is delightful and we're so glad they're getting married.So what I would say with my lack of experience is I do believe that rather than have rules it's better to have conversations in this area. And so when your kid comes home to you at fifteen and says, “I really like this kid,” one, be glad they're willing to talk to you about it. Secondly, say, “What do you like about them? Tell me what's great about them.” Be curious rather than controlling. If I could impress anything, be curious about your kid rather than control them. And so I would just say it's good to have standards. When you're talking about sexuality standards, you need to have those conversations whether they're dating or not. So that should be happening well before they're dating. way before the teen years. So I'm just assuming that in these conversations those have happened beforehand.But then I think modeling good friendships. If your kids are developing good friendships, it's a big precursor to developing a good and strong marriage and good and strong dating. But I think the main thing you want to do is keep the conversation open. Hold your tongue and listen.[49:45] Jonathan: Keeping a distraction-free family. Sort of like no cell phones at the table kind of thing?[49:57] Melissa: Yeah. You know it's just funny. We didn't have some of those rules, I guess. It was just understood that that's what we were doing. And I would say a big thing I would probably highlight is if you're going to watch a movie, all watch the same movie. And so, yeah, that means you're going to watch a lot of movies you don't really want to watch as a parent, but I'd rather have all five of us in the den together watching a movie that maybe everyone had to compromise on, than all of us in separate rooms, watching what we want to watch.[50:32] Jonathan: And I know Mike's favorite movies are horror films, right?[50:35] Melissa: No, he has to watch those alone. He's not allowed to watch those with us.[50:39] Jonathan: I was going to say. Here's a good one. “How do you balance contentment and complacency and still encourage hard work?”[50:50] Melissa: I think contentment goes right alongside with hard work. But complacency is a little different. So I think you know your child. Some children are going to need to be told, hey, you need to slow down. Some kids are going to need to be told, you need to speed up. And that's okay. But you're going to have to know your individual child to know if they're not living up to who God has made them to be or if they're trying to prove something to the world. You're going to have to know that better as a parent, so it's probably going to be different for every kid.[51:27] Jonathan: This is similar to different types of child, but “How do you parent the high-achieving, focused child, how to best support their talents?” And then we'll do the other side of that.[51:37] MELISSA: Yeah. I think with the high-achieving, focused child, it's really good to make sure they're not putting their worth and value in their performance. And so you're going to have to just work with them on that and walk through that with them and encourage them that they are beloved not because of what they do but because of who they are in that. Because they're going to fail one day, and then how you deal with their failure and mistakes is really important because those kids aren't going to be used to it, and they really need it. They need to feel what it feels like to fail sometimes. And they're going to be really uncomfortable in that moment. And so walking through that with them graciously is really important.[52:20] Jonathan: Flip side, I suppose, is “How do you parent the low-achieving, unfocused child?”[52:27] Melissa: Yeah, I mean, that's a really hard one, I have to admit.[52:30] Jonathan: Yeah, because it's different.[52:31] Melissa: It's totally different, especially if it's a child like “I know this child can do things.” One, if it is a boy, let me just say they really will get it together eventually. A lot of boys, their frontal lobe—great book called The Teenage Brain. You should read it. It's written by a neuroscientist who had two boys. It's great. I mean, their brains really are taking long to develop. I taught high school, and let me tell you, the boys were not winning in high school. They forgot their stuff, the reason they had B's rather than A's was not because they were not smart enough, it's because they did not turn in their homework.They really will, by their junior and senior year, developmentally get it together. It's the girls are just developing earlier. Some of the front-lobe stuff is connecting earlier. It's biological. So yes, have expectations, but just know that with your son you might have to remind him five times, “Hey, did you pack your lunch today? Did you pack your lunch?” Don't pack it for him, but you might have to remind him more on those things.[53:35] Jonathan: “When they experience rejection or seek acceptance from the wrong sources, how do we navigate that?” And I think that's one of your … that's one of your chapters.[53:47] Melissa: Yeah, I think that different again this one is just going to have to be prayer. Because it shares a little bit about where their heart is leaning. I mean, you can see this in some kids. Some kids just always want to be on the edge, and you can see it. I think this is where you pray and you do trust that the Lord will somehow use this season in their life.But also I think to ask questions like, “Hey, why do you want to do that? What's going on? Why is that attractive?” And it's difficult if you're not that type of personality to even understand. Like I don't want to get burned, so I stay way, far away from a fire, right? But some people are just drawn to the fire and they want to get close up to it. So sometimes it's good to just ask, “Hey, why do you want this? What's going on?” Again, I think with each kid it's going to be a little bit different, so it's important to ask what's going on with their hearts and to keep probing and keep praying.[54:50] Jonathan: Yeah. All right, I'll make this the last one. “What is the Kruger's' take on how much we are requiring church attendance, devotions, spiritual practices versus giving teens the freedom of choice?”[55:03] Melissa: That's interesting. So you're saying how much we require it versus how much we just let them make that choice.[55:12] Jonathan: In terms of family devotion. Churchgoing I guess is part of the question. [55:22] Melissa: That's a good question. That makes sense. So I'm totally fine with “you're going to go to church on Sunday” just because I don't make school a choice. If you can go to school all day, you can go to church, so that's just fine with me. If they don't believe, I'm like, “That's fine, you don't have to believe, but you're going to go to church because we go to church, just like you're going to go to school,” and I'm okay with that.When I comes to family devotions, that was again just something we had always done, so it was never a new thing. It would be like my kids saying, “Oh, all of a sudden I don't want to brush my teeth.” “Huh, really? You've brushed your teeth since you were two. You want to stop now.” Some of these habits, when you can start them young, they just don't know any different. My big hint to young parents is they only know the home you make normal for them. And so they don't know that no other family's having family devotions. When it comes to personal Bible reading, that was something I did not force at all. We gave our kids Bibles, they saw our habits and our practice, and I watched as each of my kids became interested in the Bible on their own.We did not say, “Hey, you need to read it every day.” When you're putting them in church and you're having devotions, you're showing them what you value and at some value they've got to start picking up on those personal habits. That felt much more like the very relational, intimate walking with the Lord, and I wasn't going to try and force that on them. So there are spaces, I think, where you say, “Hey, this is what we do as a family,” like go to church or have prayer time before breakfast. That's just our family rhythm, and yes, you need to participate. But when it came to their own faith and their own growth, by the teen years I think that's starting to be put in their hands.[57:04] Jonathan: All right, before we go, encouragement for parents who are feeling overwhelmed, discouraged—which is probably every parent.[57:13] Melissa: Yeah. Exactly. If you're feeling overwhelmed, this is where I'm always like go back to the basics. Read the Bible. Be encouraged. God is with you and He is parenting you while you're parenting your teen. Be in prayer, ask for His help, and be around the people in the church. And so again, that makes life a lot more simple, right? Read your Bible, it will change you, it will change how you parent. Prayer will give you hope that God can change your child. And the church will give you the community you need. And then say no to a lot of other things, but simplify your life so that those things can be a priority. [57:56] Jonathan: Well, the book is Parenting with Hope: Raising Teens for Christ in the Secular Age. Melissa Kruger, it's always so fun, and you've knocked out the lightning-round questions and I just want to say thank you so much for taking the time to be on Candid Conversations.[58:14] Melissa: Thanks for having me. It was fun.[58:16] Jonathan: Absolutely. Pleasure.

Episode 246: The Deconstruction of Christianity: Alisa Childers & Tim Barnett

The Gravel Ride. A cycling podcast

Play Episode Listen Later Apr 23, 2024 58:26

Sit down with Jonathan Youssef for a compelling conversation with Alisa Childers and Tim Barnett, authors of The Deconstruction of Christianity: What It Is. Why It's Destructive. How to Respond. This discussion examines the pervasive and unsettling movement of faith deconstruction sweeping churches today. Whether it's affecting your loved ones, straining relationships, or stirring doubts within you, this episode provides crucial understanding and guidance.Together, we will try to understand the core aspects of the Christian deconstruction movement, its origins, the meaning of deconstruction hashtags like #exvangelical, and why it attracts so many people, particularly those disenchanted with traditional church teachings.Alisa and Tim offer strategies for thoughtfully and empathetically engaging with those questioning or abandoning their faith in Christ, emphasizing responses grounded in a biblical worldview.Whether you are seeking to support a loved one in turmoil, understand the dramatic spiritual changes around you, or find answers to your spiritual doubts, Alisa and Tim provide valuable insights and answers that promise to enlighten, challenge, and encourage.Listen and gain tools and confidence to address deconstruction with clarity and love, ensuring your faith and relationships can withstand the challenges of these transformative times.ALISA CHILDERS is a popular speaker and the author of Another Gospel? and Live Your Truth and Other Lies. She has been published at the Gospel Coalition, Crosswalk, the Stream, For Every Mom, Decision magazine, and the Christian Post.TIM BARNETT is a speaker and apologist for Stand to Reason (STR). His online presence on Red Pen Logic with Mr. B helps people assess flawed thinking using good thinking, reaching millions monthly through multiple social media platforms.After you listen to this episode, you may have questions. We would love to hear from you! To ask Jonathan a question or connect with the Candid community, visit https://LTW.org/CandidAlso, join the conversation on our social media pages:Facebook: https://www.facebook.com/candidpodInstagram: https://www.instagram.com/candidpodTwitter: https://twitter.com/thecandidpodTRANSCRIPT:This transcript recounts Candid Conversations with Jonathan Youssef Episode 246: The Deconstruction of Christianity with Alisa Childers and Tim Barnett.Jonathan: Today, we have quite a special situation. We have two of my favorite guests that we've had in the past, Alisa Childers and Tim Barnett. And they have teamed up and have written a book together, The Deconstruction of Christianity: What It Is, Why It's Destructive and How To Respond. Thank you guys so much for taking the time. We're all across the nation and different nations here. Thank y'all for taking the time to be on Candid Conversations.Alisa: It's great to be back with you.Tim: Yeah, it's good to see you.Jonathan: Well, I think before we jump in we've Alisa and I and Tim and I, we've separately had conversations around this area, but I love the way you break down your book into these three parts: Exvangelical, Deconstruction, and Hope. But just again for those who are new to the terminology, let's define deconstruction and separate it and define exvangelical, and then we'll talk about the reasons for the writing of the book.Alisa: Which one you want to take, Tim, exvangelical or deconstruction?Jonathan: You each get one.Tim: All right. I'll start with deconstruction. You know this is a tough definition to nail down. In fact, this took quite some research and quite some time. In fact, I actually changed my mind on how I was using the term. At least initially when I started teaching in deconstruction a few years ago, I thought there was a way that we could use the word deconstruction in a healthy way and there was a way we could use it in an unhealthy way. And we were seeing this kind of thing happening, especially on social media. You'd have people like Lecrae or John Mark Holmer or other notable evangelicals using deconstruction as a healthy way, here's a good way to do deconstruction.Tim: That's right. And on the other hand, there's a whole lot of this other stuff that's very unhealthy. That's how we originally thought until we did serious research into what's going on in this deconstruction space, especially on social media where we're seeing a movement or an explosion. And what we saw there was that there isn't anything healthy. In fact, there are defining characteristics of the deconstruction explosion that are unbiblical and just completely wrongheaded.So at the end of the day, where we landed on this—and again, we say this is the hardest sentence we wrote in the book, but here's where we landed on our definition of deconstruction: It's a postmodern process of rethinking your faith without requiring Scripture as a standard. And all those words are important in that sentence. So it's a process, but it's a very specific kind of process. It's a postmodern process. Whereas where you would think (this is what many claim) is that they are on a search for truth, what we're finding is that it's not really about truth—in fact, by postmodern we mean that there isn't a goal of truth; there's actually a denial of objective truth, that objective truth cannot be known. And so there's that on the one hand. On the other hand, you have this rejection of Scripture as an authority. And so when we put those things together, we think these are the defining characteristics of what deconstruction is all about. And we can kind of go into more detail and give some examples of where we've seen that, but that's a starting point.Alisa: Right and then the exvangelical hashtag is often used synonymously with and at least in conjunction with that deconstruction hashtag. And it's a little bit of a tricky hashtag because it doesn't simply mean, at face value, no longer evangelical. But it's not like you have people who were raised Presbyterian and they become some kind of more liturgical Anglican or something and they use the ex. They are not using the exvangelical hashtag for that. What we're seeing with the exvangelical hashtag is that, first of all, it's very difficult to define what evangelical is. And that's kind of a word like deconstruction that's defined in a hundred different ways. So there's the Bevington's Quadrilateral that characterizes the evangelical movement under four pillars of personal conversion, emphasis on the atoning sacrifice of Jesus on the cross, biblical authority, and evangelism. And yet, if you ask people in the deconstruction hashtag what is evangelical, those beliefs are in the background for sure, but what they primarily see is God, guns and Trump. It's what is perceived in their minds to be this unholy alliance between evangelicals and the political right. And so it's all kind of mashed together, along with things like spiritual abuse and purity culture and conservative politics. It's all kind of this ball that all gets kind of mixed together and then it all gets thrown out as exvangelical. And so in some cases they're conflating evangelical with the historic Christian gospel, and in other cases, they might actually be throwing out some cultural things that are Americanized that aren't necessarily a part of the gospel. And it can be kind of like a mix of both. But it's important like when Tim talked about the shift of authority, its' like the only thing that matters for the exvangelical and deconstruction is that they are leaving behind what they perceive to be toxic beliefs. And so as best as I can analyze are it's any belief outside of yourself that you would be asked to submit to, surrender to, kneel to that is not necessarily something that resonates with you inside.Jonathan: Interesting. So you're the ultimate authority, which goes to the deconstruction definition of Scripture being the authority.Alisa: I do think it boils down to that, yes. Jonathan: Do you find this is a uniquely American phenomenon? I don't even know if phenomenon is the right word to use there.Tim: That's a really good question. I think that there's a few reasons why we're seeing this in particular in North America. It's happening in Canada, too, not just the U.S. I think that we're seeing a culture that's dominated by a philosophy of relativism on the one hand and then on the other you have this kind of explosion of social media within the last decade or so. And I think bringing those two things together in particular—And then maybe a third thing, and that is the American church and how we have, I think, neglected the life of the Christian mind. We used to say the church teaches what we believe really well but not why we believe it. So us apologists, we're trying to train up the church in why we believe these things. But to be honest, when you look at the research now that's coming out in the last couple of years, people who identify as evangelical, I think it was in our book we say 42 or 43 percent of U.S., so Americans, who identify as evangelical do not believe that Jesus is god. They think He's just a good moral teacher. Hold on a second! So these people identify as evangelical but they're not Christian. I mean, this is crazy! So you have, on the one hand, Christians, people who are professing to be Christians because, hey, I was born in America or I was born in Canada. That's the default, right. It's like in your genetics or something. Yeah, so you have that on the one hand, so there's no real understanding or foundation for what real, orthodox Christianity is. Then you have this dominant culture, I mean, it's coming from every direction, this idea of relativism. It's literally the water that many of your young people especially are swimming in, and they don't even know they're wet. And then of course you have social media, this platform now, where I have access to, I mean, the world. I have access to memes and TikToks and these, for many, they think these are compelling arguments. I can't tell you how many times I'm sitting here at my desk and I get a message coming in. It's a meme or a TikTok video that someone sends me and says, “Hey, can you respond to this? I don't know what to say. I don't know how to respond.”And I watch the video or I read the meme and I think, Really? This is not a good argument. It's not even close. Usually, it's not even an argument. And so when you bring all those things together, I think that makes America susceptible to the deconstruction movement for sure.Alisa: there's also the Trump element in the American version of deconstruction. It's just such a huge part of that that is so uniquely American. But as Tim said, I think deconstruction is happening everywhere. I know progressive Christianity is happening. Even in the Middle East I've gotten emails of people wanting my book to be translated into Farsi because it's even coming into the Middle East. So where there is progressive Christianity, there is dn. But I suppose it's just taking on maybe a different type of flavor here in America.Jonathan: Well, and even the Trump effect has ripple effects around the world to where people in foreign nations see Trump and think, Oh, well, he's their definition of Christian. Let's talk about the prevalence. Because I think there are some who think this is just happening out in large cities or this is not affecting everyday people. There can be a disconnect to just how much influence this is having. And it can be people who are watching and consuming these things that aren't even talking about it with their family because they know how the family will react when there's genuine questions and doubt. So tell us a little bit about what you're seeing with the prevalence of both of these concepts entering into homes.Alisa: Well, I think we're in a different world now, so this is an interesting anecdotal piece to this. When I go out and speak I'll often ask an audience, “How many of you have heard the word deconstruction in the context of faith?” And the older the audience, the fewer the people have even heard of it. And yet, when I go speak to students it's 90 percent. But it blows my mind. Even at women's conferences where women … the ages are 20 to maybe 60, 70, you might have 20 percent raise their hand that they've even heard of the concept.And so what I mean by we're in a different world is decades ago you had to get a book deal. There was major exposure with ideas. And so I think that there are some of us who are still living in that world and don't realize the prevalence of some of these ideas on social media. For example, we have many posts documented in our book where it's somebody that nobody's ever heard of an probably never will know their name, but their video has millions of views, hundreds of thousands of likes, and if you think about the reach of that versus somebody that you might have seen on TV decades ago or maybe in a Christian bookstore even or in the catalog that they would send out, that's a lot of people. But social media can reach so many people with a message where it's not even necessarily surrounding a particular personality.And so I think the prevalence of it is on social media, so someone's exposure to it is probably going to be directly related to what types of social media they have and how often they engaging with it. Tim: And the other element to this, the older folks who have exposure to it, is because they have a loved one, usually a younger loved one, who is going through it and now we're just, as we label it, this is what it is, deconstruction, they say—it clicks. Oh, that's what my nephew is going through, or my grandchild or my son or my daughter or whatever. So it does kind of filter up to that older generation. They're seeing the aftermath usually. It's like why is my grandson no longer following the Lord? Well, it turns out they went through a process called deconstruction. Jonathan: Well, and I imagine some of the reactions can be unhelpful, and that's why, again, I think it's important that books like yours are out there and podcasts and stuff that you guys are producing is out there, so that there's a heightened awareness but also a helpful response. Because we do have a response and a calling, but we need to make sure we're doing it in a right and biblical way.I wonder if we could come to the origins of this. I know Carl Lawson writes in the foreword in your book about technically the beginning is, when Demas, who fell in love with the world, abandoned Paul and the ministry and the faith. But I mean in this particular area, is it with social media? Was there a particular person or is it just postmodernism in general? Where do you find your origins to these movements?Tim: Well, it's true that we could trace this thing past Demas. We can go all the way back to the Garden of Eden, always. But just more recently in the 1960s we see postmodern philosophers like Derrida in particular, who is the father of deconstruction. Now of course, his application of deconstruction was to textbook religion. He argued that objective meaning, objective truth, could not be known, and that there was no actual truth, so the reader could import just as much meaning as an author of a text. And what we traced in our research is we saw there is a connection here. In fact, we discovered a book by John Caputo, who is a scholar and actually follows Derrida and applies Derrida's philosophy not just to textbook religion in general, but in fact, to Christianity. And he wants to do this postmodern move even on the words of Jesus. And so he gives application in his book. What would Jesus think about, say, homosexuality today? Well, He would look around the world and see loving, monogamous relationships and He would be affirming. Even though Derrida says, yet, in the first century, no, Paul and Jesus, they had a certain view on this, but we're going to bring new meaning to the text. In fact, the way Derrida describes this is Derrida says the text actually never arrives at a meaning. In fact, he has this analogy of a postman delivering a letter, and it's like the letter never arrives at its destination, and in that sense, Christianity has not arrived. There is no set fundamental beliefs that you need to hold to—in fact, they are always changing, never arriving.So this is kind of the history, and of course there's lots of people who don't know who Derrida is, they don't know who John Caputo is, and yet, they are taking a page out of his playbook. They are thinking in terms of that kind of postmodern philosophy as they look out at religion. It's not what is actually true corresponds to reality; instead, it's there is something else going on. Oftentimes, it's personal preferences are the authority, or maybe they're looking at the culture and saying, “Yeah, look, the culture is more accepting of sexuality and so we ought to be too.”Jonathan: Yeah, just like in the days of Noah. Help us understand who are some of the primary voices behind this today? I know we talked about how when you're on social media it can be a lot of nameless, faceless people who just have an opinion and they want to create an argument or a non-argument that has an effect on people with their emotions. Are there any that are writing or have some influence as, you know, even by way of warning people, hey, be careful of so-and-so because it tends towards this trajectory?[24:42] Alisa: Well, I would say there's, in my mind, and Tim might have some others, but in my mind there's one figure in particular that is, in my view, the most influential, although he's not primarily promoting quote/unquote “deconstruction,” is Richard Rohr. Richard Rohr, his ideas, his universal Christ worldview, is—Interestingly, when I was researching the coaching and therapy sites, I found all the ones I could find online of people offering services to coach you through deconstruction or even offer you therapy through your deconstruction—and by the way, these therapy and coaching sites are not helping you to remain a Christian; they are not interested in where you land, they just want to help you along your subjective journey.But even the ones that aren't claiming to be Christians, there's always this recommendation—I looked at all the book recommendations, and there is a Richard Rohr book there every single time, even among those that don't claim to be Christians. And so what Rohr has done, I think, is, especially among people who want to retain the title Christian but might be more spiritual but not religious, or some sort of a New Age-y kind of Jesus is more of a mascot kind of thing, Rohr has really given them a worldview to put in place of what they've turned down. And he does talk about deconstruction in his book, Universal Christ, and he says it's like the process of order, disorder, and then reorder. Well, that sounds good at face value. You're taught a certain thing, and then something messes it up and as an adult you have to do some digging and some work and then you reorder. But that's not exactly what he's talking about. His order stage is what he calls “private salvation,” your private salvation project. In other words, Rohr doesn't believe in personal salvation, he believes in universal salvation, he's a universalist. So he's saying that's like the kindergarten version of faith, this kind of Christianity where you have personal faith and you have this God of wrath and judgment. All of that just needs to be disordered so that ultimately you can reorder according to his worldview.Now I bring up Rohr because he's so influential. I mean, he makes his way into so many of the deconstruction conversations. But beyond Rohr, it's tough because there can be platforms that swell up and get really big, and then I've seen them shut down after they have maybe 20,000, 30,000 followers, even up to hundreds of thousands of followers. I've seen several of these platforms just kind of get burned out and they shut down. So it's hard to say, but I would say Derek Webb, Caedmon's Call, is an important voice in there. You've got—Well, Jon Steingard was for a while when he ended up shutting down his YouTube, but he was the lead singer of Hawk Nelson. He was commenting for quite a while. Jo Luehmann is pretty influential. Who else, Tim?Tim: Well, there's—I put them in different categories.Alisa: The NakedPastor.Tim: The NakedPastor for sure. So there's guys who, and gals who have deconstructed and posted that they've deconstructed online. So that would be someone like a Rhett McLaughlin, who 3 million people watched his video four years ago. He's been keeping people updated every year; they do kind of an anniversary thing. That sparked so many people on their own deconstruction. Now what's interesting about Rhett is he didn't necessarily tell you how toTim: Yeah. And that was enough for some people to say, “Maybe I should do this too.” Now there's other platforms out there, and all they do is criticize Christianity, or they mock Christianity. Those are big on TikTok. I mean, there are massive platforms that have half a million followers and millions of views, okay, and I could go down and list some of those for you. But the point is they're not necessarily talking about deconstruction and the process, but they're just saying, “Hey, here's what you guys believe, but here's my mocking, here's my criticism.” Then there's this other stream, and this is the NakedPastor or Jo Luehmann and others who aren't just mocking Christianity or criticizing Christianity but they're trying to advocate for a certain kind of process, okay, and that's where you're going to get a little more detail on how this deconstruction thing works out. And so they've been, in fact, Jo Luehmann and the NakedPastor, David Hayward, and—Jonathan: Joshua Harris. Didn't he do a course through that?Tim: That's right. Joshua Harris, when he—again, on Instagram. That blew up. There were like 7,000 comments in response to him just posting, “I'm no longer a Christian.” And you could see the responses, and I'm telling you, there were many who said, “This post is what set me on my deconstruction journey.” So there's at least three different categories of influencers out there, and they're all playing into the same thing, deconstruction, but they all are coming at it from a different angle.Jonathan: Alisa, for those who are familiar with your story, how is this movement different from the path that you were on?Alisa: This is a great question because I've actually changed my mind on how I talk about this. So over ten years ago I had a faith crisis that was really agonizing. It was years long. I landed fairly quickly in going through some apologetics arguments, knowing that God existed, but just the doubts that would nag at me were just years of this agonizing research, reading thousands of pages of scholarship, just trying to figure out if what I believed was actually true. And it was propelled by a progressive pastor. I didn't know he was progressive at the time, but I was in a church where there was this class going on and it set my friends, a bunch of my friends, into deconstruction. And so when I wrote my first book about my journey, I actually called the process that I went through deconstruction because it was horrible, I wouldn't wish it on my worst enemy. It was agonizing and I had to kind of de-con-struct. If you just take the word at face value, and then build back from the beginning.But interestingly, when I would go online and I would talk about my deconstruction, deconstructionists would come on and say, “No, you didn't deconstruct.” At first, that was so confusing to me. I was like, “Well, were you there?” I mean, it was like this horrible, agonizing process.Jonathan: I'm the ultimate authority here.Alisa: Yeah, right, I know. And they said, “Well, you didn't deconstruct because you still hold to toxic theology. You still have toxic theological beliefs.” And that's when I realized, oh, okay, so this isn't just—even though I knew it wasn't a good thing, I knew it was a horrible thing because, again, I wouldn't wish it on my worst enemy, but it wasn't about truth. It's actually about leaving behind these beliefs that they think are toxic. And let's say you completely do hard work of years of studying and you decide that you are a sinner and that Jesus did die on the cross for your sins, that the Bible is God's Word and that what Jesus claimed about Himself is true and that He proved it by resurrecting from the dead, if you hold to those beliefs, along with the biblical sexual ethic, you have toxic theology and you've got to go back to the drawing board and start over.So that's when I realized, okay, there's more to this. And so I actually correct myself—Jonathan: There's a goal.Alisa: Yeah. I correct myself in the new book and say I don't actually use the language of deconstruction to describe what I went through because I was on a truth quest. I wanted to know what was true, whether I liked it or not, whether it resonated with me or not. In fact, what was interesting in the class I was in where all my friends ended up deconstructing, and I mean all that I know of, there might be two that I lost touch with that maybe didn't, but most of the people that I know of did. And everything in that class was all about what resonates with me. I mean, we would … they would talk about Bible verses and say, “Well, that just doesn't resonate with me,” and they would toss it aside. And I was like, “You can't just do that.”And so I didn't deconstruct, and so I corrected my language on that and really changed my mind about what I think it is. And I think what I'm hoping to set the example for others is people who are wanting to use the word because it was trendy—because I really had a thing about that. Why am I using the word? Why am I hanging onto the word? And I had to realize there's no reason for me to use that word. Because what I did was search for truth. I tested all things, held fast to what is good—that's biblical. I don't need a postmodern word to describe that. And so that would be my journey with this word and kind of my relationship with it is that I've changed my mind; I didn't deconstruct. It was—Jonathan: You re-entrenched.Alisa: Yeah, they just think I circled some wagons and found some people to agree with me. Which is so interesting to me, because they weren't there. And that's the thing. Pete Ens, I've seen the comment from him, “Oh, Alisa doesn't know … she doesn't understand deconstruction, she doesn't get it.”And I'm just like, “Were you there? You weren't there. You have no idea what I went through.” But it's like they're so quick to say, “You have to respect my lived experience,” but they are the first ones that will not respect your lived experience if you land at historic Christianity for sure.Jonathan: That makes sense. You guys have spent hours on places like TikTok researching what leads people to deconstruct and what they all have in common. What are the common threads that you've noticed through that?Tim: Yeah, that's a good question. I mean, some of the factors that we've noticed that kind of launch people into a deconstruction are things like doubts, unanswered questions. Virtually all these stories have some instance of suffering or pain, and we've all been through that. There's church hurt, there's spiritual abuse. Now we've got to be careful about that a little bit, because sometimes it's a real abuse that happens, of course, we would all want to say that is horrible and we stand against that. That is not of God. And so when a pastor engaged in that kind of thing, he needs to be held accountable for it.But then on the other hand there is what we might call perceived abuse or perceived harm. And this is where things like teaching the doctrine of hell. In our research, we found that that's called, you know, teaching your kids, it's child abuse. If you say that Jesus died for your sins, that's considered toxic and abusive to tell someone that, yet that's the gospel message. So we want to make sure that we distinguish between those things.Of course, we just mentioned earlier about politics and Trump and all that stuff. So there's these different elements that you'll see peppered within these stories. Now we want to be quick to say that not all deconstruction stories are alike. In fact, they are often very unique, and that's because every single person is unique. So if you've heard one deconstruction story, then you've only heard one, you haven't heard them all. But there are these common threads.One question that we asked when we were doing our research is why is it that two people can grow up in the same house, they can go to the same church, the same youth group, they have the same parents, they experience some of the same trauma, suffering, whatever, and yet one will deconstruct and the other maybe becomes an even more faithful believer. What's going on there?And what we found is it comes down to—at least one element—a faith foundation. What is it, what is your faith foundation? And of course, this is going to be different for different people, and what we need to be asking, we're challenging the church to ask, is what does it mean to be a Christian? Oftentimes, you know—and this is a question I was asked when I was in university by my friends who were not believers, “Tim, why are you a Christian?” And I honestly shot back, “Because my parents are Christians.” That was my first response. I knew that ain't right. That was embarrassing. I'd grown up in the church. I'd done all the church stuff, and yet I did not have a strong Christian foundation and a strong Christian faith. And so I, at that point, was very susceptible to this kind of deconstruction, right, because I could—if TikTok was big at that time, I could have watched a video and, “Okay, I'm outta here. This has been refuted.”So I think that all those things that I mentioned earlier can make you a good candidate for deconstruction, but they don't have to lead you down the path of deconstruction. This is why it's really, really important that the church needs to be helping to develop and disciple Christians so they have a strong foundation so when that crisis hits, they are able to stand firm in their faith. So let me ask this question. There may be a simple answer. Is the faulty foundations that people are building on essentially, I mean, is the answer anything but Christ? Is it in the institution of the church or in the leadership in the church or your favorite Christian singer? Is it … do you find those the main threads that came back?Alisa: That's an interesting question. I think, you know, when I think about foundation … Because I was trying to think through this question even within my own context. So one of my sisters was not a Christian until she was an adult, and she would say that openly; that's part of her testimony. She grew up in church. We grew up in the same home, we had the same discipleship, the same youth pastors, pretty much the same experiences growing up, same environment, and yet our foundation was different because I was a devoted Christian as far back as I can remember. I mean, I don't even remember a time where I didn't absolutely know that the Bible was God's Word and Jesus was who He said He was. And yet, for my sister, she grew up in the same environment but had a totally different foundation. she did all the things, she cooperated with it, but She never personally trusted in Christ.Jonathan: Going through the motions, yeah, okay.Alisa: Yeah. And she may not have even realized that. You might have asked her at 12 years old, “Are you a Christian,” she might have said, “Well, yeah,” but she didn't know that she wasn't until she actually got saved as an adult. And so I think the foundation is more of a personal thing. The way I see it is the level of understanding you might have had. We have a lot of this sort of seeker-sensitive model that's over the past few decades has gotten really big. I'm not saying it's wrong to have a large church or try to be sensitive to people who are seeking, of course. But some of those seeker-sensitive and megachurch models really watered-down the gospel, really sacrificed discipleship for numbers. And I think that that has resulted in a lot of people growing up in churches that maybe—And I'm not … We don't speculate on this question in the book, were they really saved, were they not because we don't know the end of their story either, but I do think even right now we have a lot of people in our churches who maybe may not be Christians because they may not be getting the gospel, they're not getting Bible teaching. And they might like the community and even like and believe certain things about it, but everybody's foundation is maybe going to be a little bit different. That's kind of how I see it.Jonathan: Well, I mean, not to steer us theologically, but I mean it has to be the work of the Spirit in the life of a person, and that's all in the sovereign timing of the Lord. I wonder if sometimes in this American evangelical mindset from an older-generation perspective we have this understanding that my children should be Christians and they should be following the ways that I direct. And then I should start seeing spiritual fruit in their life. Like, well, I don't know. I mean, is there something wrong with that happening at a later point? Just thinking from a parental, a parent's perspective. Maybe I've gone into the weeds there a little bit.Alisa: Like Tim said, each deconstruction story is unique. I would say it like this. Every deconstruction story is unique and yet they're kind of all the same, too, in certain points. I know we're getting in the weeds a little bit, but as a parent, I wouldn't want to push my kid to say they believe something they don't really believe. I'd want them to come to that on their own. And that might come later, certainly, yeah.Jonathan: And there's a level of you want your child to be honest with you, and I think sometimes we can put a false expectation on your child to be going to be at a certain place when they're just not ready for that yet. And so what they're actually deconstructing is deconstructing whatever that false view—again, as you said, there's different stories of deconstruction. But ultimately, if you deconstruct and never return back, to your point, there was never faith to begin with. You experienced the benefits of a covenant community or whatever it is. As Hebrews says, you were tasting but you weren't of that, you know … not all Israel is Israel.Do you think it's potentially because parents are unwilling to engage in the hard questions of the faith? Or do you think perhaps there is always just people who are going to rebel against Christ? Is it all of the above? In your research, I don't know if you're working with people who have gone through it and then interviewing them. Are you tracing things back to a particular point? I think we all want to say, “Where does the blame lie?” Are you finding that?Tim: I think it's all of the above. A lot of these stories have unanswered questions. In fact, Alisa did a debate on Unbelievable with Lisa Gunger, and she makes this really tragic statement where she said, “Questioning was equivalent to sinning in our church. If you questioned the pastor, you questioned his teaching, whatever, you were in essence sinning.”So confessing to your questions is confessing your sins. And that mentality, I mean, we wrote a whole chapter called “Questions,” In that chapter, what we're trying to do is a little bit of a wake-up call. We're trying to rattle the church a little bit and say, “Hey, we can do better. We ought to be the place where people feel safe to ask their questions and express their doubts.” And I hope that everyone listening to this hears that. Tim and Alisa are not against questions—in fact, we're apologists. We travel around and we're doing our best to answer questions, so we're not against that, and we want the church to be a safe place.And I mean we give an example of Tim Keller. At the end of his sermons, his services, he would do like a 40-, 45-minute Q&A time where he would just stick around and, okay, come on up. And in New York City, where you have like diversity of people, diversity of views coming in, you're going to have skeptics, you're going to have atheists, you're going to have whatever coming in, asking their hard questions. And when you think about it, the way we have our churches structured, at least most of them, there isn't really a Q&A time. That would be like a very special thing. Maybe every few months the pastor will take questions or something. Jonathan: A special treat. Yeah, yeah.Tim: That's right. But for the most part, that's not there, and that can give a lot of people the impression that questions aren't allowed here. You just listen to what's spoken, do what you're told, and that's the end of it. So I think that's part of it. But you also mentioned, yeah, maybe there's a rebellious heart, too. You can't read the Bible very far without seeing someone who has a rebellious heart. So we—Tim: That's right. Just a couple of pages in. And so you end up seeing that this is a realistic element that we need to be talking about, too, and that's why we devoted an entire chapter to the deconstructor, because there are things about the deconstructor that are important to be aware of from a biblical anthropology perspective. And so there certainly are people who are seeking answers, and we want to be there to provide answers. But then there's also these questions out there that are seeking exits. And you see lots of those. You see them in Scripture and we see—When you've got Richard Dawkins saying, “Well, who made God?” Richard Dawkins should know better, you know. When my four-year-old asks that question, okay, fair enough. But when you have an academic from Oxford asking that question as if it's legitimate of the Christian God, something else is going on.Jonathan: I remember Keller teaching on Job, and he says Job is filled with questions, right, but the issue was that he never left God. He didn't say, “I have questions and now I'm going to go over here and ask them.: But he kept asking the questions of the Lord in his particular situation. And he was saying that questioning can be a good thing because it's, as we talked earlier, all truth is Christ's truth, so there's nothing to be afraid of. You're not going to get an answer where it should cause difficulty. But rather, you're sticking close to the source and you're going to get your answers within reason. But rather than going—And it's interesting, because that's what these TikToks and all these things are creating is new avenues for you to go and ask questions and find a story that resonates with you, right, that's the big terminology that we were using earlier. So that resonates with your story and how you feel, and then where did they land? How do we invite this sort of cultivating an openness for asking of questions? Is it let's have a Q&A session at the end of church? Is it, you know, we need to start training our parents to have them understand that your kids asking questions is a good thing because they're coming to you versus no, everything is fine and I'm going to go to YouTube and find the answer because I think you're going to be mad at me or whatever it is. Help us think through that from a church perspective. Alisa: Well, I think starting with the parents is a great place to start because if we can train parents to be the first person to introduce some of these difficult topics to their kids, we know statistically the first person to introduce the topic will be viewed as an expert in the eyes of the child. So when we as parents are the first people to talk to our kids about gender and sexuality and all of these different things—and promoting an environment where we're not weird about it, we're not acting awkward about it, then we want to be the Google. I want to be Google for my kids. And that means I'm going to be really honest when they ask their questions and sometimes give more information than they wanted.My daughter, she jokes with me like “I know I'll get a straight answer from you with whatever I ask.” And so maybe even training parents to ask your kids questions like “Hey, what's your biggest question about God?”And parents don't need to be afraid of what their kids say, because it's perfectly fine to say, “Wow, I've never really thought about that. Let's think that through together,” and then go do some research and continue to engage with your kid about it. But I think in the home, if we can start there, that's a great place. And then the church can help come around parents with even youth groups doing Q&As and pastors doing Q&As. I think that's a huge way to promote that environment from the home, all the way through the church culture.Jonathan: Okay, let's do a little sort of engaging with others segment here. What would you say to those who are seeing their loved ones go through deconstruction or exvangelical. What would you say to them? Buy our book.Tim: Yeah, that. And I mean the first thing that I would say is stay calm. It can be not just earthshattering for the person going through deconstruction, but the loved ones of those deconstructors it's often earthshattering. We talk about this in the book, actually. To find out that my kids who I've raised in the church come to me and say, “Dad, I don't believe any of this stuff anymore, I'm out,” that would be crushing.And I would want to remind myself: stay calm. I've heard so many stories, and they're actually horror stories, where a child comes to a parent and says, “I'm deconstructing” and the parent just loses it. “How could you do that?” And they overreact, and of course that's not going to help. That's the first thing.I would want my kids right away to know that they are loved, period. That this doesn't change my love for them. It's not “I love you, but let me fix your theology.” It's “I love you, period. You're still my daughter. I'm still your dad. That's not going to change.”And then another thing just to add is say thank you. It must have taken a lot for that individual, if they come to you and share that they've deconstructed, it must have been a big deal to do that. So I would say, “Thanks for sharing that with me and me being the person that can be there for you.” So those are introductory things. Obviously, relationship is going to be so important. It's not necessarily that you're going to be able to maintain the relationship. We've heard stories of people getting no-contact letters from their loved one saying, “Your theology is toxic. I don't want anything to do with you and so we're done. Here's my no-contact letter.”But if they're willing to stay in your life, then we want to do whatever is possible to maintain that relationship without compromising truth. Truth is absolutely necessary. But you want to be in that relationship as long as possible, because that's where you're going to be able to have probably the best impact.Its' interesting you brought up Job earlier. And Job's comforters started on the right track. They were there and they sat with Job—Jonathan: Silent.Tim: Silently for seven days. And then it was when they started to open their mouths they got themselves into trouble, and I think we can learn something from that. So we want to hear, “Hey, tell me your story.”One of the first questions I would want to know is, “What do you mean by deconstruction?” If they're using that word, I want to know if they just mean, “Hey, I'm asking some questions. Hey, I don't know if I believe in this view of creation, baptism, and maybe I'm changing.”Okay, that's different than what we're seeing online, okay, this idea of a postmodern process. So I want to nail down, okay, what are you going through and what kind of process or methodology are you using to go through it? I want to be able to identify those things.And of course, in the book we talk about this idea of triage. If you have a gunshot wound to the head but a broken finger, they're treating the gunshot wound to the head, right, the thing that's more serious. And in a similar way, once you understand where this person's coming from, you've heard their story, you're going to be able to do some triage. Okay, what's the most important thing in this moment? Is it that I answer all these questions that I'm having? Is it that they just need me to be with them because they are going through something? And I think that's important because sometimes we miss the mark. Especially as apologists, oh, let me answer that question. Let's go for coffee. I'm going to fix your theology and then we'll be back on track.Jonathan: We're going to fix the problem, yeah.Tim: That's likely not going to happen. And then finally, I would just say continue to pray. We cannot underestimate the power of prayer. If someone is going through deconstruction, what they need is God. They need the Holy Spirit. And so let's petition God on their behalf. Let's pray that God does whatever is necessary to draw that person back to Himself.Jonathan: All right, now thinking for the person who is considering deconstructing their faith. And again, that could be a myriad of different positions along that path, but what are the things you would want them to know?Alisa: Well, so here's what I would say. If someone is considering deconstruction as if it's like an option, “Oh, maybe I'll deconstruct my faith,” and there's no crisis that's actually throwing you in deconstruction, I would say you don't need to do that. There's no biblical command to get saved, get baptized, and then deconstruct your faith. You don't need to do that. If there are some incorrect theological views that you—maybe you grew up in a very legalistic stream of Christianity. Maybe you grew up in the Mormon church. Maybe you grew up as Jehovah's Witness and you need to go to Scripture, make Scripture your authority, and then get rid of beliefs that were taught to you that are not biblical. I want you to know that that is a biblical process and that is what you should do.Jonathan: This is what we call disentangling, right, that we were talking about.Alisa: Yes. In our book, we would call it reformation. But yeah, Jinger Duggar calls it disentangling. I don't care what you call it. I would just really encourage you to not use the word deconstruction, because deconstruction is a very specific thing that isn't about getting your theological beliefs corrected according to the Bible, and so we want to be reforming our faith according to Scripture. And so if you need to disentangle, as Jinger would say, or reform beliefs that were unbiblical, please do that. And that can be a very long process. It can be a difficult process. But if someone is listening who's maybe propelled into deconstruction through some church abuse or whatever it might be, my encouragement would sort of be the same. It's actually good for you to get rid of beliefs that led to abuse, that Jesus stands against abuse as well. But I would just encourage you not to get sucked into this sort of deconstruction movement, because it's not based on absolute truth. It's not based on Scripture. And it's not going to lead you to any sort of healing and wholeness spiritually. And so whether you're just considering it intellectually or you're just interested, I would resist it. And that's … There's going to be well-meaning evangelical leaders that will tell you you can deconstruct according to the bible, but I don't think you can. And so let's keep our language and the way we think about this biblical rather than bringing in a postmodern concept that just clouds the … muddies the water and causes confusion.Jonathan: All right, this is good because this goes to the next level. What do you say to those who believe that Christianity is toxic or patriarchal? What's your word to them? And then the follow-up to that would be for believers. When do we engage and when do we not engage with people who are kind of promoting that sort of ideology?Tim: I would want to ask some questions, like what do they mean by toxic, what do they do they mean by patriarchal, to nail down those definitions. Are they appealing to something objective or are they appealing to something subjective based on their own personal preferences? I think it's really important that we start with what's true before we can look at whether or not something is toxic, or harmful, or whatever. In the book, we give the example of you stumble upon someone who's kind of beating on someone's chest, and in that moment it may look like they're being abused, but you come to find out that actually they've had a heart attack, and that person is not beating on their chest, they're doing chest compressions, doing CPR. That totally changes how you see that action, right? It goes from being, hey, that's harmful and toxic to, wait, this is lifesaving, this is lifegiving. So I think that's really important, when I see a deconstructionist talk about how hell is causing child abuse, I want to know, first of all, if there is such a place as hell. For them, it's not even on the table; it's not even the question, right, because it's a totally different philosophy, a totally different worldview. I want to look at is this true?I give the example of I told my kids not to jam a knife into the wall socket. Well, why not? Because there's electricity in there and it could electrocute you and kill you. So any good parent warns their kids about that. Or touching the hot stove, these kinds of things. Is it harmful for me to tell them not to do that? Everyone agrees, no, that's not harmful; it's not toxic. Now, it would be toxic if there was no such thing as electricity. If I'm just playing these games where I'm trying to torment my kids so they're scared to do whatever, to actually make them terrified of the stove or something. No. Okay, the reason that they need to be careful around this hot stove or not stuck, stick stuff in the wall outlet is because there are dangers. And if hell really is this kind of danger, then we ought to appropriately talk about this issue. Look, I'm not talking to my three-year-old about eternal conscious torment. You know what I'm saying? Obviously, there is some appropriate when the time is right. Sexuality, we appropriately talk with those … about those issues with our kids. But we do talk about those things, and that's because they're true, and that's were we start.Jonathan: That sort of answers a little bit of the next question, which is that you both dedicated the book to your children. And we're, I think, we've kind of addressed it in terms of being available. But in light of everything that you know and all that is going on with deconstruction and the questions and the struggles of the next generation, how are you taking this and applying this as you raise your children?Alisa: Well, I know that this research has definitely affected how I parent. In fact, I went through a phase in the early stages of the research where I would hear myself saying things, and I was like, “That's going to end up in their deconstruction struggle.” And I found myself almost becoming way too passive for it was probably just a couple of months when the research was so intense, and it was new. And it was like, oh my gosh, all these things i'm saying to my children is what people say they think is toxic and that's what they're deconstructing from.And then I swung back around and I'm like, no, it's my job as a parent to teach my kids what's true about reality. Just because maybe culture things that 2 + 2 = 5 now doesn't mean that I need to cower and say, “Well, you know, I'm not going to be too legalistic about 2 + 2 + 4.” No. 2 + 2 = 4. You can believe what you want, but this is what's true. And so I actually, you know, what I've started to do is tell my kids “Look, it's my job as your mom to teach you what's true about reality. And what you believe about God and what you believe about morality is in the same category of science, math, logic. These are facts about reality. It's my job to teach you. Now, you are the person who chooses to believe it or not.”And so what I've tried to do is really engage my kids in conversations, but knowing also that statistically they might deconstruct one day. I have to leave a lot of that to the Holy Spirit, and also to try to model to my children what a real believer looks like. I think that's a huge, a huge element in parenting is letting our kids see us repent to them if we sin against them, in front of them. Reading our Bibles on a regular basis together, praying together as a family. Not just being Sunday Christians. Here in the South it's real easy to just be that Sunday Christian and then—Jonathan: Haunted by the ghost of Christ.Alisa: That's right. And then you just live like He doesn't exist the rest of the week. And that's the thing about the Bible Belt. Certainly, people aren't acting … like doing pagan sacrifices during the week. They are pretty much good people. But it's just not relevant to their lives until Sunday comes around. And just being different from that in front of our kids is something I've really tried to engage. And just engaging their questions without pushing them, I think, is a huge thing. Like you mentioned earlier, is letting them have their own story and their own journey. And even as my sons wrestled with the problem of evil for about two years really intensely, I really didn't want to push him. And I just validated that that's a good question, that's an honest question to ask, and let's talk to the Lord about it, let's think through some things. But trying not to push him to just settle really quickly so that he can work this out for himself, with discipleship and the guidance of parents. But that's one of the ways it's really affected my parenting.Tim: That's so good. Yes and amen to all of that. Jonathan: Okay, I second that. All right, give us some hope. This is your part three. Part three. This can all sound pretty scary and off-putting and you need to block it out.Tim: It really really does seem hopeless, especially if you spend any time kind of typing in hashtag deconstruction or hashtag exvangelical. I mean, I would go into my office here and start working and writing and I'd come out and I'd just be like … my mood has changed.Jonathan: Spiritual warfare, for sure.Tim: My wife knew it, oh yeah, my wife saw it and my kids could see it. It was really discouraging. And so I feel for those parents who have that loved one who's going through this, and many do, so we wanted to make sure we end the book on a hopeful note. And one of the things that we were thinking about—in fact, I think it started with a phone call. I called Alisa, and I remember I was sitting at my dining-room table and I had a sermon that I was going to give on deconstruction. And I'm like, Alisa, I need to end this thing with something hopeful because it is so … And I had, actually, a parent reach out to me before I gave the sermon, saying, “I really hope that you're going to give us some hope.” Because they have a child themselves, a young adult, who's deconstructing. I'm thinking, okay, what is it Alisa? Help me out here.And we just started talking back and forth and so I don't know how this came up, but eventually we started thinking about Easter weekend, right, we're coming up to it. Of course, you think about what was going on Friday night. It's like Peter's there; he's seen his Savior, his Messiah being crucified, and his world is turned upside down. We could just imagine what that was like to go through this traumatic experience. And then, of course, it jumps to Sunday and Sunday brings with it resurrected hope, right? And you have the angel shows up, tells the women, you know, go and tell His disciples AND Peter. Like Peter really needs to hear this. Friday night, he denied the Lord three times. It was a bad night for Peter. But he's going to receive this resurrection hope on Sunday.Well, we actually titled the last chapter “Saturday” because we think that a lot of people are living in what could be described as a Saturday. Now again, we're not told much about that particular Easter Saturday, so we can only speculate, but really, I mean, what kind of questions were the disciples, in particular, Peter, asking? Were they starting to doubt some of the things that they had been taught, maybe like trying to explain away some of the miracles they had seen? It wasn't supposed to happen this way, was it? And so there's self-doubt, there's all this trauma that they've experienced. Now of course, Sunday was just around the corner. We think that, look, if that hope can come for Peter, then it can come for you and your loved one, too, right? We don't know what that Saturday looks like. It may not be tomorrow. It may not be just one 24-hour day. It could be months down the road; it could be years down the road; but we think this is a message. Because if it can happen for Peter, it can happen for your loved one. And I think that can move us from a state of “This is completely hopeless, what good can come from this? How can this be undone,” to a state where, no, we can be hopeful. Jesus rose from the grave after being dead. And when that happened, Peter's faith is restored. “Do you love me?” He says, “Yeah, I love you.” Three times, kind of like paralleling the three denials.Jonathan: Exactly.Tim: And then the Church is built on this confession. So I mean that brings me hope, and hopefully it brings hope to others who are going through this.Jonathan: Just one final question. Have you seen anyone who's been restored out of this?Alisa: You know what? I have heard a few stories, but these are people that have platforms. So I have several people that are part of my Facebook community who have said they deconstructed into progressive Christianity but have been brought back. I have had a couple of people on my personal podcast who had deconstructed. One is a guy name Dave Stovall. We actually tell his story in the book. He was in the band Audio Adrenaline, and he deconstructed into progressive Christianity and then a local pastor here in town discipled him back to the historic Christian faith and had all these difficult conversations with him and engaged him in conversation. So I think we are seeing some. We're not seeing a lot yet, but I think a lot of the stories maybe are just more private, where people aren't necessarily shouting it on social media. But yeah, the Lord's at work, absolutely.Jonathan: That's good.Tim: Yeah, I can echo that, too. We've been … A I travel around teaching and speaking, I'll have people come up to me and usually you get a lot of people saying, “Thanks for hits information. I had no idea this was going on.” But this one guy, he said, “I went through deconstruction.” And he said, “It was when you put up your definition of deconstruction that you had me because that”—Alisa: Wow!Tim: I thought he was going to push back and be like, “But that's not how you define it. Instead, he said, “You had me as soon as you put up your definition.” Why? “Because,” he said, “that exactly described the process that I was going through.” And yet, here he was on that Sunday morning at church kind of completely kind of turning a corner and willing to say, “No, I'm willing to follow the truth wherever it leads.”And that led him to affirming that the Bible is God's Word, and now he's trying to align his beliefs. And of course, that's a journey we're all on. I have false beliefs right now; I just don't know which ones are false, right? I'm always trying to correct my mistaken beliefs and make them align with Scripture. And praise the Lord, that was the journey he was on.Jonathan: Oh, amen. Well, the book is The Deconstruction of Christianity: What It Is, Why It's Destructive and How To Respond. Alisa Childers, Tim Barnett, thank you, guys, so much for being on Candid Conversations. I've really enjoyed our talk today.Alisa: Me, too. Thanks so much.Tim: Yeah, this was a lot of fun. Thanks for having us.Jonathan: God bless.

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Fresh eyes: Jonathan Hornell-Kennedy's (Framework Bikes) unique vision of the modern gravel bike construction

Play Episode Listen Later Dec 6, 2023 52:26

This week we welcome Jonathan Hornell-Kennedy from Canada's Framework Bikes. Jonathan is a relative newcomer to the world of bicycle framebuilding, but his background in manufacturing and design supporting the aerospace industry provided him with some unique skills and insights he brings to his craft. Jonathan sheds light on his entry into custom bike building, sharing the evolution of his process. He explains the meticulous method behind the creation of his unique carbon fiber tubes and aluminum lugs. We delve into what makes these bikes versatile on various terrains, and the challenges and decision-making involved in custom builds. Jonathan also touches on the struggles of establishing his brand within the competitive bike industry. The conversation rounds off with discussions about the future of Frameworks. Join us for an insightful conversation, as we delve deeper into the fascinating world of custom bike building. Framework Bikes Instagram Episode sponsor: Hammerhead Karoo 2 (Use code: TheGravelRide for free HRM) Support the Podcast Join The Ridership Automated Transcription, please excuse the typos: [00:00:00]Craig Dalton: Hello, and welcome to the gravel ride podcast, where we go deep on the sport of gravel cycling through in-depth interviews with product designers, event organizers and athletes. Who are pioneering the sport I'm your host, Craig Dalton, a lifelong cyclist who discovered gravel cycling back in 2016 and made all the mistakes you don't need to make. I approach each episode as a beginner down, unlock all the knowledge you need to become a great gravel cyclist. [00:00:25]Craig Dalton (Host): This week on the broadcast. I bring you Jonathan Cornell Kennedy from frameworks out of Canada. You might've heard Jonathan briefly on the podcast. When I did one of my made bicycle show recap shows. I was captivated by his designs at the show as they were relatively unique amongst the field of titanium and steel welded bicycles. I'd been familiar with lugged carbon construction from a number of other builders along the years, but I hadn't seen his particular approach. And after following him on Instagram, which I definitely recommend you do, I became a NABARD with the manufacturing process. So I was excited to have him back on board to learn a little bit more about his history. He's a relative newcomer to the world of bicycling, which I think always yields interesting and innovative approaches to things. That's builders who have been around forever. Might not care to revisit as an approach. . So. I'm excited to have this conversation before we jump in. I do need to thank this week sponsor hammer had, and the hammer had Caru to computer. Maybe you've been thinking about updating your gravel cycling GPS computer. This time of year, the hammer head crew two is the most advanced GPS cycling computer available today. With industry leading mapping navigation and routing capabilities that set it apart for other GPS options, it has free global maps with points of interest included like cafes and campsites. So you can explore with confidence and on the go flexibility. One of the things I always talk about when talking about my hammerhead crew too. Is the ongoing software updates that they ship. You never have to feel left behind from a new feature coming out in the world because the team at hammerhead are always looking to improve. The device, the climber feature is one that I always call out as it notably has this predictive path technology. Which lets you visualize for the upcoming gradient changes in real time, whether without a root loaded. That is something that I particularly lean on when I'm doing. An event in terrain that I don't. I have familiarity with, or I'm on some sort of adventure ride for me. I really just love to see what's ahead of me in the climb. So I can just think about my cadence and effort level. Et cetera. The other big update that I saw come through was around this new e-bike integration, which brings detailed battery usage data right onto this. The display. As the new owner of N E MTB, I'm excited to explore this feature. Because I do have a bit of range anxiety. So having those battery details right in the display unit. By which you can access via a specific persona on the head unit. So I can switch between things I need on an e-bike ride versus things I need on a traditional gravel ride. Anyway, I encourage you to give. The Karoo to a look right now, our listeners can get a free heart rate monitor with the purchase of our hammerhead kuru two. Just visit hammerhead.io right now and use the promo code, the gravel ride at checkout today. This is an exclusive offer for my listeners. So don't forget that promo code, the gravel ride. You'll get a free heart rate monitor with your purchase of our crew to just go to hammerhead.io today at both items to your cart and use that promo code, the gravel ride. With that business behind us, let's jump right in to my conversation with Jonathan. Jonathan. Welcome to the show. I'm excited to have this conversation after we originally connected at the maid show in Portland, Oregon. Super cool. I thought your product was one of the more. Interesting products I saw in the entire show. So I'm stoked to give the listeners a little bit more insight as to your background and what frameworks is all about. [00:04:26]Jonathan: Thanks for saying that. That's nice of you. Um, yeah, it's kind of a tired story at this point. Someone with a passion in bikes and who makes things for a living decides to combine those two of their life and see what happens. [00:04:40]Craig Dalton (Host): Jonathan, where'd you grow up and how did you discover cycling in the first place? [00:04:45]Jonathan: so I'm, uh, native Southern Ontarian, uh, up here in Canada. I was born in Toronto and have lived within a few hours of Toronto my entire life. Um, so, started biking, just, you know, when you're, Parents kind of teach you how to ride a two wheeler kind of thing in the school field. Well, I was probably like six or seven at that point, um, and we moved out of the city when I was seven and into a more, well, we were still in a town, but I would say a more suburban kind of town. So biking around the neighborhoods and going to see your friends and stuff, kind of a little bit of escaping mom and dad's supervision. Uh, and then just started kind of. Like, loosely mountain biking. I had like a giant hardtail for my whole, like, biking career from age 12 to when I left for university. Um, so, you know, go on, jump off of stuff, try and jump over logs, whatever, you know, just being a goof with buddies, and then in university, I, um, that was like, what, early 2000s, um, there was kind of like, the original fixie craze, I feel like [00:05:57]Craig Dalton (Host): It comes in waves [00:05:59]Jonathan: but, so I started riding a fixie. Yeah, yeah, yeah. I don't know. It's cyclical, I'm sure. Um, so I started riding a fixie then to get around town, and that was the last bike I purchased before I made one for myself, I studied, uh, a somewhat esoteric field of statistics called, like, uh, financial math. So it was taught in the Department of Statistics and Actuarial Sciences at the university I went to, so that's like the people who do insurance math. Basically figuring out how much your life insurance policy should cost based on, you know, statistics and market values and things like that. So, um, yeah, so I was at school for quite a while. I, seven years, I think. Um, studying that I have a master's degree in it and then ended up doing nothing with that degree, uh, in practical use, like I should have been working as like a finance math kind of guy, you know, so didn't really [00:07:05]Craig Dalton (Host): And then you had mentioned, you know, you had that fixed gear bike that was the only one you had and the next one was one you built yourself. That's for most of us. That's quite a massive leap and journey. What was going on there? I mean, you had, you develop sort of a passion for the sport of cycling. Was it more the idea of frame building and how did you even begin to acquire the skills to manufacture your first bike? [00:07:30]Jonathan: Yeah, so that, that's maybe where the academic journey ends and then what I've done to earn a living, uh, commenced after that. Um, I, my wife and I own and operate a machine shop and, um, what we started the business with was, um, again, another esoteric thing, uh, pattern making is what it's called. And that's the, the trade that is involved with making the tools that foundries [00:07:58]Craig Dalton (Host): And how did, [00:07:59]Jonathan: castings. [00:08:00]Craig Dalton (Host): I'm curious, Jonathan. So how did, I mean, how did you even see that as an opportunity? Did either of you have, you know, ties into the manufacturing world to begin with? [00:08:10]Jonathan: Yeah, absolutely. So my dad is a mechanical engineer by education, and he owns and operates a company that, um, basically repairs, refurbishes, remakes large industrial pumps. Um So they, they oftentimes begin life as a casting, like a large chunk of, uh, iron or steel or bronze, whatever it might be. So when I was done university and kind of doing a little bit of soul searching, a friend of mine who's a few years older and was sort of, um, not thrilled with the job he had, I would say, or maybe that's not the right way to say it, but was looking for a change, um, He is, uh, he's a civil engineer by training and approached my dad cause he knew he was self employed and said, uh, Hey Pat, what do you think of like going out on my own? Got any ideas? I'm pretty handy guy. And my dad said to him, like, Hey, I think you should look into pattern making. The guys are all old. You really can't go to school to learn that stuff. It's all sort of apprenticeship based and they're kind of phasing out their businesses, you know? Um, so there could be an opportunity there. So Stefan, my friend, and I, um, I took like a night class at a local community college to learn how to do 3D modeling and was kind of pretty handy with SolidWorks. And the modern way of making patterns is to use CNC machines to carve 3D shapes, typically out of like blocks of foam or wood or, uh, tooling board, it's called, which is like a hard plastic. And those objects that you create are what the foundry uses to create their sand molds. So picture like a cast iron frying pan. The way that's made is they melt iron in a pot and they pour it into a mold that's made out of sand and the mold has the shape of the iron, uh, the cast iron frying pan inside of it. So my obligation or sort of the service that we offered was not only to produce the tooling, but I was also. You have to design it to work for the foundry. So, uh, cast iron frying pan is a relatively simple object, but we got, over the years, as my skill set grew, got involved with, um, some relatively complicated castings for, like, world leading Aerospace foundries. And, um, so yeah, Stefan and I ran the business together for about a year, year and a bit. He was living in a different, like he lived in Toronto property. We're in Hamilton, which is about an hour outside. And, um, he had, uh, his first kid in that time. And I was like super hungry to get the business going. And so we were kind of on different paces and there's a little bit of friction that resulted because of that. So we parted ways and then. We're still good friends, but, um, I kind of ran the business on my own and then my wife, Elise, came on, um, as we started to grow a bit, move facilities, and then started to expand more out of just pattern making to do, um, machining as well, which is, a lot of times, foundries have these metal castings that they produce that are relatively intricate shapes that need some more precise operations carried out on them. Um, you could, like, an example might be, like, an engine block in a car or turbocharger, like, objects that people, like, think of more readily than some other things I got involved with. So you've got this object that's relatively crude when it comes out of the foundry, and it might need a bearing put in it or threads added so you could bolt it together. So that, that's an operation that typically happens in some sort of machining setup. So we had this customer base of all these foundries that trusted us to make these relatively complicated things like patterns are, are big, like organic shapes, lots of 3D things that need to be accurate and go together and work. Um, so it was a pretty easy thing for us to say to them, Hey, you know, he trusts us to do this. Would you allow us to machine your castings for you? Like, can we quote on that work? And the idea for us there was, um, kind of more repeat business. The thing about, uh, uh, pattern tool, uh, is you only make one of them. Hopefully the customer is not coming back to you for another one right away, because the idea with a mold or a tool or something of that nature is that it costs a lot of money to make, but it allows you to make a ton of parts. Um, so think of that as like a mold for a carbon fiber frame. It's the same kind of idea. You've got this thing that costs a lot of money is really complicated, but it allows you to put, uh, a basic material into it and get [00:12:39]Craig Dalton (Host): And then you're in your example of like the engine block, they would have pulled something out of the mold that was a bit rough around the edges, maybe not as precise as it needed to be to fit. You would bring it back into your CNC capabilities and really use the tool to, to make precise edges and cuts and shapes around the basic block. [00:13:01]Jonathan: exactly. [00:13:01]Craig Dalton (Host): Gotcha. [00:13:03]Jonathan: Yeah. And like a lot of that stuff would have happened more historically in the, the cycling industry when they used a lot of investment castings for lugs and things like that, or, you know, a lot of that type of product has moved away, like, um, in favor of probably more cost competitive and superior products. Uh, but yeah, like, uh, there would have been a whole bunch of examples. I'm sure old shift levers and things like that die castings [00:13:28]Craig Dalton (Host): Yeah, I remember. [00:13:29]Jonathan: um. The, you get a [00:13:31]Craig Dalton (Host): remember in the early days of mountain biking, the wave of CNC machined parts that came out, preferably color anodized that were all the rage at the time. [00:13:41]Jonathan: Yeah. [00:13:42]Craig Dalton (Host): Yeah. [00:13:43]Jonathan: Yeah. So it's, so that's sort of the, the story on, and then we got involved in injection molding and doing, um, work for the government during COVID to make PCR testing consumables, uh, so that involved like some pretty complicated work in terms of reverse engineering, um, yeah, plastic components, getting a clean room set up, [00:14:05]Craig Dalton (Host): And what was that additional equipment that you invested in at the time? [00:14:09]Jonathan: Yeah. So we were, we got a grant from the government to set it up. Uh, so we had to put some capital into it for sure. That's how it worked, but you know, we felt like we're definitely doing the right thing when North America was kind of running out of those parts. The whole world was running out of them because when, when did like they ever see a demand spike like that in terms of lab consumables, right? So, uh, yeah, we got that up and running and then. worked our butts off for two years to make it all happen. And then that's kind of what I would say gave me the financial [00:14:44]Craig Dalton (Host): So that's that brings us to maybe what 2000 2022. [00:14:48]Jonathan: yeah, honestly, man, the whole pandemic is a blur in sort of timelines. Yeah, I think so. That sounds about right. Um, yeah, I would say July of 2022 is when we shipped our last part, um, to fulfill the order to the government. And, um, yeah, [00:15:06]Craig Dalton (Host): And was there a driver behind you saying like, Oh, I want to make a bike? Had you like increased your cycling during the pandemic? Yeah. [00:15:15]Jonathan: So it's another pandemic story of, I'm sure you remember trying to buy bike stuff. Um, so yeah, the, the, all along, I've been, I've always had a passion for making things, right? Like, using my hands to create an object, like I, like, when I was in school, I worked in, like, fine dining restaurants, like, 40 hours a week. That was kind of my first form of, you know, trading my time for money in terms of making things. Uh, so the, the shop that I've built up over the years, I've got some really nice equipment. I've paid for it all out of cash flow by doing other people's work. And I've always wanted a product line of my own stuff. Um, not that I don't like working with other people and you're certainly exposed to a lot of really interesting and challenging problems to solve when other people are bringing you their stuff. But it's a bit of a, like, you know, everybody's got masters, even when I started making my own product, I've got to sell it now. So that's a whole other thing. But, um, yeah, it's a bit of a, always wanted to make something and I've always been into bikes. So that's why I was saying earlier, kind of combine those two things. And the big push was, um, yeah, just not being able to buy a new bike during the pandemic. I was riding [00:16:28]Craig Dalton (Host): and given the equipment that you had in hand at that time, can you describe the bike that you were able to make? [00:16:35]Jonathan: yeah, well, uh, I had originally thought like I'm watching Cobra frameworks as Or yeah, Cobra frame buildings, YouTube channel, how to weld a bike. And I ordered a bunch of chromoly tubing. I've got welding equipment here and milling machines. So I was like, I'm going to just make myself a bike and that's it, right? Like that's going to be, it'll be very, it'll be a piece of junk because I'm not that good at welding and I've never done one before, but the, it'll be the thing that I made and I'm riding it. And that's cool. Um, and then the tube shot sat on the shelf for like two years. Because it's like, it's not, that's not what I do, right? That's not my, it felt like too fussy. I was going to have to be like sitting at a welding table, filing things. So the bike that I decided to make was, um, a format that is gaining popularity right now with the advent of 3d printing, which is a lugged. construction frame where the lugs are alloy and I'm using carbon fiber tubes. So, um, I had actually originally, like I'm really good at 3d modeling. That's one of my main skill sets. So designing the bike took like a day, less than that. And then I was going to have the lugs printed, like 3d printed, like everyone else is doing. It's a pretty, um, in comparison to CNC machine shops that could produce a part like that. In terms of intricacy, it's relatively easy to find vendors that do 3D printing as a job shopping service. Like, that's kind of the main [00:18:03]Craig Dalton (Host): And are those, are those, uh, 3d printing? Are they printing in titanium or aluminum or both? Okay. [00:18:10]Jonathan: both, there's stainless steels, there's all sorts of alloys coming out, there's different forms of printing. And then we, because we do aerospace work, like we had our aerospace designation working with foundries and machine shops that do that type of stuff. Um, we're involved with some of the like, Canadian leaders in terms of operating that equipment and having those processes validated. So I sent them to the engineers and they said you're not actually going to ride that thing. Are you? I was like, what are you talking about? I was like, yeah, I'm going to write it. And like, well, I don't know if we would like, what do you mean? And that's when I started to like do a bit more research into, um, the metallurgy of 3d prints and would have needed to beef them up more than I thought to get it to work. But the main thing that [00:18:56]Craig Dalton (Host): Yeah. Cause I often, when I see companies using the 3d printing, it's often. around the rear dropout. They might highlight that they're doing it back there, but I don't recall of anybody doing a head tube, for example, in the 3D printing style. [00:19:11]Jonathan: most head tubes on bikes that are logged with 3D prints, they actually segment a piece of carbon in there, um, in between, or a piece of titanium pipe and weld it at the two ends, because that particular shape might actually exceed the build volume of some printers. It's not that they, cost wise it doesn't make sense, it's that it, you're literally talking about a little microwave oven. [00:19:33]Craig Dalton (Host): Yeah. [00:19:34]Jonathan: to cram all the lugs into there. Um, and it's the build volume might be like nine, 10 inches cubed. So if you've got a head tube in there, that's, you know, for a taller person, it just won't even fit. So yeah, there was the, the structural element is one thing it can be overcome. The, what floored me was the cost. Um, these guys are like, often engineers are also in gear guys, right? And they're into cars and biking and stuff like that. So a lot of them knew of these brands that are doing it. And they're kind of saying like, uh, I don't know. We can't with our own cost structure on what it costs to operate these machines. And kind of how long it takes to print something. We don't get it. So then I kind of went, okay, you know what? For that amount of money, um, that we're talking just to build myself a bike. I can, I can just take a couple. Blocks of aluminum that I have on the shelf and sacrifice a few days of my life to see if I can machine them Um, so I made myself a fixie that that was the first bike and I just bought Carbon tubes from McMaster car like carbon fiber tube. McMaster car is like, uh, I don't know the Amazon of industrial Ordering so they're they're awesome. They've got everything next day shipping kind of thing. So I got all this stuff and I glued the thing up manually and then I started riding it around, um, around town and going out to group rides, which I hadn't done before. And people started asking questions about it. You know, most bike people are, they pay attention to stuff like that, whether it's a saddle bike they would ever ride themselves. Maybe not the case, but They know, right? And like, everyone's got [00:21:07]Craig Dalton (Host): your bicycles have a very distinct look that is going to get people to ask questions. And for the listener, maybe who hasn't, isn't able to kind of visualize what a lugged construction looks like, you've got the head tube. With a little bit of kind of aluminum coming out for the down tube and the top tube, you've got another lug and bottom bracket set up in a similar fashion. And similarly around the C tube and the rear stay and the carbon fiber tube basically goes inside that aluminum, that lug as we're talking about, and is bonded together in some way to kind of. Create the frame that's somewhat accurate. Jonathan, [00:21:47]Jonathan: I think that's a pretty [00:21:48]Craig Dalton (Host): I've never thought about describing lugs to someone in their ears. Not looking at a picture [00:21:53]Jonathan: Yeah, like, Colagno, Cologno? I don't know how to say the name properly. Like, even their carbon fi Colnago. There you go. They're, they're, uh, Their carbon fiber bikes are logged. So just like there's a step, like most bikes, carbon fiber bikes are made in multiple pieces. They just seen them and sand them and you don't see it because it's under the paint or they might do clear coat [00:22:13]Craig Dalton (Host): Yeah, exactly. [00:22:14]Jonathan: wrap or something. But yeah, anyways, there's a bit of a step and it's, yeah. The, and the, and the first bike, I, it's like bright aluminum. I just left it raw. I didn't put any of the, um, kind of plating that we do on the ones you would have seen. And I use like a more old school looking carbon fiber with like the checkered weave. So it's like quite, um, yeah. And it's built like a steel bike, like skinny tubes, like I think inch and an eighth or inch and a quarter down tube. Like, uh, yeah, so it was, so I started riding it around and people were saying like, Hey, you know, like go look at, then they list brands X, Y, and Z. Go look at those guys and what they're charging for a bike. And I thought like, holy cow, like that's, uh, that's, I could do this again and charge less than that and make a pretty good go of it. Um, so that's when I kind of went like, okay, maybe I should try to spend a bit more time not doing it as a one off, but think about how I would build it with the skill set and resources that I have at my disposal and to kind of rethink the construction methodology a bit. So, as much as my bike is like a object at the end, what I'm, what I really focus on when I'm thinking about the bike is, Everything that goes into making it and optimizing the design so that it can produce the best possible result, uh, in a really predictable manner [00:23:36]Craig Dalton (Host): Yeah. And in riding that first fixed gear bike and using those off the shelf carbon fiber tubes. Did you kind of recognize something in the tubing that left something to be desired? [00:23:47]Jonathan: Um, are you, is this like leading towards why I started making my own tubes? Yeah, um, so yeah, they're, they're roll wrapped, so that's a process where you take sheets of pre pranked cloth and picture like rolling pastry on a rolling pin. You've got a 2D sheet on your table and you roll it over. Um, so you're kind of at the, like, you're constrained to what the fabric itself will allow you to do in terms of laying the fiber in certain orientations and what resin is already in it. Um. So it's, it makes a more limited tube in terms of strength, but honestly, the main motivating factor for me starting to wind the tubes in house was that sourcing stuff in Canada can be problematic for a relatively small economy, you know, and like, there's the border. So every, all these tubes that I had access to were coming out of the States, I'm paying import duties on them. I'm paying in a currency that's worth a lot more than ours. So when I looked at what it was going to cost me to buy a set of tubes from Rockwest, which is what I made the first bunch of bikes with, like I was working with them on the tubing, um, I just thought like, okay, maybe I can, if the whole idea is to try to optimize the process and drive costs down a bit, I thought I got to do this in house, right? Like the, the tubes were costing me a lot more than the aluminum that goes into the bike. And that's like aerospace grade coming from a certified mill with traceability certs. And you know, it's. Good stuff. So, um, then there's the option of like when you're using, or option, that's the wrong word, sorry, there, there's the limitation that when you're buying an off the shelf product, you're constrained to how that is made, right? So the tubes I could have spec'd out to Rockwest, like, Hey, could you make me the tubes with this recipe? And they'd say, yes. But one thing I wanted to maintain, um, as wide open the variable set as possible was like making bikes customizable. Right? So like, say you're talking to a, a frame builder that's using any type of alloy. They're at the mercy of what tubes they can buy. They can't tune beyond that, right? They can maybe squish them a little bit or change the shape of them to get some different bending compliance in them, but the material is what it is. Um, so it, with internalizing the tube manufacturing, I've got a considerable amount of control over making the tubes behave differently. Um, so it looks like a fairly basic bike in profile. It looks kind of as like a classical shape in terms of if you overlaid a welded steel bike over it, they'd almost look the same, right? Like, I use a relatively large down tube, but, um, but I wanted, like, I, I think carbon fiber is an excellent material, but to produce a carbon fiber bike in a traditional sense. Um, you need a mold and then you're not doing custom geometry at that point, right? So I wanted to maintain the ability for every bike to be both custom geometry and have a lot of the benefits of [00:26:42]Craig Dalton (Host): Can you describe what the filament wound carbon fiber, what's that process like? [00:26:47]Jonathan: Yeah, so instead of roll wrapping where you're taking prepreg sheets, um, you have a machine, it's like a CNC machine that I built. Um, that operates like a lathe, so a lathe is where you have a spinning thing on a single axis rotating and something tracing back and forth along it. So, I've got a mandrel that's spinning and I, uh, like a spool of carbon fiber is on this carriage and it goes back and forth and I can basically roll or wind the single strand of carbon fiber onto this tube. So I, I got to do the math again. I did it a few months ago and I forget the number, but I think to make a tube set for a bike, there's like 20, 000 linear feet. that I lay up in a really precise manner. Um, so we build up the tube in layers and we can have different layers for different tubes, different rider thicknesses. And then what the winder allows me to do is put the fiber down in different orientations. So like, I'm not, I don't have to buy prepreg fabric from someone where it's only unidirectional, it's only. 45 or 90. Um, I can go any angle I want and put down as much or as little as I want in certain areas, and that's all done [00:28:00]Craig Dalton (Host): that sort of pastry analysis, uh, comparison you used, is there the equivalent of the rolling pin inside that you remove at the end after it's sort of wound into shape? [00:28:11]Jonathan: yeah. So our, that's where our process is differentiated once again, from people who roll wrap is I don't cure on the mandrel. So most production roll wrapping places or other frame builder, or sorry, um, filament wound tubes, what they do is they have a really precise rod that they wind onto, the mandrel, and then whether it's, you can use, so just to really muddy this a bit more, you can use two forms of fiber to it. You can have prepreg fiber, so it's a single strand with the resin already in it. Or you can do what I'm doing, which is wet winding, where I buy dry spools of fiber, and then I'm mixing my own resin, um, and the fiber gets wetted on the way to the mandrel. Um, both systems require a cure cycle after to set the resin, but with the prepreg toe, you're subjected to the same constraints that prepreg is in terms of, you know, needing to store the stuff in the freezer. It has a shelf life. You've got no say over the resin whatsoever. Um. So for us, I can mix and match the recipe for whatever I want. We use some really high performance resins and that's something that I think, you know, the bike industry doesn't talk a lot about. They talk about the fiber. I've got Toray T1100 in my frame or Ultra High Mod in my frame here, but no one talks about the stuff that actually holds it all together, which is [00:29:28]Craig Dalton (Host): Yeah. I've never heard of it beyond a technical discussion. [00:29:31]Jonathan: so we spent a lot of time [00:29:32]Craig Dalton (Host): Yeah. Yeah. I would say, I would say I would encourage the listener while they're listening to this in their earphones to go onto your Instagram account because a lot of this discussion will become more visual. If you start looking through some of the framework bikes, Instagram stories, you'll get sucked into this process and everything Jonathan's saying will come together visually for you. [00:29:54]Jonathan: I appreciate the plug. So I think the question I'm taking a really long time to answer is like, what happens once the fiber is on the rod? Most places, what they do is to get some amount of consolidation is they wrap tape over it once it's on the mandrel. Kind of like wrapping a hockey stick or a golf club grip or a tennis racket or whatever. So they've got an additional head that has what looks like packing tape and they pull on it kind of hard and then try and wrap, wrap it under tension to consolidate that fiber down onto the mandrel. Then that whole thing goes in an oven. Some guys will vacuum bag it depending on what you're doing. So that means they put a big plastic sleeve over it and pull vacuum on the sleeve. So that'll give you, I think it works out to about 14 PSI of consolidation, um, and then, then they have to remove the rod from the carbon fiber once it's cured, pull it out the end, and you're left with your final carbon fiber tube. So what we do that's a little different is, while the fiber is still wet, like the glue, the epoxy glue hasn't set up yet, mandrel, and then I place it into a mold, like a, The mold that has two hemispheres in it. So I slip a bladder inside of it and then, um, expand the fiber into the mold to give it a really accurate shape and much higher consolidation than you can achieve with, um, traditional [00:31:21]Craig Dalton (Host): Interesting. You mentioned you, um, [00:31:24]Jonathan: So that there's, there's a few motivations for that. One is to get like much higher quality product without, because when you're wet winding, um, air and stuff gets worked in. It's really hard to avoid little micro air bubbles and tiny little air bubbles in carbon fiber is what causes the material to break down over time more rapidly. It's if the, if the plastic starts to fatigue, the fibers get overworked and then the thing kind of breaks down. So the higher quality you can make the product coming out of the mold, the longer it's going to last, the better performance you get out of it. The other thing for us is I wanted really accurate. diameter on the outside of the tube because that's how we glue it into the lugs. Um, so if you can imagine the process that I described where you tape the outside of it, you're left with a fairly coarse outer surface on your filament wound tube. So most people have to sand it quite heavily to get it either dimensionally accurate or, you know, looking good. So that's another step I wanted to avoid. Like my whole thing is about trying to minimize the amount of human [00:32:26]Craig Dalton (Host): Yeah, I think when many of us look around our garages at the carbon fiber frames, uh, clearly like they, they must've been sanded. And then obviously like the paint and everything gets it smoothed over. So you don't see if anybody's seen like a raw construction of a carbon fiber frame, they look a lot rougher around the edges than the finished painted products do. But in your case, there's nowhere to hide. You know, the, the, the product is everything. [00:32:52]Jonathan: You could, like, like you, what you could do to rectify it, and I think some other builders do need to do this, is like, you've got little pinholes everywhere, you've got little wrinkles in the surface, you lay on a clear coat, you mix up your epoxy, or some other finishing agent, you lay it down, and then you sand it. And then you repeat that process three or four times until you've got something that looks really nice, but it's, you can kind of think of it as like the, the mosquito trapped in amber, you know, there's like, your carbon fiber tube is in there, but you have layers of extra resin and clear coat on the outside to make it look pristine, but there's actually a lot of like little plastic and paint on the [00:33:31]Craig Dalton (Host): So we've given the listener a little bit of an understanding of like the process that you go through and all the, your background as a machine shop first, and why you became suited to kind of create these frames with the process you have today, what is a customer engagement look like, how do they work with you? How do you leverage? All of that customization capability you've just described to create a unique ride property for a customer's bike. [00:33:59]Jonathan: That's a question that I don't have a, I don't think I have a satisfying answer to for most people. I'm, I'm coming to this from an extremely technical background where, like, you have to measure and prove everything and, uh, ride feel is totally subjective. You know, there's no, there's no, um, industry standard guidelines for how you test for ride feel. So people will say to me, Oh, I ride your bike. If you could. talk more, or I'd buy a bike from you if you talk more about how it feels and all these things. So my, I would say my thesis on it is that torsional stiffness is really important. So again, coming back, there's so many layers of like, I could go into techie deep dives on everything, but the, the torsional strength you can get from a filament wound product is like exceptionally high. It's how they make, like, really high performing, um, motorsport driveshafts and stuff like that. So, torsion refers to how much twisting the downtube can handle, basically. Um, that's the main structural element there. Uh, so, if you wanted to make an object that had the same strength as our downtube, and sort of, in terms of torsion, they would be really stiff in all your other dimensions, right? It would be an uncomfortable bike to ride. So, I really focus on, um, like, speed and comfort. I would say, uh, you'd think those things might be at odds with one another, but the efficiencies from sort of the bike, not wanting to twist it, like. Yeah, when you pull on the handlebars and push on the bottom bracket, you're trying to torque the down tube, right? So, I can make that strong enough to resist that, that you're not being inefficient during pedaling or riding and you're gonna corner well. But it, it's not unnecessarily stiff in plane, so you don't get like, uh, a chattery feel when you're going over bumps. So, yeah, but I, I don't like, I don't have an answer that I think is satisfying. I, I, I, Honestly, I was researching this last night, going through like academic literature for what places, like, where do you put accelerometers and strain gauges on a bike to try and figure out ride feel? And there's no, there's no answer. And then even if you, even if I come up with a rigorous testing methodology, I say my bike's a seven. Like, what does that mean to you, Craig, when you're going to buy it? Right. So I think within custom frames, the customer is taking a little bit of a risk. Because they can't go to the showroom floor and try my bike, right? And even if they did try my bike, um, that was built for a different rider, there's no guarantee that the one I make is going to be, you know, I'm not a mind reader and a psychic. I don't know how to translate those things. But, um, for people who are very concerned about that, I don't have a satisfying answer. I don't think I can't tell them I can make you exactly what you want. The things we look at are your weight, your riding style. Um, your preferences in terms of stiffness, like just having a sort of verbal conversation about that, and like describe what you're looking for, your power output, like FTP, things like that. Um, yeah, and [00:36:59]Craig Dalton (Host): the challenge with your process that you can make it overly stiff and it's backing it off to the [00:37:06]Jonathan: Uh, no, I don't, I don't think we'd ever be able to, I, I, I maybe could if I redesign things, but no, we're not going to be like, uh, you know, early 2000s, we feel like riding a board. That's like our, our two profiles in a lot of places are slender, our chainstays are small, they're strong, they're very strong. But, um, you know, I think if, if you're someone who comes from riding like pretty hardcore road bikes or like time trial bikes, our bike is not going to feel, um, too stiff to you. There's no, no, I'm making something that I want to ride for a couple hours and have fun on, and we can stiffen things up for sure if that's what you're looking for. But I. You know, like there's the whole conversation of, um, pedaling efficiency, aero gains, all those types of things. Like I'm not making a type of bike that anyone is going to race on, right? Like people who are racing and are concerned about aero gains and drivetrain efficiency and all that stuff are, they're probably on, they want to be on the BMC or the Canyon or the Factor or whatever other guys are racing on. So for me to try to tailor the bike construction methodology to capture that little bit more of the market, Even if I had a product that met their needs, I don't think I'd have a very easy time selling it because it's not got, you know, it's not what other people are racing. So, um, yeah, I've, I've. Tried to make a bike that is really enjoyable for most people. Like even if you are a serious racer, train on one of our bikes, you're going to have a lot [00:38:33]Craig Dalton (Host): Yeah. Yeah. Interesting. So, I mean, just to be clear. So for the would be gravel cyclists looking at one of your gravel frames, what size tire clearance can you get? And do you sort of in your mind say this is sort of a, this is an all around gravel bike. This is going to get it in that sweet spot of you can do almost everything from including racing with it to, you know, your local group ride, gravel rides, et cetera, [00:38:59]Jonathan: Yeah. I think that comes down to what do you define a gravel bike as, right? So we, because everything is custom geometry, I can take it from being basically like a nineties, late eighties mountain bike, um, to. Basically a super fast road bike that you can fit gravel tires on, right? Like it's, I can do the whole spectrum. So I kind of didn't answer this part of the question that you asked about what the customer experience is like. Everything we do is like, I haven't made two bikes that are the same yet. Right. And I'm on a boat. Bike 20 at this point. So we can do all your normal fit stuff. But then again, yeah, the question of tire clearance, drivetrain impingement. Um, I'd say, uh, we would have a tough time stuffing a 50 millimeter tire in with a two by drivetrain with one by no problem. Um, upfront. So we're, uh, classified OEM. I don't know if you're familiar with those. Uh, yeah. The internal shifting hub. So if people like really want huge tire clearance and two by that's like one of the things I can lean on there. Um, but yeah, like I think my, I've made myself, uh, kind of an all road gravel leaning bike and a gravel bike. That's got a really slack head tube and I ride it with 45s on it all the time. Uh, so yeah, we can, we can kind of do whatever you're looking for. I think. Gravel as a segment has a lot more variability than like a road bike, you know, there's fast gravel Um, you know, whatever slack bike packing type gravel. So yeah, we can kind of do Anything really and that that is one of the challenges we have is like, okay I'm telling you about how diverse our system is in terms of its output and we can tune tubes and all this stuff It [00:40:39]Craig Dalton (Host): 100%. Yeah. [00:40:40]Jonathan: For the customer, right? Like they can't, it's, it's, it's too much. So that's why in the new year, I'm working on it right now. We want to offer like pre made geometry essentially at a slightly better price than our customs. We're going to have a couple of geometry tables, um, for, you know, road, all road, gravel, maybe even do two gravels, like the fast gravel and the, but that'll kind of like, which is all road, [00:41:02]Craig Dalton (Host): Yeah. Yeah. Having gone through my own, uh, custom [00:41:05]Jonathan: And just to kind [00:41:07]Craig Dalton (Host): overwhelmed with choice all of a sudden when someone says they can make you anything all of a sudden, it's hard not to become paralyzed. And it took me a while. And fortunately, I'm surrounded by lots of advisors in this front to help that helped me kind of just narrow down the constraints. Of what I wanted and then kind of work with the frame builder to say, yeah, this makes sense. [00:41:28]Jonathan: yeah. So our, like. Easiest customers, fastest, like, time from first interaction to when the bike is built are people who have commissioned lots of custom bikes already, right? They don't, like, they're not doubting their decision. They know what they're looking for. They know they're fit. Um, so they're not belabouring these decisions of like, oh, what's a 0. 2 degree difference on my head tube gonna do, right? Like, they're, it's To them, it's not a big deal. So that's where it's, someone said it to me at, at made actually is like, Oh, what you want is freedom from choice in terms of like having the, the, the product, you know, take this or leave it, you know, that's, if you want to do the full custom thing, we can do that, but maybe it's easier for you to just cross shop geometry tables on like bike insights. And that's what you, how you want to do it. So I need to kind of make that, um, available for people. So yeah, it is, it is totally overwhelming. And I think it's, so there is no customer interaction for me right now that isn't like one click buy on the website, right? Like I'm, there's a bunch of emails back and forth. There's drawing revisions, there's discussions about what you're looking for, what bikes you currently have, um, and what your goals are for the build. So yeah, it's, it, it's involved. And that's part of the reason for shifting to like sort of the tiered model of like prebuilt at one price. And. Full custom at another price because there's a ton of time involved in custom where I can just like Turn on the CNC machine and make make the size 56 all road and you get your thing a couple weeks later You know, there's [00:43:06]Craig Dalton (Host): You had mentioned in this conversation sort of this journey to becoming part of the bike industry. Is, is there anything that stands out that surprised you? About the way people buy bikes or what it's like being a bicycle manufacturer. [00:43:20]Jonathan: no everything. I'm I'm yeah, we talked about this a bit before we started But yeah, like that's the whole side of it. That's It's a total mystery to me, like I'm, I'm a like tech focused, fact based kind of person and to try to navigate, um, the mind of the consumer amidst all the information they're giving, given from general marketing and you know, what, what's important, what's not, it's, and, and convincing someone that what you're doing is worthwhile. Is really challenging. That's, that's going to be the kind of crux of my success or failure. It's not like, I think we make a good product and I can't guarantee you. Sorry. I think my heater just kicked on in the shop. Did that come [00:44:03]Craig Dalton (Host): No worries. [00:44:04]Jonathan: microphone a bit? Okay. Um, so yeah, like that, that, that's going to be the make or break for me. Can I sell enough bikes to keep it, uh, [00:44:14]Craig Dalton (Host): Yeah. Yeah. It's, it, [00:44:16]Jonathan: So [00:44:16]Craig Dalton (Host): so interesting [00:44:17]Jonathan: inside the mind. [00:44:18]Craig Dalton (Host): your business over Instagram because you're, you're so, um, open about sharing your manufacturing process and open to engineering debates and discussions with would be commenters on your Instagram stories that I do think, I mean, from an outsider's perspective, Jonathan, I think you, you showcase the quality of your work in those discussions. And you have always shown up in every story that I've, I've watched in our, our previous conversations, you show up as someone who's very thoughtful about the things you're doing. And obviously there are different ways of doing things, but you are clear about why you are doing things the way you are doing that. [00:45:00]Jonathan: Yeah. So that's always been what's worked for me is sort of the behind the scenes, lay it out for what it is. Um, I think what a lot of people have told me in that sort of marketing branding thing is like, you need to take it a step further. You need to not just show what you're doing, but you need to explain why it's good. And that's where I think I draw a little bit of a personal line because it's like, I'm not, I don't want to take it to, I'm telling you what you should think. I want to leave it at let me show you and you decide for yourself and I don't know if [00:45:29]Craig Dalton (Host): Yeah, I think, I mean, I think the challenge now just my two senses, um, given the small number of frames you have out there in the world is just getting rider feedback, testimonials, reviews, other people riding bikes that are willing to comment on things like ride quality to kind of bring it all together, because as I just said, like, I do think that you've yeah. You've established through your social accounts that trust in your skill as a manufacturer. Now people are just wanting to see what do people say when they've got one of these underneath them? [00:46:02]Jonathan: Yeah I've had people literally DM me and said like there I've got some review bikes out there with Certain reviewers and I've had people say when so and so writes their review as long as it's not bad. I'm buying a bike It's like okay great I think that's good that you need that little like last bit of confirmation that it's not a crapshoot but Like I'm, I'm over here kind of feeling a little vulnerable to be honest, like you put yourself out there. I'm selling bikes. I don't know what expectations I had in terms of how fast sales would take off. I think, like my wife keeps reminding me, like you've been doing this for a year, like maybe you have unreasonable expectations. Just keep your head down and keep like doing good stuff. So yeah, I think you're right. That'll just take a little bit of time, awareness. [00:46:46]Craig Dalton (Host): Yeah. And then [00:46:47]Jonathan: Yeah, all those things of [00:46:49]Craig Dalton (Host): would say, and I maybe I've missed this on your account to the degree in which you are writing your own product and out there. Just sharing a little bit of, of your own commentary again, like everybody's going to take it with a, Hey, this is one rider and, you know, maybe it's a very self interested rider's perspective, but I, you always have struck me as someone who's honest. So I'm not thinking you're going to film a video of yourself riding a gravel trail saying this is the fastest bike ever been produced on earth. [00:47:17]Jonathan: so yeah, I might've given, uh, discredited myself already in this conversation in that regard of, I wrote a fixie for the last 20 years, right? Like what's my frame of reference? I've, I've said this to people and they look at me like, Oh my God, this guy must be a total idiot. Where I say like, I'm not a bike guy. Like, I'm a cyclist. I love riding bikes, but I'm not a guy that's reading the magazines every month, seeing what the latest and greatest is, or knowing what the trends are. Like, I'm kind of outside of all of that. So I think, to your question about what are the biggest kind of shocks is, um, yeah, the whole branding, marketing side of it. I was, I really underestimated that. I thought like a good product, a good, well made product is worthy of, um, you know, at least consideration from a buyer, but there's so much information out there, right? There it's overwhelming and it changes [00:48:06]Craig Dalton (Host): hundred percent. I mean, I think what, [00:48:08]Jonathan: me saying, I'm enjoying riding my bike. It's like, yeah, of course I'm going to say like, [00:48:14]Craig Dalton (Host): oh man, well, I mean, this is great. Jonathan, just one final question on like the customer journey. Like if someone was to come to you with a custom project and assume that they kind of are in the know and got to understand the basics of what they want. Once you kind of locked in design back and forth, how long does it take you to produce a bicycle? And are you typically selling a complete bike or just a frame? [00:48:35]Jonathan: so I'll answer the last part of that question first. We do both. Um, I would say. The farther away the bike's getting shipped, the less likely it is that it's a complete, if that makes any sense. Like I'm in Canada, I'm sourcing components here, so our American customers, it might make more sense for them to work with their local shop. To fill out the build and I just send the frames work and handlebars or whatever they're buying down there. Um, local people have bought full builds. I've sent stuff, yeah, internationally as far as Japan more recently, and those are typically frames. So we do both. We do want to know about component, um, compatibility, even if we're not the ones. We're doing the full build, you know, that's an important part of making sure everything works for the customer when they get it. Um, so the way we work is we take a deposit, uh, 500 right now to reserve a spot in the build queue and to kind of do that back and start the discussion on what you're looking for. That deposit's non refundable, but it gets applied to the balance of whatever the build cost comes out to at the end. Um, and from the approval, like some people approve same day. They know exactly what they want. Might go to production later that day or the next morning. Uh, it's, I would say it's typically about a month right now from start to finish to build the bike. Like, it's, there's, it's not a lot of my time, but there's a bunch of steps where you wait in between. The main one being that I send the lugs out for plating for, uh, corrosion resistance and Uh, and that, you know, if I finish them on a Monday, I ship them out a Tuesday or Wednesday, I get them back a week and a half later, uh, in that time I can have made the tubes. So, yeah, it's our lead time right now is about two months. I think we've got some backlog, a small backlog of orders to work through, some review bikes going out and. Yeah, so it's, we're pretty quick, I think, like our, the theoretical throughput on what I can do in a year, uh, on our current equipment is [00:50:41]Craig Dalton (Host): Okay. [00:50:42]Jonathan: 200 bikes. So I don't expect to be selling that many. If I was, [00:50:47]Craig Dalton (Host): Well, we'll get you there in time. Jonathan. I'm good. I'm excited to see this journey ahead of you. [00:50:53]Jonathan: Thanks. [00:50:54]Craig Dalton (Host): Yeah. Cool. Well, I'll put links to everything in the show notes. So people know how to find you again for the listener. Definitely follow the frameworks framework bikes, Instagram account, which I'll link to as well. You can get all the behind the scenes. You're going to want a friend of mine who tipped me off to your brand when we were at Manufacturer's porn, which I think is appropriate. [00:51:15]Jonathan: No, Yeah, the website, uh, it's there. It needs some work. Like I said, we're working on the kind of program for 2024 in terms of the stock sizes. Throwing some more information up there. It's just really it's a placeholder website right now. So definitely needs [00:51:31]Craig Dalton (Host): Right on. Thanks for all the time, Jonathan. [00:51:34]Jonathan: Thank you [00:51:34]Craig Dalton (Host): that's going to do it for this week's edition of the gravel ride podcast. Big, thanks to Jonathan from frameworks for coming on board. And telling us all about his journey and manufacturing process for those beautiful bikes. Additional thanks. Goes out to our friends at hammerhead. For sponsoring the show many times this year, truly appreciate their support as I couldn't do what I do without some of their underwriting. If you were able to support the show, a couple of things you can do for me, ratings and reviews are hugely appreciated. They really help. With discoverability. Or if you're able to financially contribute to the show, simply visit buy me a coffee.com/the gravel ride. Until next time here's to finding some dirt onto your wheels.

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Jonathan Band Explains Recent Internet Archive Injunction

©hat

Play Episode Listen Later Aug 22, 2023 36:20

Read the Internet Archive Injunction Order here. Sara: Welcome to another episode of copyright chat. It's been a minute I've been on Sabbatical. I've been traveling to Geneva, working at the World intellectual property organization on some research. So, welcome back, we have a very exciting episode talking about the Internet Archive litigation with Jonathan Band from policy bandwidth. He is a renowned lawyer in intellectual property and policy out of Washington, DC. His views are his own. Nothing in this podcast, should be taken as legal advice, of course. But welcome, Jonathan. Jonathan: Thanks for having me. Sara: I would think, since this litigation has been pending for quite some time that most of our listeners are familiar with it. But we can go through a little bit of background. So the Internet Archive was sued by authors and publishers, because, largely as I understand it, because of the emergency lending during Covid. Is that your understanding, too? I mean, that's what prompted the suit Jonathan: The suit initially was filed right after the Internet Archive announced the National Emergency Library early in the pandemic. But very quickly, as you know, with the pleadings and sort of look looking at where the decision ended up. The decision hardly focused on the National Emergency Library at all that just got a paragraph in the decision. It was really focusing on the controlled digital lending under the Internet archives open library. So it could be that that the National Emergency Library is what really got the publishers' attention and that's what prompted the filing of the lawsuit. But the case ended up being about the open library more generally. And what's interesting about that is that that was not new. I mean, the Internet Archive has been doing, lending through the open library for a while. So you know I'm sure at some point in the future we'll sort of look back and try to figure out. You know why. what prompted it, and why and why did they not sue about the open library earlier? But that's, you know, not completely relevant to today's discussion. Sara: Yeah, I also think that's interesting, because my own take on it, maybe not accurate, but my own take on it was that the authors got mad because they were. They kind of. They kind of went a little excessive, I guess, in the emergency library, saying, Well, we're gonna lend more than maybe one to one. Well, and they claimed usually to be lending older books. Maybe 5 years past publication date, but they threw a few newer books in there by mistake. I understand it was kind of not intentional on behalf of Internet Archive, and that was what kind of perked the ears up of the authors and the publishers. But yes, I mean, the case is broader than just the emergency. Library, which I think is important, because some libraries such as my own, were engaging in controlled digital lending through the Hathi Trust during covid, because we couldn't let people in the doors. We had a pretty justifiable, I think, reason, and the fact that they brought in this lawsuit up probably made it harder on the side of the Internet Archive to justify what they were doing. I don't know. Maybe that's my own, my own conclusion there. But the outcome, as we know which recently happened, was an injunction that told the Internet Archive, as far as I understand it, to stop doing CDL. Essentially, for now. Jonathan: right well, it's a little more. Let's fine tune that a bit. So first of all, what happened is, you know, the lawsuit was initially filed back in 2020 when the National Emergency Library was opened. And then again, as I said, it sort of morphed into this focus on controlled digital lending by the open library. More generally. The judge issued a decision in in March of this year. So March 2023, basically saying that the open libraries controlled digital lending with respect to 127 books at issue in the case. So that was the 127 books identified by the publishers hashed, and the other publishers involved in the litigation. You know that that it was not fair use for Internet Archive to distribute those titles through its open lending. It's open library project in a controlled digital lending manner. Then the court said, Okay, now, parties, you figure out what happens next in this litigation, how we should proceed, what the order would excuse me, what remedies should look like and conceivably there could have been an additional a trial over damages there could have been a trial over saying, you know, or what about other books beyond these 127. But instead, what happened is, the parties started talking to each other, and they negotiated. And they basically they were negotiating, negotiating the judge. You know, the judge initially wanted them to, you know, come back with a proposal within a couple of weeks, and they kept on asking for an extension, and the judge gave them extension after extension after extension, and finally, a. At the end of July, the judge said, no more. You guys decide. You know you have to do something within 2 weeks, or else you know, I'm gonna do it. And so then within 2 weeks the parties came up with a proposed injunction. So they basically came up with a draft injunction, a proposed injunction that the court then approved. Now the injunction, basically said that Internet Archive and its partners, which include some libraries that were working with the Internet Archive would no longer reproduce or distribute covered books, and we'll get back to that in a minute. Covered books through the open library. And then the question became. What is the meaning of the term covered books. and that's where the parties had a disagreement, and presumably that's what's been. Why, there was all this delay, you know. It could be that they agreed pretty much early on on most of the contours of the injunction, but that they couldn't agree on covered books and covered books. The Internet Archive said covered books should just be books by these publishers issued by these publishers that are available in ebook form. Yeah, you know, sort of commercially through overdrive or through Amazon, kindle, but they have to be again available in ebook form. The publishers, on the other hand, were saying, No, no, no! Covered books should be any book that we publish or have published. You know I don't think there was. I don't think they were saying it necessarily needs to be in print. I figured I don't 100% remember. But it basically, the issue is, is it ebooks which are sort of currently available or books, general and so they submitted that question to the judge and the judge very quickly. Within a day, or actually over a weekend, the judge said, Okay, covered books means ebooks. Because you know what the Internet Archive argued, is, that this whole case has been about ebooks, and the fact that you know, the publisher said. It's not fair use because we are selling these ebooks. We're making these available now in ebook form, and the open library competes directly with the ebook market. So the case is about ebooks. And so, and the judge agreed that this case was all about ebooks and the harm to the ebook market. And you know, because that's what the case was about. The injunction can't be any broader than that. Can't talk about books generally. And so the injunction covers ebooks. But interestingly, it's not just this 100 727 titles. It's sort of any book that these publishers publish in ebook format. And they're supposed to provide Internet Archive a list of their titles. And they will. And then the Internet Archive is supposed to pull those out of the open library. It doesn't seem that it has to be titles that are now available in ebook. It could be if the publishers make other titles available in ebook sort of like their backlist. That's currently not ebook that they can make them available as ebooks. And at that point, Internet Archive needs to pull those out. Even though this injunction just covers these publishers, there is sort of like the side letter where the Internet Archive. I don't know if that side letter has been made available. But, the way it's been described is that in in in press releases is that other members of the Association of American Publishers who sort of like were behind this litigation if they want to sort of opt into this deal. They can do that, too. And I'm not 100% sure but what the you know to what extent the Internet Archive is committed, but it's sort of like if they don't do it, then they'll get sued, and you know they would have to do it, at least again, with respect to the ebooks. So that's that's the the basic framework of the injunction. Sara: Yeah. So for those folks listening who are not lawyers. Injunction really means stop. You are being ordered to stop doing this. If you don't. If you violate that I'm assuming you're gonna get damages imposed against you. Jonathan: Well, yeah, yeah, you'd be right. You'd be held in contempt. And in this case, yeah, damage. Or you know, you'd be fines would be imposed. You know. I suppose if it's sometimes with criminal contempt, you could go to jail, but I don't think that would happen here. There's no reason to believe that Internet Archive won't just comply. And you know, pull those titles. Yeah. Sara: And also, as you pointed out, the one important factor is, it's a consent injunction. So you know, the parties did agree to this injunction. Then the judge signed off on it. So yes, I don't think there's any. There would be no reason they would be doing it intentionally. There might be an accidental thing that happens. So you answered a lot of the questions like, I think this gives the publishers an incentive to start making more ebooks, would you think. Jonathan: Yes. In in theory it you know, some of their back list that is currently not available in ebook format. They might make available. But there's also the question as to why they haven't done that till this point. It could be that they just don't see any market at all for those titles. It could also be and this is kinda like the the dirty secret here is that they don't know if they have the rights to make those titles available. You know older titles, you know the publisher agreement. You know. The agreement between the publisher and the author may have simply been that the author, the publisher, has the right to publish it in physical form, you know, because that's the technology that was known at the time, you know, in the 1970 s. Or 1960S. You know, these are big publishers, and they have you know. Lots of books, but it could, very well be for those older titles. Either the author actually has the electronic rights not the publisher, or it could be that it's unclear. No one knows because the agreement is silent on that, or it's unambiguous on that. And, more importantly, it could be. No one has a copy of the publishers Agreement. I mean, these are the kinds of issues that came up in the context of the Google Books case. You know, about 10-15 years ago. And you know it was discovered there was a huge area of ambiguity. I mean, there's all. There were many cases where simply was unclear who has the right to digitize those books. and again, with older books. To some extent, no one really cares. There's no market for it. And so that's why you know, you know the pub. But but it's certainly, you know. Let's say post 1990 or post 2000. It's all clear. Publishers made sure they had the agreement or made sure, the publishers agreement said who had the rights. But it could be that the publishers have already made available in ebooks all the books that they really care about, and that they really intend. or the all the books that they have the rights to, and that the other stuff they really don't have the rights to. Or, you know again, from a lot of those titles that are in the back list, they really might not have the rights. And it's unclear who does. Sara: Oh, that's a really good point, and, as we both know, tracking down who owns the rights is never fun, especially if someone who wrote the book, the author, is deceased. Then you're really just looking down the family tree. And then are they gonna get into some sort of bidding war with, you know. some kid who wants a big payout because their dad wrote some big book, and really no one wants to read it. You know. I mean, there is a reason some of these books are not available in ebooks, and a lot of the books that are currently lent through controlled digital lending. At least in my experience with orphan works again. We just really don't even know who owns it. Maybe the publisher even went out of business. I mean, this is not for these books cause they obviously know that they publish them. But they, you know, controlled digital lending the aim is not, to, you know take a new release and start making copies of it right the aim generally is to get some books that are not available online to readers and on a one to one basis. What is the take away here? I mean this case isn't over right. I think it's going to be appealed right? Jonathan: It's set forth in the order that the Internet Archive does not wave its right to appeal. And so one can safely assume that within the next, in the very near future they will appeal the case to the second circuit. And so you know the brief a lot of briefing likely will happen this fall. But the second circuit is not the known for making decisions quickly. And so, once the case is submitted. Once you know the briefings done, and they have the oral argument, you know. Again, it could take a while to schedule that that could be, you know, into next year, and then, you know. There could easily be a year, 2 years. It could take a while for them to get around to issuing a decision, particularly when there's a consent injunction, right? Cause. It's you know, the parties have agreed to this injunction, so that to some extent, you know, sort of signals to the court. Well, the parties can live with this injunction can live with this kind of status quo, and you know there's no urgency to make a decision so we wouldn't. You know it could be 2025, late 2025, or into 2026, before we have a decision out of the second circuit in this case, on the other, I mean, it could be that they see this is an easy case and decided very quickly.. Unlike the Supreme court, which you know, decides all of its cases each term, you know they move along the courts of appeal don't have that same urgency, and so again, that it could happen very quickly, or they could take their time about it. Sara: They also don't have any say in whether they take the case. They have to take the case. I mean, I think it's an interesting question. If the second circuit does take the case, I mean, once they make their decision sorry they don't have a choice once they make their decision, if it it's the decision, is against the Internet Archive, and they decide to, and it gets appealed, or against the other. Either party could appeal to the Supreme Court. Would the Supreme Court care about this case? I mean, they just decided a big copyright case. So maybe it was a second case. That would be a very interesting question. Jonathan: I mean, you're exactly right. After the second surface decision the losing side could petition for cert to the to the Supreme Court. And the Supreme Court. Yeah, I mean, it's up to the you know. They have the choice whether they accept the case or not. I think it would be kind of an interesting case at that point for them, maybe. It would probably be more interesting if the Internet Archive wins in the second circuit. Right? Then that would be yeah. I would think that that would be more attractive. But if they lose at the second circuit. you know. Then then that's a less interesting case, because it's sort of say, well, you know. Okay, well, whatever they did, they did went too far. And so we don't need to look at what are the limits. But if you know, I think I think the likelihood of the Court Supreme, we're branding. Cert is greater ifthe Internet Archive prevails on appeal. One of the thing is, you know it's pretty clear the publishers are not happy with the fact that the judge limited the injunction just or interpreted, covered books to apply just to ebooks, and it, could they? They could very well cross appeal. I mean, they could appeal that even though that's kinda hard cause, you know the standard, for that would be an abuse of discretion, you know. So I think that that's unlikely. You know that that, you know, cause why, you know it would be. It would sort of unnecessarily antagonize the judge, and I think, the judge. The reasoning of the judge is pretty solid that, you know. All the evidence was about the ebook market, and so you know and if he and and if he had a gone and applied, had covered books, applied all books that would have been you know better. You know that that would have been more likely an abuse of discretion that the Court of appeals would have reversed on a you know, the second separate would have reversed so so, and then even it's you know a lot of things. It can go a lot of different ways going forward right? Sara: And so to be clear, this case did not tell the Internet Archive. You have to stop using controlled digital lending as a method to reach readers. It told them you have to stop lending these particular titles in ebook or titles that might become available in ebook if they make them available in ebook by these publishers. Right? Jonathan: And again, yes, and so that that does leave, you know, it certainly is all other publishers. Sort of out of litigation, even though there is a side letter that might bring publishers that are members of the AAP. And again it does leave all the non ebooks out. So that's right. I mean it. It is somewhat limited in that sense. And it is different. And it doesn't apply to you know, a lot of the kinds of controlled digital lending that various libraries are doing. Certainly the kind of stuff that Hathi Trust is doing. You know, which, again, is much more circumscribed. and you know it also left out. You know things, you know, relating to sort of anything that that is similar to recent case law. So, for example, the, you know, the Authors Guild versus Hathi Trust, and the author's Guild versus Google books and Warhol. I mean, it is actually the consent injunction order specifically cited. Those is the kind of thing that is not, you know. Like, when the yeah, this injunction about what say, oh, you can't make these reproductions, but you could conceivably make reproductions that are consistent with those decisions. And so that that does give. Certainly, you know folks a lot of leeway, even if they're not in part of this case and sort of say, well, what am I safe doing until you know, for the next couple of years until we have a resolution of this case. It gives a lot of guidance. Sara: Yeah, exactly. So. I think some folks, I'm sure people who are in engaged in CDL in their libraries are thinking what's my take away right? I'm not in the jurisdiction of this court right? I mean, you know, I'm not a party to this lawsuit. But it's still helpful. It's still provides some guidance. Right? So if you are trying to engage in. CDL, and you're trying to lend a book that is available in ebook format. That'd be more risky, let's say, than, if you had a book that was older, not available in ebook, you know, maybe even an orphan work that kind of a thing. And so I think it's still good guidance and even better guidance, probably, if the second circuit affirmed right? Because then it's like, Okay, well, the circuit courts tend to follow each other. Look at each other, and like I'm in the seventh circuit, for instance you know, II know the second circuit doesn't bind what we do at University of Illinois. But if the second circuit is leaning certain way, I'm gonna think. Hmm. That's probably pretty good guidance. Right? Jonathan: Yeah, absolutely. But one can't overstate the case. So you could certainly say that. Let's say the second circuit affirms the District Court. And you know also with the you know, that makes it clear that this is just about ebooks. Then that could say, then then an institution could say, Okay, we're pretty, you know. We feel somewhat degree of confidence that if we or we know that if we engage in CDL for books that are currently available as ebooks. That's probably you know, a red zone right? That that that raises flags that might be dangerous. You don't necessarily know that if it's not an ebook that you're in the clear, all you know is that if it's not an ebook, this case doesn't say anything about it. So it could be. You know, the language of the second circuit, what it's not deciding could be important. Then it would basically leave existing fair use jurisprudence and people's judgment, and certainly say, Well, okay, if it's an older title, an orphan work. That's pretty. Okay, you know. But what about? If it's not that old, the title? Let's say it's you know, book in the eighties. Right? And you know, the author is still alive. Is that okay? Unclear, you know. But I'm not sure I think right now, even before the decision, I think a lot of University council. say now that it's not. That's already a little too risky, and would say when I was gotta be, you know, before a certain date, or you know something else, you know something. The eighties might be a little too recent, especially if you know if it's from a real university press or a real publishing house that might not be making the whole title available, and again. But you know it could be that the real question coming forward is, you know, you can imagine all kinds of litigation. As people try to refine what's okay and what isn't. Okay. I suspect there probably won't be a lot because it's just not worth it to the publishers. I mean, I think, that they felt that the Internet Archive, especially once, you know, when it when it had the National Emergency library. That was just kinda like, just too far. It just couldn't tolerate that. And then once they started litigating, they realize, well, wait a minute. We can't say that CDL is okay. But the National Emergency Library isn't right. I mean they couldn't. I don't think they felt they could make that kind of concession. Maybe they felt sort of backed into a corner, that, you know, because the Internet Archive gun. So far they felt they needed to say, Okay, no, you know no to CDL, at least in these circumstances. But I think you know part of it is clear, and all the pleadings they really don't like the Internet Archive generally. I mean, they feel that the Internet and it could be the Internet Archive, maybe sort of poke the bear too many times from their point of view. And if you change the facts enough, and if it's University of Illinois Library, and it's you know, maybe maybe it is books from the seventies and eighties, but you know the university can put together a rationale that not only is it trying to make these titles more available. It has all sorts of statistics that no one has checked this book out in 15 years or 20 years, which is often the case. and they could also talk about the this host. The whole CDL thing is also part of the rationale is managing its collection, managing its space. It doesn't have enough room to hold all of these books. It could come up with various rationales that then that might tip the balance, and that would be the reasoning would be different.It could make arguments that the Internet Archive couldn't make. But I have a feeling no one's gonna litigate that. So I just don't think so. I think libraries will be careful and you know, sort of like. Let's say, when they are in books, you know, titles that are in the 80 s. Or whatever they'll be very selective about what they do and do, and it would be, let's say, a title that has not been circulated in 20 years or 40 years. Right? And I'm sure you have titles like that. On the other hand, litigation is really expensive, and it seems that there was a side agreement here where the Internet Archive is gonna pay the publishers' legal fees, but nothing else, no damages. It's sort of like reading between the lines that seem seems to be what the situation is, but litigation is really expensive. From their point of view, they're not gonna bother. So there's gonna be. I think there'll still be a lot of ambiguity. There'll be a big grey zone. And because even the publishers and the authors, guild and other groups, you know. It's certainly in private conversations and say, Oh, we have no problem with orphan works.you know. But of course, their definition of an orphan work might be different from our definition of an orphan work. Right? So so there's going to be, you know, certain areas where it's going to be very safe, certain areas where it's gonna be pretty risky. And then there's going to be this big gray area in the middle. And I think that that's, gonna you know, continue to pose a challenge for libraries. And again, all this is assuming that the second circuit affirms, if they reverse it's obviously very different. Sara: Right. And in terms of the super risky. You know. To me that is always the textbook situation. People say, Oh, I want to put this textbook through. Cdl, what? No, please don't do that, because textbooks are such a such a small market. Right? I mean, you have a calculus, 101 textbook that's really just for those students. I'm not gonna read that textbook. That's not for just anybody that's for a very small market. On the other hand, don't even get me started about the price of textbooks. Because. Jonathan: yeah, I mean, you know, making textbooks available would be problem unless again, you know it. It. It's let's say it's an older textbook that no one is using in courses anymore. So let's say, you know, the second edition of you know Samuelson Economics. And now there's probably up to the thirtieth edition, right? I mean so an older edition, where the only person who would be looking at it would be a scholar, right? I mean. So I think in every case you could sort of make general generalizations. But even then, I think there could be is situ circumstances. Under which sort of saying, Yeah, making the third edition of the Samuelson Economics textbook is on a CDL basis is fair use. That's a good point. Yeah, I could see a historical analysis of a textbook that's really old would be a very different thing than something like Samuelson, which has been the bedrock of economics courses. Again, since you know, since long before I took economics. So it's been around. That textbook has probably been around for 50 years or more, you know, and sort of seeing how it's evolved. That seems like a good research, you know. topic for a doctoral dissertation, if it hasn't already been done. Sara: Yeah. So it's just another way to say that, you know fair use is flexible, and you really can't just put a line in the sand I just tried to put a line in the sand. Didn't work right? Jonathan: That's right. That's why it's, you know, that is the beauty and the frustration of fair use. Sara: The beauty. I think it's beautiful. I think it's a good thing right? It's it gets frustrating for people in their day to day work. They want these hard line rules, but, on the other hand, it allows us to do things and be flexible in ways that counterparts across the world who don't have fair use, cannot do it. And so, you know, we also then have to keep up on all the fair use decisions. So we can understand what the courts are saying about it, which is a whole other thing. Well, I hope, I hope, in terms of keeping up on the decisions. I hope that this discussion. I know it's been really enlightening for me, Jonathan, you have such a bird eye view of what's been going on. Much more nuanced than my understanding. So thank you so much, and I hope it's been helpful to listeners. I'm sure it has. I mean, it's just been so interesting to listen to your thoughts about this case, and it's not over yet. But at least this is something that will be probably in place for a while right while the appeal is pending. So it's good to understand where we are now. And where we're headed. Yeah. Well, thanks so much for joining me today, Jonathan. Jonathan: It was really nice talking to you.

The Nazi Lies Podcast Ep. 22: The Lying Press

The Nazi Lies Podcast

Play Episode Listen Later May 30, 2023 70:33

Mike Isaacson: Lügenpresse! [Theme song] Nazi SS UFOs Lizards wearing human clothes Hinduism's secret codes These are nazi lies Race and IQ are in genes Warfare keeps the nation clean Whiteness is an AIDS vaccine These are nazi lies Hollow earth, white genocide Muslim's rampant femicide Shooting suspects named Sam Hyde Hiter lived and no Jews died Army, navy, and the cops Secret service, special ops They protect us, not sweatshops These are nazi lies Mike: Welcome to another episode of The Nazi Lies Podcast. Today, we're talking about the lying press with Jonathan Hardy, professor of communications and media at the University of Arts, London. His most recent book, Branded Content: The Fateful Merging of Media and Marketing, explores the world of branded content, particularly native advertising or sponsored content–longform marketing copy made to look like news items. Welcome to the podcast, Dr. Hardy. Jonathan Hardy: Thank you, Mike. It's a pleasure to be here. Mike: It's great to have you. So I'm really excited to talk about marketing with you because that's the industry I'm in now, and I do have some ethical issues with some of the techniques that we use. Now I write in the B2B space, selling services to business owners and officers, so I don't super have a problem with what I do–you know, manipulating business owners into buying things. So reading your book, what comes up again and again is that most of these marketing techniques aren't new, but the digital age has made them more invasive and persistent. Can you talk a bit about how digitization has changed the advertising world? Jonathan: Sure. Well, it's done so definitely in a great many ways but I'll talk about some key ones that really relate to the work I've been doing on branded content. In the 20th century, through most of the 20th century, we had a model that I call advertising integration with separation, which means that the advertising appeared in the same vehicles as media. When you looked at a magazine or a newspaper, you turned the page and it's editorial, you turn the page, it's advertising. Or the adverts that appeared between programs on television and radio. So we had integration, but often some quite strict rules and strict practices that kept advertising and media separate. So what we're seeing in the digital age is an intensification of two tendencies which face in opposite directions. One is towards integration, so advertising getting baked into media content and integrated with it; product placement all the way through to influencer marketing, branding content and so on. But the other trend is disaggregation, advertising getting decoupled from media. Because essentially in the digital age, advertisers didn't need–as some of them put it–to pay the premium prices to put their ads in media content. They could track users around the internet. So these are trends going in opposite directions obviously, right? One is about integration, the other one is about disaggregation. But I argue that they have one really common power, which is that they indicate the growing strength of marketers over media. Media that rely on advertising revenue are having to become more and more dependent, satisfying advertisers who want to integrate their content so that people will engage with it. And they're also desperate because of these other trends of losing ad revenue coming from disaggregation to kind of, again, appeal as much as they can. So what we're seeing is a strengthening of marketer power in the digital age. Mike: So my intention with this episode was to give a deep dive into how things like the Cambridge Analytica scandal could have happened. To start, let's get some technical details. We're talking mostly about inbound marketing today. So before we get into advertising techniques and stuff, what is the difference between inbound and outbound marketing? Jonathan: Sure. Well, I'll talk about that, Mike. But we should acknowledge there's some confusion here, because these terms are not always used to talk about the same things. I think one really valuable aspect is this idea of push and pull, right? If you're pushing out messages, this is known as outbound marketing. You're sort of pushing your message out to reach people. If you on the other hand create great content that people come to you for to engage with, that's pulling. And that's known as inbound. So, so far, so good. That makes sense to me. But this is used in other ways too, and I think that illustrates actually a broader point which is that marketers, not surprisingly, are often in a competitive struggle to be on the side of the new and the innovative, and not the old and the tired. So some versions of inbound and outbound marketing I think get a bit problematic here. Because outbound in some versions is kind of associated with scattergun marketing. Right? The opposite of inbound as highly targeted aiming at particular people. And I don't really buy that. You know, marketers sometimes talk about spray and pray, for instance, you know? Chucking out messages. But quite honestly, most of the time modern marketers don't do that because they can't afford to do that. So I don't really buy the argument that outbound is untargeted. I think that's misleading. What's a bit more helpful from all of this, and actually quite a crucial issue, is if you like the challenges for a thing called push marketing. The challenge is when people are not engaging with traditional advertising forms and pushing them out, and the need to come up with more engaging content; either because it's more entertaining or it's more informative. And I think that aspect of inbound is important. Mike: So when it comes to inbound marketing, it's all about the buyer journey or the marketing funnel. Can you talk a bit about the theory behind the marketing funnel? Jonathan: Yeah, sure. I often test this out on students, but if you were studying advertising in the 20th century, you might have come across a model called AIDA, which was a mnemonic, helps you remember some important fundamentals. AIDA stands for Awareness, Interest, Desire, and Action. And it kind of summed up this idea of what's called in modern terms, a marketing funnel or a customer journey. Sort of how if you're a brand, people start off with awareness and then become more interested and motivated all the way up to purchase. That's essentially what the marketing funnel means. Just to relate it to branded content for a moment, it was often argued in the past that brands branded content, which means content that's produced or funded by brands, was particularly associated with that early stage–building brand awareness. But if you speak to people in the industry, they say it's not really true. Branded content is the content that serves people right across the customer journey. So if you think someone becomes more interested and they want to find more information about the product, for example, I think they're right and I think that's– We're often thinking about a new world where brands are involved in kind of thinking, "What are the information needs? What are the communication needs of consumers at every point?" And engaging with it. And amongst other things, that's breaking down some old divisions between what we might call advertising and customer services. And as an academic, I'm really interested. I'm critical of a lot of what's going on, but I'm interested in how that speaks to a changing world and convergence across communications. Mike: Where I work, we definitely use branded content across the buyer journey and we use different kinds of content for different points along the journey. So for instance, we do more informative content for when you're in the awareness stage. Whereas when you're in the purchasing stage, we hit you more with salesy content. Because that's the point where you're trying to just hear about the benefits and decide upon a final product. Jonathan: Yeah exactly. Mike: Can you talk a little bit about the software that's used to track customers? Because that's something that I don't think most people are aware about, the CRM software. Jonathan: Yeah. CRM means customer relations management software. Some of your listeners might be aware of software like Salesforce, which tracks relations between a company and its clients, or including its prospects. So yeah, customer relations management is a huge area. One of the things I looked at interestingly was the annual reports of what are called the holding companies. These are the really big groups that own advertising agencies and PR agencies. And they've been in a battle for survival and for their presence in companies, and they're often fighting alongside companies like Accenture who are offering companies all sorts of other data services. So it's a kind of interesting world in which the traditional advertisers are maneuvering to cover more ground because that ground's becoming more and more important to companies. And definitely, all the data around customers and other people in the chain is a really important battleground for these firms. Mike: Okay, and we'll talk a bit about what gets fed into the CRM in a bit. So the company I work for, we do exclusively owned media and digital ads, pretty much all inbound with an occasional email campaign here or there. But there's other forms of digital advertising, too. Let's start by talking about what owned media is. What do advertisers mean when they talk about owned media? Jonathan: Okay. This is content that's produced and published by the brand or the marketer themselves. It's got a really long history. In the United States at the end of the 19th century, the farm implements company John Deere had a magazine called The Furrow, for example. So what we now call contract publishing by a brand. Lots of other examples; the Michelin Guide to restaurants, the Guinness Book of Records, and so on. Brands have been involved in producing their own content for a long time, but this really got turbocharged in the internet age. With the early internet, brands started to create their own websites and web pages. They've now moved right across social media, for example. And some brands have become essentially media companies. So a brand like Red Bull, which is involved right across kind of music, sports, etc, is producing content of all kinds to support the brand. Your listeners, again, one of the models that's really helpful for students and might be of interest to your listeners is called PESO. PESO stands for paid, which is a term for advertising essentially, right? The brand pays and controls. Earned, which stands for traditional public relations. You work in PR, you write a great story or a feature, it gets carried by the media, you didn't pay. That's called earned media. The S is for shared. Used to be called viral, but shared is a much nicer word for things that get moved and amplified across the internet and social media. And then the O is owned. And what PESO tells us is, these things are still separate but they're overlapping and converging in the middle. Mike: Right. So the problem with owned media is that you have to get it in front of people. What are the various ways that advertisers try to get their own media to an audience? Jonathan: Well, I'm just gonna... If you don't mind, I'll just pick up this word 'problem', Mike, because it might help to explain where I come from on these issues. I think the industry is essentially looking for how to do marketing better, right? And quite a lot of people who are in academia, in universities like myself, are really asking and answering the same question. Their aim is really to help marketers do better and do research on it. And I call all of that affirmative. So the problem from that framing is how can we do this better? How can we learn how to be more effective? But I would self-describe myself as coming from a critical tradition, a tradition of critical political economy. And we ask a different question about “problem.” We say, "Are there problems in the way communications are organized and delivered? Are there problems for communication users? Are there problems for societies? And if there are, if things aren't great out there, let's identify them, understand them, and think about how to change them." So when I come to questions of problems, that's really the kind of dominant lens that I look at them. But obviously like anyone in order to understand things better, you've got to listen to everyone in this space; to industry practitioners, and I work a lot with them. So that's just a wider framing, but actually to answer your question. Well, it's interesting because historically, they've struggled. Right? Brands have kind of invested in great content and then found surprise, surprise! People aren't always interested in going to corporate websites and finding this stuff. So part of this story has been brands producing content that they need advertising, social media advertising, to say to people, "Hey, we've done this. Here's a snippet, but come and look at the full amount." That's an interesting feature. But essentially, in this space brands would say, "Well, you've got to produce material of value back to this language of sort of pull. People have to be engaged, entertained, and/or informed. Those are the key things you need to do to solve the problem." But the other thing we'll come on to is when the marketing messages get disguised and buried. Just to give you another take on problems, I think there are problems about brand's own content. Sometimes that can be really entertaining and I enjoy it like anyone else, but there are problems essentially because it's a brand voice. And sometimes that brand voice can be louder than other voices. And that essentially is an issue. But actually, I see less problems with brands and content compared to the material that's weaved into media content: sponsored, editorial, native advertising, and so on. Mike: Okay. What about things like SEO, SMO, paid search, display ads? That sort of thing. Jonathan: Sure. SEO, search engine optimization, is a practice of trying to improve your ranking traditionally in search results, but in wider areas of content so that it gets visibility and people engage with it. Right? Because we all know people don't turn mostly past the first page of search ranking results. And as I know you know, this divides into what are called relatively good practices and bad practices, sometimes referred to as white hat–in other words, everyone does this to try and be effective–and blackhat, which is nefarious 'don't do this'. What that sums up is a cat-and-mouse game between marketers and agencies and the platforms, because the platforms are concerned to ensure the integrity and quality of search results because they depend on that trust and therefore want to move some of these black practices off to the margins, if not get rid of them entirely. But we should remember, of course, these platforms are not just there to serve the consumer. They're there to generate ad revenue. And some of the tensions that play out in that space are important to note, too. But I'd say for me, again, there's a whole literature on how to do search engine optimization and if you were teaching people how to be marketers, I'd certainly say they need to understand that. One of the bigger concerns for me is about awareness. How aware are consumers of things like sponsored search results? There was some really important research done by the UK regulator for communications, Ofcom, which looked at young people and found that a majority of them couldn't recognize the difference between sponsored listings and so-called organic ones. Only a third of young people aged 12 to 15, for example, knew which search results on Google were sponsored, were adverts, or organic. That's a really, I think, important issue and an ongoing issue. Mike: Yeah, especially when it comes to children. Let's dig a little deeper into SEO. What kind of techniques do content producers both in media and advertising use to boost their search engine results? Jonathan: Oh, wow. There's a lot of terms and some great names out there to describe some of this stuff: keyword stuffing, cloaking, bait and switch. What they really have in common is artificially enhancing the value of your content without the intrinsic worth and value that would come from people's clicks and engagement. Okay? So there are a whole series from mildly artificial through to downright criminal and exploitative means to do it. One of the more serious, for example, is this great term brandjacking, where someone acquires or otherwise assumes the online identity of a brand for the purposes of inquiring their followers, their brand equity as they say. Mike: It can be less than that too. It can just be, for instance, putting a brand's name as one of your keywords in paid search. That's brand jacking too. Jonathan: Exactly, Yeah, exactly. Mike: Yeah. So keyword stuffing, this idea of throwing search terms into content. One other thing though that bothers me a little bit where I work is the way that we go after keywords. The content that we write is pretty much exclusively based on whether there is search for it. And so as a result–I guess in the aggregate–you end up with huge patches of knowledge that just are not covered by free media. Jonathan: Yeah, I agree. I think one of the fundamental questions here is, "What about brand voice in a world where that voice comes with resources that are not widely shared?" Right? In order to be a marketer, you have resources of money. And money buys you the chance to speak. Not everyone in our world gets the chance to speak and be heard, but brands can do it through their money. Now, of course there are small brands, there are radical organizations who advertise. But we also know that the concentration of voice is often in the hands of the concentration of wealth. Which means some people, some brands, some interests, some ideas get privileged over others. And that is a really fundamental concern and it drives, for me, this issue of saying, "Well, what's the settlement for society between communications and brands?" In the old world, I mentioned the 20th century, we had some settlements. We had some rules which said, "We're going to really make sure that you know this is an advert and we're going to keep some controls on where advertising appears and how much appears and what's advertised." And the digital age is throwing up challenges all the time because new spaces, new opp,ortunities emerge for brands. And the rules are often some way behind. So those are the, kind of fundamental issues. I think voice is a really good term to use to get into that. Mike: Right. So in addition to the black hat and white hat, there are gray hat techniques which kind of straddle the boundaries of marketing ethics. One example is the subject of your book, which is native ads, sponsored content, advertorials. So, what are these? What is sponsored content? We've talked about it a bit, we haven't really defined it. Jonathan: Sure. Well, lots of different forms. But what's common to a lot of the forms I examined is in the way the industry would describe it, that the advertising is blended into the media environment in which it appears. Okay? The advertising is integrated and blended in. And I think a good way in is–building on what I was just saying to you, really–is to start by asking some questions about payment and control. Those are really key elements in tracking this story. In the old world, we had advertorials in newspapers and magazines. We still do, of course, but they're a feature of the old world. And the brand paid and controlled the content. It was an ad, but it was an ad that started to blend in to its surroundings. But what's happened in the digital age is that's taken off across all media. So we have native advertising as a term for adverts, which are also paid for and controlled by the brand, but are coming into your newsfeed on mobile social media and so on. Then we have sponsored content. And here, things get a bit more complicated because these questions of payment and control get widened. Because sometimes the brand pays and controls, sometimes the brand pays and the media, the publisher, or an influencer for example says, "No, we control the content." And sometimes it's a blend of both. And fundamentally across that spectrum, we don't have clear and consistent labeling that is readily understood by people to know exactly what's happening here. So we don't always know when a brand paid and shaped content in this space, and that's a fundamental problem. Sorry, but can I just put in–I don't know if this will be helpful or not-- but an example I was going to give from the UK is that we have a London paper called The Evening Standard. And an investigation by an online publication, openDemocracy, discovered that Syngenta, which is a US agribusiness firm, was paying for favorable editorial in that newspaper. But those stories weren't being clearly labeled as paid for and sponsored by Syngenta. And obviously, that's a big deal because Syngenta was at the time being sued by a large number of American farmers, which of course didn't feature in this more positive coverage. So here we have some problems of labeling and identifying content, we have some problems of what kind of story gets shown, but we also have an issue which goes to the heart of this where the brand could pay but the publication could say, "No, we're in control. So we don't have to label that as an ad." Mike: Right. And there's also the other problem of advertisers' control over media in general, where if there's an unfavorable story they could have it pulled. And we've seen instances of this, too. Jonathan: Yeah, it's funny. And just to share with you, sometimes when you're talking to students particularly as a professor, it's good to show them that you may make mistakes, too. So I shared the fact that, you know, I'm in a tradition which has seen advertiser influence on the media as essentially a negative force, right? And looked at, kind of, "Well, when does this happen? And how does it happen? And how is it resisted?" You know, sometimes it's resisted because journalists say, "We're not going to have it." Chrysler company told American magazine editors it wanted to be told when they were putting its ad next to content it thought was controversial. The American Society of Magazine Editors said, "We're not doing that. We stand up for free media." So, those kinds of stories. But I said to the students I have to update this. Because we're in an era where advertisers are using their power and clout, sometimes for positive and progressive ends–ends that many of you might agree with. So you know, Unilever doing an ad ban on Facebook. The current ban or semi-ban, if you like, in which one of these major holding companies Omnicom is, quote, "Advising its clients,” so it's not quite a ban, but it's advice, “not to advertise on Twitter because look what Musk is doing, who knows how this is going to play out." So in its language, it's concerned with brand safety. It's advising marketers to produce a boycott. So what I'm saying is I come from a tradition which sees advertising influence as negative. You could argue and it's important to recognize there's some positive things happening in these stories, brands doing good, right? Calling out hate speech and racism and xenophobia. That story, of course, isn't just because those brands are angelic. It's because they've been put under powerful pressure from campaigns, from #StopHateForProfit in the US, Sleeping Giants, we have Stop Funding Hate in the UK. ANd also, frankly there's still a problem. Because however good they do, they still have enormous power and they can still use it in unaccountable ways. But anyway, there's a story that just acknowledges that it's sometimes complicated. Mike: So native advertisement's gone beyond traditional news media in the digital age. Where else do we find sponsored content? Jonathan: Well, we find it right across what we could call audio-visual. We've had a long history of product placement in films and television programs but, you know, there's some big questions about where that's going next. Amazon is a company that sells things, but it's chock full of audiovisual content, sponsored brand videos, and so on. So as this world evolves, as we get Amazon's Alexa and audio marketing, we're going to have more and more content in which there's a brand role and a brand presence. Another big example is the Beta Verses. I was at a recent conference with advertising lawyers and they were kind of half-jokingly saying, "What's going to happen in this world? Are people going to walk around in T-shirts with #AdOn if it's sponsored? How is the brand presence going to be seen and identified?" And again just on this, I'd like to go back to something that was written in 1966. The code of the International Chamber of Commerce is kind of the big international code, the self-regulatory code for marketers. And it said, at the time, "Advertisements should be clearly distinguishable as such, whatever their form and whatever the medium used." Again, I like to share with you and my students, that's great language. That includes TikTok. It was written in 1966. It's really clear what it's asking for. And it went on to say, "When published into medium post that also contains news and editorial opinion, an advertisement should be so presented that the consumer can readily distinguish it from editorial matter." That's interesting because it didn't even need to add that second sentence. It's just indicating that it really underscores the importance in some of our media like news and editorial that it really matters that we can trust the content and it's not an ad. That was 1966, I don't think that describes the world today, I don't think that rule even in its current form holds, but it does exist to call on. Mike: Yeah, I know. We now have companies that are flooding their own reviews with positive reviews to boost their rankings on Google and stuff. I do want to talk about something that skeeves me out in what I do, and that's ad retargeting. So, what is ad retargeting? Jonathan: Retargeting ads are a form of online targeted advertising that is served to people because they visited a particular website. We all know this, you kind of go to a website, look at a pair of shoes, go on to some other websites, and you're being flooded by adverts for those shoes. What on earth is going on? And the answer has been third-party cookies. So to introduce another term, cookies are bits of data that get put onto your browser, so they can then follow you as you move around the rest of the internet. And those so-called third-party cookies are sold for advertising purposes; they build up a profile of you so that you can be advertised to. And that's essentially what's gone on in retargeting. Now, the world of cookies is undergoing a change at the moment, which is interesting. But all your listeners will know this experience, as you say, of ad targeting. And it's still very much present in our experience of the internet. Mike: Yeah. So basically the cookies originally were intended, as I understood it, to allow websites to remember what you have, like in your shopping cart on digital marketing or on a digital storefront. And they kind of morphed into this weird thing where they can now track you across the Internet and add things to your profile so they have more and more information about you. Okay. Jonathan: Yeah. Well, there's an important difference, Mike. The first type you're talking about is called first-party cookies. And the important thing is, again, many of your listeners will say, "Actually, some of what they provide is quite helpful to me." You know, you go to a website, you put something in a shopping basket, you don't want to pay for it. But when you come back to that site, it's still in your shopping basket, right? That's a cookie that's controlled by the website itself. And often, frankly that can be a help to us. It's still collecting data. It still raises privacy issues.But it's often helpful. Third-party is different. For example, you go to a publisher who signed up to Google's AdSense. You go there because you want to read a story, but what gets put onto your browser is a third-party cookie. And that is being used to sell advertising to reach you. Mike: The third party being AdSense, right? Jonathan: Yeah. Mike: Okay. So let's talk a little bit about market research. How have market research techniques advanced in the digital age? Jonathan: I mentioned there's this challenge to third-party cookies. And that's been driven by a number of factors. It's been driven partly because with more use of mobile, people are on different devices, it's harder to track them. It's been driven by privacy pressures which have led to important new regulation, particularly for us in Europe. And I'd say that from the UK, we don't know exactly what's going to happen next. In fact, we have a government that's probably going to relax rules that apply in Europe. But from 2018, Europe said, "You need permission to collect cookies." And there was a really deep intake of breath across the advertising and marketing and platform industry saying, "This is going to destroy the model of internet advertising." So you need permission, and we have strong rules now that demand it. As I understand it in the US, there's no federal-level regulation. But there are states–California is an example–which have brought in new rules for consent to kind of strengthen privacy and protection. So, third-party cookies are on the slide. And to answer your question about data, one of the things that is becoming more and more important is so-called first-party data. So companies, brands are collecting as much material as they can about their customers so that they can market to them. So we're seeing a huge industry growing up around digital data in the areas of customer data, financial data, and operational data. Mike: In addition to collecting their own market research data, businesses can also pay for data. So, what kind of marketing data are businesses and ad agencies buying? Jonathan: What marketers are interested, as I say, in customer, financial, operational, derive from different sources. So yeah, they're buying up to create a richer tapestry of their clients and potential clients from their own data first party and from third-party data. And we're seeing the whole ecology of advertising and marketing and media changing with the growth of these firms that are basically data harvesters and data brokers. Mike: And are advertisers the only one that are buying these data. Jonathan: Certainly not. Political movements and organizations who want richer data on consumers to target them are also absolutely buying up this data too. Mike: Okay, so now I think we've discussed is everything you'd need to know to understand how the Cambridge Analytica scandal worked. So let's talk about it. So unlike the UK, the US did not have widely publicized hearings regarding Cambridge Analytica, so a lot of my US audience will probably be unfamiliar with what happened. So before we get into the details of how the scandal worked, big picture, what was the Cambridge Analytica scandal? Jonathan: Well, I like to think of this as kind of a bundle of scandals actually because it involved failures across quite a range of organizations. Cambridge Analytica, this company that gathered and used data and sold it on to political campaigns, but other players too. I mean, it's one of the biggest scandals for Facebook. So essentially what happens–and this as a practice goes back to 2015–is a Cambridge-based researcher puts out an app which collects the data on US Facebook users. But not just them–the people who willingly took part–it accesses the profiles of all their friends and family. So in the end, data on about 87 million Americans–about a quarter of the whole Facebook audience in the US–were collected. Mike: Can you describe the app that they put out? Jonathan: Yeah. Sure, Mike. The researcher was called Aleksandr Kogan, and he put out an app called This Is Your Digital Life. It was a psychological profile app in June 2014. Either way, one group that comes out reasonably good from this story and I'm particularly proud of this or pleased about this because it is close to my heart, was the Ethics Committee at Cambridge University, because that rejected an application by this academic and also made the damning judgment that Facebook's approach to consent fell far below the ethical expectations of the university. In other words, it was deeply unimpressed with Facebook's provision. But of course having said that, we could say Cambridge University has questions to answer because this was still an academic who undertook this work. So it was an app, people who took part gave consent, but they didn't give consent for their entire network to be data scraped in this way. The crucial thing about the scandal is that data was then used and sold on to right-wing politicians in the US in various forms, to Ted Cruz for his presidential campaign, and later for Donald Trump, because it produced rich, detailed profiles of American voters, which allowed micro-targeting. And we've seen this more and more, but it's a kind of early example of what kinds of micro targeting can be done. In other words, you identify a voter who's going to be particularly triggered by rights to own and carry a gun, for example, but you trigger a different message to a different voter to mobilize them. And often those messages can be actually flat contradiction that can be at odds, but it doesn't matter. It's whatever works to build your political coalition. I think the other thing just to highlight from this is this is often framed as a digital story, but it's older and broader than that. It's about power and money. We've had lots of lobbyists who engage in political campaigns and, again, we might all agree it's okay to promote your candidate and do marketing techniques. But it's not okay to do the dark arts of demolishing a candidate through fake news and misinformation, for example. Some of your listeners might be interested; I'm in the UK, I have a great shoutout for the Channel 4 News, a public service news channel which did amongst other things, an undercover investigation in which executives from Cambridge Analytica are sort of bragging, because they don't think they're being filmed, about how they've intervened in democratic elections. It's a deeply disturbing portrait of how money and power can be used to undermine democratic processes. Mike: Okay. And Cambridge Analytica wouldn't have been nearly as successful with what they did without the plethora of right-wing content farms pumping out slanted and misleading news content. Talk about the online ecosystem that existed in 2015-2016 that allowed these websites to thrive. Jonathan: Yeah, one kind of crystallizing example, again some of your listeners will remember, was an infamous example of a Russian organization called the Internet Research Agency, which spent thousands of dollars on social media ads and promoted posts in an effort to influence the US elections in 2016. So misinformation, fake authors, pretending to be Texans when you're actually in a content farm as part of the kind of quasi-state corporate world of Russia. How did that all happen? It partly happens because of the deeper logics and business models of the internet, right? You know, promoting controversy and hate, driving traffic and engagement. It happened because of lax rules on who's the source and sponsor of marketing messages. Lots of things caused it but yeah, that was the ecosystem at the time. And I think, again, before we just jump to the digital, this happens because of money. And so much of the right which can often appear to be kind of grassroots is, as we know, funded by very rich corporate donors who often don't like to be particularly transparent about who they are and how they operate. And the left progressive forces, which are more rooted in popular movements, in the end have less resource. We don't have the power of capital. We have the power of trade unions and collective work, but relatively weakly resourced. And that's a key issue. Mike: And the content farming, it wasn't just from the Russian state, it was also private sector too. I mean, there was money to be made here. So can you talk a bit about how that was profitable? Jonathan: Yeah. Well, if you generate clicks, if you produce clickbait, then the algorithmic world recognizes success at the levels of engagement and eyeballs, and that can be monetized. We should remember that's often not the primary motivation for political campaigns, it was information, disinformation, and mobilizing people to vote for candidates. But yeah, there's an economy built around it as well which meant advertisers became very aware that they were often not choosing to support right wing publications because of the way the algorithms were driving traffic towards popular and shared content. And that's one of the reasons we saw the first wave, if you like, of boycotts and withdrawals from big brands like– big companies, rather, like Unilever who were being advised that their brand safety was being compromised by the sites that were appearing on and that many of their consumers were deeply unhappy about hate speech being connected with their advertising and advertising dollars. Mike: Yeah. So one of the things that happened too as a result of these boycotts was that major social media and search platforms kind of reformed their algorithms to try to suppress this misinformation from proliferating. So, how has the digital media landscape changed since the 2016 presidential election and since Brexit? Jonathan: Well, as I say, I think we should recognize that it's often been civil society power, political power, these campaigns that have forced marketers to divest. This hasn't just come from corporate voices; it's come from popular campaigns which absolutely deserve recognition. But as I say, I think marketers using their power for good is all well and good, if you like, but it's still an exercise in a marketer's power. And that power is ultimately private and in my view, unaccountable. I mean, a defender would say, "What are you talking about? The market decides that consumers don't like it. That's a powerful force on brands." To which you could say, "Well, consumer power does matter." Right? Ad blocking is a really good example of consumer power in this world. But consumer power is dispersed, it's not concentrated. And it's not sufficient very often to challenge corporate power and interests. So these are all arguments, essentially, for a much stronger public regulation of communications because it shouldn't be left to private power to regulate itself. But nor, however important it is, can we rely on consumers only, you know? Like other people, I believe in the importance of media literacy and better education so we can find our way through this world and decode it, but I also don't think the burden of responsibility should lie on consumers. It should be a principle. If you're big and you're in a communications space, then you act responsibly, and public regulation is the only way to kind of underpin that that is actually done. Relying on self-regulation from powerful forces in this world is not enough. Mike: Yeah. Especially when the advertising techniques are constantly changing and evolving, you can't expect consumers to be privy to new ways of reaching them. So we've talked about various advertising techniques, let's talk a bit about their social implications. What are the consequences we're seeing from the proliferation of owned media? Jonathan: Sure. Well, I like to sum up the whole world of what I call branded content around three problem areas. The first key problem area is around consumer awareness–this principle that we should know when we're being sold to. And that gets the lion's share of attention, actually, from all parties to the discussion. And that's important. It's about labeling and disclosure and identification. But I argue that that attention tends to displace two others. The second big area of concern is around the quality and integrity of the media. I don't think there's enough people in this world who are speaking up for the importance of having media spaces that are free from commercial influence and interference. So that's the second area. And then the third area, which I think is really where the radical voices come in, where the critical tradition I'm part of comes in, is this notion of marketer's power of voice. You know, the significance of a world in which the ability to pay can give you a louder voice. It's not to say we can wish that away, but it is to say that it's a way of thinking about historically that societies have put limits on that. They've said, "This is where advertising can appear. This is how it can appear." And I think we need a conversation about what those rules should be for the 21st century because at the moment, we're in a bit of a hybrid of old rules that are weak and don't work, and new spaces that are opening up. So for me, that's the call of my book, really, to say, "These are deep problems. This isn't just about surface-level techniques; this isn't just about new tools in the marketing toolbox. This is a much more deep reconfiguration of the space between commercial voices, advertising, and communication space, and we need to work out what the rule should be. I put a call in for saying we really need to have a discussion about what a 21st century version of separation–keeping media and advertising apart–would look like. And I say that because of course we can't put it all back in the box, we can't come up with a solution that would have worked in 1960 and say that's going to do it. It isn't going to do it. But I think that's a really key discussion to be had. Where should we be seeking a world which is free or freer from commercial influence and interference? How are we going to create that? How should it be configured and organized? Mike: Yeah. Going back to owned media, I mean, the owned media dominates search results now. It's basically impossible to look something up online unless you're finding it through Wikipedia without having to use corporate blogs. And there's always a limitation to that, right? There's always a wall where they will not give you more information than is necessary to hook you to their services, right? When I farm out my content to freelancers, I actually specifically instruct them that the reader should come away knowing what to do, but not how to do it. And so there's a technique to writing instructional articles that make you feel more helpless, and that's definitely what we aim for in our copy, which I take particular pleasure in making business owners feel helpless and so on and whatever. So let's talk about native. Jonathan: Can I just say, I think that's such an important point and I agree entirely, and it shows that, kind of, you know, this isn't a simple change where we can easily identify the before and after. What you're describing is a kind of world where more and more content comes from an interested party and is underpinned by money and monetizing it as a driver. And we know historically we've relied on content to come from other quarters, right? I'm very proud to work in a university world because that's a world that defends the idea of, "Well, actually we should ask questions that are important for society, not the sponsor, not the company." So that's one side. We've traditionally had media in various traditions, you know, a free press in the US standing up for the idea of independent and impartial, know the advertisers can't call the tune because then we lose something really precious and what it means to do journalism. And all of those alternative sites are weak because for me, this all comes down to these questions of resource, money and power as a way in, so they have relatively less. What are we going to do about it? Well, in Europe some of us defend and advocate for public service media, but also for new forms of public service community media, non-profit, hyperlocal, because those are really important spaces where that other content gets produced. I don't know about you, sometimes it's depressing that we don't link up the networks more effectively. Why don't we have publications that pull together all the non-governmental organizations and civil society groups who are producing great content but can't always get it out to wide audiences? We don't have a very great tradition of connecting the content with the vehicle to promote it amongst, if you like, the left and progressive causes. But plenty of people are thinking about how to do it. And yeah, absolutely, it comes through to other solutions. We need to defend and extend public media–what I call in Europe, public service media. And do that in new ways, too, because some of the old ways have been– Well, PBS in the States and all the problems of corporate funding kind of shrinking what gets said in that space, so a lot to fix too. But I think that's a really important part of the solution. We need non-commercial media, and have to work out how to support and develop it to create that kind of other kinds of information. Mike: So by that same token, open-access journals I think are also really important, too. The fact that so much media now is putting up paywalls, all these academic journals are charging $30-$40 to rent an article, and there's just really no way to get free information that isn't paid for in some way. So let's talk about native. What is the effect of sponsored content on the public? Jonathan: Let me answer that by an example I show my students, which is an Exxon advertorial in the New York Times. Exxon paid for an editorial which said, "Guess what? The solution to the climate crisis isn't the removal of fossil fuels. It's smarter use of our assets." That sums up for me some of the greatest dangers, which is sponsored content amplifies voices who can speak with partiality because they're advocating for themselves, but undermines independent journalism in the process. To give another example, Facebook, as you know, has paid huge sums into lobbying and influencing politicians in Europe because it senses danger, right? Europe has created some quite strong rules on data privacy and on cookies as we discussed earlier. Facebook took out 20 ad-sponsored content items in the British newspaper, The Daily Telegraph. So it sets up stories with charity bosses who say Facebook is great without disclosing that they're financed by Facebook. It has people saying what great things it's doing to kind of cut content, even though it's been pushed out just after the Christchurch massacre, which of course was relayed for hours on Facebook and other social platforms before it was taken down. That's the problem with sponsored content, it strengthens and amplifies voices. And of course there are other problems; it's disguised; it's hidden; people aren't aware of it. We should know who the source of our content is. In fact, just be interested to talk to you because you're working in journalism. I think one of the things I grapple with but would really like to see more debate out is about the disclosure of sources. Now, I know from the Human Rights tradition and so on the absolute importance of protecting a journalist's sources. Because we don't get good stories if journalists can't protect whistleblowers and others. But we need something which protects that important public interest right. That gives readers better guidance to what the provenance, you know, what's behind the story. We could have ingredients in food and drink, but what were the sources? And in particular, we definitely need to know when there's been a paid source underlying a piece of content. So what drives me in that debate is one of the things that happened in the UK was we had a debate about political advertising on Facebook, which said we should be told better when there are political advertising. But that was running alongside another debate about how to save the British press, which was saying let's have more native advertising. So we've had contradictions and gaps in the way these issues have been treated. And I think we should recognize what's happening underneath, which is we don't always know the interests and sources behind our content. And we should do. Particularly when it's either a political voice or a commercial voice. Mike: Yeah. And I want to give a shoutout here to Corey Pein and his book, Live Work Work Work Die, where he talks about how the tech world typically, they don't really concern themselves with following rules and regulations. They just kind of do what they do and then just once regulators catch up to them, they hope they've made enough money where the fines or penalties or whatever is insignificant to how much profits they've made. And we see that with what happened with Facebook and I guess Twitter to some extent where they weren't regulating political advertisements at all. At least in the United States, political advertising has certain rules for financing and stuff that you have to report it and stuff like that. And so in the 2016 election, that was just out the window. And that's been fixed. Facebook now requires that political advertisements are registered as such, and they only get served in certain ways. All right, so there are regulations in place regarding advertising. What safeguards exist to protect the public from nefarious advertisers? Jonathan: I think just to respond to what you were saying, these are kind of almost the deeper myths, the deeper stories that have been told. The story that internet innovation was somehow kind of natural, inescapable, has-to-be-done-this-way. You want change and all these great services, this is what comes with it. It's going to be driven in these ways, we're going to move fast, we're going to trip over the old rules. I don't know about you, I think that is a myth in the making and it doesn't stack up, and it's already fragmenting and under pressure. So when Facebook's Mark Zuckerberg gets into US hearings in the likes of Cambridge Analytica, he has to say something different at that point. He has to say we do stand up for privacy and consumer protection. The problem is he doesn't fully deliver, and perhaps the bigger problem is the grand-sounding statements are there to reassure investors and markets and other stakeholders, but behind the scenes, Facebook carries on paying millions into lobbyists who go and influence politicians to make sure the rules are kept as weak as possible. So that would be my summary. In the space that I've looked at, native advertising and so on, we see a kind of mixed progress. So just taking the United States, 2015 Federal Trade Commission comes in with new rules and guidance on native advertising. And the rules are certainly an improvement: they're sharper; they're clearer. But what happens? Compliance by the industry remains low. Some early studies found 70% of marketers within I think a year of the new guidance weren't compliant. It got a bit better. But all the latest studies show right across publishing or influencer marketing, there's a compliance problem. There's that lobbying problem I mentioned. So the big marketers say, "Yes, we want to be responsible and transparent, it's in our interests that consumers know they've got ads." But actually then go and lobby. And the kind of thing they lobby over is to say, "Leave it to us what the disclosures should be." So what happens is consumer awareness is very low. Lots of the academic studies in this area have found awareness rates of about 10%, right? People being able to fully identify ad-sponsored content in news publications, for example. And it remains very low. So these industry people are kind of saying, "Well, leave it to us. We need to be fitting for the platform." And the result is consumers have low awareness and are confused. And people like me in this debate and in my book say, "We should call this out. We should have– If the objective really was consumer awareness, then we should move to clearer and more consistent labeling." And why I perfectly accept Instagram and Facebook are not the same thing and TikTok is not the same thing, if we had much more consistent labeling, we'd be in a better place. So one of the things I've argued for in Europe, for example, when we have product placement on television, unlike in the US it has to show a sign–a P sign to tell you that there's product placement. And not just at the end of programs as you're used to where the credits roll very quickly, but before and after each ad break. So why don't we have a sign, a hashtag ad, or a B sign for branded content across all branded material? I think that's an important argument to have because I think we're going into a world which is going to become even less recognizable as these new forms and formats emerge. Mike: Okay, so we've talked about some of them already, but what kind of policy gaps do you see with respect to marketing and media? And what do you think we should do to patch them? Jonathan: Well, I must just say it's a lovely time to speak to you and your audience about this because we've just started–I'm very proud of this–a three year research project which is looking into the rules and regulation of branded content. So we have what's called a Branded Content Governance Project and we're looking at the United States, Canada, Mexico, the UK, every country in the European Union, and Australia to kind of track what the rules are and what we can learn from that to do better. When I map this, I see the forces sitting in four areas. There's regulation, public regulation. There's industry self-regulation, when it makes its own rules. There's the power of the market, ad blocking, for example. And there's the power of civil society arguing for better. And I think we're at a point where self-regulation by the industry is failing. And that's becoming recognized not just by activists if you like, but by governments too. So we need a new settlement. And I think that needs a strengthening of public regulation as I've outlined. But I think all the elements need to work together. And that means putting pressure on companies to actually do as they say and strengthen their own self-regulation. Mike: Okay. Let's talk a bit about the stakes. So given the current digital landscape, what do you see the internet looking like if policy does not catch up with advertisers? Jonathan: Yeah. Well, that's a great question. Pretty chastening one, isn't it? There's a famous moment in 1994 where the chairman of Procter & Gamble, Edward Harnes, gets up and does a speech to the American Association of Advertising Agencies. And it basically says, "Hold your nerve. Things are happening, digitalization is about to happen. You could get slaughtered. The digital world could help people bypass ads and evade them. But if you keep your nerve, you can dominate this space." And I don't know about you, Mike, but I feel he was right. [chuckles] We knew this was happening in the early internet, the commercialization of the internet. But that corporate model and that corporate dominance is dominant. It's strong. However, I think we always need to look for sources of hope. And if it's dominant, it's also contested. There are forces challenging it, whether those forces are kind of carving out space for public media as we discussed, or whether like I am with others, we're kind of arguing for the rules to be improved on behalf of consumers and society. So I think we're losing, but classic Gramscian and optimism of the will is required. And to recognise all the things that are being done to highlight the problem and think through solutions. Whether that's very local ones like– I mean, something we haven't mentioned I think is very important is kitemarking, right? Small publications, non-profit or low profit saying, “We're going to signal what standards are to readers." And that's good for the publication but I think it also is good for awareness. It says, "Well, yeah, why is this publication different from these other commercial ones?" Because this is how it engages with advertisers. So I think that's all really important, too. Mike: All right. Well, cool. Well, hopefully, we can save the internet. Thanks, Dr. Hardy, for coming onto the Nazi Lies Podcast to talk about the lying press. The book again is Branded Content out from Routledge. Thanks again, Dr. Hardy. Jonathan: Thank you. Mike: If you liked what you heard and want to help us pay our guests and transcriptionist, consider subscribing to The Nazi Lies Patreon. Subscriptions start as low as $2, and some levels come with merch. If you don't want to commit to monthly donations, you can give a one-time donation via PayPal.me/NaziLies or CashApp to $NaziLies. [Theme song]

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MPT-7B and The Beginning of Context=Infinity — with Jonathan Frankle and Abhinav Venigalla of MosaicML

Latent Space: The AI Engineer Podcast â€” CodeGen, Agents, Computer Vision, Data Science, AI UX and all things Software 3.0

Play Episode Listen Later May 20, 2023 66:43

We are excited to be the first podcast in the world to release an in-depth interview on the new SOTA in commercially licensed open source models - MosiacML MPT-7B!The Latent Space crew will be at the NYC Lux AI Summit next week, and have two meetups in June. As usual, all events are on the Community page! We are also inviting beta testers for the upcoming AI for Engineers course. See you soon!One of GPT3's biggest limitations is context length - you can only send it up to 4000 tokens (3k words, 6 pages) before it throws a hard error, requiring you to bring in LangChain and other retrieval techniques to process long documents and prompts. But MosaicML recently open sourced MPT-7B, the newest addition to their Foundation Series, with context length going up to 84,000 tokens (63k words, 126 pages):This transformer model, trained from scratch on 1 trillion tokens of text and code (compared to 300B for Pythia and OpenLLaMA, and 800B for StableLM), matches the quality of LLaMA-7B. It was trained on the MosaicML platform in 9.5 days on 440 GPUs with no human intervention, costing approximately $200,000. Unlike many open models, MPT-7B is licensed for commercial use and it's optimized for fast training and inference through FlashAttention and FasterTransformer.They also released 3 finetuned models starting from the base MPT-7B: * MPT-7B-Instruct: finetuned on dolly_hhrlhf, a dataset built on top of dolly-5k (see our Dolly episode for more details). * MPT-7B-Chat: finetuned on the ShareGPT-Vicuna, HC3, Alpaca, Helpful and Harmless, and Evol-Instruct datasets.* MPT-7B-StoryWriter-65k+: it was finetuned with a context length of 65k tokens on a filtered fiction subset of the books3 dataset. While 65k is the advertised size, the team has gotten up to 84k tokens in response when running on a single node A100-80GB GPUs. ALiBi is the dark magic that makes this possible. Turns out The Great Gatsby is only about 68k tokens, so the team used the model to create new epilogues for it!On top of the model checkpoints, the team also open-sourced the entire codebase for pretraining, finetuning, and evaluating MPT via their new MosaicML LLM Foundry. The table we showed above was created using LLM Foundry in-context-learning eval framework itself!In this episode, we chatted with the leads of MPT-7B at Mosaic: Jonathan Frankle, Chief Scientist, and Abhinav Venigalla, Research Scientist who spearheaded the MPT-7B training run. We talked about some of the innovations they've brought into the training process to remove the need for 2am on-call PagerDutys, why the LLM dataset mix is such an important yet dark art, and why some of the traditional multiple-choice benchmarks might not be very helpful for the type of technology we are building.Show Notes* Introducing MPT-7B* Cerebras* Lottery Ticket Hypothesis* Hazy Research* ALiBi* Flash Attention* FasterTransformer* List of naughty words for C4 https://twitter.com/code_star/status/1661386844250963972* What is Sparsity?* Hungry Hungry Hippos* BF16 FPp.s. yes, MPT-7B really is codenamed LLongboi!Timestamps* Introductions [00:00:00]* Intro to Mosaic [00:03:20]* Training and Creating the Models [00:05:45]* Data Choices and the Importance of Repetition [00:08:45]* The Central Question: What Mix of Data Sets Should You Use? [00:10:00]* Evaluation Challenges of LLMs [0:13:00]* Flash Attention [00:16:00]* Fine-tuning for Creativity [00:19:50]* Open Source Licenses and Ethical Considerations [00:23:00]* Training Stability Enhancement [00:25:15]* Data Readiness & Training Preparation [00:30:00]* Dynamic Real-time Model Evaluation [00:34:00]* Open Science for Affordable AI Research [00:36:00]* The Open Approach [00:40:15]* The Future of Mosaic [00:44:11]* Speed and Efficiency [00:48:01]* Trends and Transformers [00:54:00]* Lightning Round and Closing [1:00:55]TranscriptAlessio: [00:00:00] Hey everyone. Welcome to the Latent Space podcast. This is Alessio partner and CTO-in-Residence at Decibel Partners. I'm joined by my co-host, Swyx, writer and editor of Latent Space.Swyx: Hey, and today we have Jonathan and Abhi from Mosaic ML. Welcome to our studio.Jonathan: Guys thank you so much for having us. Thanks so much.Swyx: How's it feel?Jonathan: Honestly, I've been doing a lot of podcasts during the pandemic, and it has not been the same.Swyx: No, not the same actually. So you have on your bio that you're primarily based in Boston,Jonathan: New York. New York, yeah. My Twitter bio was a probability distribution over locations.Swyx: Exactly, exactly. So I DMd you because I was obviously very interested in MPT-7B and DMd you, I was like, for the 0.2% of the time that you're in San Francisco, can you come please come to a podcast studio and you're like, I'm there next week.Jonathan: Yeah, it worked out perfectly. Swyx: We're really lucky to have you, I'll read off a few intros that people should know about you and then you can fill in the blanks.So Jonathan, you did your BS and MS at Princeton in programming languages and then found your way into ML for your PhD at MiT where you made a real splash with the lottery ticket hypothesis in 2018, which people can check up on. I think you've done a few podcasts about it over the years, which has been highly influential, and we'll talk about sparse models at Mosaic. You have also had some side [00:01:30] quest. You taught programming for lawyers and you did some law and privacy stuff in, in DC and also did some cryptography stuff. Um, and you've been an assistant professor at Harvard before earning your PhD.Jonathan: I've yet to start.Swyx: You, you yet to start. Okay. But you just got your PhD.Jonathan:. I technically just got my PhD. I was at Mosaic which delayed my defense by about two years. It was, I was at 99% done for two years. Got the job at Harvard, Mosaic started, and I had better things to do than write my dissertation for two years. Swyx: You know, you know, this is very out of order.Jonathan: Like, oh, completely out of order, completely backwards. Go talk to my advisor about that. He's also an advisor at Mosaic and has been from the beginning. And, you know, go talk to him about finishing on time.Swyx: Great, great, great. And just to fill it out, Abhi, you did your BS and MS and MIT, you were a researcher at Cerebras, and you're now a research scientist at Mosaic. Just before we go into Mosaic stuff, I'm actually very curious about Cereus and, uh, just that, that space in general. Um, what are they doing that people should know about?Abhinav: Yeah, absolutely. Um, I think the biggest thing about CEREUS is that they're really building, you know, kind of the NextGen computing platform beyond, like GPUs.Um, they're trying to build a system that uses an entire wafer, you know, rather than cutting up a wafer into smaller chips and trying to train a model on that entire system, or actually more recently on many such wafers. Um, so it's, and it's really extraordinary. I think it's like the first time ever that kind of wafer scale computing has ever really worked. And so it's a really exciting time to be there, trying to figure out how we can map ML workloads to work, um, on a much, much bigger chip.Swyx: And do you use like [00:03:00] a different programming language or framework to do that? Or is that like..Abhinav: Yeah, so I mean, things have changed a bit since I was there.I think, um, you can actually run just normal tensor flow and pie torch on there. Um, so they've built a kind of software stack that compiles it down. So it actually just kind of works naturally. But yeah.Jonathan : Compiled versions of Python is a hot topic at the moment with Mojo as well. Swyx: And then Mosaic, you, you spearheaded the MPT-7B effort.INTRO TO MOSAIC [00:03:20]Abhinav: Uh, yeah. Yeah, so it's kind of like, it's been maybe six months, 12 months in the making. We kind of started working on LMs sort of back in the summer of last year. Um, and then we came with this blog post where we kind of profiled a lot of LMs and saw, hey, the cost of training is actually a lot lower than what people might think.Um, and then since then, you know, being inspired by kind of, you know, meta's release, so the LLaMA models and lots of other open source work, we kind of started working towards, well, what if we were to release a really good kind of 7 billion parameter model? And that's what MPT is. Alessio:You know, we mentioned some of the podcasts you had done, Jonathan, I think in one of them you mentioned Mosaic was not planning on building a model and releasing and obviously you eventually did. So what are some of the things that got you there that maybe obviously LLaMA you mentioned was an inspiration. You now have both the training and like inference products that you offer. Was this more of a research challenge in a way, uh, that you wanted to do?Or how did the idea come to be?Jonathan: I think there were a couple of things. So we still don't have a first class model. We're not an open AI where, you know, our businesses come to use our one great model. Our business is built around customers creating their own models. But at the end of the day, if customers are gonna create their own models, we have to have the tools to help them do that, and to have the tools to help them do that and know that they work we have to create our own models to start. We have to know that we can do something great if customers are gonna do something great. And one too many people may have challenged me on Twitter about the fact that, you know, mosaic claims all these amazing numbers, but, you know, I believe not to, you know, call out Ross Whiteman here, but, you know, I believe he said at some point, you know, show us the pudding.Um, and so Ross, you know, please let me know how the pudding tastes. But in all seriousness, like I think there is something, this is a demo in some sense. This is to say we did this in 9.5 days for a really reasonable cost, straight through 200, an intervention. 200 K. Yep. Um, you can do this too.Swyx: Uh, and just to reference the numbers that you're putting out, this is the, the last year you were making a lot of noise for trading GPT 3 under 450 K, which is your, your initial estimate.Um, and then it went down to a 100 K and stable diffusion 160 k going down to less than 50 K as well.Jonathan: So I will be careful about that 100 K number. That's certainly the challenge I've given Abhi to hit. Oh, I wouldn't make the promise that we've hit yet, but you know, it's certainly a target that we have.And I, you know, Abhi may kill me for saying this. I don't think it's crazy. TRAINING AND CREATING THE MODELS [00:05:45] Swyx: So we definitely want to get into like estimation math, right? Like what, what needs to happen for those big order magnitude changes to in, in infrastructure costs. But, uh, let's kind of stick to the MPT-7B story. Yeah. Tell us everything.Like you have, uh, three different models. One of them. State of the art essentially on context length. Let's talk about the process of training them, the, uh, the decisions that you made. Um, I can go into, you know, individual details, but I just wanna let you let you rip.Abhinav: Yeah, so I mean, I think, uh, we started off with the base model, which is kind of for all practical purposes, a recreation of LLaMA 7B.Um, so it's a 7 billion perimeter model trained on the trillion tokens. Um, and our goal was like, you know, we should do it efficiently. We should be able to do it like, kind of hands free so we don't have to babysit the runs as they're doing them. And it could be kind of a, a launching point for these fine tune models and those fine tune models, you know, on, on the one hand they're kind of really fun for the community, like the story writer model, which has like a 65,000 length context window and you can even kind of extrapolate beyond that. Um, but they're, they're also kind of just tr inspirations really. So you could kind of start with an MPT-7B base and then build your own custom, you know, downstream. If you want a long context code model, you could do that with our platform. If you wanted one that was for a particular language, you could do that too.But yeah, so we picked kind of the three variance chat and instruct and story writer just kind of like inspirations looking at what people were doing in the community today. Yeah. Alessio: And what's the beginning of the math to come up with? You know, how many tokens you wanna turn it on? How many parameters do you want in a bottle? 7 billion and 30 billion seem to be kind of like two of the magic numbers going around right now. Abhinav: Yeah, definitely. Definitely. Yeah, I think like there's sort of these scaling laws which kind of tell you how to best spend your training compute if that's all you cared about. So if you wanna spend $200,000 exactly in the most efficient way, there'd be a recipe for doing that.Um, and that we usually go by the Chinchilla laws. Now for these models, we actually didn't quite do that because we wanted to make sure that people could actually run these at home and that they [00:07:30] were good for inference. So we trained them kind of beyond those chinchilla points so that we're almost over-training them.I think there's like a joke going on online that they're like long boy and that that came up internally because we were training them for really, really long durations. So that 7B model, the chinchilla point might be 140 billion tokens. Instead, we trained a trillion, so almost seven times longer than you normally would.Swyx: So longboi was the code name. So is it, is it the trading method? Is it the scaling law that you're trying to coin or is it the code name for the 64 billion?Jonathan: Uh, 64. It was just an internal joke for the, for training on way more tokens than you would via chinchilla. Okay. Um, we can coin it long boy and it, it really stuck, but just to, you know, long boys filled with two ELs at the beginning.Yeah. Cause you know, we wanted the lLLaMA thing in there as well. Jonathan: Yeah, yeah, yeah. Our darn CEO we have to rein him in that guy, you know, you can't, yeah. I'm gonna take away his Twitter password at some point. Um, but you know, he had to let that one out publicly. And then I believe there was a YouTube video where someone happened to see it mentioned before the model came out and called it the Long G boy or something like that.Like, so you know, now it's out there in the world. It's out there. It's like Sydnee can't put it back inSwyx: There's a beautiful picture which I think Naveen tweeted out, which, um, shows a long boy on a whiteboard.Jonathan: That was the origin of Long Boy. In fact, the legs of the lLLaMA were the two Ls and the long boy.DATA CHOICES AND THE IMPORTANCE OF REPETITION [00:08:45]Swyx: Well, talk to me about your data choices, right? Like this is your passion project. Like what can you tell us about it?Jonathan: Yeah, I think Abhi wanted to kill me by the end for trying to use all the GPUs on data and none of them on actually training the model. Um, at the end of the day, We know that you need to train these models and [00:09:00] lots of data, but there are a bunch of things we don't know.Number one is what kinds of different data sources matter. The other is how much does repetition really matter? And really kind of repetition can be broken down into how much does quality versus quantity matter. Suppose I had the world's best 10 billion tokens of data. Would it be better to train on that a hundred times or better to train on a trillion tokens of low quality, fresh data?And obviously there's, there's a middle point in between. That's probably the sweet spot. But how do you even know what good quality data is? And. So, yeah, this is, nobody knows, and I think the more time I spent, we have a whole data team, so me and several other people, the more time that we spent on this, you know, I came away thinking, gosh, we know nothing.Gosh, if I were back in academia right now, I would definitely go and, you know, write a paper about this because I have no idea what's going on.Swyx: You would write a paper about it. I'm interested in such a paper. I haven't come across any that exists. Could you frame the central question of such a paper?THE CENTRAL QUESTION: WHAT MIX OF DATA SETS SHOULD YOU USE? [00:10:00]Jonathan: Yeah. The central question is what mix of data sets should you use? Okay. Actually I've, you know, you had mentioned my law school stuff. I went back to Georgetown Law where I used to teach, um, in the midst of creating this model, and I actually sat down with a class of law students and asked them, I gave them our exact data sets, our data mixes, um, like how many tokens we had, and I said, Create the best data set for your model.Knowing they knew nothing about large language models, they just know that data goes in and it's going to affect the behavior. Um, and I was like, create a mix and they basically covered all the different trade-offs. Um, you probably want a lot of English language [00:10:30] text to start with. You get that from the web, but do you want it to be multilingual?If so, you're gonna have a lot less English text. Maybe it'll be worse. Do you wanna have code in there? There are all these beliefs that code leads to models being better at logical reasoning, of which I've seen zero evidence. Rep. It's not, um, I mean, really made a great code model, but code models leading to better chain of thought reasoning on the part of language or code being in the training set leading to better chain of thought reasoning.People claim this all the time, but I've still never seen any real evidence beyond that. You know, one of the generations of the GPT three model started supposedly from Code Da Vinci. Yes. And so there's a belief that, you know, maybe that helped. But again, no evidence. You know, there's a belief that spending a lot of time on good sources like Wikipedia is good for the model.Again, no evidence. At the end of the day, we tried a bunch of different data mixes and the answer was that there are some that are better or worse than others. We did find that the pile, for example, was a really solid data mix, but you know, there were stronger data mixes by our evaluation metrics. And I'll get back to the evaluation question in a minute cuz that's a really important one.This data set called c4, which is what the original T five model was trained on, is weirdly good. And everybody, when I posted on this on Twitter, like Stella Beaterman from Luther mentioned this, I think someone else mentioned this as well. C4 does really well in the metrics and we have no idea why we de-duplicated it against our evaluation set.So it's not like it memorized the data, it is just one web scrape from 2019. If you actually look at the T five paper and see how it was pre-processed, it looks very silly. Mm-hmm. They removed anything that had the word JavaScript in it because they didn't want to get like no JavaScript [00:12:00] warnings. They removed anything with curly braces cuz they didn't wanna get JavaScript in it.They looked at this list of bad words, um, and removed anything that had those bad words. If you actually look at the list of bad words, words like gay are on that list. And so there's, you know, it is a very problematic, you know, list of words, but that was the cleaning that leads to a data set that seems to be unbeatable.So that to me says that we know nothing about data. We, in fact used a data set called mc four as well, which is they supposedly did the same pre-processing of C4 just on more web calls. The English portion is much worse than C4 for reasons that completely escape us. So in the midst of all that, Basically I set two criteria.One was I wanted to be at least as good as mc four English, like make sure that we're not making things actively worse. And mc four English is a nice step up over other stuff that's out there. And two was to go all in on diversity after that, making sure that we had some code, we had some scientific papers, we had Wikipedia, because people are gonna use this model for all sorts of different purposes.But I think the most important thing, and I'm guessing abhi had a million opinions on this, is you're only as good as your evaluation. And we don't know how to evaluate models for the kind of generation we ask them to do. So past a certain point, you have to kinda shrug and say, well, my evaluation's not even measuring what I care about.Mm-hmm. So let me just make reasonable choices. EVALUATION CHALLENGES OF LLMs [0:13:00]Swyx: So you're saying MMLU, big bench, that kind of stuff is not. Convincing for youJonathan: A lot of this stuff is you've got two kinds of tasks. Some of these are more of multiple choice style tasks where there is a right answer. Um, either you ask the model to spit out A, B, C, or D or you know, and if you're more [00:13:30] sophisticated, you look at the perplexity of each possible answer and pick the one that the model is most likely to generate.But we don't ask these models to do multiple choice questions. We ask them to do open-ended generation. There are also open-ended generation tasks like summarization. You compare using things like a blue score or a rouge score, which are known to be very bad ways of comparing text. At the end of the day, there are a lot of great summaries of a paper.There are a lot of great ways to do open form generation, and so humans are, to some extent, the gold standard. Humans are very expensive. It turns out we can't put them into our eval pipeline and just have the humans look at our model every, you know, 10 minutes? Not yet. Not yet. Maybe soon. Um, are you volunteering Abhi?Abhinav: I, I, I just know we have a great eval team who's, uh, who's helping us build new metrics. So if they're listening,Jonathan: But it's, you know, evaluation of large language models is incredibly hard and I don't think any of these metrics really truly capture. What we expect from the models in practice.Swyx: Yeah. And we might draw wrong conclusions.There's been a debate recently about the emergence phenomenon, whether or not it's a mirage, right? I don't know if you guys have opinions about that process. Abhinav: Yeah, I think I've seen like this paper and all and all, even just kind of plots from different people where like, well maybe it's just a artifact of power, like log scaling or metrics or, you know, we're meshing accuracy, which is this a very like harsh zero one thing.Yeah. Rather than kind of something more continuous. But yeah, similar to what Jonathan was saying about evals. Like there there's one issue of like you just like our diversity of eval metrics, like when we put these models up, even like the chat ones, the instruct ones, people are using 'em for such a variety of tasks.There's just almost no way we get ahead of time, like measuring individual dimensions. And then also particularly like, you know, at the 7B scale, [00:15:00] um, these models still are not super great yet at the really hard tasks, like some of the hardest tasks in MMLU and stuff. So sometimes they're barely scoring like the above kind of random chance, you know, like on really, really hard tasks.So potentially as we. You know, aim for higher and higher quality models. Some of these things will be more useful to us. But we kind of had to develop MPT 7B kind of flying a little bit blind on, on what we knew it was coming out and just going off of like, you know, a small set of common sensor reasoning tasks.And of course, you know, just comparing, you know, those metrics versus other open source models. Alessio: I think fast training in inference was like one of the goals, right? So there's always the trade off between doing the hardest thing and like. Doing all the other things quickly.Abhinav: Yeah, absolutely. Yeah, I mean, I think like, you know, even at the 7B scale, you know, uh, people are trying to run these things on CPUs at home.You know, people are trying to port these to their phones, basically prioritizing the fact that the small scale would lead to our adoption. That was like a big, um, big thing going on. Alessio: Yeah. and you mentioned, um, flash attention and faster transformer as like two of the core things. Can you maybe explain some of the benefits and maybe why other models don't use it?FLASH ATTENTION [00:16:00]Abhinav: Yeah, absolutely. So flash attention is this basically faster implementation of full attention. Um, it's like a mathematical equivalent developed by like actually some of our collaborators, uh, at Stanford. Uh, the hazy research. Hazy research, yeah, exactly.Jonathan: What is, what, what, what's the name hazy research mean?Abhinav: I actually have no idea.Swyx: I have no clue. All these labs have fun names. I always like the stories behind them.Abhinav: Yeah, absolutely. We really, really liked flash attention. We, I think, had to integrate into repo even as [00:16:30] as early as September of last year. And it really just helps, you know, with training speed and also inference speed and we kind of bake that into model architecture.And this is kind of unique amongst all the other hugging face models you see out there. So ours actually, you can toggle between normal torch attention, which will work anywhere and flash attention, which will work on GPUs right out of the box. And that way I think you get almost like a 2x speed up at training time and somewhere between like 50% to a hundred percent speed up at inference time as well.So again, this is just like, we really, really wanted people to use these and like, feel like an improvement and we, we have the team to, to help deliver that. Swyx: Another part, um, of your choices was alibi position, encodings, which people are very interested in, maybe a lot of people just, uh, to sort of take in, in coatings as, as a given.But there's actually a lot of active research and honestly, it's a lot of, um, it's very opaque as well. Like people don't know how to evaluate encodings, including position encodings, but may, may, could you explain, um, alibi and, um, your choice?Abhinav: Yeah, for sure. The alibi and uh, kind of flash attention thing all kind of goes together in interesting ways.And even with training stability too. What alibi does really is that it eliminates the need to have positional embeddings in your model. Where previously, if you're a token position one, you have a particular embedding that you add, and you can't really go beyond your max position, which usually is like about 2000.With alibies, they get rid of that. Instead, just add a bias to the attention map itself. That's kind of like this slope. And if at inference time you wanna go much, much larger, they just kind of stretch that slope out to a longer, longer number of positions. And because the slope is kind of continuous and you can interpret it, it all works out now.Now one of [00:18:00] the, the funny things we found is like with flash attention, it saved so much memory and like improved performance so much that even as early as I kind of last year, like we were profiling models with, with very long context lines up to like, you know, the 65 k that you seen in release, we just never really got around to using it cuz we didn't really know what we might use it for.And also it's very hard to train stably. So we started experimenting with alibi integration, then we suddenly found that, oh wow, stability improves dramatically and now we can actually work together with alibi in a long context lens. That's how we got to like our story writer model where we can stably train these models out to very, very long context lenses and, and use them performantly.Jonathan: Yeah.Swyx: And it's also why you don't have a firm number. Most people now have a firm number on the context line. Now you're just like, eh, 65 to 85Abhinav: Oh yeah, there's, there's a, there's a big age to be 64 K or 65 k. 65 k plus.Swyx: Just do powers of twos. So 64 isn't, you know. Jonathan: Right, right. Yeah. Yeah. But we could, I mean, technically the context length is infinite.If you give me enough memory, um, you know, we can just keep going forever. We had a debate over what number to say is the longest that we could handle. We picked 84 cakes. It's the longest I expect people to see easily in practice. But, you know, we played around for even longer than that and I don't see why we couldn't go longer.Swyx: Yeah. Um, and so for those who haven't read the blog posts, you put the Great Gatsby in there and, uh, asked it to write an epilogue, which seemed pretty impressive.Jonathan: Yeah. There are a bunch of epilogues floating around internally at Mosaic. Yeah. That wasn't my favorite. I think we all have our own favorites.Yeah. But there are a bunch of really, really good ones. There was one where, you know, it's Gatsby's funeral and then Nick starts talking to Gatsby's Ghost, and Gatsby's father shows up and, you know, then he's [00:19:30] at the police station with Tom. It was very plot heavy, like this is what comes next. And a bunch of that were just very Fitzgerald-esque, like, you know, beautiful writing.Um, but it was cool to just see that Wow, the model seemed to actually be working with. You know, all this input. Yeah, yeah. Like it's, it's exciting. You can think of a lot of things you could do with that kind of context length.FINE-TUNING FOR CREATIVITY [00:19:50]Swyx: Is there a trick to fine tuning for a creative task rather than, um, factual task?Jonathan: I don't know what that is, but probably, yeah, I think, you know, the person, um, Alex who did this, he did fine tune the model explicitly on books. The goal was to try to get a model that was really a story writer. But, you know, beyond that, I'm not entirely sure. Actually, it's a great question. Well, no, I'll ask you back.How would you measure that? Swyx: Uh, God, human feedback is the solve to all things. Um, I think there is a labeling question, right? Uh, in computer vision, we had a really, really good episode with Robo Flow on the segment. Anything model where you, you actually start human feedback on like very, I think it's something like 0.5% of the, the overall, uh, final, uh, uh, labels that you had.But then you sort augment them and then you, you fully automate them, um, which I think could be applied to text. It seems intuitive and probably people like snorkel have already raised ahead on this stuff, but I just haven't seen this applied in the language domain yet.Jonathan: It, I mean there are a lot of things that seem like they make a lot of sense in machine learning that never work and a lot of things that make zero sense that seem to work.So, you know, I've given up trying to even predict. Yeah, yeah. Until I see the data or try it, I just kind shg my shoulders and you know, you hope for the best. Bring data or else, right? Yeah, [00:21:00] exactly. Yeah, yeah, yeah.Alessio: The fine tuning of books. Books three is like one of the big data sets and there was the whole.Twitter thing about trade comments and like, you know, you know, I used to be a community moderator@agenius.com and we've run into a lot of things is, well, if you're explaining lyrics, do you have the right to redistribute the lyrics? I know you ended up changing the license on the model from a commercial use Permitted.Swyx: Yeah let's let them. I'm not sure they did. Jonathan: So we flipped it for about a couple hours. Swyx: Um, okay. Can we, can we introduce the story from the start Just for people who are under the loop. Jonathan: Yeah. So I can tell the story very simply. So, you know, the book three data set does contain a lot of books. And it is, you know, as I discovered, um, it is a data set that provokes very strong feelings from a lot of folks.Um, that was one, one guy from one person in particular, in fact. Um, and that's about it. But it turns out one person who wants a lot of attention can, you know, get enough attention that we're talking about it now. And so we had a, we had a discussion internally after that conversation and we talked about flipping the license and, you know, very late at night I thought, you know, maybe it's a good thing to do.And decided, you know, actually probably better to just, you know, Stan Pat's license is still Apache too. And one of the conversations we had was kind of, we hadn't thought about this cuz we had our heads down, but the Hollywood writer Strike took place basically the moment we released the model. Mm-hmm.Um, we were releasing a model that could do AI generated creative content. And that is one of the big sticking points during the strike. Oh, the optics are not good. So the optics aren't good and that's not what we want to convey. This is really, this is a demo of the ability to do really long sequence lengths and.Boy, you know, [00:22:30] that's, that's not timing that we appreciated. And so we talked a lot internally that night about like, oh, we've had time to read the news. We've had time to take a breath. We don't really love this. Came to the conclusion that it's better to just leave it as it is now and learn the lesson for the future.But certainly that was one of my takeaways is this stuff, you know, there's a societal context around this that it's easy to forget when you're in the trenches just trying to get the model to train. And you know, in hindsight, you know, I might've gone with a different thing than a story writer. I might've gone with, you know, coder because we seem to have no problem putting programmers out of work with these models.Swyx: Oh yeah. Please, please, you know, take away this stuff from me.OPEN SOURCE LICENSES AND ETHICAL CONSIDERATIONS [00:23:00]Jonathan: Right. You know, so it's, I think, you know, really. The copyright concerns I leave to the lawyers. Um, that's really, if I learned one thing teaching at a law school, it was that I'm not a lawyer and all this stuff is a little complicated, especially open source licenses were not designed for this kind of world.They were designed for a world of forcing people to be more open, not forcing people to be more closed. And I think, you know, that was part of the impetus here, was to try to use licenses to make things more closed. Um, which is, I think, against the grain of the open source ethos. So that struck me as a little bit strange, but I think the most important part is, you know, we wanna be thoughtful and we wanna do the right thing.And in that case, you know, I hope with all that interesting licensing fund you saw, we're trying to be really thoughtful about this and it's hard. I learned a lot from that experience. Swyx: There's also, I think, an open question of fair use, right? Is training on words of fair use because you don't have a monopoly on words, but some certain arrangements of words you do.And who is to say how much is memorization by a model versus actually learning and internalizing and then. Sometimes happening to land at the right, the [00:24:00] same result.Jonathan: And if I've learned one lesson, I'm not gonna be the person to answer that question. Right, exactly. And so my position is, you know, we will try to make this stuff open and available.Yeah. And, you know, let the community make decisions about what they are or aren't comfortable using. Um, and at the end of the day, you know, it still strikes me as a little bit weird that someone is trying to use these open source licenses to, you know, to close the ecosystem and not to make things more open.That's very much against the ethos of why these licenses were created.Swyx: So the official mosaic position, I guess is like, before you use TC MPC 7B for anything commercial, check your own lawyers now trust our lawyers, not mosaic's lawyers.Jonathan: Yeah, okay. Yeah. I'm, you know, our lawyers are not your lawyers.Exactly. And, you know, make the best decision for yourself. We've tried to be respectful of the content creators and, you know, at the end of the day, This is complicated. And this is something that is a new law. It's a new law. It's a new law that hasn't been established yet. Um, but it's a place where we're gonna continue to try to do the right thing.Um, and it's, I think, one of the commenters, you know, I really appreciated this said, you know, well, they're trying to do the right thing, but nobody knows what the right thing is to even do, you know, the, I guess the, the most right thing would've been to literally not release a model at all. But I don't think that would've been the best thing for the community either.Swyx: Cool.Well, thanks. Well handled. Uh, we had to cover it, just causeJonathan: Oh, yes, no worries. A big piece of news. It's been on my mind a lot.TRAINING STABILITY ENHANCEMENT [00:25:15]Swyx: Yeah. Yeah. Well, you've been very thoughtful about it. Okay. So a lot of these other ideas in terms of architecture, flash, attention, alibi, and the other data sets were contributions from the rest of the let's just call it open community of, of machine learning advancements. Uh, but Mosaic in [00:25:30] particular had some stability improvements to mitigate loss spikes, quote unquote, uh, which, uh, I, I took to mean, uh, your existing set of tools, uh, maybe we just co kind of covered that. I don't wanna sort of put words in your mouth, but when you say things like, uh, please enjoy my empty logbook.How much of an oversell is that? How much, you know, how much is that marketing versus how much is that reality?Abhinav: Oh yeah. That, that one's real. Yeah. It's like fully end-to-end. Um, and I think.Swyx: So maybe like what, what specific features of Mosaic malibu?Abhinav: Totally, totally. Yeah. I think I'll break it into two parts.One is like training stability, right? Knowing that your model's gonna basically get to the end of the training without loss spikes. Um, and I think, you know, at the 7B scale, you know, for some models like it ha it's not that big of a deal. As you train for longer and longer durations, we found that it's trickier and trickier to avoid these lost spikes.And so we actually spent a long time figuring out, you know, what can we do about our initialization, about our optimizers, about the architecture that basically prevents these lost spikes. And you know, even in our training run, if you zoom in, you'll see small intermittent spikes, but they recover within a few hundred steps.And so that's kind of the magical bit. Our line is one of defenses we recover from Las Vegas, like just naturally, right? Mm-hmm. Our line two defense was that we used determinism and basically really smart resumption strategies so that if something catastrophic happened, we can resume very quickly, like a few batches before.And apply some of these like, uh, interventions. So we had these kinds of preparations, like a plan B, but we didn't have to use them at all for MPT 7B training. So, that was kind of like a lucky break. And the third part of like basically getting all the way to the empty law book is having the right training infrastructure.[00:27:00]So this is basically what, like is, one of the big selling points of the platform is that when you try to train these models on hundreds of GPUs, not many people outside, you know, like deep industry research owners, but the GPUs fail like a lot. Um, I would say like almost once every thousand a 100 days.So for us on like a big 512 cluster every two days, basically the run will fail. Um, and this is either due to GPUs, like falling off the bus, like that's, that's a real error we see, or kind of networking failures or something like that. And so in those situations, what people have normally done is they'll have an on-call team that's just sitting round the clock, 24-7 on slack, once something goes wrong.And if then they'll basically like to try to inspect the cluster, take nodes out that are broken, restart it, and it's a huge pain. Like we ourselves did this for a few months. And as a result of that, because we're building such a platform, we basically step by step automated every single one of those processes.So now when a run fails, we have this automatic kind of watch talk that's watching. It'll basically stop the job. Test the nodes cord in anyone's that are broken and relaunch it. And because our software's all deterministic has fast resumption stuff, it just continues on gracefully. So within that log you can see sometimes I think maybe at like 2:00 AM or something, the run failed and within a few minutes it's back up and running and all of us are just sleeping peacefully.Jonathan: I do wanna say that was hard one. Mm-hmm. Um, certainly this is not how things were going, you know, many months ago, hardware failures we had on calls who were, you know, getting up at two in the morning to, you know, figure out which node had died for what reason, restart the job, have to cord the node. [00:28:30] Um, we were seeing catastrophic loss spikes really frequently, even at the 7B scale that we're just completely derailing runs.And so this was step by step just ratcheting our way there. As Abhi said, to the point where, Many models are training at the moment and I'm sitting here in the studio and not worrying one bit about whether the runs are gonna continue. Yeah. Swyx: I'm, I'm not so much of a data center hardware kind of guy, but isn't there existing software to do this for CPUs and like, what's different about this domain? Does this question make sense at all?Jonathan: Yeah, so when I think about, like, I think back to all the Google fault tolerance papers I read, you know, as an undergrad or grad student mm-hmm. About, you know, building distributed systems. A lot of it is that, you know, Each CPU is doing, say, an individual unit of work.You've got a database that's distributed across your cluster. You wanna make sure that one CPU failing can't, or one machine failing can't, you know, delete data. So you, you replicate it. You know, you have protocols like Paxos where you're literally, you've got state machines that are replicated with, you know, with leaders and backups and things like that.And in this case, you were performing one giant computation where you cannot afford to lose any node. If you lose a node, you lose model state. If you lose a node, you can't continue. It may be that, that in the future we actually, you know, create new versions of a lot of our distributed training libraries that do have backups and where data is replicated so that if you lose a node, you can detect what node you've lost and just continue training without having to stop the run, you know?Pull from a checkpoint. Yeah. Restart again on different hardware. But for now, we're certainly in a world where if anything dies, that's the end of the run and you have to go back and recover from it. [00:30:00]DATA READINESS & TRAINING PREPARATION [00:30:00]Abhinav: Yeah. Like I think a big part, a big word there is like synchronous data pluralism, right? So like, we're basically saying that on every step, every GP is gonna do some work.They're gonna stay in sync with each other and average their, their gradients and continue. Now that there are algorithmic techniques to get around this, like you could say, oh, if a GP dies, just forget about it. All the data that's gonna see, we'll just forget about it. We're not gonna train on it.But, we don't like to do that currently because, um, it makes us give up determinism, stuff like that. Maybe in the future, as you go to extreme scales, we'll start looking at some of those methods. But at the current time it's like, we want determinism. We wanted to have a run that we could perfectly replicate if we needed to.And it was, the goal is figure out how to run it on a big cluster without humans having to babysit it. Babysit it. Alessio: So as you mentioned, these models are kind of the starting point for a lot of your customers To start, you have a. Inference product. You have a training product. You previously had a composer product that is now kind of not rolled into, but you have like a super set of it, which is like the LLM foundry.How are you seeing that change, you know, like from the usual LOP stack and like how people train things before versus now they're starting from, you know, one of these MPT models and coming from there. Like worship teams think about as they come to you and start their journey.Jonathan: So I think there's a key distinction to make here, which is, you know, when you say starting from MPT models, you can mean two things.One is actually starting from one of our checkpoints, which I think very few of our customers are actually going to do, and one is starting from our configuration. You can look at our friends at Rep for that, where, you know, MPT was in progress when Refl [00:31:30] came to us and said, Hey, we need a 3 billion parameter model by next week on all of our data.We're like, well, here you go. This is what we're doing, and if it's good enough for us, um, hopefully it's good enough for you. And that's basically the message we wanna send to our customers. MPT is basically clearing a path all the way through where they know that they can come bring their data, they can use our training infrastructure, they can use all of our amazing orchestration and other tools that abhi just mentioned, for fault tolerance.They can use Composer, which is, you know, still at the heart of our stack. And then the l l M Foundry is really the specific model configuration. They can come in and they know that thing is gonna train well because we've already done it multiple times. Swyx: Let's dig in a little bit more on what should people have ready before they come talk to you? So data architecture, eval that they're looking, etc.Abhinav: Yeah, I, I mean, I think we'll accept customers at any kind of stage in their pipeline. You know, like I'd say science, there's archetypes of people who have built products around like some of these API companies and reach a stage or maturity level where it's like we want our own custom models now, either for the purpose of reducing cost, right?Like our inference services. Quite a bit cheaper than using APIs or because they want some kind of customization that you can't really get from the other API providers. I'd say the most important things to have before training a big model. You know, you wanna have good eval metrics, you know, some kind of score that you can track as you're training your models and scaling up, they can tell you you're progressing.And it's really funny, like a lot of times customers will be really excited about training the models, right? It's really fun to like launch shelves on hundreds of gfs, just all around. It's super fun. But then they'll be like, but wait, what are we gonna measure? Not just the training loss, right? I mean, it's gotta be more than that.[00:33:00]So eval metrics is like a, it's a good pre-req also, you know, your data, you know, either coming with your own pre-training or fine-tune data and having like a strategy to clean it or we can help clean it too. I think we're, we're building a lot of tooling around that. And I think once you have those two kinds of inputs and sort of the budget that you want, we can pretty much walk you through the rest of it, right?Like that's kind of what we do. Recently we helped build CR FM's model for biomedical language a while back. Jonathan: Um, we can. That's the center of research for foundation models. Abhi: Exactly, exactly.Jonathan: Spelling it out for people. Of course.Abhinav: No, absolutely. Yeah, yeah. No, you've done more of these than I have.Um, I think, uh, basically it's sort of, we can help you figure out what model I should train to scale up so that when I go for my big run company, your here run, it's, uh, it's predictable. You can feel confident that it's gonna work, and you'll kind of know what quality you're gonna get out before you have to spend like a few hundred thousand dollars.DYNAMIC REAL-TIME MODEL EVALUATION [00:34:00]Alessio: The rap Reza from rap was on the podcast last week and, uh, they had human eval and then that, uh, I'm Jon Eval, which is like vibe based. Jonathan: And I, I do think the vibe based eval cannot be, you know, underrated really at the, I mean, at the end of the day we, we did stop our models and do vibe checks and we did, as we monitor our models, one of our evals was we just had a bunch of prompts and we would watch the answers as the model trained and see if they changed cuz honestly, You know, I don't really believe in any of these eval metrics to capture what we care about.Mm-hmm. But when you ask it, uh, you know, I don't know. I think one of our prompts was to suggest games for a three-year-old and a seven-year-old. That would be fun to play. Like that was a lot more [00:34:30] valuable to me personally, to see how that answer evolved and changed over the course of training. So, you know, and human eval, just to clarify for folks, human human eval is an automated evaluation metric.There's no humans in it at all. There's no humans in it at all. It's really badly named. I got so confused the first time that someone brought that to me and I was like, no, we're not bringing humans in. It's like, no, it's, it's automated. They just called it a bad name and there's only a hundred cents on it or something.Abhinav: Yeah. Yeah. And, and it's for code specifically, right?Jonathan: Yeah. Yeah. It's very weird. It's a, it's a weird, confusing name that I hate, but you know, when other metrics are called hella swag, like, you know, you do it, just gotta roll with it at this point. Swyx: You're doing live evals now. So one, one of the tweets that I saw from you was that it is, uh, important that you do it paralyzed.Uh, maybe you kind of wanna explain, uh, what, what you guys did.Abhinav: Yeah, for sure. So with LLM Foundry, there's many pieces to it. There's obviously the core training piece, but there's also, you know, tools for evaluation of models. And we've kind of had one of the, I think it's like the, the fastest like evaluation framework.Um, basically it's multi GPU compatible. It runs with Composer, it can support really, really big models. So basically our framework runs so fast that even Azure models are training. We can run these metrics live during the training. So like if you have a dashboard like weights and biases, you kind of watch all these evil metrics.We have, like, 15 or 20 of them honestly, that we track during the run and add negligible overhead. So we can actually watch as our models go and feel confident. Like, it's not like we wait until the very last day to, to test if the models good or notJonathan: That's amazing. Yeah. I love that we've gotten this far into the conversation.We still haven't talked about efficiency and speed. Those are usually our two watch words at Mosaic, which is, you know, that's great. That says that we're [00:36:00] doing a lot of other cool stuff, but at the end of the day, um, you know, Cost comes first. If you can't afford it, it doesn't matter. And so, you know, getting things down cheap enough that, you know, we can monitor in real time, getting things down cheap enough that we can even do it in the first place.That's the basis for everything we do.OPEN SCIENCE FOR AFFORDABLE AI RESEARCH [00:36:00]Alessio: Do you think a lot of the questions that we have around, you know, what data sets we should use and things like that are just because training was so expensive before that, we just haven't run enough experiments to figure that out. And is that one of your goals is trying to make it cheaper so that we can actually get the answers?Jonathan: Yeah, that's a big part of my personal conviction for being here. I think I'm, I'm still in my heart, the second year grad student who was jealous of all his friends who had GPUs and he didn't, and I couldn't train any models except in my laptop. And that, I mean, the lottery ticket experiments began on my laptop that I had to beg for one K 80 so that I could run amist.And I'm still that person deep down in my heart. And I'm a believer that, you know, if we wanna do science and really understand these systems and understand how to make them work well, understand how they behave, understand what makes them safe and reliable. We need to make it cheap enough that we can actually do science, and science involves running dozens of experiments.When I finally, you know, cleaned out my g c s bucket from my PhD, I deleted a million model checkpoints. I'm not kidding. There were over a million model checkpoints. That is the kind of science we need, you know, that's just what it takes. In the same way that if you're in a biology lab, you don't just grow one cell and say like, eh, the drug seems to work on that cell.Like, there's a lot more science you have to do before you really know.Abhinav: Yeah. And I think one of the special things about Mosaic's kind of [00:37:30] position as well is that we have such, so many customers all trying to train models that basically we have the incentive to like to devote all these resources and time to do this science.Because when we learn which pieces actually work, which ones don't, we get to help many, many people, right? And so that kind of aggregation process I think is really important for us. I remember way back there was a paper about Google that basically would investigate batch sizes or something like that.And it was this paper that must have cost a few million dollars during all the experience. And it was just like, wow, what a, what a benefit to the whole community. Now, like now we all get to learn from that and we get, we get to save. We don't have to spend those millions of dollars anymore. So I think, um, kind of mosaical science, like the insights we get on, on data, on pre-screening architecture, on all these different things, um, that's why customers come to us.Swyx: Yeah, you guys did some really good stuff on PubMed, G B T as well. That's the first time I heard of you. Of you. And that's also published to the community.Abhinav: Yeah, that one was really fun. We were like, well, no one's really trained, like fully from scratch domain specific models before. Like, what if we just did a biomed one?Would it still work? And, uh, yeah, I'd be really excited. That did, um, we'll probably have some follow up soon, I think, later this summer.Jonathan: Yeah. Yes. Stay tuned on that. Um, but I, I will say just in general, it's a really important value for us to be open in some sense. We have no incentive not to be open. You know, we make our money off of helping people train better.There's no cost to us in sharing what we learn with the community. Cuz really at the end of the day, we make our money off of those custom models and great infrastructure and, and putting all the pieces together. That's honestly where the Mosaic name came from. Not off of like, oh, we've got, you know, this one cool secret trick [00:39:00] that we won't tell you, or, you know, closing up.I sometimes, you know, in the past couple weeks I've talked to my friends at places like Brain or, you know, what used to be Brain Now Google DeepMind. Oh, I R I P Brain. Yeah. R i p Brian. I spent a lot of time there and it was really a formative time for me. Um, so I miss it, but. You know, I kind of feel like we're one of the biggest open research labs left in industry, which is a very sad state of affairs because we're not very big.Um, but at least can you say how big the team is actually? Yeah. We were about 15 researchers, so we're, we're tiny compared to, you know, the huge army of researchers I remember at Brain or at fair, at Deep Mind back, you know, when I was there during their heydays. Um, you know, but everybody else is kind of, you know, closed up and isn't saying very much anymore.Yeah. And we're gonna keep talking and we're gonna keep sharing and, you know, we will try to be that vanguard to the best of our ability. We're very small and I, I can't promise we're gonna do what those labs used to do in terms of scale or quantity of research, but we will share what we learn and we will try to create resources for the community.Um, I, I dunno, I just, I believe in openness fundamentally. I'm an academic at heart and it's sad to me to watch that go away from a lot of the big labs. THE OPEN APPROACH [00:40:15]Alessio: We just had a live pod about the, you know, open AI snow mode, uh, post that came out and it was one of the first time I really dove into Laura and some of the this new technologies, like how are you thinking about what it's gonna take for like the open approach to really work?Obviously today, GPT four is still, you know, part of like that state-of-the-art model for a [00:40:30] lot of tasks. Do you think some of the innovation and kind of returning methods that we have today are enough if enough people like you guys are like running these, these research groups that are open? Or do you think we still need a step function improvement there?Jonathan: I think one important point here is the idea of coexistence. I think when you look at, I don't know who won Linux or Windows, the answer is yes. Microsoft bought GitHub and has a Windows subsystem for Linux. Linux runs a huge number of our servers and Microsoft is still a wildly profitable company.Probably the most successful tech company right now. So who won open source or closed source? Yes. Um, and I think that's a similar world that we're gonna be in here where, you know, it's gonna be different things for different purposes. I would not run Linux on my laptop personally cuz I like connecting to wifi and printing things.But I wouldn't run Windows on one of my surfers. And so I do think what we're seeing with a lot of our customers is, do they choose opening IR mosaic? Yes. There's a purpose for each of these. You have to send your data off to somebody else with open eyes models. That's a risk. GPT four is amazing and I would never promise someone that if they come to Mosaic, they're gonna get a GPT four quality model.That's way beyond our means and not what we're trying to do anyway. But there's also a whole world for, you know, domain specific models, context specific models that are really specialized, proprietary, trained on your own data that can do things that you could never do with one of these big models. You can customize in crazy ways like G B T four is not gonna hit 65 K context length for a very long time, cuz they've already trained that [00:42:00] model and you know, they haven't even released the 32 K version yet.So we can, you know, we can do things differently, you know, by being flexible. So I think the answer to all this is yes. But we can't see the open source ecosystem disappear. And that's the scariest thing for me. I hear a lot of talk in academia about, you know, whatever happened to that academic research on this field called information retrieval?Well, in 1999 it disappeared. Why? Because Google came along and who cares about information retrieval research when you know you have a Google Scale, you know, Web Scale database. So you know, there's a balance here. We need to have both. Swyx: I wanna applaud you, Elaine. We'll maybe edit it a little like crowd applause, uh, line.Cuz I, I think that, um, that is something that as a research community, as people interested in progress, we need to see these things instead of just, uh, seeing marketing papers from the advertising GPT 4.Jonathan: Yeah. I, I think I, you know, to get on my soapbox for 10 more seconds. Go ahead. When I talk to policymakers about, you know, the AI ecosystem, the usual fear that I bring up is, Innovation will slow because of lack of openness.I've been complaining about this for years and it's finally happened. Hmm. Why is Google sharing, you know, these papers? Why is Open AI sharing these papers? There are a lot of reasons. You know, I have my own beliefs, but it's not something we should take for granted that everybody's sharing the work that they do and it turns out well, I think we took it for granted for a while and now it's gone.I think it's gonna slow down the pace of progress. In a lot of cases, each of these labs has a bit of a monoculture and being able to pass ideas [00:43:30] back and forth was a lot of what kept, you know, scientific progress moving. So it's imperative not just, you know, for the open source community and for academia, but for the progress of technology.That we have a vibrant open source research community.THE FUTURE OF MOSAIC [00:44:11]Swyx: There's a preview of the ecosystem and commentary that we're, we're gonna do. But I wanna close out some stuff on Mosaic. You launched a bunch of stuff this month. A lot of stuff, uh, actually was, I was listening to you on Gradient descent, uh, and other podcasts we know and love.Uh, and you said you also said you were not gonna do inference and, and, and last week you were like, here's Mosaic ML inference. Oops. So maybe just a, at a high level, what was Mosaic ml and like, what is it growing into? Like how do you conceptualize this? Jonathan: Yeah, and I will say gradient, when graded dissent was recorded, we weren't doing inference and had no plans to do it.It took a little while for the podcast to get out. Um, in the meantime, basically, you know, one thing I've learned at a startup, and I'm sure abhi can comment on this as well, focus is the most important thing. We have done our best work when we've been focused on doing one thing really well and our worst work when we've tried to do lots of things.Yeah. So, We don't want to do inference, we don't want to have had to do inference. Um, and at the end of the day, our customers were begging us to do it because they wanted a good way to serve the models and they liked our ecosystem. And so in some sense, we got dragged into it kicking and screaming. We're very excited to have a product.We're going to put our best foot forward and make something really truly amazing. But there is, you know, that's something that we were reluctant to do. You know, our customers convinced us it would be good for our business. It's been wonderful for business and we are gonna put everything into this, but you know, back when grading dissent came out, I [00:45:00] was thinking like, or when we recorded it or focused, oh God, like focus is the most important thing.I've learned that the hard way multiple times that Mosaic, abhi can tell you like, you know, I've made a lot of mistakes on not focusing enough. Um, boy inference, that's a whole second thing, and a whole different animal from training. And at the end of the day, when we founded the company, our belief was that inference was relatively well served at that time.There were a lot of great inference companies out there. Um, training was not well served, especially efficient training. And we had something to add there. I think we've discovered that as the nature of the models have changed, the nature of what we had to add to inference changed a lot and there became an opportunity for us to contribute something.But that was not the plan. But now we do wanna be the place that people come when they wanna train these big, complex, difficult models and know that it's gonna go right the first time and they're gonna have something they can servee right away. Um, you know, really the rep example of, you know, with 10 days to go saying, Hey, can you please train that model?And, you know, three or four days later the model was trained and we were just having fun doing interesting, fine tuning work in it for the rest of the 10 days, you know. That also requires good inference. Swyx: That's true, that's true. Like, so running evals and, and fine tuning. I'm just putting my business hat on and you know, and Alessio as well, like, uh, I've actually had fights with potential co-founders about this on the primary business.Almost like being training, right? Like essentially a one-time cost.Jonathan: Who told you it was a one time cost? What, who, who told you that?Swyx: No, no, no, no. Correct me. Jonathan: Yeah. Yeah. Let me correct you in two ways. Um, as our CEO Navine would say, if he were here, when you create version 1.0 of your software, do you then fire all the engineers?Of [00:46:30] course not. You never, like, MPT has a thousand different things we wanted to do that we never got to. So, you know, there will be future models.Abhinav: And, and the data that's been trained on is also changing over time too, right? If you wanna ask anything about, I guess like May of 2023, we'll have to retrain it further and so on.Right? And I think this is especially true for customers who run like the kind of things that need to be up to date on world knowledge. So I, I think like, you know, the other thing I would say too is that, The malls we have today are certainly not the best malls we'll ever produce. Right. They're gonna get smaller, they're gonna get faster, they're gonna get cheaper, they're gonna get lower latency, they're gonna get higher quality.Right? And so you always want the next gen version of MPT and the one after that and one after that. There's a reason that even the GPT series goes three, four, and we know there's gonna be a five. Right? Um, so I I I also don't see as a, as a one-time cost.Jonathan: Yeah. Yeah. And I, if you wanna cite a stat on this, there are very, very

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Jonathan Shariat on Tragic Design

Software Sessions

Play Episode Listen Later Sep 9, 2022 55:19

Jonathan Shariat is the coauthor of the book Tragic Design and co-host of the Design Review Podcast. He's currently a Sr. Interaction Designer & Accessibility Program Lead at Google.This episode originally aired on Software Engineering Radio.Topics covered: How poor design kills in medical environments Causing harm with features meant to bring joy Considerations during the product development cycle Industry specific checklists and testing requirements Creating guiding principles for a team Why medical software often has poor UX Designing for crisis situations Why dark patterns can be bad in the long term Related Links @designuxui Tragic Design How Bad UX Killed Jenny Design Review podcast Deceptive Design TranscriptYou can help edit this transcript on GitHub.[00:00:00] Jeremy: Today I'm talking to Jonathan Shariat, he's the co-author of Tragic design. The host of the design review podcast. And he's currently a senior interaction designer and accessibility program lead at Google. Jonathan, welcome to software engineering radio.[00:00:15] Jonathan: Hi, Jeremy, thank you So much for having me on.[00:00:18] Jeremy: the title of your book is tragic design. And I think that people can take a lot of different meanings from that. So I wonder if you could start by explaining what tragic design means to you.[00:00:33] Jonathan: Hmm. For me, it really started with this story that we have in the beginning of the book. It's also online. Uh, I originally wrote it as a medium article and th that's really what opened my eyes to, Hey, you know, design has, is, is this kind of invisible world all around us that we actually depend on very critically in some cases.And So this story was about a girl, you know, a nameless girl, but we named her Jenny for the story. And in short, she came for treatment of cancer at the hospital, uh, was given the medication and the nurses that were taking care of her were so distracted with the software they were using to chart, make orders, things like that, that they miss the fact that she needed hydration and that she wasn't getting it.And then because of that, she passed away. And I still remember that feeling of just kind of outrage. And, you know, when we hear a lot of news stories, A lot of them are outraging. they, they touch us, but some of them, some of those feelings stay and they stick with you.And for me, that stuck with me, I just couldn't let it go because I think a lot of your listeners will relate to this. Like we get into technology because we really care about the potential of technology. What could it do? What are all the awesome things that could do, but we come at a problem and we think of all the ways it could be solved with technology and here it was doing the exact opposite.It was causing problems. It was causing harm and the design of that, or, you know, the way that was built or whatever it was failing Jenny, it was failing the nurses too, right? Like a lot of times we blame that end user and, and it caused it. So to me, that story was so tragic. Something that deeply saddened me and was regrettable and cut short someone's uh, you know, life and that's the definition of tragic, and there's a lot of other examples with varying degrees of tragic, but, um, you know, as we look at the impact technology has, and then the impact we have in creating those technologies that have such large impacts, we have a responsibility to, to really look into that and make sure we're doing as best of job as we can and avoid those as much as possible.Because the biggest thing I learned in researching all these stories was, Hey, these aren't bad people. These aren't, you know, people who are clueless and making these, you know, terrible mistakes. They're me, they're you, they're they're people. Um, just like you and I, that could make the same mistakes.[00:03:14] Jeremy: I think it's pretty clear to our audience where there was a loss of life, someone, someone died and that's, that's clearly tragic. Right? So I think a lot of things in the healthcare field, if there's a real negative outcome, whether it's death or severe harm, we can clearly see that as tragic.and I, I know in your book you talk about a lot of other types of, I guess negative things that software can cause. So I wonder if you could, explain a little bit about now past the death and the severe injury. What's tragic to you.[00:03:58] Jonathan: Yeah. still in that line of like of injury and death, And, you know, the side that most of us will actually, um, impact, our work day-to-day is also physical harm. Like, creating this software in a car. I think that's a fairly common one, but also, ergonomics, right?Like when we bring it back to something like less impactful, but still like multiplied over the impact of, multiplied over the impact of a product rather, it can be quite, quite big, right? Like if we're designing software in a way that's very repetitive or, you know, everyone's, everyone's got that, that like scroll, thumb, scroll, you know, issue.Right. if, uh, our phones aren't designed well, so there's a lot of ways that it can still physically impact you ergonomically. And that can cause you a lot of problem arthritis and pain, but yeah, there's, there's other, there's other, other ways that are still really impactful. So the other one is by saddening or angry.You know, that emotional harm is very real. And oftentimes sometimes it gets overlooked a little bit because it's, um, you know, physical harm is what is so real to us, but sometimes emotional harm isn't. But, you know, we talk about in the book, the example of Facebook, putting together this great feature, which takes your most liked photo, and, you know, celebrates your whole year by you saying, Hey, look at as a hero, you're in review this, the top photo from the year, they add some great, you know, well done illustrations behind it, of, of balloons and confetti and, people dancing.But some people had a bad year. Some people's most liked engaged photo is because something bad happened and they totally missed. And because of that, people had a really bad time with this where, you know, they lost their child that year. They lost their loved one that year, their house burnt down. Um, something really bad happened to them.And here was Facebook putting that photo of their, of their dead child up with, you know, balloons and confetti and people dancing around it. And that was really hard for people. They didn't want to be reminded of that. And especially in that way, and these emotional harms also come into the, in the play of, on anger.You know, we talk about, well, one, you know, there's, there's a lot of software out there that, that, um, tries to bring up news stories that anger us and which equals engagement. Um, but also ones that, um, use dark patterns to trick us into purchasing and buying and forgetting about that free trial. So they charge us for a yearly subscription and won't refund us.Uh, if you've ever tried to cancel a subscription, you start to see some real their their real colors. Um, so emotional harm and, uh, anger is a, is a big one. We also talk about injustice in the book where there are products that are supposed to be providing justice. Um, and you know, in very real ways like voting or, you know, getting people the help that they need from the government, or, uh, for people to see their loved ones in jail.Um, or, you know, you're getting a ticket unfairly because you couldn't read the sign was you're trying to read the sign and you, and you couldn't understand it. so yeah, we look at a lot of different ways that design and our saw the software that we create can have very real impact on people's lives and in a negative way, if we're not careful. [00:07:25] Jeremy: the impression I get, when you talk about tragic design, it's really about anything that could harm a person, whether physically, emotionally, you know, make them angry, make them sad. And I think the, the most liked photo example is a great one, because like you said, I think the people may be building something that, that harms and they may have no idea that they're doing it.[00:07:53] Jonathan: Exactly like that. I love that story because not, not to just jump on the bandwagon of saying bad things about like Facebook or something. No, I love that story because I can see myself designing the exact same thing, like being a part of that product, you know, building it, you know, looking at the, uh, the, the specifications, the, um, the, the PM, you know, put it that put together and the decks that we had, you know, like I could totally see that happening.And just never, I think, never having the thought, because our we're so focused on like delighting our users and, you know, we have these metrics and these things in mind. So that's why, like, in the book, we really talk about a few different processes that need to be part of. Product development cycle to stop, pause, and think about like, well, what are the, what are the negative aspects here?Like what are the things that could go wrong? What are the, what are the other life experiences that are negative? Um, that could be a part of this and you don't need to be a genius to think of every single thing out there. You know, like in this example, I think just talking about, you know, like, oh, well, some people might've had, you know, if they would have taken probably like, you know, one hour out of their entire project, or maybe even 10 minutes, they might've come up with like, oh, there could be bad thing.Right. But, um, so if you don't have that, that, that moment to pause that moment to just say, okay, we have time to brainstorm together about like how this could go wrong or how, you know, the negative of life could be impacted by this, um, feature that that's all that it takes. It doesn't necessarily mean that you need to do.You know, giant study around the impact, potential impact of this product and all the, all the ways, but really just having a part of your process that takes a moment to think about that will just create a better product and better, product outcomes. You know, if you think about all of life's experiences and Facebook can say, Hey, condolences, and like, you know, and show that thoughtfulness that would be, uh, I would have that have higher engagement that would have higher, uh, satisfaction, right?So they could have created a better outcome by considering these things and obviously avoid the impact negative impact to users and the negative impact to their product. [00:10:12] Jeremy: continuing on with that thought you're a senior interaction designer and you're an accessibility program lead. And so I wonder on the projects that you work on, and maybe you can give us a specific example, but how are you ensuring that you're, you're not running up against these problems where you build something that you think is going to be really great, um, for your users, but in reality ends up being harmful and specifically.[00:10:41] Jonathan: Yeah, one of the best ways is, I mean, it should be part of multiple parts of your cycle. If, if you want something, if you want a specific outcome out of your product development life cycle, um, it needs to be from the very beginning and then a few more times, so that it's not, you know, uh, I think, uh, programmers, uh, will all latch onto this, where they have the worst end of the stick, right?Because a and Q and QA as well. Because, you know, any bad decision or assumption that's happened early on with, you know, the, the business team or, or the PM, you know, gets like multiplied when they talk to the designer and then gets multiplied again, they hand it off. And it's always the engineer who has to, has to put the final foot down, be like, this doesn't make sense.Or I think users are going to react this way, or, you know, this is the implication of that, that assumption. So, um, it's the same thing, you know, in our team, we have it in the very early stage when someone's putting together the idea for the feature, our project, we want to work on it's right there. There's a few, there's like a section about accessibility and a few other sections, uh, talking about like looking out for this negative impact.So right away, we can have a discussion about it when we're talking about like what we should do about this and the D and the different, implications of implementing it. That's the perfect place for it. You know, like maybe, maybe when you're a brainstorm. Uh, about like, what should we should do? Maybe it's not okay there because you're trying to be creative.Right. You're trying to think. But at the very next step, when you're saying, okay, like what would it mean to build this that's exactly where I should start showing up and, you know, the discussion from the team. And it depends also the, the risk involved, right? Like, uh, it depends, which is attached to how much, uh, time and effort and resources you should put towards avoiding that risk it's risk management.So, you know, if you work, um, like my, um, you know, colleagues, uh, or, you know, some of my friends were working in the automotive industry and you're creating a software and you're worried that it might be distracting. There might be a lot more time and effort or the healthcare industry. Um, those were, those are, those might need to take a lot more resources, but if you're a, maybe a building, um, you know, SaaS software for engineers to spin up, you know, they're, um, you know resources.Um, there might be a different amount of resources. It never is zero, uh, because you still have, are dealing with people and you'll impact them. And, you know, maybe, you know, that service goes down and that was a healthcare service that went down because of your, you know, so you really have to think about what the risk is.And then you can map that back to how much time and effort you need to be spending on getting that. Right. And accessibility is one of those things too, where a lot of people think that it takes a lot of effort, a lot of resources to be accessible. And it really isn't. It just, um, it's just like tech debt, you know, if, if you have ignored your tech debt for, you know, five years, and then they're saying, Hey, let's all fix all the tech debt. Yeah. Nobody's going to be on board for that as much. Versus like, if, if addressing that and finding the right level of tech debt that you're okay with and when you address it and how, um, because, and just better practice. That's the same thing with accessibility is like, if you're just building it correctly, as you go, it's, it's very low effort and it just creates a better product, better decisions.Um, and it is totally worth the increased amount of people who can use it and the improved quality for all users. So, um, yeah, it's just kind of like a win-win situation.[00:14:26] Jeremy: one of the things you mentioned was that this should all start. At the very beginning or at least right after you've decided on what kind of product you're going to build, and that's going to make it much easier than if you come in later and try to, make fixes then, I wonder when you're all getting together and you're trying to come up with these scenarios, trying to figure out negative impacts, what kind of accessibility, needs you need to have, who are the people who are involved in that conversation?Like, um, you know, you have a team of 50 people who needs to be in the room from the very beginning to start working this out.[00:15:05] Jonathan: I think it would be the same people who are there for the project planning, like, um, at, on my team, we have our eng counter counterparts there. at least the team lead, if, if, if there's a lot of them, but you know, if they would go to the project kickoff, uh, they should be there.you know, we, we have everybody in their PM, design, engineers, um, our project manager, like anyone who wants to contribute, uh, should really be there because the more minds you have with this the better, and you'll, you'll tease out much, much more of, of of all the potential problems because you have a more, more, um, diverse set of brains and life experiences to draw from.And so you'll, you'll get closer to that 80% mark, uh, that you can just quickly take off a lot of those big items off the table, right? [00:16:00] Jeremy: Is there any kind of formal process you follow or is it more just, people are thinking of ideas, putting them out there and just having a conversation.[00:16:11] Jonathan: Yeah, again, it depends which industry you're in, what the risk is. So I previously worked at a healthcare industry, um, and for us to make sure that we get that right, and how it's going to impact the patients, especially though is cancer care. And they were using our product to get early warnings of adverse effects.Our, system of figuring that like, you know, if that was going to be an issue was more formalized. Um, in, in some cases, uh, like, like actually like healthcare and especially if the, if it's a device or, or in certain software circumstances, it's determined by the FDA to be a certain category, you literally have a, uh, governmental version of this.So the only reason that's there is because it can prevent a lot of harm, right? So, um, that one is enforced, but there's, there's reasons, uh, outside of the FDA to have that exact formalized part of your process. And it can, the size of it should scale depending on what the risk is. So on my team, the risk is, is actually somewhat low.it's really just part of the planning process. We do have moments where we, we, um, when we're, uh, brainstorming like what we should do and how the feature will actually work. Where we talk about like what those risks are and calling out the accessibility issues. And then we address those. And then as we are ready to, um, get ready to ship, we have another, um, formalized part of the process.There will be check if the accessibility has been taken care of and, you know, if everything makes sense as far as, you know, impact to users. So we have those places, but in healthcare, but it was much stronger where we had to, um, make sure that we re we we've tested it. We've, uh, it's robust. It's going to work on, we think it's going to work.Um, we, you know, we do user testing has to pass that user testing, things like that before we're able to ship it, uh, to the end user.[00:18:12] Jeremy: So in healthcare, you said that the FDA actually provides, is it like a checklist of things to follow where you must have done this? As you're testing and you must have verified these, these things that's actually given to you by the government.[00:18:26] Jonathan: That's right. Yeah. It's like a checklist and the testing requirement. Um, and there's also levels there. So, I have, I've only, I've only done the lowest level. I know. There's like, I think like two more levels above that. Um, and again, that's like, because the risk is higher and higher and there's more stricter requirements there where maybe somebody in the FDA needs to review it at some point.And, um, so again, like mapping it back to the risk that your company has is, is really important to understanding that is going to help you avoid and, and build a better product, avoid, you know, the bad impact and build a better product. And, and I think that's one of the things I would like to focus on as well.And I'd like to highlight for your, for your listeners, is that, it's not just about avoiding tragic design because one thing I've discovered since writing the book and sharing it with a lot of people. Is that the exact opposite thing is usually, you know, in a vast majority of the cases ends up being a strategically great thing to pursue for the product and the company.You know, if you think about, that, that example with, with Facebook, okay. You've run into a problem that you want to avoid, but if you actually do a 180 there and you find ways to engage with people, when they're grieving, you find people to, to develop features that help people who are grieving, you've created a value to your users, that you can help build the company off of.Right. Um, cause they were already building a bunch of joy features. Right. Um, you know, and also like user privacy, like I, we see apple doing that really well, where they say, okay, you know, we are going to do our ML on device. We are going to do, you know, let users decide on every permission and things like that.And that, um, is a strategy. We also see that with like something like T-Mobile, when they initially started out, they were like one of the nobody, uh, telecoms in the world. And they said, okay, what are all the unethical bad things that, uh, our competitors are doing? They're charging extra fees, you know, um, they have these weird data caps that are really confusing and don't make any sense their contracts, you get locked into for many years.They just did the exact opposite of that. And that became their business strategy and it, and it worked for them now. They're, they're like the top, uh, company. So, um, I think there's a lot of things like that, where you just look at the exact opposite and, you, one you get to avoid the bad, tragic design, but you also see boom, you see an opportunity that, um, become, become a business strategy.[00:21:03] Jeremy: So, so when you referred to exact opposite, I guess you're, you're looking for the potentially negative outcomes that could happen. there was the Facebook example of, of seeing a photo or being reminded of a really sad event and figuring out can I build a product around, still having that same picture, but recontextualizing it like showing you that picture in a way that's not going to make you sad or upset, but is actually a positive.[00:21:35] Jonathan: Yeah. I mean, I don't know maybe what the solution was, but like one example that comes to mind is some companies. Now, before mother's day, we'll send you an email and say, Hey, this is coming up. Do you want us to send you emails about mother's day? Because for some people that's Can, be very painful. That's that's very thoughtful.Right. And that's a great way to show that you, that you care. Um, but yeah, like, you know, uh, thinking about that Facebook example, like if there's a formalized way to engage with, with grieving, like, I would use Facebook for that. I don't use Facebook very often or almost at all, but you know, if somebody passed away, I would engage right with my, my Facebook account.And I would say, okay, look, there's like, there's this whole formalized, you know, feature around, you know, uh, and, and Facebook understands grieving and Facebook understands like this w this event and may like smooth that process, you know, creates comfort for the community that's value and engagement. that is worthwhile versus artificial engagement.That's for the sake of engagement. and that would create, uh, a better feeling towards Facebook. Uh, I would maybe like then spend more time on Facebook. So it's in their mutual interest to do it the right way. Um, and so it's great to focus on these things to avoid harm, but also to start to see new opportunities for innovation.And we see this a lot already in accessibility where there's so many innovations that have come from just fixing accessibility issues like closed captions. We all use it, on our TVs, in busy crowded spaces, on, you know, videos that have no, um, uh, translation for us in different places.So, SEO is, is the same thing. Like you get a lot of SEO benefit from, you know, describing your images and, and making everything semantic and things like that. And that also helps screen readers. and different innovations have come because somebody wanted to solve an accessibility need.And then the one I love, I think it's the most common one is readability, like contrast and tech size. Sure. There's some people who won't be able to read it at all, but it hurts my eyes to read bad contrast and bad text size. And so it just benefits. Everyone creates a better design. And one of the things that comes up so often when I'm, you know, I'm the accessibility program lead.And so I see a lot of our bugs is so many issues that, that are caught because of our, our audits and our, like our test cases around accessibility that just our bad design and our bad experience for everyone. And so we're able to fix that. And, uh, and it's just like an another driver of innovation and there's, there's, there's a ton of accessibility examples, and I think there's also a ton of these other, you know, ethical examples or, you know, uh, avoiding harm where you just can see it. It's an opportunity area where it's like, oh, let's avoid that. But then if you turn around, you can see that there's a big opportunity to create a business strategy out of it.[00:24:37] Jeremy: Can, can you think of any specific examples where you've seen that? Where somebody, you know, doesn't treat it as something to avoid, but, but actually sees that as an opportunity.[00:24:47] Jonathan: Yeah. I mean, I, I think that the, um, the apple example is a really good one where from the beginning, like they, they saw like, okay, in the market, there's a lot of abuse of information and people don't like that. So they created a business strategy around that And that's become a big differentiator for them.Right. Like they, they have like ML on the device. They do. Um, they have a lot of these permission settings, you know, the Facebook. It was very much focused right. On, on using customer data and a lot of it without really asking their permission. And so once apple said, okay, now all apps need to show what you're tracking.And, and then, um, and asked for permission to do that. A lot of people said no, and that caused about $10 billion of loss for, for Facebook. and for, for apple, it's, you know, they advertise on that now that we're, you know, ethical that, you know, we, we source things ethically and we, we care about user privacy and that's a strong position, right?Uh, I think there's a lot of other examples out there. Like I mentioned accessibility and others, but like it they're kind of overflowing, so it's hard to pick one.[00:25:58] Jeremy: Yeah. And I think what's interesting about that too, is with the example of focusing on user privacy or trying to be more sensitive around, death or things like that, as I think that other people in the industry will, will notice that, and then in their own products, then they may start to incorporate those things as well.[00:26:18] Jonathan: Yeah. Yeah, exactly what the example of with T-Mobile. once that worked really, really well and they just ate up the entire market, all the other companies followed suit, right? Like now, um, having those data caps that, you know, are, are very rare, having those surprise fees are a lot, uh, rare.Um, you know, there's, there's no more like deep contracts that lock you in and et cetera, et cetera. A lot of those have become industry standard now. Um, and so It, and it does improve the environment for everyone because, because now it becomes a competitive advantage that everybody needs to meet. Um, so yeah, I think that's really, really important.So when you're going through your product's life cycle, you might not have the ability to make these big strategic decisions. Like, you know, we want to, you know, not have data caps or whatever, but, you know, if you, if you're on that Facebook level and you run into that issue, you could say, well, look, what could we do to address this?What could we could do to, to help this and make, make that a robust feature? You know, when we talk about, lot of these dating apps, one of the problems was a lot of abuse, where women were being harassed or, you know, after the day didn't go well and you know, things were happening. And so a lot of apps have now dif uh, these dating apps have differentiated themselves and attracted a lot of that market because they deal with that really well.And they have, you know, it's built into the strategy. It's oftentimes like a really good place to start too, because one it's not something we generally think about very, very well, which means your competitors. Haven't thought about it very well, which means it's a great place to, to build products, ideas off of. [00:27:57] Jeremy: Yeah, that's a good point because I think so many applications now are like social media applications, their messaging applications there, their video chat, that sort of thing. I think when those applications were first built, they didn't really think so much about what if someone is, you know, sending hateful messages or sending, pictures that people really don't want to see.Um, people are doing abusive things. It was like, they just assume that, oh, people will be, people will be good to each other and it'll be fine. But, uh, you know, in the last 10 years, pretty much all of the major social media companies have tried to figure out like, okay, um, what do I do if someone is being abusive and, and what's the process for that?And basically they all have to do something now. Um,Um [00:28:47] Jonathan: Yeah. And that's a hard thing to like, if, if that, uh, unethical or that, um, bad design decision is deep within your business strategy and your company's strategy. It's hard to undo that like some companies are still, still have to do that very suddenly and deal with it. Right. Like, uh, I know Uber had a big, big part of them, like, uh, and some other companies, but, uh, we're like almost suddenly, like everything will come to a head and they'll need to deal with it.Or, you know, like, Twitter now try to try to get, be acquired by Elon Musk. Uh, some of those things are coming to light, but, I, what I find really interesting is that these these areas are like really ripe for innovation. So if you're interested in, a startup idea or you're, or you're working in a startup, or, you know, you're about to start one, you know, there's a lot of maybe a lot of people out there who are thinking about side projects right now, this is a great way to differentiate and win that market against other well-established competitors is to say, okay, well, what are they, what are they doing right now that is unethical. And it's like, you know, core to their business strategy and doing that differently is really what will help you, to win that market. And we see that happening all the time, you know, especially the ones that are like these established, uh, leaders in the market. they can't pivot like you can, so being able to say, I'm, we're going to do this ethically.We're going to do this, uh, with, you know, with these tragic design in mind and doing the opposite, that's going to help you to, to find your, your attraction in the market.[00:30:25] Jeremy: Earlier, we were talking about. How in the medical field, there is specific regulation or at least requirements to, to try and avoid this kind of tragic design. Uh, I noticed you also worked for Intuit before. Uh, um, so for financial services, I was wondering if there was anything similar where the government is stepping in and saying like, you need to make sure that, these things happen to avoid, these harmful things that can come up.[00:30:54] Jonathan: Yeah, I don't know. I mean, I didn't work on TurboTax, so I worked on QuickBooks, which is like a accounting software for small businesses. And I was surprised, like we didn't have a lot, like a lot of those robust things, we just relied on user feedback to tell us like, things were not going well. And, you know, and I think we should have, like, I think, I think that that was a missed opportunity, um, to.Show your users that you understand them and you care, and to find those opportunity areas. So we didn't have enough of that. And there was things that we shipped that didn't work correctly right out of the box, which, you know, it happens, but had a negative impact to users. So it's like, okay, well, what do we do about that?How do we fix that? Um, and if the more you formalize that and make it part of your process, the more you get out of it. And actually this is like, this is a good, a good, um, uh, pausing point bit that I think will affect a lot of engineers listening to this. So if you remember in the book, we talk about the Ford Pinto story and there isn't, I want to talk about this story and why I added it to the book.Is that, uh, one, I think this is the thing that engineers deal with the most, um, and, and designers do too, which is that okay. we see the problem, but we don't think it's worth fixing. Okay. Um, so that, that's what I'm going. That's what we're going to dig into here. So it's a, hold on for a second while I explain some, some history about this car.So the Ford Pinto, if you're not familiar is notorious, uh, because it was designed, um, and built and shipped and there, they knowingly had this problem where if it was rear-ended at even like a pretty low speed, it would burst into flames because the gas tank would rupture the, and then oftentimes the, the, the doors would get jammed.And so it became a death trap of fire and caused many deaths, a lot of injuries. And, um, in an interview with the CEO at the time, like almost destroyed Ford like very seriously would have brought the whole company down and during the design of it, uh, and design meaning in the engineering sense. Uh, and the engineering design of it, they say they found this problem and the engineers came up with their best solution.Was this a rubber block. Um, and the cost was, uh, I forget how many dollars let's say it was like $9. let's say $6, but this is again, uh, back then. And also the margin on these cars was very, very, very thin and very important to have the lowest price in the market to win those markets. The customers were very price sensitive, so they, uh, they being like the legal team looked at like some recent, cases where they have the value of life and started to come up with like a here's how many people would sue us and here's how much it would cost to, uh, to, to settle all those.And then here's how much it would cost to add this to all the cars. And it was cheaper for them to just go with the lawsuits and they, they found. Um, and I think why, I think why this is so important is because of the two things that happened afterward, one, they were wrong. it was a lot more people it affected and the lawsuits were for a lot more money.And two after all this was going crazy and it was about to destroy the company, they went back to the drawing board and what did the engineers find? They found a cheaper solution. They were able to rework that, that rubber block and and get it under the margin and be able to hit the mark that they wanted to.And I think that's, there's a lot of focus on the first part because it's so unethical to the value of life and, and, um, and doing that calculation and being like we're willing to have people die, but in some industries, it's really hard to get away with that, but it's also very easy. To get into that.It's very easy to get lulled into this sense of like, oh, we're just going to crunch the numbers and see how many users it affects. And we're okay with that. Um, versus when you have principals and you have kind of a hard line and you, and you care a lot more than you should. And, and you really push yourself to create a more ethical, more, a safer, you know, avoiding, tragic design, then you, there there's a solution out there.Like you actually get to innovation, you actually get to the solving the problem versus when you just rely on, oh, you know, the cost benefit analysis we did is that it's going to take an engineer in a month to fix this and blah blah blah. But if, if you have those values, if you have those principles and you're like, you know what, we're not okay shipping this, then you'll, you'll find that.They're like, okay, there's, there's a cheaper way to, to fix this. There's another way we could address this. And that happens so often. and I know a lot of engineers deal with that. A lot of saying like, oh, you know, this is not worth our time to fix. This is not worth our time to fix. And that's why you need those principles is because oftentimes you don't see it and it's, but it's right there at right outside of the edge of your vision. [00:36:12] Jeremy: Yeah. I mean, with the Pinto example, I'm just picturing, you know, obviously there wasn't JIRA back then, but you can imagine that somebody's having an issue that, Hey, when somebody hits the back of the car, it's going to catch on fire. Um, and, and going like, well, how do I prioritize that? Right? Like, is this a medium ticket?Is this a high ticket? And it's just like, it's just, it just seems insane, right? That you could, make the decision like, oh no, this isn't that big an issue. You know, we can move it down to low priority and, and, and, ship it.Okay. [00:36:45] Jonathan: Yeah. And, and, and that's really what principals do for you, right? Is they help you make the tough decisions. You don't need a principle for an easy one. Uh, and that's why I really encourage people in the book to come together as a team and come up with what are your guiding principles. Um, and that way it's not a discussion point every single time.It's like, Hey, we've agreed that this is something that we, that we're going to care about. This is something that we are going to stop and, fix. Like, one of the things I really like about my team at Google is product excellence is very important to us. and. there are certain things that, uh, we're, you know, we're Okay. with, um, letting slip and fixing at a next iteration.And, you know, obviously we make sure we actually do that. Um, so it's not like we, we, we always address everything, but because it's one of our principles. We care more. We have more, we take on more of those tickets and we take on more of those things and make sure that they ship before, um, can make sure that they're fixed before we ship.And, and it shows like to the end user that th that this company cares and they have quality. Um, so it's one of it. You need a principal to kind of guide you through those difficult things that aren't obvious on a decision to decision basis, but, you know, strategically get you in somewhere important, you know, and, and like, like design debt or, um, our technical debt where it's like, this should be optimized, you know, this chunk of code, like, nah, but you know, in, in it grouping together with a hundred of those decisions.Yeah. It's gonna, it's gonna slow it down every single project from here on out. So that's why you need those principles.[00:38:24] Jeremy: So in the book, uh, there are a few examples of software in healthcare. And when you think about principles, you would think. Generally everybody on the team would be on board that we want to give whatever patient that's involved. We want to give them good care. We want them to be healthy. We don't want them to be harmed.And given that I I'm wondering because you, you interviewed multiple people in the book, you have a few different case studies. Um, why do you think that medical software in particular seems to be, so it seems to have such poor UX or has so many issues.[00:39:08] Jonathan: Yeah, that's a, complicated topic. I would summarize it with a few, maybe three different reasons. Um, one which I think is, uh, maybe a driving factor of, of some of the other ones. Is that the way that the medical, uh, industry works is the person who purchases the software. It's not the end user. So it's not like you have doctors and nurses voting on, on which software to use.Um, and so oftentimes it's, it's more of like a sales deal and then just gets pushed out and they, and they also have to commit to these things like, um, the software is very expensive and, uh, initially with, you know, like in the early days was very much like it needs to be installed, maintain, there has to be training.So there was a lot to money to be made, in those, in that software. And, and so the investment from the hospital was a lot, so they can't just be like, oh, can it be to actually, don't like this one, we're going to switch to the next one. So, because like, once it's sold, it's really easy to just like, keep that customer.There's very little incentive to like really improve it unless you're selling them a new feature. So there's a lot of feature add ons. Because they can charge more for those, but improving the experience and all that kind of stuff. There is less of that. I think also there's just generally a lot less like, uh, understanding of design, in that field.And there's a lot more because there's sort of like traditions of things. they end up putting a lot of the pressure and the, that responsibility on the end individuals. So, you know, you've heard recently of that nurse who made a medication error and she's going to jail for that. And sh you know, And oftentimes we blame that end, that end person.So the, the nurse gets all the blame or the doctor gets all the blame. Well, what about the software, you know, who like made that confusing or, you know, what about the medication that looks exactly like this other medication? Or what about the pump tool that you have to, you know, type everything in very specifically, and the nurses are very busy.They're doing a lot of work. There's a 12 hour shifts. They're dealing with lots of different patients, a lot of changing things for them to have to worry about having to type something a specific way. And yet when those problems happen, what do they do? They don't go in like redesign the devices. Are they more training, more training, more training, more training, and people only can absorb so much training.and so I think that's part of the problem is that like, there's no desire to change. They blame the end, the wrong person, and. Uh, lastly, I think that, um, it is starting to change. I think we're starting to see like the ability for, because of the fact that the government is pushing healthcare records to be more interoperable, meaning like I can take my health records anywhere, that a lot of the power comes in where the data is.And so, um, I'm hoping that, uh, you know, as the government and people and, um, and initiatives push these big companies, like epic to be more open, that things will improve. One is because they'll have to keep up with their competitors and that more competitors will be out there to improve things. Because I, I think that there's, there's the know-how out there, but like, because the there's no incentive to change and, and, and there's no like turnover and systems and there's the blaming of the end user.We're not going to see a change anytime soon.[00:42:35] Jeremy: that's a, that's a good point in terms of like, it, it seems like even though you have all these people who may have good ideas may want to do a startup, uh, if you've got all these hospitals that already locked into this very expensive system, then yeah. Where's, where's the room to kind of get in there in and have that change.[00:42:54] Jonathan: yeah. [00:42:56] Jeremy: Uh, another thing that you talk about in the book is about how, when you're in a crisis situation, the way that a user interacts with something is, is very different. And I wonder if you have any specific examples for software when, when that can happen.[00:43:15] Jonathan: yeah. Designing for crisis is a very important part of every software because, it might be hard for you to imagine being in that situation, but, it, it definitely will still happen so. one example that comes to mind is, uh, you know, let's say you're working on a cloud, um, software, like, uh, AWS or Google cloud.Right. there's definitely use cases and user journeys in your product where somebody would be very panicked. Right. Um, and if you've ever been on an on-call with, with something and it goes south, and it's a big deal, you don't think. Right. Right. Like when we're in crisis, our brains go into a totally different mode of like that fight or flight mode.And we don't think the way we do, it's really hard to read and comprehend very hard. and we might not make this, the right decisions and things like that. So, you know, thinking about that, like maybe your, your let's say, like, going back to that, the cloud software, like let's say you're, you're, you're working on that, like.Are you relying on the user reading a bunch of texts about this button, or is it very clear from the way you've crafted that exact button copy and how big it is? And, and it's where it is relation to a bunch of other content? Like what exactly it does. It's going to shut down the instance where it's gonna, you know, it's, it's gonna, do it at a delay or whatever, like be able to all those little decisions, like are really impactful.And when you, when you run them through the, um, the, the furnace of, of, of, uh, um, a user journey that's relying on, on a really urgent situation, you'll obviously help that. And you'll, you'll start to see problems in your UI that you hadn't noticed before, or, or different problems in the way you're implementing things that you didn't notice before, because you're seeing it from a different way.And that's one of the great things about, um, the, the systems and the book that we talk about around, like, thinking about how things could go wrong, or, you know, thinking about, you know, designing for crisis. Is it makes you think of some new use cases, which makes you think of some new ways to improve your product.You know, that improvement you make to make it so obvious that someone could do it in a crisis would help everyone, even when they're not in a crisis. Um, so that, that's why it's important to, to focus on those things. [00:45:30] Jeremy: And for someone who is working on these products, it's kind of hard to trigger that feeling of crisis. If there isn't actually a crisis happening. So I wonder if you can talk a little bit about how you, you try to design for that when it's not really happening to you. You're just trying to imagine what it would feel like.[00:45:53] Jonathan: yeah. Um, you're never really going to be able to do that. Like, so some of it has to be simulated, One of the ways that we are able to sort of simulate what we call cognitive load. Which is one of the things that happen during a crisis. But what also happened when someone's very distracted, they might be using your product while they're multitasking.We have a bunch of kids, a toddler constantly pulling on their arm and they're trying to get something done in your app. So, one of the ways that has been shown to help, uh, test that is, um, like the foot tapping method. So when you're doing user research, you have the user doing something else, like tapping or like, You know, uh, make it sound like they have a second task that they're doing on the side.It's manageable, like tapping their feet and their, their hands or something. And then they also have to do your task. Um, so like you can like build up what those tabs with those extra things are that they have to do while they're also working on, uh, finishing the task you've given them. and, and that's one way to sort of simulate cognitive load.some of the other things is, is really just, um, you know, listening to users, stories and, and find out, okay, this user was in crisis. Okay, great. Let's talk to them and interview them about that. Uh, if it was fairly recently within like the past six months or something like that. but, but sometimes you don't like, you just have to run through it and do your best.Um, and you know, those black Swan events or those, even if you're able to simulate it yourself, like put your, put your, put yourself into that exact position and be in panic, which, you know, you're not able to, but if you were that still would only be your experience and you wouldn't know all the different ways that people could experience this.So, and there's going to be some point in time where you're gonna need to extrapolate a little bit and, you know, extrapolate from what you know, to be true, but also from user testing and things like that. And, um, and then wait for a real data [00:47:48] Jeremy: You have a chapter in the book on design that angers and there were, there were a lot of examples in there, on, on things that are just annoying or, you know, make you upset while you're using software. I wonder for like our audience, if you could share just like a few of your, your favorites or your ones that really stand out.[00:48:08] Jonathan: My favorite one is Clippy because, um, you know, I remember growing up, uh, you know, writing software, writing, writing documents, and Clippy popping up. And, I was reading an article about it and obviously just like everybody else, I hated it. You know, as a little character, it was fun, but like when you're actually trying to get some work done, it was very annoying.And then I remember, uh, a while later reading this article about how much work the teams put into clubby. Like, I mean, if you think about it now, It had a lot of like, um, so the AI that we're playing with just now, um, around like natural language processing, understanding, like what, what type of thing you're writing and coming up with contextualized responses, like it was pretty advanced for the, uh, very advanced for the time, you know, uh, adding animation triggers to that and all, all that.Um, and they had done a lot of user research. I was like, what you did research in, like you had that reaction. And I love that example because, oh, and also by the way, I love how they, uh, took Clippy out and S and highlighted that as like one of the features of the next version of the office, uh, software.but I love that example again, because I see myself in that and, you know, you ha you have a team doing something technologically amazing doing user research, uh, and putting out a very great product, but he totally missing. And a lot of products do that. A lot of teams do that. And why is that? It's because they're, um, they're not thinking about, uh, they're putting their, they're putting the business needs or the team's needs first and they're putting the user's needs second.And whenever we do that, whenever we put ourselves first, we become a jerk, right? Like if you're in a relationship and you're always putting yourself first, that relationship is not going to last long or it's not going to go very well. And yet we Do that with our relationship with users where we're constantly just like, Hey, well, what is the business?The business wants users to not cancel here so let's make it very difficult for people to cancel. And that's a great way to lose customers. That's a great way to create, this dissonance with your, with your users. And, um, and so if you, if you're, focused on like, this is what the we need to accomplish with the users, and then you work backwards from.You're you're, you're, you're, you're lower your chances of missing it, of getting it wrong of angering your users. and const always think about like, you sometimes have to be very real with yourselves and your team. And I think that's really hard for a lot of teams because we have we don't want to look bad.We don't want to, but what I found is those are the people who actually, um, get promoted. Like, you know, if you look at the managers and directors and stuff, those are the people who can be brutally honest. Right. Um, who can say, like, I don't think this is ready. I don't, I don't think this is good. And so you actually, I, I, you know, I've done that in the front of like our CEO and things like that.And I've always had really good responses from them to say, like, we really appreciate that you, you know, uh, you can call that out and you can just call it like, it is like, Hey, this is what we see this user. Maybe we shouldn't do this at all. Maybe. Um, and that can, uh, you know, at Google that's one of the criteria that we have in our software engineers and the designers of being able to spot things that are, you know, things that we shouldn't should stop doing.Um, and so I think that's really important for the development of, of a senior engineer, uh, to be able to, to know that that's something like, Hey, this project, I would want it to work, but in its current form is not good. And being able to call that out is very important.[00:51:55] Jeremy: Do you have any specific examples where there was something that was like very obvious to you? To the rest of the team or to a lot of other people that wasn't.[00:52:06] Jonathan: um, yeah, so here's an example I finally got, I was early on in my career and I finally got to lead in our whole project. So we are redesigning our business micro-site um, and I got to, I got, uh, assigned two engineers and another designer and I got to lead the whole. I was, I was like, this is my chance.Right? So, and we had a very short timeline as well, and I put together all these designs. And, um, one of the things that we aligned on at the time was like as really cool, uh, so I put together this really cool design for the contact form, where you have like, essentially, I kind of like ad-lib, it looks like a letter.and you know, by the way, give me a little bit of, of, uh, of, of leeway here. Cause this was like 10 years ago, but, uh, it was like a letter and you would say like, you're addressing it to our company. And so it had all the things we wanted to get out of you around like your company size, your team, like, and so our sales team would then reach out to this customer.I designed it and I had shown it to the team and everybody loved it. Like my manager signed off on it. Like all the engineers signed off on it, even though we had a short timeline, they're like, yeah, well we don't care. That's so cool. We're going to build it. But as I put it through that test of like, does this make sense for the, what the user wants answers just kept saying no to me.So I had to go and back in and pitch everybody and argue with them around not doing the cool idea that I wanted to do. And, um, eventually they came around and that form performed once we launched it performed really well. And I think about like, what if users had to go through this really wonky thing?Like this is the whole point of the website is to get this contact form. It should be as easy and as straightforward as possible. So I'm really glad we did that. And I can think of many, many more of those situations where, you know, um, we had to be brutally honest with ourselves with like this isn't where it needs to be, or this isn't what we should be doing.And we can avoid a lot of harm that way too, where it's like, you know, I don't, I don't think this is what we should be building. Right.[00:54:17] Jeremy: So in the case of this form, was it more like you, you had a bunch of drop-downs or S you know, selections where you would say like, okay, these are the types of information that I want to get from the person filling out the form as a company. but you weren't looking so much at, as the person filling out the form, this is going to be really annoying.Was that kind [00:54:38] Jonathan: exactly, exactly. Like, so their experience would have been like, they come up, they come at the end of this page or on like contact us and it's like a letter to our company. And like, we're essentially putting words in their mouth because they're, they're filling out the, letter. Um, and then, yeah, it's like, you know, you have to like read and then understand like what, what that part of this, the, the page was asking you and, you know, versus like a form where you're, you know, it's very easy.Well-known bam. You're, you're you're on this page. So you're interested in, so like, get it, get them in there. So we were able to, to decide against that and that, you know, we, we also had to, um, say no to a few other things, but like we said yes, to some things that were great, like responsive design, um, making sure that our website worked at every single use case, which is not like a hard requirement at the time, but was really important to us and ended up helping us a lot because we had a lot of, you know, business people who are on their phone, on the go, who wanted to, to check in and fill out the form and do a bunch of other stuff and learn about us.So that, that, that sales, uh, micro-site did really well because I think we made the right decisions and all those kinds of areas. And like those, those general, those principles helped us say no to the right things, even though it was a really cool thing, it probably would have looked really great in my portfolio for a while, but it just wasn't the right thing to do for the, the, the goal that we had.[00:56:00] Jeremy: So did it end up being more like just a text box? You know, a contact us fill in. Yeah.[00:56:06] Jonathan: You know, with usability, you know, if someone's familiar with something and it's, it's tired, everybody does it, but that means everybody knows how to use it. So usability constantly has that problem of innovation being less usable. Um, and so sometimes it's worth the trade-off because you want to attract people because of the innovation and they'll bill get over that hump with you because the innovation is interesting.So sometimes it's worth it and sometimes it's not, and you really have to, I'd say most times it's not. Um, and So you have to find like, what is, when is it time to innovate and when is it time to do the what's tried and true. Um, and on a business microsite, I think it's time to do tried and true. [00:56:51] Jeremy: So in your research for the book and all the jobs you've worked previously, are there certain. Mistakes or just UX things that you've noticed that you think that our audience should know about?[00:57:08] Jonathan: I think dark patterns are one of the most common, you know, tragic design mistakes that we see, because again, you're putting the company first and the user second. And you know, if you go to a trash, sorry, if you go to a dark patterns.org, you can see a great list. Um, there's a few other sites that have a nice list of them and actually Vox media did a nice video about, uh, dark patterns as well.So it's gaining a lot of traction, but you know, things like if you try to cancel your search, like Comcast service or your Amazon service, it's very hard. Like I think I wrote this in the book, but. Literally re researched what's the fastest way to delete it to, to, you know, uh, remove your Comcast account.I prepared everything. I did it through chat because that was the fastest way for first, not to mention finding chat by the way was very, very hard for me. Um, so I took me, even though I was like, okay, I have to find I'm going to do it through chat. I'm gonna do all this. It took me a while to find like chat, which I couldn't find it.So once I finally found it from that point to deleting from having them finally delete my account was about an hour. And I knew what to do going in just to say all the things to just have them not bother me. So th that's on purpose they've purposely. Cause it's easier to just say like fine, I'll take the discount thing.You're throwing in my face at the last second. And it's almost become a joke now that like, you know, you have to cancel your Comcast every year, so you can keep the costs down. Um, you know, and Amazon too, like trying to find that, you know, delete my account is like so buried. You know, they do that on purpose and a lot of companies will do things like, you know, make it very easy to sign up for a free trial and, and hide the fact that they're going to charge you for a year high.The fact that they're automatically going to bill you not remind you when it's about to expire so that they can like surprise, get you in to forget about this billing subscription or like, you know, if you've ever gotten Adobe software, um, they are really bad at that. They, they trick you into like getting this like monthly sufficient, but actually you've committed to a year.And if you want to cancel early, we'll charge you like 80% of the year. And, uh, and there's a really hard to contact anybody about it. So, um, it happens quite often. If the more you read into those, um, different things, uh, different patterns, you'll start to see them everywhere. And users are really catching onto a lot of those things and are responding.To those in a very negative way. And like, um, we recently, uh, looked at a case study where, you know, this free trial, um, this company had a free trial and they had like the standard free trial, um, uh, kind of design. And then their test was really just focusing on like, Hey, we're not going to scam you. If I had to summarize that the entire direction of the second one, it was like, you know, cancel any time.Here's exactly how much you'll be charged. And on the, it'll be on this date, uh, at five days before that we'll remind you to cancel and all this stuff, um, that ended up performing about 30% better than the other one. And the reason is that people are now burned by that trick so much so that every time they see a free trial, they're like, forget it.I don't, I don't want to deal with all this trickery. Like, oh, I didn't even care about to try the product versus like. We were not going to trick you. We really want you to actually try the product and, you know, we'll make sure that if you're not wanting to move forward with this, that you have plenty of time and plenty of chances to lead and that people respond to that now.So that's what we talked about earlier in the show of doing the exact opposite. This is another example of that. [01:00:51] Jeremy: Yeah, because I think a lot of people are familiar with, like you said, trying to cancel Comcast or trying to cancel their, their New York times subscription. And they, you know, everybody is just like, they get so mad at the process, but I think they also may be assume that it's a positive for the company, but what you're saying is that maybe, maybe that's actually not in the company's best interest.[01:01:15] Jonathan: Yeah. Oftentimes what we find with these like dark patterns or these unethical decisions is that th they are successful because, um, when you look at the most impactful, like immediate metric, you can look at, it looks like it worked right. Like, um, you know, let's say for that, those free trials, it's like, okay, we implemented like all this trickery and our subscriptions went up.But if you look at like the end, uh, result, um, which is like farther on in the process, it's always a lot harder to track that impact. But we all know, like when we look at each other, like when we, uh, we, we, we talk to each other about these different, um, examples. Like we know it to be true, that we all hate that.And we all hate those companies and we don't want to engage with them. And we don't, sometimes we don't use the products at all. So, um, yeah, it, it, it's, it's one of those things where it actually has like that, very real impact, but harder to track. Um, and so oftentimes that's how these, these patterns become very pervasive is the oh, and page views went up, uh, this was, this was a really, you know, this is high engagement, but it was page views because people were refreshing the page trying to figure out where the heck to go. Right. So um, oftentimes they they're less effective, but they're easier to track[01:02:32] Jeremy: So I think that's, that's a good place to, to wrap things up, but, um, if people want to check out the book or learn more about what you're working on your podcast, where should they head?[01:02:44] Jonathan: Um, yeah, just, uh, check out tragic design.com and our podcast. You can find on any of your podcasting software, just search design review podcast. [01:02:55] Jeremy: Jonathan, thank you so much for joining me on software engineering radio.[01:02:59] Jonathan: alright, thanks Jeremy. Thanks everyone. And, um, hope you had a good time. I did.

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Listener Interview 002: Jonathan from Costa Rica

The A to Z English Podcast

Play Episode Listen Later Aug 19, 2022 15:17

In this special episode of The A to Z English Podcast, we talk with Jonathan from Costa Rica, a dedicated English student and an active member of our Whatsapp group. (Link here: https://forms.gle/zKCS8y1t9jwv2KTn7)Website Link: https://atozenglishpodcast.com/?p=1739It's a great conversation, so you won't want to miss it!Share your thoughts about today's interview in our Whatsapp group or tell us if you think you have something interesting to talk about. Perhaps you could be our next guest on the podcast!If you could take a minute and complete a short survey about the podcast, we would be very appreciative. You can find the survey here: https://forms.gle/HHNnnqU6U8W3DodK8We would love to hear your feedback and suggestions for future episodes.Intro/Outro Music by Eaters: https://freemusicarchive.org/music/eaters/the-astronomers-office/agents-in-coffee-shops/Full Transcript: Jonathan from Costa RicaKevin: Welcome to an A to Z English listener interview. Today we're talking with Jonathan Gutierrez who is in Costa Rica and is one of our listeners. And he's going to tell us today about his English learning experience using A to Z English and all of the other sources that he did. So Jonathan, nice to see you. it's night time there right?Jonathan: Okay, it's nice to see you guys. So um thank you for having me here.Kevin: Oh you're welcome. it's great to have you on the show. Jack: Yeah thanks for coming and I appreciate it. Kevin: Yeah it's already evening there. Did you have your dinner tonight?Jonathan: Uh not yet. I just arrived at home a few minutes ago.Kevin: Yeah?Jonathan: I was working today, so I just arrived at home maybe 10 or 15 minutes ago. But it's okay.Kevin: Well thank you for finding time to join us then for us it's Monday daytime of course time zones are funny, so Jonathan you're in Costa Rica.I've never been to Costa Rica though I have had a couple of friends that went there. Actually one of my good friends from university, he and his uh girlfriend at the time, now wife, they went to Costa Rica many years ago, maybe almost 20 years ago and they were teaching English for six months or a year, so I know English education is quite big in Costa Rica. How, where or when did you first start learning English? Was it in schools or did you have a tutor or just the internet or where did you start? Jonathan: Yeah I started when I in high school. Okay so I'm learning a few things in high school. Maybe I don't uh that I feel for example um I love the idiom or stuff like that. Sure maybe a couple years ago that I started to return again to learning English and I joined what's the room with Robin Shaw? So I started my new challenge. I changed my mind because I want um to get a bilingual job and I think I start to practice a little bit more. I forgot all the rules and English grammars. I love vocabulary so it was a little bit insane you know. Maybe not because I forgot so a lot of things um so it was something new for me. Let's start again. They start with uh maybe kids stuff um and it was pretty good. Robin helped me a lot. Kevin: I'm curious. if you said you started again because you forgot everything, I actually I know Costa Rica is a Spanish-speaking country and I used to speak a little bit of Spanish. I studied Spanish in university. But like you I stopped using it and I totally forgot everything once you started to study again. Was it easier than the first time? Did you start to remember things?Jonathan: Yeah it's quite something funny because when I'm trying to learn again um I remember oh I remember this but how can we use everything. So I forgot for example um singular verbs, plural, past tense and stuff like that. Yeah so it started again. I practiced a lot um every day and yeah I found a bunch of friends and I tried to do my best every day to learn English and my one of my goals was get bilingual because I am native speaker Spanish speaker all right good yeah. it was a big challenge you know. it was pretty awesome. I was excited to learn again English, so I decided to start again and practice and practice every day. Jack: That's great! Yeah do you use English in your job right now? Jonathan: Yes I've been working in a call center for around five months oh nice and is for um I am customer service agent for us company so it's something new for me and I'm taking calls every day for…Jack: So are the people that calling you are they they're Americans then?Jonathan: Yes.Kevin: And I know speaking another language over the phone can sometimes be more difficult than speaking together with a person because you can't see them. You don't know what their facial expressions or what their body is doing. What things have been the hardest for you doing a phone job where you're only listening to people speaking English and Americans have many different styles of English. Some are very fast. Some are very slow. What was what's the hardest thing for you in in your job?Jonathan: All right um I guess that's the listening stuff because when the customer speaks.Kevin: They start to speak and start to speak uh faster right?Jonathan: Faster and you need to get all the information in a few seconds and trying to avoid. Kevin: Do you mean trying umJonathan: Yeah trying I need to improve a lot my listening skills to avoid this kind of situation because it's a customer service job I mean right we need to focus on listening and try to get the best message with the customer and assist the customer and sometimes we can hear um maybe i'll set customers and we need to okay slow down, take it easy and assist the customer.Kevin: Well that sounds like our podcast would be helpful for listening skills. Then so I'm hopeful that we are helping you. There that's great yeah what was the…Jack: Uh could you could you give us an example of maybe like a very challenging phone call or a uh experience that you've had at the call center? Is there one memorable experience? Jonathan: Yeah we got a lot of accents from us so maybe for example when I try to speak uh when a customer uh he got access from example for Texas or um it's so hard to understand but I try to do my best and when decide to speak it faster and faster, it's hard to understand. But I always do my best every day.Jack: Yeah so like a southern Texas accent would be hard to understand but like in eastern in the east uh people speak quite quickly in New York and yeah Massachusetts in that area yeah people speak very fast, very quickly. Jonathan: You got it uh by the way um well our customers are from the east coast uh Massachusetts, Boston, New York and New Jersey yeah and Philadelphia um and I find that listening also can sometimes be more difficult than speaking because there's so many ways to say the same thing and one person says it this way, another person says it a different way and you know one way to say it and so you're correct you know how to do it but they use a different or a different way and so it can be very confusing. It's like oh I know what that means I know what you're saying but I don't know that way of saying it. Yeah all this comes with more and more practice. Kevin: Yeah exactly in the second part is the most important trying to explain the situation with the customer because it's a technical vocabulary so you need to explain some things from to someone that never uses uh technical vocabulary. That's really interesting. You need me to focus uh in something easy right to say to another person that's really interesting because then you are listening to an american a native speaker and you're speaking back to them and you're using words that they don't know so you know more English in some ways than they do. It's just that technical language. What a unique experience to know more English than a native speaker but having to change it for them to understand.Jonathan: Yeah it's a challenge because every day you need to focus on trying to explain yourself something easy about technical vocabulary so maybe it's easy, maybe sometimes it's uh difficult because you need to guess what the customer needs and sometimes it's hard because the customer is trying to explain something and you need to all right. Did you need uh this? You need this all right. I got it and this is the result.Jack: So uh you so you need to practice um your English and you use uh Shaw English and you listen to the A to Z English Podcast but um at your work do you also speak English to your co-workers, your colleagues. Do you practice even though you can both of you speak Spanish as a first language? Do you ever communicate in English with your colleagues just for practice?Jonathan: Yes a few things we need to uh speak English with another uh co-workers or maybe when you need to target another department, it's always speaking English and we always needs to be focused in speaking English together and it's more easy to end of the day for the end of the day. Yeah so when you go to work you basically switch your mind to English. You just say when I'm at work I'm using English and then when I get home I use Spanish.Jack: Is that right?Jonathan: Yeah but it's funny because for me I try to get involved um always in English environment so when I arrive at home I turn on my tv and find um series on Netflix and in English and or are you going to when i'm going to work i'm going to listen to music or listen to your podcast on my cell phone so I trying to always um thinking English, do something in English.Kevin: Cool! That's awesome! Yeah that's more and more practice. So of all of those things that you do the last question I like to ask people that we talk to is if you could give a tip to other listeners, what one thing do you think would be the most useful to practice English? Or what do you do that you think is the most useful? Jonathan: All right for me um I guess um you need to practice every day. It's not my magical poison you know or something like that but the first thing you need to change your mind, uh you need to start to focus in English uh think in English. Uh do exercise practice speak with friends uh maybe international friends is the best way because you never need to speak in another language, just holding in English because if I have a friend here, I can speak Spanish. But for example, if I got a friend on in Malaysia and another person doesn't know anything about the Spanish so you need to focus almost in English.Jack: That's a nice tip! Kevin: Nice! Well Malaysia is good. We talked to Mei Fong last week, so maybe if you talk to her, then you can practice as well. Yeah but that's a great tip getting your mind around English that's yeah a great thing. Just practice, practice, practice. Jonathan: Yeah a lot of practice and uh one thing, it's helped me a lot, is this shadowing technique.Kevin: Uh shadowing uh yeah watching videos on YouTube and practice is a bit aloud and yeah if you can't practice with a friend, you can still do something alone. Just listen and repeat and listen, repeat it does help. It helps you sound more natural in the language that's really fantastic.Kevin: You sound like you work really hard at your English and we're talking to you here, so it's having good results. Jack: Good job! Absolutely. Yeah thanks a lot Jonathan. We really appreciate it.Kevin: Yeah Jonathan. Thanks for sharing your story with us. It's very cool and now you've got to get some dinner. It's late there. You must be very hungry. Jonathan: Yeah a little bit. Kevin: Nice well thank you for coming and talking to us.Jonathan: Thanks to you guys. I really appreciate it. Jack: It's our pleasure. Kevin: Yyeah have a great evening.Jonathan: Same to you and take care and I hope I'll see you soon again. Kevin: All right thank you.Jack: Thanks Jonathan bye bye. Jonathan: See ya. Support this podcast at — https://redcircle.com/the-a-to-z-english-podcast/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

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Ep. 285 - Managing Mental Compulsions (With Dr. Jon Greyson)

Your Anxiety Toolkit

Play Episode Listen Later May 20, 2022 43:03

SUMMARY: In this weeks podcast, we talk with Dr Jon Greyson about managing mental compulsions. Jon talks about how to use Acceptance to manage strong intrusive thoughts and other obsessions. Jon addressed how to use acceptance with OCD, GAD and other Anxiety disorders. Covered in This Episode: What is a Mental Compulsion? What is the difference between Mental Rumination and Mental Compulsions? How to use Acceptance for Mental Compulsions How to practice acceptance when the intrusive thoughts are so strong. Links To Things I Talk About: Jon's Book Freedom from Obsessive Compulsive Disorder: A Personalized Recovery Program for Living with Uncertainty Jon's Website https://www.laocdtreatment.com/ ERP School: https://www.cbtschool.com/erp-school-lp Episode Sponsor: This episode of Your Anxiety Toolkit is brought to you by CBTschool.com. CBTschool.com is a psychoeducation platform that provides courses and other online resources for people with anxiety, OCD, and Body-Focused Repetitive Behaviors. Go to cbtschool.com to learn more. Spread the love! Everyone needs tools for anxiety... If you like Your Anxiety Toolkit Podcast, visit YOUR ANXIETY TOOLKIT PODCAST to subscribe free and you'll never miss an episode. And if you really like Your Anxiety Toolkit, I'd appreciate you telling a friend (maybe even two). EPISODE TRANSCRIPTION This is Your Anxiety Toolkit Episode - 285. Welcome back, everybody. We are on episode three of the six-part series. And if you have listened to the previous episodes, I am sure you are just full of information, but hopefully ready to hear some more. Today, we have Dr. Jonathan Grayson. He's here to talk about his specific way of managing mental compulsions. As you may know, if you've listened before, I strongly urge you to start and go in order. So, first, we started with Mental Compulsions 101. That was with yours truly, myself. Then Jon Hershfield came in. He talked about mindfulness and really went in, gave some incredible tools. Shala Nicely, again, gave some lived experience and really the tools that worked for her. And I have just been mind-blown with both of their expertise. And it doesn't stop there. We have amazing Dr. Jonathan Grayson today talking about all of the ways that he manages mental compulsions and how he brings specific concepts to help a client be motivated and lean into that response prevention and to reduce those mental compulsions. I am again blown away with how amazing and respectful and kind and knowledgeable these experts are. I just am overwhelmed with joy to share this with you. Again, please remember this should not replace professional mental health care. We are here at CBT School, who is the host of this series. We're here to provide you skills and tools, and resources specifically if you don't have access to those resources. That is a huge part of our mission. So, even though we have ERP School – and that is an online course, you can take it from your home – we wanted to offer this freely because so many people are seeming to be misunderstanding mental compulsions, and it's an area I really have been excited to share with you in this free series. So, I'm not going to yammer on anymore. I'm going to let you hear the amazing wisdom of Jonathan Grayson. Have a wonderful day. Kimberley: Welcome. I am so honored to have you here, Jon Grayson. Jonathan: It is always a pleasure. Kimberley: Okay. So, I actually am really, really interested to hear your point of view. As we go through a different episode, I actually am learning things. I thought I knew it all, but I'm learning and learning. So, I'm so excited to get your view on managing mental compulsions or how you address them. My first question is, do you call them mental compulsions, mental rituals, rumination? How do you frame it? Jonathan: I'm never really too big on jargony, but mental compulsions are mental rituals. And I think that's trying to-- and I think the thing about mental rituals is some people don't know they have them. I mean, some people know, but some people will describe it as, “I just obsess, I don't have rituals.” but then when you listen, they do. And the ritual part is trying to reassure themselves or convince themselves that whatever it is they're worrying about isn't. So, they have both the fear part like, “Oh my God, what if this is true? But wait, here's why it's not true. Now I know that's not really true. But what if it is true?” So, that is what I would call mental compulsion or rituals. Kimberley: Right. How do you-- let's say you're sitting across from a patient or a client they are doing either predominantly mental compulsions or that's a huge part of the symptoms that they have. How would you address in your own way, teaching somebody how to manage mental compulsions? Jonathan: I think there's two answers to the question because I never have, and one has to do with what is the content, because I believe every set of mental rituals – I believe it for all forms of OCD, whether there's a very strong behavioral component or it's all mental – it has its own set of arguments that we're going to use. Of course, when I talk about arguments, I know this will be a shock to you, but to me, it always has to do with coping with uncertainty, because I think the purpose of mental compulsions is to deny reality. That is, there is something I don't want to be true and I keep trying to convince myself it's not true. Now often it's a low probability. But low probability is not no probability. Sometimes I have clients a little confused, saying like, “I tell myself it's low probability,” and they actually feel better. Is that okay? And the answer is, it depends. If I'm trying to convince myself, I don't have to worry about it because it's a low probability, no, that's a ritual. If I'm just saying it's a low probability, I mean, way actually with OCD, it's very easy because people don't mind saying it's low prob they. They like saying it's low probability, but they don't want the last sentence to be “But it might happen.” So, it's like, as long as you're answering “It might happen,” then you're dealing with reality because everything is a low probability, even if it's really small. So, one part has to do with the content. And I think for every set of obsessions, there is, what is the content they're doing? I think in a more general way, the goal of treatment is basically accepting that low probability things might happen. I was recently saying to people that I hope the probability of nuclear war is no worse than that. It was as bad as likely as a worldwide pandemic. Some people would freak out like, “You think there's going to be a war?” First of all, I know anything, but they were missing the point. It's like, no, I really mean it's as likely as a pandemic, which means it's not likely. However, the thing about the pandemic, low probability things can happen. So yeah, we're probably okay. And so, the thing about acceptance that everyone hates is acceptance is second best. We spend so much time talking about how great acceptance is and I really think it's a disservice in some respects to not point out what acceptance means because it almost always is. Here's something you don't want that you might have to live with. If I lose a loved one, we start in denial. And for me, denial is defined as I'm comparing life to a fantasy. I have a woman in a bad relationship and she thinks he really loves the guy, but it's like, he'd be so good if only he would change X, Y, and Z. And of course, if he changed X, Y, and Z, he would be someone else. So, they're in love with a fantasy. And when somebody dies, the fantasy is life would be better if they were here. It's a fantasy because that's never happening again. So, we have to get them to the point. And of course, the thing, the reason I mentioned death is it points out a really important thing about acceptance. You don't get to just decide, “I'm going to accept.” I lose a loved one. I don't care how or where you are. You're starting in denial because you're missing them and you want them there. And after about a year, if you've gone through mourning, you accept it. It's not like you don't care they're gone. You can still cry. You can still miss them. But when you're doing something you're enjoying and in the present not comparing to what it would be with that person. So, acceptance, I'm pretty sure, always sucks. However, it's better than fantasy because the fantasies never happen. So, it doesn't matter if it's likely or unlikely. It's just a matter that this is your fear and the thing that's hard for people to deal with fear is to cope with it. You're going to say, “How would I try to live with the worst happening?” And people's initial response to something is, “Yeah, but I don't want that.” There are multiple reasons that we need to do acceptance. If I'm correct about denial, that's comparing reality to fantasy. Well, not acceptance means what I want will never happen. So, for me to want that there's no possibility something will occur is probably not true. I don't care if it means that maybe this reality doesn't exist and I'm going to wake up, and some of the things that discover I've created all of reality, there's nothing. I don't know that that's likely, but I can't prove it's not likely. So, I think people go in circles. And you can hear it. The thing about the pandemic, you could hear the regular population denial. Because when I say it's comparing reality to fantasy, a lot of times that sounds cool. And people don't quite get what it means, but here are statements of denial early in the pandemic, “Well, this can't go on more than a few weeks.” Honestly, at the beginning, I was like, “Of course, it's going on for a few weeks. They have to have a vaccination. They're telling us that's two years down the road. This is going on for a long time.” Kimberley: I was in team two weeks. Jonathan: Yeah. “It can't last. I can't take it.” Saying “I can't take it,” although you're expressing the feeling like “I really hate this,” but including in the words “I can't take it” is a fantasy as if you have a choice. And in a way, luckily, most people who say they can't take it didn't kill themselves. It's proved that they can't take it. They took it. They kept going on. It's like, they didn't want to imagine continuing to live that way. So, acceptance is like, “Yeah, this is going to happen. Yes, it can keep going.” How will you try to cope with the worst? And go on, I'll shut up. You look like you want to say something. Kimberley: No, no. I'm following you. I'm really enjoying this. I actually wrote down the word “cope” right at the beginning because I think that that's such a keyword here. To stay out of the fantasy, would you say that's true? Jonathan: Well, yes. The worst might-- I mean, I always feel like if I'm doing therapy and if somebody has intolerance of uncertainty, they don't like uncertainty, I have to treat that problem. And what I mean by that is we have a lot of therapists who impose their own feelings on the client. If I have a therapist that I have somebody who's socially anxious and saying, “I'm afraid if I go in a room, some people won't like me.” Almost every therapist is going to say, “Oh, well, that's the fact, they might not like you.” But that same patient is like, “I'm afraid if I touch the doorknob, I'm going to get sick.” “Oh no, that won't happen.” Well, that's not the issue. Now therapist is-- if I have a problem of threat estimation, that's fine, but that's not it. I don't want to know that it's a low probability, I want no probability. So, we have to deal with the fact that this is what the person's afraid of. This is what they fear. Somebody will say, “Well, but they don't have cancer issue. Why should they worry about it?” But let's face it. If they did have cancer, the focus would be coping with the fact they're dying. And if they're afraid of having cancer, I'd say the treatment is the same. Now, the only great thing is they probably won't have cancer, so it's not a fear they will have to probably deal with. They want to have the second part of it like, “And I'm dying.” But to be more prepared-- and I think what you've done wisely, like hearing that, yes, what you've done wisely is you're talking about the fact that this is not just a nosy problem. This is a problem for everyone, coping with uncertainty. I hate to do a plug. It's okay. It's a while away. Actually, Liz McIngvale and I, we're working on a book, talking about-- well, the book is partially-- and we'll be doing some talks on it. We're saying that ERP is not the gold standard of treatment for OCD. And we're going to say that it's not the gold standard because it's lacking the gold. It really needs to be ERP plus gold. But that's awkward because I like to be calling these initials. So, we want to use initials. Do you happen to know the chemical symbol for gold? Kimberley: F-- no. FE is copper. Jonathan: No, that's iron. Kimberley: Iron. Jonathan: Yeah. AU. Kimberley: AU. Jonathan: The gold standard of treatment-- Kimberley: Like Australia. Jonathan: Well, no. ERP plus AU. AU as in Accepting Uncertainty. Kimberley: Oh, my trap. Jonathan: Yeah. It took me a while to work that around. Kimberley: Now you sure it's not Australia. Jonathan: But our point is what we want to write. We want to write a book that's not only about helping therapists deal with every presentation of OCD and how you deal with the uncertainty problem, but we're also arguing that it's a book for everyone that people can learn from OCD, a disorder that intolerance uncertainty is like the core. Because I always feel that our clients who get better, they're not normal. They are better than normal because they're coping with uncertainty, because the average person really doesn't do that. Well, I mean, in the pandemic, you got to see how bad non-sufferers are. So, I think the core of coping with mental obsessions is this. Well, what if the worst happens? And so many people, “I don't want to think it,” and that leaves us stuck because we're not stupid. If you say to somebody-- if you get a phone call from police and they say your spouse has died, your first response is you're just in this shock and you're just like frozen. And for a lot of things that are bad, that's the way people stop thinking. It's like, “I don't want to think about it.” The thing is, if the police make that call, something happens next. And life goes on. And back for clients, I often ask that in a sneaky way. What if this did happen? What would be next? What if he did have-- the doctor says, “Yeah, it can,” so I freak out. What does that look like? “I'd be screaming.” You're in the doctor's office, screaming. How long are you going to do that? And then you're going to go home and you need dinner. What do you do the next day? And even though we're going through something that sounds terribly scary, people oddly feel better after that. Now, this is first session. It's not like they've done treatment, but they feel better because a statement that is true, you can't do what you won't imagine. And I don't mean this as you would say, in the flowers and unicorns kind of way that you can do anything you can imagine. I do not mean that. But if you won't even imagine it, you can't do it. So, what would you do in X situation where it's like, no. Well, it's like the world is ending. When we imagine it, it's not like it's good. But it's like, oh, because the feeling that accompanies acceptance is a down, depressing feeling like, “Oh, that could happen.” However, it's not frantic. Denial is frantic. “That can't happen. No, no.” Again, everything at least has some low probability. Some things are higher. You could have cancer, yes. Your family could die. Those things are like, they're there. So, it's not like I get the choice. So, the statement of denial is frantic. The statement of acceptance is depressing, but it's not frantic. And so, I don't care how bad the disaster is. How would you try to cope? Because in most realities, that's what you're going to do. And I could pause at this moment because I don't know if this would be the point where I would then be shifting to, well, what are the mental compulsives we're talking about here? Because I think again, each one has its own set of arguments. You've heard my general thing. In some ways I think I'm reasonably good at applying it to myself. I think there's some areas I haven't been tested in. So, that's nice. I hope I could be-- I know what I want is possible because I've seen people do it. Would I be one of those good people? I can only hope. But at least because I know people have done it, I know it's possible. I like to believe-- go on, you. Yes. Kimberley: What does that look like? Can you paint me a picture of a client who does well using this strategy at managing mental compulsions? Jonathan: A client that I-- there's a podcast on that, the OC stories, he was afraid of going crazy. And he had had this from age 19 to his late forties. And he had ERP, but ERP was always focused likely and we're going to focus on going crazy and all this stuff. Know whatever explicit just said to him, the goal of treatment is for you to risk going crazy. I told him that the first session and he began to cry because he's been spending more than 30 years trying to avoid this. And I'm saying, “Oh yeah, this might happen.” And many people really are able to accept. And I never talk about accepting uncertainty. I talk about learning to accept uncertainty. Because really, if I can talk to you-- if it's just a decision, we're done the first session. But most people are convinced of recession. It took about three months to help convince him. And he kept going back and forth. And so, convincing him, we went through a number of things to work on it. So, I'm describing it quickly, so it sounds simple. But remember, three months. The first reason, and this is true of almost all rituals, mental compulsions, regardless, you don't have a choice. All your rituals do not prevent you from going crazy. He's avoiding places because you've got an anxiety attack there, so I'm not going to go there. It's like, sorry, it's a biological process that you're going crazy. That's doing nothing. So, one is, your rituals don't work. Two, for pretty much anything, you don't have a choice. Uncertainty is the fact of life. We talked about what it would look like and he went crazy. And we were going-- and we talked about, well, what's going to happen? Where are you going to go? He went through all these things. And because he's logical, at some point it's like, it could happen. And at that point, he's then able to spend the other work, which is not fun, which is then imagining going crazy and looking at all the things that scare the heck out of him so he could begin to function again. We wanted to treat going crazy, the way most people do this is not their problem. Treat, getting main paralyzed and disfigured in a car crash. We all know it's possible. Our brilliant plan is generally, I hope it doesn't happen. I'm not dealing with it until I'm bleeding out, crushed under the metal. To say, “I'm not going to be in a car accident today,” it's like, really? I can't say that. So, our goal is to get whatever uncertainties in life there are to be like that. And it doesn't matter whether I'm afraid of going crazy. I'm afraid that I'm going to be a pedophile. I'm going to slice and dice my wife tonight. I'm going to flunk the test. These people don't like me. It doesn't matter what it is. It's still always the same. I mean, we can talk about odds, but not as simply reassurance because, again, it's reassurance if I want to know it's low odds, but if I want it to not be possible, it's not reassuring. It's like, it's probably not this, but it might be how we deal with it is that way. The other thing that we look at is, how does it work for you to fight against this uncertainty? What are you losing? And of course, the more pathological the problem is, the worse it is. So, if I have OCD, it could be destroying my life. I'm not only hurting myself, I'm hurting my family. Let's go how you're really torturing everybody. And sometimes I think, in that case, we're looking for reasons to get better. I always like people to look at all the harm they're doing to themselves and their family. And I think in a brilliant way, just to plug you, I think your book, your new book really partially addresses that because the self-compassion part isn't just like, okay, be nice to yourself, stop suffering. It's like, if you're going to love yourself, what kind of life do you want to make for yourself? What are your values going to be? Because I think we transform this process of coping into something more than simply confronting fear. It becomes something for myself. And secondarily, not as preferable, but sometimes easier to get to – it becomes not only confronting a fear, it becomes an act of love. Because you know what, I'm going to stop being a pain in the ass to my family. I'm now going to put all of us first. And so, we're really going to have-- what are my values, and how does this interfere with my values? And again, it doesn't have to be as major as I'm dysfunctional, torturing my family with something OCD for any worry. Everybody's going to be happier if I can cope with my worries better. I mean, my family's going to be happier because they love me. It's really nice to see me not freaking out because they don't have-- because you want to help and there's no way to help. So, for me to be better and calmer and coping is nice for them. It's certainly nice for me, and isn't that what I would prefer in life? And so, when, when my life depends on me having a worry that's not allowed to happen, I don't get to enjoy things. Another coping thing I do that's smaller is I will ask people to notice what they're enjoying, no matter how, whatever level, even 5%. I think many times people will say, “Everything sucks, I don't enjoy anything because of this problem.” Now that's not entirely true because in the course of interviewing them, there are a few times I'll get them to laugh for three seconds. And I admit if laughing three seconds were the goal, wow, that'd be great. But three seconds of laughter isn't much compared to a life of misery. But the thing is, they don't even notice that ever. The entire experience has been horrible and it's like-- and to get them to notice not what it should be, but what it was. I once did this with a guy. I sent him to the movies and I said, “Watch the movie, just tell me whatever you enjoyed. I don't care how little.” And he came back and he said, “It didn't work. Everything was horrible.” I'm like, “Okay, now tell me about the movie.” So, he was describing the movie to me, it was a war movie, and it is clear, this guy liked the climax. So, I'm like-- Kimberley: Isn't that funny? The way our brain works? Jonathan: Yeah. And I said, “That was pretty cool, that climax. Are you sorry you saw that?” “No.” I said, “Okay, you didn't do my assignment. Notice whatever you enjoyed. I don't care that it's not as good as it should have been. You clearly like that.” And it makes a difference because it means a two-hour experience that he comes away believing he had nothing. It would be a slight change to go like, “I enjoyed a little bit of that.” I try to tell people, think of it as like a little while of enjoyment that you don't notice exists, and we want to expand those. And most people would recognize that in a way, what we're talking about is a little bit of mindfulness. Like, okay, it sucks. I'm not arguing it doesn't suck, but a lot of mindfulness. It isn't like, I'm going to put you in a happy land. It's like, we were trying to do AND, not OR. The beginning of the pandemic, Kathy and I, we're out on our pandemic walk. And she said to me, “This would be such a great day if all this wasn't going on.” I said, “You're wrong, Kathy.” We should let you and your listeners know. You don't know this, but your husband does. Being married to a psychologist is not necessarily fun. Kimberley: So true. Jonathan: It is a beautiful day. We're walking together, it's beautiful. We're together, it is beautiful. It is a beautiful day AND it sucks that there's a pandemic. Kimberley: So true. Jonathan: Not OR, it's AND. In a sense, mindfulness is teaching us to live in that world of AND. This is awful AND I can still enjoy stuff, as opposed to it's either or. And again, some people go like, “Well, that's awful.” And that's perfectly true, because we're going back to what is acceptance. Acceptance sucks. It's the second-best life. However, what's really great about the second-best life, the first best doesn't exist. So, it's like, yeah, it's second-best, but it's this or nothing. So, I think those are a lot of the principles of doing it and I think to do it, it's like, why would I take this risk? It's not a risk, but essentially, it's like, why would I accept living like this, whatever this is? And I don't have a choice. What am I losing by not living like this? Am I hurting my family? What would life be like if I could be okay with this? Depending who you are, that's an incredibly amazing change or it's a minor change. I mean, if I'm a very competent worrier and very successful, we're talking about way more peace. But if I'm competent, I'm interfering with my life and taking up a lot of time, we're now making major changes in the quality of life. And as you know, I can obsess or worry about anything from like, “I need to be the best.” And I always ask people, what is so good about best? Because God forbid, you should be mediocre. God forbid, you should be a happy mediocre person than the best person. And so, for some-- Kimberley: Well, that's still a piece of denial, isn't it? They have this idea that the best is no pain. Jonathan: Yeah. Kimberley: There's no pain at the top. Jonathan: Yeah. Right. And generally, there's some other assumption that-- I don't know. Somehow, I'm deficient of, I'm not best. So, it's like the only way I can know. It's another set of issues. What is it that I fear that I have to cope with? Not being best. Okay, I get you want to be best. Why? Well, best is best. I mean, it's nice, I guess. When I think about being well-known, I generally think of being well-known as icing. That is, what makes my life great? For me, I love what I'm doing, and what I'm doing is, besides talking a lot because I love talking, but I like working with people, and I just really enjoy it. I have no plans on retiring because I like this too much. That's almost all year round. Being famous and well-known, that's about six days a year when I go to conventions. And I say, it's like icing to indicate I am weak enough. I'll admit I'm weak enough to really enjoy it. But I also recognize it is nothing. It doesn't have any substance. And the thing about fame, you're always going to lose it. You're never famous enough. And there's a poem by Shelly that I think really characterizes it. It describes a traveler in an ancient land. It's come across a huge fallen monument and it's describing the magnificence of what this had been. And he comes to the base of the statue where these words are written: “My name is Ozymandias, King of Kings; Look on my Works, ye Mighty, and despair!” That's fame. It's empty I can gorge, but it doesn't mean anything because what I enjoy is what I actually do. It'd be sad if my life was like, it's good six days a year when I can feel it. Kimberley: Right. And I think what's important, particularly for the sufferer, is you still have uncertainty in your life. Jonathan: I don't know any way to be certain, so I know nothing. Kimberley: Right. You know what I was reflecting on, and this is just me reflecting, is last year, maybe it was the beginning of this year, I gave myself the exercise to catch the mini toddler tantrums that showed up in my mind. Jonathan: I love that term. Great. Did you make that up? Kimberley: I think I did because it-- Jonathan: Take credit. It's great. Love it. Kimberley: It feels like a toddler tantrum in my mind. Jonathan: It's perfect. It's that “But I don't want that.” I love it. Oh, I love it. Go on. Kimberley: Yeah. I did a whole podcast about it last year because I was just noticing toddler tantrum after toddler tantrum, and I regulate myself really well. But it was showing up. And then as you're talking, I'm thinking about how that was me resisting acceptance. That toddler tantrum is probably where I have the option to pull out of rumination and be present when I can catch it and be like, “Okay, you're totally in denial. You're in a fantasy land.” And so, that really speaks to me as a way to catch when you're up in that place of rumination. Jonathan: That's perfect. Kimberley: Yeah. For me, that was really powerful. I love that you brought that up because I think that is the bridge. I'm totally out of acceptance when I'm in a toddler tantrum. Jonathan: Right. Because when you get better, as you're describing, you can deal that pull of like, “This is what it is. No, no, no.” You can feel that pull back and forth because you don't get completely lost and it's like, ah. Kimberley: Yeah. It was such a visual. I could see it tantruming out. “No, no, no.” And so, I love that you brought that in particularly in this way, like I said, of catching the compulsion. So, thank you. That actually consolidated-- Jonathan: I'm just now obsessing about how I'm going to work this in. We'll give you credit. Kimberley: You do. The Kimberly Quinlan “toddler tantrum,” I'm very well-known for it now. No, I am so thankful for you for bringing all this up. Is there-- because I want to be respectful of your time, is there anything else that you want to address when it comes to conceptualizing or managing mental compulsions? Jonathan: I think that I'm afraid I have to be patient. Again, thinking about death, I don't get to accept just because I want to. You have some people who try to accept like, “I'm accepting and I'm accepting it.” It's like, yeah, sorry. I can be working towards learning it. I think sometimes people have an insight. An insight is not like you suddenly know some new piece of information. Insight is something that you basically knew, suddenly it's true. I had somebody have that the other day when that's hurting and they felt like it was trivial trying to explain to me what happened, but I already had this concept. I said, “I know. It's like, you've always known you feel like going wrong.” “No, you don't get it. It's really true.” So, it was very cool. And so, I think it's a gradual process where I get better at it. And because life is completely uncertain in every which way, there's always opportunities to practice it, better personal. And you may scare other people. And one client who was very scared of a lot of things, especially of one of their pets dying. As they got uncertain and told, and then they could talk about it pretty calmly with people, “Oh yeah, I think she's going to die at some point.” And people would be horrified. She could sound so calm, but she was like, not that she likes it and she really doesn't want it to happen, but she could also think about it and think about life after that. And I think some people mistakenly will say something like, “Oh my God, you're making life complete miserable. All you're thinking about is all these nightmares that can happen all the time. That's terrible.” That's crazy because-- I thought I'd use a clinical term. Because what happens when I accept uncertainty? Somebody else has said this. Unfortunately, I haven't made it up. I become, in a positive way, hopeless future. And what I mean by hopeless is the way most people who aren't scared of the car crash, or it's not like, I'm okay with a car crash. It's like, what can I do? And when I become hopeless about control, that is when I get to live in the present because I'm no longer in the past or the future. Let's face it. The truth is that's all we have. The past of great memories or terrible memories, the future's hopes, all we have is the present, this moment, my entire life and your entire life with each other. Everything else we like might not be there at this moment. So, I get to have the only thing there is, which is the present. And again, I can't just decide because you see people do this, “I'm going to live in the present. I'm going to enjoy the present now. Enjoy the present.” It's like, I have to learn to give things up. To steal from this woman who wrote this book of compassion: “To be kind to myself, to let myself learn, to not expect it all at once.” Again, if we were talking OCD, I don't know why we were talking about that. If we were talking about OCD, every particular variation has its own uncertainties to cope with. Scrupulosity, how do I learn to believe in a God and simultaneously admit I might be wrong? How do I live in a world where probably I'm not going to slice and dice Kathy tonight? But if I do, how would I try to-- what would I do the next step? When my son was 16 and going out on dates. And of course, he would never be home on time. And Kathy always wanted to call him. And I wouldn't let her call him not to be nice to him, but I knew as she knew, his cell phone would be on. So, calling somebody you're worried about in their cell phone on is not going to be comforting. So, she'd go like, “Well, when can I call him?” So, I'd make this mental calculation. Okay, he should be home now. I think he'll be home in these many minutes. And let me add another half hour and say, you can call him dead. And she could for some reason, which is unusual, she would then go to sleep. And I would go there and I think, “Huh, he's probably okay. He's probably not doing anything terrible. Probably nothing terrible is happening to him. But tonight could be the night that our lives change and everything is screwed up forever.” And then I would go to sleep. That's just the truth. Kimberley: Yeah. It's powerful. I'll be calling you, and my kids are teenagers, saying “Coach me, coach me.” Jonathan: Yeah. And I will give you the following advice. It gets so much easier when they're 23. Kimberley: Yes, I know. Jonathan: Until your acceptance is, “Oh yeah,” you're screwed till then. Kimberley: It's true. I'm so grateful for you and your time and all your wisdom. I feel like I'm sitting and just absorbing it all for myself, which I'm loving. Jonathan: Thank you. Kimberley: Tell us, I know you've been on the podcast before, but tell us where people can hear more about you and your work. You obviously have a new book, which I did not know about. Jonathan: Well, we are working on it and we're at the stage of working it, not procrastinating. We're at the stage of doing a bunch of presentations on the idea, because I've just seen so many treatments fail because it didn't address uncertainty. Although I always focus on certainty, it really is-- the bottom part of dealing with that is coping with life. It transcends OCD. So, I don't know. What would you like to know about me? Kimberley: Where can people find you? Jonathan: Where can people find me? Easily on the internet. Website is a laocdtreatment.com. But I think my name plus OCD tends to come up a lot. Kimberley: Your book? Jonathan: I have a book. It's Freedom From OCD. I think there are a lot of good OCD books. Of course, I like mine because I agree with it most. But it's a little scary when people read it before they see me because it is almost my entire repertoire minus maybe about 40 minutes. I feel like I'm going to be repeating myself, but somehow that doesn't seem to be a problem. Apparently, hearing it out loud is different than reading it. Kimberley: Well, and that's the whole point, right? I have the same situation as people need to hear it more than once too, in some cases. Not as a form of reassurance, but I think we all need to hear it. Even me today having a little light bulb moment I think is really cool, even though I've heard that before. So, I will have your website and your work in the show notes. Jonathan: Very kind. Kimberley: Thank you so much for being here and sharing. Jonathan: I don't know if you figured it out yet. I know I've told you this, but I'll just repeat it. Probably if you asked me to come on, the answer will always be yes. So, thank you. Kimberley: I'm so happy. No, I remember you saying that last time. Like I said to you, before we started recording, I have wanted to do this series for quite a while. And I had you right there going. I already put you on the list because I already knew. You told me you would say yes. Jonathan: And so, apparently, I'm not dishonest or not that dishonest. Kimberley: Not at all. When I texted to ask you, I actually already had you on the list and scheduled you in. Jonathan: It was a confidence that you could well have. Kimberley: Yeah. I'm so grateful. And yes, we will definitely have you on. It's always a pleasure. Jonathan: All right. Okay. Take care. Thank you very much.

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Episode 153 Special Follow up: How NYC's 92Y Developed the Largest Jewelry Program in the Country

Jewelry Journey Podcast

Play Episode Listen Later Apr 15, 2022 18:06

What you'll learn in this episode: How Jonathan moved from sculpture to jewelry to drawing, and why he explores different ideas with each medium How the relationship between craft and fine art has evolved over the years Why people became more interested in jewelry during the pandemic Why jewelers working in any style benefit from strong technical skills How you can take advantage of the 92nd Street Y's jewelry programming and virtual talks About Jonathan Wahl Jonathan Wahl joined 92nd Street Y in July 1999 as director of the jewelry and metalsmithing program in 92Y's School of the Arts, the largest program of its kind in the nation. He is responsible for developing and overseeing the curriculum, which offers more than 60 classes weekly and 15 visiting artists annually. Jonathan is also responsible for hiring and supervising 25 faculty members, maintaining four state-of-the-art jewelry and metalsmithing studios, and promoting the department locally and nationally as a jewelry resource center. Named one of the top 10 jewelers to watch by W Jewelry in 2006, Jonathan is an accomplished artist who, from 1994 to 1995, served as artist-in-residence at Hochschule Der Kunst in Berlin, Germany. He has shown his work in the exhibitions Day Job (The Drawing Center), Liquid Lines (Museum of Fine Arts Houston), The Jet Drawings (Sienna Gallery, Lenox MA, and SOFA New York), Formed to Function (John Michael Kohler Arts Center), Defining Craft (American Craft Museum), Markers in Contemporary Metal (Samuel Dorsky Museum of Art), Transfigurations: 9 Contemporary Metalsmiths (University of Akron and tour), and Contemporary Craft (New York State Museum). Jonathan was awarded the Louis Comfort Tiffany Emerging Artist Fellowship from the Louis Comfort Tiffany Foundation, two New York Foundation for the Arts Fellowships in recognition of "Outstanding Artwork," and the Pennsylvania Society of Goldsmiths Award for "Outstanding Achievement." As part of the permanent collections of The Metropolitan Museum of Art in New York, The Museum of Fine Arts in Houston, TX, and The Museum of Arts and Design in New York, his work has been reviewed by Art in America (June, 2000), The New York Times (June 2005), and Metalsmith Magazine (1996, 1999, 2000 2002, 2005, 2009); his work was also featured in Metalsmith Magazine's prestigious "Exhibition in Print" (1994 and 1999). Jonathan's art work can be seen at Sienna Gallery in Lenox, Massachusetts, which specializes in contemporary American and European art work, and De Vera in Soho, New York. His work can also be seen in the publications The Jet Drawings (Sienna Press, 2008), and in three collections by Lark Books: 1,000 Rings, 500 Enameled Objects and 500 Metal Vessels. Before joining 92Y, Jonathan was, first, director of the jewelry and metalsmithing department at the YMCA's Craft Students League, and later assistant director of the League itself. Mr. Wahl holds a B.F.A. in jewelry and metalsmithing from Temple University's Tyler School of Art and an M.F.A. in metalsmithing and fine arts from the State University of New York at New Paltz. He is a member of the Society of North America Goldsmiths. Additional Resources: Website: www.jonathanwahl.com Website: www.92y.org/jewelry LinkedIn: www.linkedin.com/in/jonathancwahl Instagram: @jonathancwahl/ Photos: Available at TheJewelryJourney.com Transcript: With more than 60 jewelry classes offered weekly, the 92nd Street Y's Jewelry Center is by far the largest program of its kind in the country—and it's all run by award-winning sculptor, jeweler and artist Jonathan Wahl. He joined the Jewelry Journey Podcast to talk about the different relationships he has with jewelry and sculpture; why craftsmanship should be embraced by the art world; and what he has planned for 92Y in 2022. Read the episode transcript here. Interview with Jonathan Wahl 4/3/22 Sharon: Welcome to the Jewelry Journey Podcast. Today, my guest is Jonathan Wahl, Director of the Jewelry Center at the 92nd Street Y in New York. Jonathan was recently on the podcast, but we had to rush through the description of the many jewelry programs that are going on at the Y. So, I asked him back to tell us about the programs in more detail. Many of them are online and are recorded, so it doesn't matter where you are in the world. Jonathan, nice to see you again. Jonathan: Nice to see you, Sharon. Thanks for having me back. Sharon: You ran through it very quickly at the end because I didn't realize how much you had to say basically. So, tell us first about your interviews you have with sculptors and jewelers. Tell us about those. Are there any upcoming? Who are the next ones? Give us-- Jonathan: Sure, so the lecture series came out of the pandemic obviously. I think I've done about 25 or 30 lectures or interviews so far. The most recent series was a series of three talks about female sculptors who are jewelers or jewelers who are sculptors. As you could tell from our last conversation, I'm really interested in this line be-tween the fields of art, particularly between jewelry and sculpture or fine art and decorative art. So, I was really curious to talk to these three in particular New Yorkers who practice in both fields and it was Joe Platner who is a longtime jeweler in New York City, Michelle Okeldoner(?) whose work was primarily sculpture and also does jewelry and Anna Corey whose work also started in sculpture, but now is primarily a jeweler. So, it was really fascinating to talk to these women artists about how they practice and what inspires them in their practice. Sharon: And do you have series upcoming more in the spring or summer? Jonathan: Yup, I'm working on a series about enamel. Enameling seems to be having a re-surgence in our department and I think in jewelry in general, we're seeing a lot more enamel and a lot more color in metals. So, it will be with a contemporary artist, a historical collection and a contemporary fine jeweler. Sharon: It sounds very interesting and enamel, at least in the view I see now, is becoming much more popular. Jonathan: Yeah, yeah, I'm not exactly sure why. I'm really curious. I think maybe it's happy; it's colorful; it's as close to painting, I guess, as you can get in jewelry in a way. Sharon: It's such a skill if you do it right. It's an artistry. Jewelry is an art, but it's such an artistry within the art in a sense. Jonathan: Absolutely, you can, as we say, shake and bake and get color on metal pretty easily. So, you can get pretty direct results and get color on your metal pretty simply. Of course, to be an expert enamellist, to practice grisaille or cloisonne or brioche, you need to become master craftsman. So, there's a lot to dig into. Sharon: So, do we need to keep our eyes on the spring session, the summer session or when? Jonathan: It's going to be the summer session. I think it's going to take place in June. Sharon: O.K., I look forward to it. Jonathan: I'm not sure of the dates, but it's coming and you'll see it. Most of the talks so far are on our archives at 92Y.org in the jewelry center page. Sharon: Yeah, I know there are some that I'd really like to go look at that I missed. Jonathan: The previous three were with three Brazilian jewelers. Sharon: Now, you just had an interview with—I don't know how to say her last name—but she was talking about a Brazilian jeweler, Roberto Burle Marks. Jonathan: Uhum, correct. Sharon: But that was separate. Jonathan: It was part of the Brazilian series because Roberto Burle Marks was a Brazilian. Sharon: But it wasn't part of the Sculpture and Artist Series; it was a different series. Jonathan: Correct, right, they were three and three. Sharon: There's a lot going on. So, tell us about this jewelry residency. I was just looking at your Instagram and the ads for it. So, tell us about it. Jonathan: The Jewelry Residency Program, it would be its fifth year, but we took two years off because of the pandemic. The Jewelry Residence Program is something that I've always dreamed of doing and I'm so happy that it's back on. What it provides is a studio apartment here in our facility, 24-hour access to one of our studios and air-fare to and from New York City from anywhere in the world. Sharon: Are people applying now? When does it start? Jonathan: Yes, the applications are open until April 15. We extended the deadline. Sharon: Does it start in September-- Jonathan: Sorry, it's August 18-September 19, if I'm not mistaken. That's the residency program. Sharon: And you get applications from all over the world or what? Jonathan: We had applications from fifty countries in 2019. I would love to have applications from farther afield. Most of them come from western Europe. We're still trying to figure out how we reach populations in Asia or sub-Saharan Africa or Africa in gen-eral or even more in South America. It's been kind of hard to get to some of those areas. I'm working on a trip to Korea which you know about, so I sent it to all the artists that we're going to visit in Korea. So, I hope we get some applications from Korea and I also just was in contact with an artist who's a Ukrainian jeweler and she has started on Facebook to try and raise money and funds and help Ukrainian jewel-ers who've been displaced, so of course I've shared that residency with her and the opportunity. We would love to support a Ukrainian jeweler and have them here in New York City for a month, particularly if they're not in a studio, but I'm also looking forward to seeing how we can support a Ukrainian jeweler in general if they are here in New York City. Sharon: And so it doesn't matter, a male, female, anybody in between. Jonathan: It doesn't matter and it is open to Americans. It is an international jewelry resi-dency, but you are welcome to apply as an American. The reason for the residency is, as I mentioned, to expand New York City's access to jewelers who don't maybe normally get here and the type of work that isn't often shown in New York City, but it's also for an artist who might not normally be able to come to New York City to come to New York City, but it's also about why an artist needs to be in New York, what would New York City do for them and that could be for a whole host of reasons and there is a jury panel that I assemble every year that helps me decide who that next person should be. Sharon: Wow! That sounds pretty competitive, but it's sounds really worthwhile. Jonathan: Well, there's only one spot. Sharon, with funding, we could expand that. So again, if anyone wants to help support a residence. The residency program, I'm completely open to a conversation. Sharon: Well, I will suggest that people get in touch with you, O.K., or at least send the checks. O.K., so tell us about the travel program to Korea. Jonathan: I do a trip every other year to somewhere in the world and we have gone to Israel, Italy, Austria, the Czech Republic, India, Japan and this year hopefully to Korea. Sharon: Wow! That really sounds fabulous. Jonathan: Yeah, the trips are centered around historical collections and contemporary jewelers and if you're not familiar with the Korean jewelry scene, it's really vibrant and really robust. It has its roots in Europe and the United States as well as with Korean tradi-tion. So, I'm really excited to meet these artists who blend a lot of techniques and traditions and they're doing some really extraordinary work. Sharon: Well, the Korean artists who have exhibited at the international shows have really been creative and really amazing. Jonathan: Really strong work, yeah. Sharon: So, the last I talked to you, I just wanted to double check. Are you still thinking you'll be going October 6, whenever? Jonathan: Yeah, that's the tentative plan. The one thing. Korea has lifted quarantine restric-tions which is great, but groups are still restricted to six or fewer, so it's a bit of a problem for our group which is about fifteen people. So, I'm a little bit on edge about that. I'm waiting to see if that will change. Sharon: Wow! Six or fewer, that's pretty-- Jonathan: That would make going out to dinner a problem and just going to into groups and staggering them, it's like taking two trips frankly. Sharon: Yeah, no, it sounds like a lot of logistics. Jonathan: With that being said, I have a trip to the southwest in the wings for the end of October. If for some reason the gods are not with us to go to Korea, I'm putting together a trip to San Jose and Taos. Sharon: There's lots to see there. Jonathan: Uhum. Sharon: So, you also have a program for highschoolers to teach them about the jewelry industry. Tell us about that. Jonathan: Yeah, this is certainly a program that's been a dream of mine for a long time. It is a program that is offered to Title 1 art and design school in New York City and Title One schools tend to service underserve populations in general in New York City and most of those students wouldn't normally get access to a jewelry studio in high school. Most kids don't get access to a jewelry studio in high school in general. Particularly this population most likely wouldn't be taking a class at the 92nd Street Y as a fee-for-service program for obvious reasons. So, this is a program to get kids who would normally be in the studio into the studio and expose them to the tech-niques and materials and offer them a view into a possible career path, if that's something they would like to pursue. We're coordinating with New York City Jewel-ry Week who has organized wonderful guest speakers with these kids and with NYCJWM and the Department of Education, are able to offer paid internships this summer which is really exciting. It's the first year of this program, so we're still find-ing our footing and I know there are going to be some kids who decide to go into the next year and I think particularly the juniors and seniors will hopefully take advan-tage of some of these opportunities and perhaps go deeper into the field. Sharon: It sounds like a great opportunity, yeah. Jonathan: Even master soldering to a teenager, regardless of whether or not you go into the field as a career, it's a great skill to have. Sharon: I don't know that much about New York and the school system, but I would assume that there are not a lot of opportunities like this that are going on in New York. Jonathan: To my knowledge, there is not a functioning jewelry studio in any of the public high schools in New York City. Sharon: Now, that's really amazing to me. Would a shop class teach jewelry and metal-smithing? Jonathan: To my knowledge, there aren't any functioning jewelry programs classes in New York City public schools right now and we don't have trade schools for jewelry in America. There are art schools and we've talked about how that's always the best fit if you're going into the trade. Sharon: It sounds like a program that would really take off. So, what else should we know about—and what else is coming up? I know you have some great—you've had Tony Greenbaum teaching a class who teaches about modernist jewelry. Jonathan: Yup and Bella Neyman just finished a great series on costume jewelry that was really fascinating. Sharon: Uhuh, I do have to say it was great. I did listen to it. It was great because it was in Los Angeles and it was at seven in the morning which is usually not the time I'm up to watch class. So, I watched the recorded classes which was great to have. Jonathan: Yeah, and we're working on our fall programming, so I'm not exactly sure what the talks will be, but I'm sure there will be one. I'm working on another few initiatives—well, one initiative in particular that is not confirmed yet, but I would like to also create a younger designer's award or fund in which we would help support a new jeweler and help them with classes and to continue their education as well as men-torship through our faculty and through our connections. One of the huge leaps is to go from undergrad or grad in these very supportive environments and then to be let loose to fly free. Many people hone their skills while working for another artist doing benchwork, but I would like to help an artist or a young designer home their skills through our classes and through our faculty mentorship and our professional mentorship opportunities. So, I'm working on that. I would love to see it happen by the fall, but TBD. Sharon: O.K., well, you can keep us posted. I know you have so much going on, so thank you so much. I just envision you juggling so many balls. Jonathan: There's always a lot going on as well as continuing to support the programing that we do on an ongoing basis here. Every day, every week--there's a class going on right outside my office right now, one of three or four classes going on right now in the center. We do offer over fifty classes a week for jewelry alone, so that in itself is enough of a job-- Sharon: For hands-on jewelry. Jonathan: Hands-on jewelry, hands-on making. To my right, there's a wax covering class going on. To my left, there's a jewelry two class going on. Further down the road is a goldsmithing class and then—yeah, I can't remember what's in the fourth studio right now, but the most pressing thing is if you are interested or know someone who might apply for the Jewelry Residency Program, I'd strongly encourage them to do so. We've got some wonderful press from Town and Country Magazine last year and in the cut from New York Magazine, so there are some great opportunities. Sharon: It sounds like it and since the deadline is right around the corner, April 15, people need to get on it. Jonathan: But it's easy. It's a submittable application. You upload your images. You make the case for why you want to be in New York City and away you go. Sharon: I don't know. That still involves somebody sitting down and really putting their brainpower behind it. Jonathan: Get on it, people. Sharon: Jonathan, thank you so much for being here today. Jonathan: You're welcome. Sharon: And we'll keep everyone posted on what else is going on at the Y. Jonathan: Thank you, Sharon, it's always a pleasure. Hope to see you soon.

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Episode 153 Part 1: How NYC's 92Y Developed the Largest Jewelry Program in the Country

Jewelry Journey Podcast

Play Episode Listen Later Apr 13, 2022 27:20

What you'll learn in this episode: How Jonathan moved from sculpture to jewelry to drawing, and why he explores different ideas with each medium How the relationship between craft and fine art has evolved over the years Why people became more interested in jewelry during the pandemic Why jewelers working in any style benefit from strong technical skills How you can take advantage of the 92nd Street Y's jewelry programming and virtual talks About Jonathan Wahl Jonathan Wahl joined 92nd Street Y in July 1999 as director of the jewelry and metalsmithing program in 92Y's School of the Arts, the largest program of its kind in the nation. He is responsible for developing and overseeing the curriculum, which offers more than 60 classes weekly and 15 visiting artists annually. Jonathan is also responsible for hiring and supervising 25 faculty members, maintaining four state-of-the-art jewelry and metalsmithing studios, and promoting the department locally and nationally as a jewelry resource center. Named one of the top 10 jewelers to watch by W Jewelry in 2006, Jonathan is an accomplished artist who, from 1994 to 1995, served as artist-in-residence at Hochschule Der Kunst in Berlin, Germany. He has shown his work in the exhibitions Day Job (The Drawing Center), Liquid Lines (Museum of Fine Arts Houston), The Jet Drawings (Sienna Gallery, Lenox MA, and SOFA New York), Formed to Function (John Michael Kohler Arts Center), Defining Craft (American Craft Museum), Markers in Contemporary Metal (Samuel Dorsky Museum of Art), Transfigurations: 9 Contemporary Metalsmiths (University of Akron and tour), and Contemporary Craft (New York State Museum). Jonathan was awarded the Louis Comfort Tiffany Emerging Artist Fellowship from the Louis Comfort Tiffany Foundation, two New York Foundation for the Arts Fellowships in recognition of "Outstanding Artwork," and the Pennsylvania Society of Goldsmiths Award for "Outstanding Achievement." As part of the permanent collections of The Metropolitan Museum of Art in New York, The Museum of Fine Arts in Houston, TX, and The Museum of Arts and Design in New York, his work has been reviewed by Art in America (June, 2000), The New York Times (June 2005), and Metalsmith Magazine (1996, 1999, 2000 2002, 2005, 2009); his work was also featured in Metalsmith Magazine's prestigious "Exhibition in Print" (1994 and 1999). Jonathan's art work can be seen at Sienna Gallery in Lenox, Massachusetts, which specializes in contemporary American and European art work, and De Vera in Soho, New York. His work can also be seen in the publications The Jet Drawings (Sienna Press, 2008), and in three collections by Lark Books: 1,000 Rings, 500 Enameled Objects and 500 Metal Vessels. Before joining 92Y, Jonathan was, first, director of the jewelry and metalsmithing department at the YMCA's Craft Students League, and later assistant director of the League itself. Mr. Wahl holds a B.F.A. in jewelry and metalsmithing from Temple University's Tyler School of Art and an M.F.A. in metalsmithing and fine arts from the State University of New York at New Paltz. He is a member of the Society of North America Goldsmiths. Additional Resources: Website: www.jonathanwahl.com Website: www.92y.org/jewelry LinkedIn: www.linkedin.com/in/jonathancwahl Instagram: @jonathancwahl/ Photos: Available at TheJewelryJourney.com Transcript: With more than 60 jewelry classes offered weekly, the 92nd Street Y's Jewelry Center is by far the largest program of its kind in the country—and it's all run by award-winning sculptor, jeweler and artist Jonathan Wahl. He joined the Jewelry Journey Podcast to talk about the different relationships he has with jewelry and sculpture; why craftsmanship should be embraced by the art world; and what he has planned for 92Y in 2022. Read the episode transcript here. Sharon: Hello, everyone. Welcome to the Jewelry Journey Podcast. Here at the Jewelry Journey, we're about all things jewelry. With that in mind, I wanted to let you know about an upcoming jewelry conference, which is “Beyond Boundaries: Jewelry of the Americas.” It's sponsored by the Association for the Study of Jewelry and Related Arts, or, as it's otherwise known, ASJRA. The conference takes place virtually on Saturday and Sunday May 21 and May 22, which is around the corner. For details on the program and the speakers, go to www.jewelryconference.com. Non-members are welcome. I have to say that I attended this conference in person for several years, and it's one of my favorite conferences. It's a real treat to be able to sit in your pajamas or in comfies in your living room and listen to some extraordinary speakers. So, check it out. Register at www.jewelryconference.com. See you there. This is a two-part Jewelry Journey podcast. Please make sure you subscribe so you can hear part two as soon as it comes out later this week. Today, my guest is Jonathan Wahl, Director of the Jewelry Center at the 92nd Street Y in New York City. The program is the largest of its kind in the country. In addition to his life in jewelry, Jonathan is an award-winning artist whose work is in the permanent collections of prestigious museums. It has been exhibited nationally and internationally. We'll hear more about his jewelry journey today and how art fits into that. Jonathan, welcome to the program. Jonathan: Thank you, Sharon. It's a pleasure to be here. It's a pleasure to see you. Sharon: It's nice to see you. Hopefully next time, it'll be in person. Jonathan: I would love that. Sharon: Jonathan, tell us about your jewelry journey. How did you get to jewelry? Was that where you originally started out? Jonathan: Recently I've been doing a lot of interviews myself with artists around the world—virtually since the pandemic—as Director of the Jewelry Center, and one of the questions I always ask them is “How did you find your way to jewelry?” It's one of the questions I love to be asked because, at least for myself, it was interesting. I think all of us start out as artists, unless we're born into a jewelry family. Everyone learns how to draw. Everyone paints on their own. Maybe they have classes in high school. If you're lucky, you have a jewelry class in high school. I didn't, so like many people, I discovered jewelry in college at Tyler School of Art, which has one of the best jewelry programs in the country, but I didn't know jewelry existed until I went to art school. When I went to art school, I thought I was going to be a graphic designer. Being the son of a banker and coming from a prep school, I figured I was going to be an artist, but I had to make a living. I wasn't going to be a painter, so I was thinking I was going to be a graphic designer when I grew up. At the college, I discovered jewelry in my sophomore year. Stanley Lechtzin said to me—I'll never forget it—“After you graduate you could design, if you wanted, costume jewelry in New York City,” and I thought, “That sounds kind of exotic and fun in New York City.” That's how my jewelry journey really began, in an elective class as a sophomore at Tyler School of Art. Sharon: Where is Tyler? I'm not familiar with it. Jonathan: In Philadelphia. It's part of Temple University. Sharon: And Stanley Lechtzin, is he one of the professors there? I don't know that name. Jonathan: Stanley Lechtzin really put the program on the map. He's in collections internationally. He pioneered the use of electroforming in individual objects. Electroforming was a commercial process used throughout the country for many different industrial applications, but Stanley figured out how to finetune it for the individual artist. His work has recently had some new-found appreciation because of the aesthetics from the 60s and 70s that are also coming back into vogue. His pieces are extraordinary. Sharon: Before you came to the Y, did you design jewelry? Did you do art? Did you come home from your banking job and work on that stuff? Jonathan: My father was a banker. I was not a banker. The closest I got to banking was working at a casino in Atlantic City one summer. My family has a house in Ocean City, New Jersey, so I could get to Atlantic City. I had to count a bank of anywhere between $30,000 and $70,000 a night. That's the closest I got to being a banker. I quickly then moved to London. This was the summer of my senior year after Tyler. After I graduated from Tyler, I moved to London briefly and worked for a crafts gallery in northern London. Then I decided I wanted to go to graduate school. I came back for about a year to work towards applying to graduate school, which ultimately became SUNY New Paltz. I graduated Tyler in 1990, so most of my undergraduate years were in the 80s. If you're familiar with 80s jewelry, it was no holds barred. It was any kind of jewelry you wanted. My work—or at least my practice—quickly started to veer away from jewelry and towards objects and what I would call small sculpture. My choice to go SUNY New Paltz was specific because I didn't really want to make jewelry, but I was interested in the field and decorative arts, the material culture of jewelry and metalsmithing. That's what I pursued while I was in graduate school. I was recreating early American tinware about my experience as a gay American at that time. I wish there were visuals included, but that's what I was doing at SUNY New Paltz. Sharon: How did you find that material? Jonathan: The tinware was a metaphor for America, for traditionalism. The pieces were metaphors for the function or dysfunction of America. These objects were a little perverse, a little sublime and really honest about how frustrated I felt about being an American and growing up in Philadelphia during the bicentennial. I thought life, liberty and the pursuit of happiness was for everybody, but I found myself not really able to access the full extent of that saying, like many people in our country even today. But I'm happy to report that a piece from that era was just acquired by the Museum of Fine Arts in Boston. I'm thrilled that the older work is getting some interest. There's some interest from the New York Historical Society, which is not finalized yet, but it's interesting to see that work with new eyes 20-some years later. Sharon: Congratulations! Jonathan: When I was in Germany, my partner at the time was finishing his master's degree, and I was an artist in residence there at the Hochschule der Künste, which is now the Academy of Art, I think it's called. That was an interesting experience because Europeans in general, and Germans in particular, approach craft differently. They have a much longer and supportive tradition of craft of all kinds, so when they saw my tinware, it was a little confusing to them. I ended up in a program called small sculpture as an artist in residence because there was no jewelry program at this art university. It was interesting. It was curious. Sharon: Tell us how you came to jewelry. Jonathan: Jewelry eventually gets into my story. After leaving Berlin, I moved to New York. I knew I wanted to be a New York artist. That's the place I had to go. That's the place I had to find my destiny. I was walking around looking for positions in a gallery, which was what I thought I was supposed to do. I walked into one gallery and the director there said, “I don't have any gallery work for you, but I'm on the board of a not-for-profit gallery at the YWCA. That's the home of the Craft Students League. They are looking for a program associate, which pays a ridiculously low hourly wage but has health benefits.” I thought, “O.K., I can do that.” That's when I found myself in the not-for-profit arts administration position that was developed into what I do now, at least part time. I was the program coordinator for the Craft Students League, which is unfortunately gone now, but had a wonderful ceramics, jewelry, painting, and book arts department. I ultimately became director of the jewelry studio and metalsmithing studio there, and then I became the assistant director of the whole program before I moved to the 92nd Street Y to become the director of the Jewelry Center here. Sharon: Did they have an opening? How did you enter the 92nd Street Y? Jonathan: Yes, there was an opening. There was John Cogswell. The Jewelry Center has some wonderful previous directors. It was Thomas Gentile from the late 60s to mid-70s, who really put this program on the map. He was followed by John Cogswell until the early 90s. Then briefly Shana Kroiz took over. She was between Baltimore and New York, and when she left the department, there was a call for a new director. That's when I joined the program here. Sharon: Wow! I didn't know that Thomas Gentile was one of the—I don't know if you want to call it the founders, but one of the names that launched it. Jonathan: Yeah. The program began in 1930 in its earliest form as a class in metalworking and slowly evolved into a few more classes. It became part of the one of the largest WPA programs in the country here at the 92nd Street Y, but it kind of floated along until Thomas came—and Thomas, forgive me if I get this wrong—in the mid-60s, I think, maybe later. He came in and really started to formulate a program of study here. He was the one who really created the Jewelry Center as a center. Sharon: Was he emphasizing art jewelry or all jewelry? Jonathan: There was a great book put out by the Museum of Modern Art in the 50s about how to make modern jewelry. Now, I don't know if the MOMA realized that they put out a book on how to make jewelry, but my point is in New York, I think there was still this idea of the modernist aesthetic and the artist as jeweler or jeweler as artist. I would say that Thomas was focused more on artist-made jewelry, the handmade, the one-of-a-kind object. It was still not looking in any way towards traditional or commercial jewelry. Sharon: Jonathan, tell us what the 92nd Street Y is, because people may not know. Jonathan: The 92nd Street Y is a 140-year-old institution here on the Upper East Side of New York City. It is one of New York City's most important cultural anchors. It has many different facets. We have a renowned lecture series. The November before the pandemic, I remember we had back-to-back Ruth Bader Ginsburg and Lizzo. Wednesday night it was Ruth Bader Ginsburg, and Thursday night it was Lizzo. Last night we had Outlander here, and I think we had a full house of 900 people plus 2,000 people online. We also have a world-renowned dance center that has a long history with Martha Graham and Bill T. Jones. In many ways, modern dance coalesced at the 92nd Street Y. The Jewelry Center has had a presence here at the Y since 1930. We have a wonderful ceramic center. We also have one of the most prestigious nursery schools in New York City. You name it. The 92nd Street Y is a Jewish cultural center. It's part of the UJA Association, but it's kind of its own thing. It's a whole other story about what Ys are and the difference between YWCAs, YMCAs and YM-WHAs, which is what we are, but the 92nd Street Y is really a cultural center. Sharon: When are you opening your West Coast branch in Los Angeles? Because you have such an incredible number of speakers and programs. Jonathan: Many of them come from the West Coast. We had Andrew Garfield here the week before last to talk about his amazing performance for a Reel Pieces program with Annette Insdorf. I think that was a full house of 900 people for a performance from “Tick Tick Boom,” which was great. I don't know when we're coming to LA. We're just reemerging from the pandemic here in New York. Sharon: This is not related to jewelry, but do you think that without the pandemic, you would have gone online to such an extent? Would it have been possible for people around the world, including on the West Coast, to see what's going on? Jonathan: The pandemic was the catalyst to do something we'd always thought about, but yes, the pandemic definitely forced us to do it. On March 13, New York City shut down. That Monday, we flipped all of our classes, every single one of our classes in the Art Center, which is about 200 classes, to be virtual. That worked for some classes better than others, obviously for painting and drawing. It was fine for jewelry. It's tough if you don't have a studio. What we did through the summer is offer online classes. We still offer online classes to some extent, but my focus is on building back our in-person class schedule, which we're doing. We're over about half enrollment now from the pandemic and moving quickly towards three-quarters. Sharon: Did the people who enrolled in hands-on jewelry classes, did that just stop with the pandemic? Jonathan: Yes, it stopped from March 2020 until September 2020. In September, we actually opened back up for in-person classes. We wore masks. We were socially distanced. We were unvaccinated. I was taking the subway and it worked. It was slow at first, but I think this process is a part of many people's lives and this program is so meaningful for so many people. Being in New York, access to a studio is important, and very few people have studios at home. This is not only an important part emotionally of their lives, it's also literally, physically, an important part of making jewelry their practice. Sharon: Since you started as director of the program, I know you've been responsible for growing it tremendously. Was that one of your goals? Did you have that vision, or there was just so much opportunity? What happened? Jonathan: All of the above. There was a lot of opportunity. Unfortunately, the Crafts Students League closed shortly after I left. Parsons closed their department. There were a number of continuing education programs that left Manhattan, and this is before the country of Brooklyn was discovered, even though I lived there. There were no schools in Brooklyn, really. The 92nd Street Y became one of the few places to study when I came on. Also, to my point about studying jewelry in art school, you're studying to be an artist generally in art school; you're not really studying to be a jeweler in the way most people understand jewelers to be. Although certainly at Tyler, it was a great technical education and I learned a lot of hard skills, many people, including myself, were not adept at those hard skills. We're not taught at a trade school, and I found that most of the people who were looking for jewelry classes wanted to make more traditional jewelry than the classes we were offering. Most of our faculty came from art school. There were some amazing people, Bob Ebendorf and Lisa Grounick(?) to name just a few, but as the 90s wore on and the aesthetic changed, I found that people really wanted to learn how to work in gold, how to set a stone. The aesthetics of jewelry shifted. You probably know yourself that the art jewelry world shifted a little bit too. For myself, I wanted to learn more hard skills, and I basically started creating classes that reflected my interests in how to make better wax carvings, how to set a brilliant-cut stone. I can then make that into what I want: studio jewelry, art jewelry, whatever, but those hard skills were lacking. I've said this many times: I don't know that this program would exist in another city other than New York because there was so much talent here. There were people from the industry here. There were artists who were studio jewelers and art jewelers all at my fingertips. I think that was one of the ways it grew, not because I reduced the perspective of what was being made here, but because I enlarged the perspective of what was being made here or taught here. Sharon: How did you do that? Did you do that by identifying potential teachers and attracting them? What did you do? Jonathan: I was lucky to have some wonderful people in New York City at that time. We had a wonderful faculty to begin with, but we also were able to expand the faculty with incredible people who had recently resigned. Pamela Farland, who was a master goldsmith and was the goldsmith at the Metropolitan Museum of Art for many years, was on our stuff. Klaus Burgel, who was trained at the Academy of Munich, was here in New York and came to us as a faculty member. Tovaback Winnick(?), who was a master wax carver and worked for Kieselstein-Cord for many years, came on as well. Some people work here for a shorter period of my time. My good friend, Lola Brooks, was here and taught stone setting. There was some really stellar talent around that helped me build this program. Sharon: That's quite a lineup you're mentioning. Jonathan: And a really diverse lineup. Sharon: Diverse in what sense? Jonathan: Klaus' work is pure art jewelry: the iconic object, incredibly crafted, but what one would consider as art jewelry in its most essential sense. Lola Brooks, her work crosses the lines of both art and jewelry, and she's got a beautiful studio jewelry line. Then there are people like Pamela Farland, who made very classical, Greco-Roman, high-carat granulated stones, classical goldsmithing. Then there was Tovaback Winnick who teaches carving, which is how the majority of commercial jewelry is made. We had real range as well as your regular Jewelry 1, Jewelry 2, Jewelry 3 classes where we're teaching the basics of sawing, forming and soldering. Sharon: You answered my question in part, but if somebody says, “I'm tired of working as a banker; I want to be a jeweler,” can you come to the Y and do that? Can you go through Jewelry 1, Jewelry 2, Jewelry 3 and then graduate into granulation? I don't know if there's a direct line. Jonathan: Absolutely. We don't have a course of study. We don't have a certificate, but you can definitely come here and put your own skillset together. That's also what I found strong about the program, that it gave people access to put their skillsets together without going through art school or going through college. You're able to learn those hard skills in an environment where it's no frills. Sharon: Are they mostly younger people, older people, people of all ages? Jonathan: It's people of all ages. When I joked about the country of Brooklyn not being discovered yet, I lived in Williamsburg, Brooklyn for my whole New York life, so I'm speaking the truth. There really wasn't anything out there. If you were young and hip and cool when I lived in Brooklyn, you had to come here. So, for a long time, we had a much younger population that was cool, hip. Now, everybody has moved to the country called Brooklyn. That demographic has aged a little bit for us. We have three classes during the day. We have a morning class, an afternoon class, a late afternoon class and then an evening class. If you're a younger person, it's most likely that you have a job, so you're going to come at night for our classes. That's only one-quarter of the population that can take a class here, because there's only one slot of night classes. There could be four classes happening at the same time, but all from 7:00-9:30. So, in general our population skews old because those are the people who are generally available during the day. That being said, it's New York City. There are lots of different ways to make a living here. There are definitely people who are actors or bartenders or artists or what have you who do have time during the day and come here. It really depends on what class, but absolutely; we have all ages for sure. We also have kids' classes in the afternoon from 4:00-6:30.

america american new york director new york city art school los angeles germany design society european philadelphia german new jersey arts study berlin jewish academy league massachusetts baltimore tx manhattan museum register named west coast americas rings wahl lizzo largest ruth bader ginsburg print fine arts munich transfiguration soho formed developed jewelry exhibition ymca akron parsons atlantic city temple university state university andrew garfield modern art williamsburg outlander moma hochschule markers metropolitan museum greco roman tick tick boom ywca upper east side ocean city ys lenox outstanding achievement art center street y wpa martha graham new paltz new york foundation new york historical society suny new paltz bill t jones tyler school 92y fine arts houston america june arts fellowships jonathan yeah new york times june lark books annette insdorf louis comfort tiffany foundation

Carl Richards - Making Stuff On Purpose

Ditching Hourly

Play Episode Listen Later Aug 24, 2021 54:40

Carl Richards of Behavior Gap joins me to talk about why it makes sense for him to sell his new book for $10,000.Talking Points The paradox of working in public every day The terror of going from 0 to 1 Using permission-less projects to get going The importance of noticing “tailwind” Turning flaws into features Using impostor syndrome as a compass Reacting to negative feedback about pricing How to decide whether to start a podcast Carl's BioCarl Richards is a Certified Financial Planner™ and creator of the Sketch Guy column, appearing weekly in The New York Times since 2010.Carl has also been featured on Marketplace Money, Oprah.com, and Forbes.com. In addition, Carl has become a frequent keynote speaker at financial planning conferences and visual learning events around the world.Through his simple sketches, Carl makes complex financial concepts easy to understand. His sketches also serve as the foundation for his two books, The One-Page Financial Plan: A Simple Way to Be Smart About Your Money and The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money (Portfolio/Penguin).His sketches have appeared in a solo show at the Kimball Art Center in Park City, Utah as well as other showings at Parsons School of Design in New York City, The Schulz Museum in Santa Rosa, California, and an exhibit at the Mansion House in London. His commissioned work is on display in businesses and educational institutions across the globe.Find Carl online here: https://behaviorgap.com https://behaviorgap.com/radio/ https://www.linkedin.com/in/thinkingcarl https://twitter.com/behaviorgap Transcript Of The Show[00:00:00] Jonathan: Hello, and welcome to ditching hourly. I'm Jonathan Stark. And today I'm joined by Carl Richards of behavior gap. Carl, welcome to the show. [00:00:08] Carl: Thanks, Jonathan, super excited to talk to you. [00:00:10] Jonathan: Same here. So before we get started for anyone who hasn't yet heard of you, could you give folks just quick background? [00:00:17] Carl: Yeah. So I it's crazy to let me think about how to do it quickly. So I. Was a financial advisor and that's not normally thought of as a creative job. But one day I found myself in immediate and I had a familiar experience that I finally realized. Going on. I was meeting with clients and I thought I was really good at communicating. [00:00:44] And these were really smart clown. My clients were really smart, successful people, and I was trying to explain a concept to them and I was just getting blank stares. Despite thinking that I was really good at this and knowing that these are smart people. So since they were smart people, it was clearly impact. [00:01:01] I remember who it was either a doctor and a technology sales rep, really technical sales rep. And I remember thinking that. This is bad, right? Like I'm doing the best I can. There's this concept they really need to understand, and I'm not getting it across. So out of a act of really desperation and I had never really done this before. [00:01:21] I didn't think of myself as a doodler. I didn't draw, I didn't do visual journal. Like I had done none of this. I'd never taken an art class in my life, but I don't have an act of desperation. I was like, there was a whiteboard in the office that I had never used and I jumped up and was like, no, like this. [00:01:35] And I drew. Like a couple of boxes and some arrows and some circles or something. And I remember the feeling in the room when the clients were like, oh, now I. [00:01:46] Jonathan: Yeah. [00:01:47] Carl: And I became a diff is my word. I like to use to that experience of taking something that was seemingly complex, whether it was or not, it doesn't matter, but seemingly complex and reducing it to something simple. [00:02:00] And so I started doing that publicly. I just, I started a little blog. This was years and years ago. My mom and my sister were the only ones that would read it. Like I found out later, my sister was lying. So it was really just the mom, but I kept doing it. And every time a question came up, every time I read something or somebody asked me a question or a client asked me a question, and at this point it was all about money investing and spending and budgeting. would answer the question and then I would try to, I would try to draw some simple sketch. And at this point, it was Sharpie and cardstock and if the Jitsu snap scanner. [00:02:36] I did that for a while. I just kept putting them up on this little blog. And I did that for awhile. It was probably a year which is, seems like it happened pretty quick to be honest, I'm a year. [00:02:45] And then I got an email and there's a little bit of story that I'm leaning out, but not much. I got an email from the editor at the New York times saying, Hey, we love these women. Do it for us. And I knew enough to say yes and figure it out later. So [00:03:01] Jonathan: Yeah. [00:03:01] Carl: that started this column for the New York times that we did. [00:03:04] And again, I had no clue this would happen when I said yes, but we did that column ended up running weekly for 10 years, that led to the book. And then, maybe three or four years into that column, I kinda got bored. Just straight money. And expanded the definition of money and started doing things around creativity. [00:03:24] And we started thinking of it as a business life column. And so that expanded it to imposter syndrome and fear and doing public work and then. The two books and some speaking engagements. And I started getting asked to do speak at creative conferences, and I did an art show, a solo eight week art show and another one in London. [00:03:43] And all of it was a hundred percent by accident. And I couldn't ever believe that it happened so that's a little bit of the bio. [00:03:51] Jonathan: Yeah, that's amazing. Yeah. I love the juxtaposition of certified financial planner and creator of the sketch guy column. [00:03:57] It feels like [00:03:59] Carl: super fun to [00:03:59] Jonathan: interesting Venn diagram there. Okay, cool. So I'm glad you brought up the New York times thing. Cause I was going to ask you about that backstory and yeah. [00:04:09] Is there a piece that, so I would love to connect the dots if there are any dots to connect. Was it, because the listener is probably either blogging or something like that, YouTube channel, or they are thinking about starting one, maybe it's a mailing list. Maybe it's a podcast, but people who listen generally do some sort of. [00:04:29] You content creation and I have a I'll just quickly say short stories, not dissimilar. Where I was just, years ago, 2000, I don't even know five ish. I was blogging about a really niche topic for, I feel like I, I posted six posts in six weeks maybe. And a book publisher contacted me completely out of the way. [00:04:52] And I'm just curious if the New York times thing was completely out of the blue, or if you did anything to was there any, anything you did that actually led to that? Or was it pretty much out of the blue? [00:05:03] Carl: I wish I had something more, like I've been asked this question so many times, including my editor at the time, it was like, Hey, what would you tell? Wants to, and I was like, Ron, I've got nothing for you. The only thing I have. And this, unfortunately like this doesn't fit into the tips, tricks and tactics and hacks that everybody wants because we all want deeply. [00:05:24] We just want a tactic that we can follow it up. I think this, endless focus that I have on tactics and we all have on tactics is actually just a place to hide. [00:05:33] Jonathan: I agree. [00:05:34] Carl: but so I'm not gonna it would be cute to make up a story. But it really was the only thing I have is playing in traffic. Right, Like that, that, that was it. I didn't even know what SEO was like. I didn't I just kept doing the thing and I don't know why for some people doing the thing that you just can't not do. Like for some people that lead, that ends up being a quiet life of disappointment and desperation, and for other people. [00:06:05] Something hits and I wish I knew the answer to that. That's the question I've been thinking about for over a decade? Cause they're doing work in public doesn't guarantee that a book publisher is going to reach out to you. In fact, it's highly unlikely that they will, but I promise you, the only thing I have is I promise you, they won't, if you don't do it [00:06:24] Jonathan: Yup. I'm actually glad. That you have a non-answer there because it is an answer it's stop worrying about that stuff. Keep playing in traffic, you know it, [00:06:32] Carl: yeah. [00:06:33] That's all. I often want to be like we, I play a lot of, I think a lot about emphasis hugs versus punches in the nose and this feels like both it's like deeply empathetic look, brother, I get you. I understand. That this can be a lonely pursuit. You got a thing that's bothering you, and by bothering, like stirring within you and you can't stop doing it and you're going to do it publicly, you can do it. And I and stop worrying about all that other stuff. I didn't even know. I just did the work and sometimes it's going to work and sometimes it's not. And that's the big mystery for me. [00:07:08] Jonathan: I'm a big fan of Seth Godin's approach of suggesting for people who just need a little bit more than what we're seeing right now. Just find the minimum viable audience for the present that you made. And it's so doable. It just feels so doable. Okay. We can move on. I just curious if I'm glad you, it was out of the blue basically, because I think that frees people actually to just focus on creating stuff, they want to create. [00:07:33] Carl: Gentlemen, before you move on, let me say it like that's that has not stopped. Like I don't have the same thing for the first book. Same thing for the second. Same thing for the book I'm working on now say it like it's, there is no master plan. And so I, yeah, I think to me, that's actually freeing, like you said, so I, Yeah. [00:07:53] it hasn't stopped. [00:07:54] I haven't come up with a formula since. [00:07:57] Jonathan: okay. So let me, so let's go into that a little bit, because I do know for some things we're going to get into here you have at least one probably multiple daily practices. So it feels like you must have systems in place that Allow you to continue or not allow you to but support you in showing up every day. [00:08:16] Yeah, I can traffic. And this isn't really a show about systems, but I would just say to the person listening that, I don't, I wouldn't say I have a master plan. I don't know every step I'm going to take over the next three, even let's just say. Definitely three years, but I've got a rough goal for the kind of impact I want to have and who I want to help. [00:08:36] And I have a strategy to do that. And there's some systems in place that helped me show up every day and do it and, meet with great people like this, have them on the podcast. And there, there are, it's not that there are no tactics. It's just not worth worrying about the tactics. You just, have a goal, set up a system to support it and look it heads down and do the system. [00:08:55] Carl: Yeah. I The word that keeps coming to mind as you're talking is habits. Like I, I have a habit of noticing things in the world. I even have it. There's like a, I even joked, there's a face I make it's I call it the, her face huh. Like I have a habit of looking for that to happen a couple of times a day. [00:09:13] And then when it happens, I pull out my iPhone and see, this is the interesting piece. If you don't have a knife, if you don't have an iPhone, you can't do this. That's the places to hide. But I'm trying, I'm only going to tell you this, tell your listeners this, because I think it demonstrates like how simple it needs to be. [00:09:30] I mentioned that earlier cardstock Sharpie and Fujitsu, snap, scanner. I didn't have a flatbed scanner. There was no music playing there. So. [00:09:37] now it's like I noticed something in the world. I pull out my phone under notes. I have a folder called ideas. I take a note and if I'm moving, I'll just record on voice memo. [00:09:49] The note, then that folder, when it's time to put something into the world, I go to that folder. And I pull up the idea, like there's one in there from last there's one in there. Let me just do a real quick notes. There's Yeah. [00:10:03] there was one real, oh yeah. Re the idea of re-investing. Like I have a habit of, as soon as I feel better, like healthy, I'm energetic, I'll go make a big athletic goal. [00:10:14] And somebody [00:10:15] somebody was like what if you just reinvested that energy? So that's an idea that will go up on the podcast tomorrow. I go into the notes folder. There's an ideas folder. I pull it up. Oh, reinvest is there. When I do something with the idea of reinvest, I move it to another folder. [00:10:29] The folder is called used ideas. And that's the end of the, that's the end of the system. [00:10:35] Jonathan: Yeah [00:10:36] Carl: Yeah. [00:10:36] there are habits and I think James Claire's work around process and systems are super smart. And I think that's the thing that sometimes I think there's a big difference between being creative and the process of making stuff. [00:10:52] Jonathan: oh, that's a good point. [00:10:53] Carl: And I don't think of myself as creative, although I do now because I'm like, oh, actually it turns out being creative. Isn't some magic for some people. It is. And that's awesome. Like cool. But there's also a process of, and I call it making stuff on purpose. It's like stuff. It's not art. It's not, I it is, but there's no fancy feelings about it. [00:11:12] There's a big difference between being creative and sometimes they're the same thing, but just for people who don't feel like they're creative, you can create a system for making stuff. It's just like another widget. It's not a big deal. So anyway, yeah, I agree that there are systems, process and habits. [00:11:27] Jonathan: Yep. Yep. And James has been on the show. So folks if you're interested, if you don't know who James Claire is, check out the podcast in his book, Atomico atomic habits. It's fabulous. So yeah, my, I do a daily mailing list and I just, when I have one of those ideas, same thing, probably talk face. I like that. [00:11:43] And I whip out the phone and I start a new Gmail message and I typed the idea or I say the idea and I just close it and it automatically saves on all my devices. It's instantly available everywhere. [00:11:53] Carl: So good. [00:11:54] Jonathan: Yeah, and it's just, it's the teeniest tiniest little spark will happen during the day. And I just know if I don't instantly grab it, I'm going to forget it. [00:12:01] 30 seconds later, kids come and say something, make gone all gone. But if you get into the habit of capturing those things, even if you don't have an answer, it's just an inspiration sometimes and or weird observation or paradox, if you don't capture that it is going to be gone. But when you do capture it, you get into the habit. [00:12:19] I sh I have like over 600 of these unreal. Ideas in this folder. And same thing if I don't have an idea for today, I just open up the folder and oh yeah, let's write about that [00:12:29] Carl: can I just mention two things, one I've heard that like it's gone thing and I think that's true for, I don't know where the boundary conditions are on any of this stuff. I only want to mention this because maybe there's some listeners. Think a little differently about it. And I have finally I've noticed that the good stuff sticks. [00:12:49] I don't know where, again, I don't know the boundary condition of it. I don't know. So I've started to be a little less precious about the idea I got to capture it. I got to grab it. Because I find that the good stuff comes back and I don't, again, I don't know if that's just me or, Elizabeth Gilbert's thing at some point, if you don't let the idea out into the world that we'll find a new host. [00:13:09] I don't know. Is it three times? Is it one time? Is it, I don't know, but, so I've started to be just recently, I've developed a little less preciousness around oh, and I'll even find myself saying it to the idea. Hey right now, I'm driving brother. But if you're really good and you want me to be involved, could you come back? [00:13:26] Cause I think you're not nice. And I'd like to see you again, right? Like that kind of thing. And then the second thing I would mention is sorry, got what the second thing was, it was preciousness and then [00:13:35] Jonathan: If it'll come back, [00:13:36] Carl: it will come back. Exactly. Oh, this the not knowing the answer. I like it took me five years to finally get my editor convinced that point of the column was often the question. Cause there was always this, like this common refrain in journalists of so what what's the point here? And I would have to say the point is the question. And so I only mentioned that because I like, I wouldn't be scared. To share observations and create stuff that you don't know the answer to. [00:14:07] And you can be upfront about this. And I say this like almost every day on the podcast, I'm like, I don't know. I don't know, but I think it's interesting. And I probably, you, this is, I think we get hung up in this oh, where am I going to find ideas? And this is all the same thread. It's if you think something's interesting. [00:14:24] And again, it's just for me, if that her face, like I could be reading something. If I notice I have to pause and go back and read a sentence that's assigned to me where I'm like, oh, that's, there's something interesting. If you find something interesting, we live in such an inter it's such a connected world now that I promise, how, no matter how silly you think it is, there's something it's out there. [00:14:47] That's going to find it. Interesting. It's just a function of doing it long enough in a space where the signal gets clear. So I just wanted to mention that idea. You don't have to have the answers. In fact, I think it's far more. Gosh, far more honest and far more interesting to follow somebody on the exploration. [00:15:06] I think of the work I do really as like Shackleford journal. I don't know, it's not advice, but if you come this way, if you happen to find yourself on this trail, I found a spring here and it was interesting. It was nice to know that there's water and there's a tree around the corner that provides good shade. [00:15:23] I don't know if you, if it's good for you, but it was good for me. So that's the one thing I wanted to do. [00:15:28] Jonathan: Yeah, I do like that. And I did notice that on the podcast where you're like this isn't advice, it's observation things I've observed and there's something, the thing I like about that is it removes the word should from any sentence you would ever write, because the word should always scares me. If that comes out of my mouth, I'm like, that's a little, yeah. Yeah. It's a Derek Sivers has a really. He is a very similar approach. I don't know if you're familiar with his stuff, but [00:15:52] Carl: for sure. [00:15:53] Jonathan: yeah, his, especially his new book or it's like how to live. And it's chapter after chapter of almost contradictory ways that you could run your life. [00:16:03] Some of them are completely contradictory, like one right after the other. And it's here's a bunch of ways you could do it. [00:16:10] Carl: right. [00:16:11] Jonathan: It's a fascinating approach. It's and maybe most fascinating. Yeah. How rare it is most books that you'd buy, self-help book would be like, here's what you do first get up at 4:00 AM, make your bet, like the classic stuff. [00:16:24] And it's yeah, I already read that. And that's not gonna work for me for whatever reason. Cool. All right. I have a feeling that we could talk for four hours. [00:16:31] Carl: Right. [00:16:32] Jonathan: This is great. Obviously if people want more of this kind of like talking about Karl's content, like the actual content go to behavior, gap.com and just start reading. [00:16:42] There's like loads and loads of great stuff there. But what I really the primary reason I reached out is, pricing podcast and you've got a new book coming out that has a pun intended novel pricing structure. Could you talk about that a little bit? Where'd that idea come well first, what is it? [00:16:59] And then where did that idea come from? Those sorts of things. [00:17:02] Carl: Yeah. [00:17:03] Again, no grand scheme here. I I wanted to okay. So keep in mind. Let me just describe what it is first. So I do the sketches. I noticed years and years ago. I. Other people who gave financial advice for living. So this would range from CPAs attorneys, financial advisors, financial planners, private equity, venture capital, anybody who kind of deals with money and takes risk for a living started to ask for these images. [00:17:33] And they would I specifically remember the first time was like aye. You remember the guy's name? He said, Hey, could I, would you, could I have a print of one of these and would you sign it? And I was like, that is so silly. No. And he said I'll give you two twenty-five dollars for an unsigned one. [00:17:50] I'll give you a hundred dollars for a sign when I was like, give me the pen, so that was the first time. And I was like, oh, that's interesting. Again. I'm not very good at seeing the future, but I'm really good at noticing T well, I'm getting better at noticing tailwind. And so it was like, oh, that's interesting. [00:18:05] So we started selling like prints and that's that? That's where like the art show I did an eight week solo 50 piece show that sold out and I was like, Ooh. [00:18:14] Jonathan: Wow. [00:18:15] Carl: it was tailwind. So there's this group of people who use. So this is like purpose art, and I've got lots of friends who are off. [00:18:23] They don't have that kind of an audience and this idea would not work unless you had that kind of an audience. So people give my first book, the behavior gap sold to those same people and they would give it away to their clients. So it's, so it's been years of me thinking like, oh, isn't that interesting? [00:18:43] These are tools. The sketches themselves. And then the writing that goes with the sketches are actual tools. We think of them as conversation grenades. I think I stole that from class. You throw them in a room and conversations break out and it's the exact kind of con it's supportive conversations for people to give financial advice for a living. [00:19:00] They, they're the exact kind of conversations these people want to be having. So with all of that, and in mind, I was like, wow, I should create a, I want to create Yeah. [00:19:08] I've got to tell you another part of this story. I got contacted by somebody who said. I get these kinds of phone calls every once in a while. [00:19:15] It's actually quite annoying, but they're like, look, do you own all the rights to your material? And I do. And it's been very intentional. And do you own the name bay area? Like I do. Would you sell the whole thing to us? [00:19:28] And I was like, for how much? And they threw out a number and I was like tomorrow. And it didn't work out, but it got me thinking, and again at NFTE has played into this too. All of these little things mashing together got me thinking, like, how could I ever release? And Bob Dylan selling his catalog for 600 million, like all of those things were in the past. And I was like could I sell a fractional piece of my library? [00:19:53] And so I was thinking through that and I was like who would I sell it to? And I could sell it to people who use it, not just enjoy it, but people would use it. And wouldn't it be interesting if those people thought of themselves as owners, not just customers. So all of that came together and I was like, all Right. [00:20:05] I want to create, and then Austin Cleveland's book the size of it, six by six, the map. [00:20:10] Soft cover matte finish, like all of that, all of it came together. It was like, okay, I'm going to do a coffee table book. That's eight by eight square soft cover, matte finish. And I'm going to make, I love playing with the juxtaposition of kind of Swiss grid and hand-drawn elements. I love that. It's it feels like a business suit with flip flops. [00:20:31] Like I just love playing around with that. And we, I love juxtaposition and I, we also have a fundamental concept here called permissionless project. So it was like, okay, how can I do this project that would involve no one else's permission, no gatekeeper and a publisher? No, nothing. [00:20:43] So that's what, that's how the present came about. And it's eight, eight by eight soft cover. It's 52. I took 52 sketches. We wrote up 52 essays. We got a really fine I feel like the subtitle of the book should be better than the New York times, because these are all things that have appeared. [00:21:00] Then they went through more editorial processes based on feeds. So it's 52 sketches, 52 essays. Each fold of the book is a sketch and an essay when we mixed them up a little bit on which side and how they're done. But each bolt of the book is self-contained sketch essay. And then I was like, all right, great. [00:21:15] What should I do with this? And I thought, okay, the people, the fractional ownership, the sell of the library and all that MFT, like all of that came together. And I was like, what if I only made this available to a hundred people? [00:21:25] And each person will get a hundred. Signed and numbered. So I'm gonna, I'm literally calling the printer and saying I'm printing, I'm actually printing 11,000 because I want to keep a thousand as artist proofs for myself to give to friends. [00:21:37] But so 10 I'm ordering 10. That's the only print run. It will never be printed. And I, all of this is I get so excited about it. Cause it's all part of my ethos. Like a project that has a start, a finish. It's not gonna be around forever. Like I love calling the printer saying 10,000, like the first print run. [00:21:53] I'm like, no final. Only, never again. And then I'm gonna get this 10,000. I'm going to go sit in the printers place and sign one of 10,002 of them. That's going to take me a week. And then you get the book. A hundred copies of the book to give to your clients. Again, that's the part that you know, is relatively unique here. [00:22:13] A hundred copies of the book to give to your clients. You get the digital rights, the forever digital use rights for the 52 sketches in the 52 S. These people will use the people who will buy this will use it. These in social media, they'll use them in their client newsletter and they'll use them occasionally. [00:22:32] We've had people in Texas print them on a billboard. Yes, of course [00:22:37] Jonathan: I thought I saw that. I thought it was, I thought it was like digital magic. [00:22:41] Carl: Yeah no. That one, the one you saw probably was digital magic, but there is a real one and I just haven't been able to get a picture of it. So you can print them on a t-shirt. You can print them on a mug as long as you're not selling. To give to clients. So like you, we call it, do the, do whatever you want license. [00:22:55] So you get to do whatever you want. Licensed 52 sketches forever. Cool. Geez. How do you price that? What do you do? And so I knew enough for my art show because when I did the art show, I went, I literally read everything. I get my hands on and how to price art. And I don't know if you know this, but there's no manual. [00:23:13] Jonathan: Yeah. I do know that. [00:23:15] Carl: Yeah. There's no, like I looked everywhere. There's no, like in my world you can price a comp a comparable ass. Of similar risk and similar reward. And you've known with the price in the art world. There's nothing. So the same thing with the book, I was like wait a second. This isn't really a book. It's 52 weeks of marketing. [00:23:34] It's all these other things. I was like I just picked a number and partially I was like, Okay. [00:23:38] you know what? I want to do something that scares me. And I've always wanted to do a million dollar book launch. [00:23:43] And so we priced it at $10,000 a piece, a hundred people can buy. It's a million dollars. [00:23:48] We've actually made 20 slots available. That would include me coming to speak at your book, like at a book. [00:23:54] party. So those are 20,000. So it's actually, what is that? It's a hundred and it's a hundred. And if those all sell, it's a $1.2 million. [00:24:03] Jonathan: Amazing [00:24:03] Carl: And it's crazy, right? And I feel all those feelings of wait, who told you, you could do this. [00:24:08] I have a buddy is called imposter syndrome. And he shows up every time I do something cool. He comes every time I talk about like right now, I totally I'm like what? That's nuts. I can hear listeners being like what I'm scared to death. And that's part of the project. [00:24:22] Jonathan: Yeah, imposter syndrome is a good sign. If imposter syndrome shows up, it means you're doing something interesting and new. Okay. So that's incredible. Very cool. Totally. I saw it and I was just like, oh, we have to talk about this. Has someone besides imposter syndrome shown up to throw rocks? [00:24:39] Carl: Oh, for sure. Yeah. I We've only recently started announcing, you saw one of the early announcements you probably saw. And talk [00:24:45] Jonathan: Yeah, I think so. [00:24:47] Carl: And Blair is a friend of mine and he's had something to do with this. I'll call him and be like, really? Am I doing it? And he's do you know the answer to this? [00:24:52] Yeah. [00:24:52] I th I, I think I saw, I'm trying to spend less and less time on Twitter. I do use Twitter for a lot for broadcasting, but I'm trying not to do a lot of interacting with. I did see like people in my industry saying things like it's obviously a top that's a joke that will always say like the market's certainly frothy at this point, if Carl's doing this and then somebody else, the one that, and those are like, whatever, like it's certainly, it's not for you. [00:25:18] You clearly don't understand somebody else said oh, here's Carl playing a joke on all his loyal fans. And w I then explained to him what it was. It was like, no joke here. This is what, and he's oh, I didn't get that. It had the digital rights. So those things I'm like, it's not for you. [00:25:33] The one that I heard the most recently was somebody saying, I thought you were all about helping people. Why are you suddenly leaving everybody? Yeah. So that, and I can feel that and then say, and it's Okay. [00:25:48] for me to do a project like this. Yeah, [00:25:50] for sure. And I don't know if it'll work. We've already, pre-sold a bunch of them. [00:25:53] We opened up 21 early seats. Cause there were people who sent notes saying literally like I'm bringing a bag of cash to your door. And I was like, oh, okay. But I don't know if we'll get to, I don't even know if we'll get to 15. But I'm okay with that because next year we could sell 10 more and 10 more until all hundred go. [00:26:12] Jonathan: right. [00:26:13] Carl: I don't know if it'll work is what I'm saying. I have no idea if that will work, but there's enough tailwind for me to try. [00:26:19] Jonathan: Yeah, I love that. I actually wrote that down tailwind. That's your so you'd note you're noticing engine is very good. Where you'll notice this sort of puppy, dog face stuff, but then also like when something happens, it's not just like you move on to the next thing. It's whoa, there's the sort of after effect of motion happening here just really good detector. [00:26:40] Carl: We generally, we tried to systemize that a bit. Like I think of it as a system. Like we use early detection stuff, like Twitter's a great place to toss something out. And again, if you get no feedback, I actually, I don't use that as a, I don't use that as a sign. It's only if I get feedback that I'm like, oh, interesting. [00:26:59] Because no feedback, actually the sample size is so small that no matter what the feedback is, it's inconclusive. So the only thing I can ever say from it is oh, interesting. Like maybe I should try a little more of that. [00:27:13] Jonathan: Right. [00:27:13] Carl: And just it's just a slight tailwind at that point. [00:27:15] And then, but we try to we have systems now for like, where does the idea get tested first? Behavioral up radio is where it gets heard first. And then if it makes it out of behavior, I pray a little go here. And if it makes it go there, I'll go here. And eventually it'll end up in volume for right. [00:27:29] Cause that's part of it. That's the other thing I should tell you the book's name. We were like, what did we name the book? I was like Let's just call it volume one. So somebody on the team actually suggested volume one. I'm like we can't do that. Like my publisher would never like we don't have a, what was her, the design of the book jar then? [00:27:44] How cool is this? Like when we'd realized we didn't have to design for Amazon or the bookstore, all we had to design was for the moment. I just envisioning it. I'm doing it right now. Like a financial person, but it's advice giver has it in their hand and they hand it to a customer, a client that moment we could design the entire book cover for that moment. [00:28:07] Really cool. So that's some fun stuff. [00:28:10] Jonathan: Huge. That's amazing. Yep. You're just so focused on what it's for. This is what it's for. [00:28:17] Carl: Yep. And that circles back to your idea of throwing stones. I have tried to get really good, and I'm not very good at it, but I try so hard that it's not for them. So that's phrase like it's not for you. And so if there's anybody throwing stones, I understand and empathize and get it. [00:28:37] And there's a reasonable, if they're thoughtful, I treat them as gold because I can make the project better. But largely I would say. It must not either. I didn't communicate well enough or it's not for you. [00:28:48] And both of those are within my power, which is really freeing to me because if I didn't communicate clearly that's on me. [00:28:55] And if it's not for you, there's nothing I can do. It's okay. We'll just move on. [00:28:59] Jonathan: right. Yeah. Not everyone gets the joke as they say so. Okay. So you just mentioned the behavior gap radio. [00:29:06] Carl: Yeah. [00:29:06] Jonathan: Let's talk about that a little bit because I am signed up to that. It's well, you can describe it. What's the [00:29:12] Carl: Yeah. [00:29:13] I think for your listeners, this may be the most important idea because obviously I, there was a whole bunch of caveats around that book, project. Make it unique. I had somebody tell me a good friend of mine said, Carl, you're an N of one for this project. I don't know anybody else who could do it cause you've got a market that needs it. [00:29:29] So I understand that. But there's a bunch of N of one projects for everybody listening has an N of one project, right? Like you're the only one that could do it. So don't let that be a place to hide. But behavior radio to me is a, so let me just describe how it happened. I was noticing things in the world. [00:29:47] And it was actually a challenge from Seth Goden. He, we were having breakfast and he said, Carl, why aren't you writing a daily blog? And I said, cause it's, he's unabashed about how powerful it's been for him. And I'm like I don't like to write. He's you like to talk. And so why don't you just record? [00:30:03] I'm like, oh my gosh, really? And this was before like the most recent like podcast craze. [00:30:10] Jonathan: Yeah. [00:30:11] Carl: So I just started recording. Initially the notes folder I described early on wasn't notes. It was audio files, just what do they call it? Voice memos. So I started recording voice memos and I was saving them on a Dropbox file folder and somebody on the team. [00:30:26] And when I say team there's three. [00:30:28] Jonathan: Yeah. [00:30:28] Carl: Somebody on the team pound. And then they're like, what are you? Do you mind if I, why don't we start a podcast? And I was like no, I don't want to, no, I can't all sorts of imposter syndrome. They're like Okay. [00:30:37] What if I just put them on SoundCloud? And we embed the player someplace. [00:30:42] And it was like, oh Yeah. [00:30:43] fine. And then the times ran across them and they were like, can we run them every once in a while? So they ran it around as well, but then they stopped. And so it was just us posting these things up and I'd get notes, emails from people saying, I love your podcast. And I'd be like, I don't have a podcast. [00:30:57] And they would say, I don't know what you call it, but would it, could you put it on iTunes so I can listen to it in the car? I'm like, all right. it. And but remember it was just part of my process. That's why I think everybody could do this. It's awesome. Cleanse work, show your work. So I just started recording these every day and sometimes I do six a day and sometimes I take days off. [00:31:22] Still have the six, like I've, I haven't missed a day for a very long time, except Sundays I take Sundays off in terms of publishing. And then the people that I was having a conversation with the folks at super cast and super cast is a paid subscriber based podcast system, which is amazing. You can go check it out. [00:31:38] And they were like, wait, you're doing this anyway. And so I decided I didn't care if anybody listens. And Seth says that this is the story I tell myself, at least I'm not sure it's true, but I try to tell myself I don't care if anybody would listened to it, [00:31:49] I'm doing it anyway. It's the idea generation. [00:31:52] Seth says, it's the metacognition, right? It's thinking about your thinking and it's the exercise of that muscle, because like you said, you have hundreds of them sitting in there. Like I did too. Like I, people are like, when are you gonna run out ideas? And never as long as I keep exercising the muscle, [00:32:06] Jonathan: right. [00:32:06] Carl: so I'm doing It anyway. [00:32:08] So yeah, somebody was like what if you just made it a paid podcast? So I had this little items I want to do a little experiment. What if I told no one about it for awhile? I just put it up and all we did, so we didn't lean on my list. We didn't lean on the TA. Anybody else? Like we just, all we did was we posted about it on Twitter. We take little snippets, audio grams, post them on Twitter and Instagram. What if we did that? And I thought if I did that for a year and I made it $10 a month, would it, would I be happy or sad at the end of this? It was like, dude, there's no doubt. If I had no audience and I started doing that every day and I put it on Instagram and Twitter, that's all I did every day. [00:32:49] I took a snippet or I took the highlight. I wrote the highlight on Instagram and Twitter. I said, if you like this, you'd love my daily podcast. It's 10 bucks. Go here, sign up. If you did that everyday for a year, I would be willing to bet money that you would be happy. You did. [00:33:06] Jonathan: Such a good way to put it [00:33:07] Carl: Like it's I don't know how happy. I don't know why, but I guarantee you'd be happy. [00:33:12] Jonathan: Here's the flip side of that because I agree with you, but let's just let the devil come in and advocate. So that's a lot of time to invest in something and I want to pay off Carl. I want it to pay off. I want my tea. I could use that. I could bill $200 for that hour or two every day. So I'm losing, whatever, 365 minus Sunday's times, at least a hundred. [00:33:37] Carl: Yeah, I don't buy it. So here's what I don't buy it. I see the point totally. And I think [00:33:41] Jonathan: It's opportunity cost at least. [00:33:42] Carl: Yeah, I think it's a very good conversation. So number one, it doesn't take me an hour. It takes me about 15 minutes. So we got that. So I should describe it. Yeah. It's a daily podcast. [00:33:50] I was like, oh, I don't want to start a podcast. I don't wanna have guests. That's so much work. So we have I have another concept that I love called turn the flaw into the feature. [00:33:58] So it started with the Sharpie, Right. [00:34:00] Like I downloaded that, believe me, I did, I downloaded the illustrator and tried to figure out how to use it and couldn't figure out how to use it. [00:34:05] So I was like, I'll just, okay, crap. I'll just have to use a Sharpie and cardstock and a Fujitsu, snap scanner. I did that. And a couple of years later, I hired a designer and I said, Hey, take this and turn it into a beautifully designed product. I put it out and everybody was like, why I love the Sharpie. So the flaw became the feature. [00:34:23] So in this case, behavioral operators, I was like, oh no podcasts have guests and they're long and they're thoughtful. I didn't have time for any of that. And I didn't want to do it. And I wasn't very good. So I was like, okay but I want to do one okay. What's the fly is, it's just me talking. So it's me talking between three and 12 minutes and I have no problem with it being three minutes. [00:34:43] In fact, I work really hard to make it three minutes. So it's me talking between three and 12. And now I've asked anybody want me to have guests do no, in fact, I just had somebody yesterday, send me a message saying your podcast fits perfectly into my time while I'm getting, like making my coffee. And I love it because I don't have to set aside a bunch of times. So the flaw has become a feature. So reasonable one, it doesn't take that much time. So if I was saying that to myself, I really want to do this, but it takes too much time. I would say. How could I do it in a way that didn't take much time? [00:35:18] Number two? I don't know what the value would be. So remember the value extraction. I'm always thinking value creation and value extraction. Value extraction doesn't have to be money value extraction could be thinking about my thinking. Seth claims you'd write his daily blog if nobody read it. [00:35:34] Jonathan: I would do. I would, I'm terrified of stuffing my daily blog. I would never stop it because my brain would dry up. Like it's where all my ideas. So I've been thinking about this a lot lately and ideas. I don't make my ideas, pop into my head and have created the conditions. That cause a certain kind of idea to pop into my head. [00:35:59] So it's like these events are happening to me, but if I took away the conditions, the events would stop happening to me, even though they're happening in my head. They're like outside events. It's if I moved to, I don't know Afghanistan, or if I live in Providence, Rhode Island, different events are gonna happen to me and it's going to come. [00:36:18] Different actions. I'm going to have to make different decisions because outside events are, you can, are predictably different in those two places. And if I stopped doing my daily list, that'd be like moving my brain to a place where it would stop having these things happen to it. It's hard. I haven't figured out how to describe this very well but taking, yeah, go ahead. [00:36:40] Carl: are those things? Are those things creating value in other areas of your life? [00:36:44] Jonathan: oh, a hundred percent. [00:36:46] Carl: Yeah, so that's that to me is the most interesting part, right? Wait, I don't want to do this thing cause it's gonna take an hour and I could have built a hundred dollars. Or 200 or 500, whatever the number is. [00:36:55] And that would be like saying, the New York times didn't pay me very well. If at all, how could I possibly calculate what it was worth to me? [00:37:06] Jonathan: Yes. So there's the leap of faith and I've made that leap and it and there's a solid ground on the other side of the chasm. So the thing for the listener who doubts this yeah. I have to, yes, there is. I can give maybe a lead, even more specific question. It's really a question is why are you doing it in the first place? [00:37:27] So if you want to do it to make a million dollars, then don't do it. But if you want to do it because you want to do it, it seems like a fun way to spend your day instead of doing actual work or not. Even your whole day is spent 15 minutes. Then go ahead. It's like the, when I'm coaching someone and they're like, but how is this going to pay off? [00:37:47] And I'm like, I don't know, but I'm sure it's, like you said at the beginning, I'm sure if you don't do it, you're going to be stuck right. Where you are right now in two years, in five years in 10 years. [00:37:55] Carl: Yeah. [00:37:56] That inability to draw a linear line between creation and capture. Is I think a real hangup for most of us. And I have gotten so comfortable with the idea because we live, we go deep down this hole, but if we live in a complex adaptive system and in complex adaptive systems, you can't draw linear straight lines between creation and capture. [00:38:17] You have to be comfortable. The idea that it's going to be a messy, everybody will tell you that. That's why you see so many of those little hand drawn things that look like balls of yard, right? You have a hockey stick and that's like the myth hockey stick up into the right. [00:38:30] It's the myth. And then you have the ball of yarn is the reality. Like I had no clue that this was going to happen. My entire career is a giant ball of yarn. I have no clue what's going to happen now. And I've now gotten to the point where that if I'm not in that condition, I think I just think of it as an irreducible uncertainty, right? [00:38:53] If I'm not living in uncertainty with extended breaks, Right. [00:38:56] Like time to rest and recover because uncertainty is, can be a little taxing, but if I'm not living in uncertainty, then I'm doing something wrong. So I love sess. Like it may not work. So I agree. Just go and see everybody. [00:39:11] I think everybody, who's honest about a creative career says this same thing, [00:39:17] Jonathan: The argument you mean. [00:39:18] Carl: Yeah. Everybody who has a creative career, that's worked [00:39:21] Jonathan: Oh, yeah, [00:39:22] Carl: and there, and if they're artists that, I just mean that by like self-aware of it, like it's not necessarily dishonest. I'm just. [00:39:28] Jonathan: sure. [00:39:29] Carl: They'll say I don't, I didn't know. [00:39:31] Like I, I had a plan, but mostly it's mostly it's this thing that you could not do. And we've all felt it. And most of us bury it, but if you're feeling it, like all I'm suggesting is damn, I call it dancing with dragons, like dance with a little bit. [00:39:45] Jonathan: Yeah. Let it out. [00:39:46] Carl: Yeah. And find a forum. And now it's, I don't care if it's just to your neighborhood coffee shop or if it's on Twitter, like whatever, find a forum, let it out, play in public because I promise you if you do it consistently for a year, you won't be sad. [00:39:59] You did it. I don't know why you'll be happy, but I know you will be sad. [00:40:03] Jonathan: Yeah. I hundred percent agree with that. I've just, I've got a lot of engineering mindset folks who. Who feels like they can predict the future in many ways. And when there's decreased amount of certain, about like building stuff software and so forth. So it's I know if I do this, then it's going to do that. [00:40:17] So it's tough to say to them, it's okay, but you gotta trust. You gotta let go and not know exactly how it's gonna play out. But you're right. If you show up for you. And you're doing something that's meaningful you in some way that you want to do, not just because you think there's a big payout at the end, because you want to do it. [00:40:35] You're not going to be sad that you did it. You're not, so it's so good. Okay. Is there more to talk about with the podcast, the daily podcast? Or could we jump over? If so then let's definitely do that. I'm also curious about the mailing list and we we, I guess we already did talk about selling the sketches. [00:40:53] I have a number of illustrators on the list and it's and they're struggling. It's like, how do I, how could I possibly, how can I sure it was in the bowl doing illustration without going on Upwork and just being told what to do by horrible client. [00:41:09] Carl: Yeah. Yeah. So I don't know, but let me wrap up the real Brady. I would just say the reason I like that as a topic for this audience is because everybody could do it. If you just took your process, And decided to do your work publicly. How did you pick that pen? Which app do you use? I know that's a little tactical, but it's I tried, like just so many of us are convinced we don't have anything to say and I just would beg you to believe me, like that's classic imposter syndrome thinking. [00:41:36] Yeah. Because it's become easier. Second nature for you. Both of those in air quotes, it's become easier. Second nature for you. You think it's easier. Second nature for everyone else. And if it's easy and second nature for everyone else, it must not be valuable because it's common. It turns out it's not, none of those things are true. [00:41:54] You've just forgotten. Like I always in my audience, I always tell him, like you forgotten that most people in the world don't know what standard deviation means. Megan, you throw it around, like it's like a normal term. So that's w B area, the podcast, everybody could just start doing that and you look, it doesn't have to be a paid podcast just anyway. [00:42:13] So that was allied wrap that up the illustration thing. I don't know. I have I have a unique tailwind because these are it's purpose art. But there's a lot of it going on, I see really good friend of mine that does he does. He does marketing cartoons, the Marketoonist Tom fish, board marketing. [00:42:29] Marketoonist like he does marketing opportunities. [00:42:32] Jonathan: Huh? [00:42:33] Carl: Illustrations around. So I think that maybe it's just look, somebody came up, asked me if they could have one on the wall. I said, sure. And they paid me for it. And then we started now we sell digital downloads for a hundred dollars a piece. [00:42:48] You get the high res file and the forever do whatever you want. Licensed is what we call it. And now who's going to pay a hundred dollars. Like the people who pay the a hundred dollars for these are people who typically it's not, I have a few sketches that people hang on their walls in their house. [00:43:04] Like one, maybe I'm the only one. My wife would allow it, our house. But the rest are like in the office. They're they serve a purpose. [00:43:12] Jonathan: Right. [00:43:13] Carl: I don't know outside of that, except that I've watched some people do. And it's always the same. The formula is always the same. It's like play in traffic, do a lot of it. [00:43:22] And then find interesting ways. There's so many interesting illustrators Right. [00:43:26] now on Instagram getting paid for all the standard ways, like a notebook, a print, a t-shirt and then. Digital rights to it. I've followed. I have a collection of those people. Cause I just love because they're permissionless, right? [00:43:41] Like nobody there's no gallery owner. There's no, like they're direct to the people in Kevin Kelly's standard thousand true fans approach. So that's all I really got on that. I don't really know how to be helpful there. [00:43:54] Jonathan: I think that was pretty helpful. And again, it's it's like a bunch of things that we've said, I think all would contribute into observations that might work for the illustrators in the audience. It's, there's not a million. [00:44:08] Carl: Yeah. [00:44:08] Jonathan: it's, there's just not, you don't have to worry as much about all of that stuff that you might be worrying about. [00:44:12] And I just, I do love the working in public or playing in traffic and paying attention to what's meaningful to people, but there's, there is also the thing of like I started doing a Sunday comic and I love it. It's super fun. Is anything going to happen from it? Not, no, I don't think so. [00:44:31] It's just another way to communicate the ideas that I read about it. And it breaks up the, cause I do even Sundays. Seven days a week, I'm putting stuff out. So it breaks it up for me. And it's a different way to communicate hard ideas in a funny way. So I dunno maybe something will happen, but it's just fun. [00:44:52] Carl: as I'm listening to Jonathan, I'm thinking like I've actually had this conversation probably a hundred times with people. So I do like here's, what I would do is I would find one person that would buy something. Going from zero to one is, I don't know, 60, 70, 80% of the way. [00:45:08] Jonathan: Yeah. [00:45:08] Carl: And it, because it's all the fears, they're all the tactical places to hide, but what is it? [00:45:13] So I don't care what it is. Like I just worked with somebody here locally that loves to draw zombie sort of drawings, which I'm just not into it. I have no interest in, but I love this person because they're way into it. Like I'm thinking agnostic. I just am super stoked when you have a thing. And his thing is he draws these zombie things. I'm like, what are, these would be super cool is a skateboard deck. [00:45:34] Go would do, would you do me a favor? Just go by one blank screen, draw one and put it up for sale for 50 bucks and just see Hey, made this thing. I hope you like it. Classic stuff. [00:45:48] Like I do that in public and S and if you don't have it, anybody in public listening, do you send an email to 10 people? [00:45:57] Jonathan: Yeah. [00:45:57] Carl: I made this thing. Okay. How about stickers? I made a pack of five stickers. People seem to find my my sketches, a little humorous and light-hearted and it makes me feel good. [00:46:05] So I made a packet of five stickers. They're $12. Like we could okay. Make a mug, do a t-shirt do it. Like we could riff all day. Hang on what the thing is, but the what matters is the zero to one. Can you get somebody to buy it? Can you get one person? [00:46:20] Jonathan: Yeah, I'm chuckling because of the terror of doing that first skateboard. I just it's just so classic. [00:46:27] Carl: Sure. And he hasn't done it yet. And I'm literally I actually went out and bought this kid he's well, he's 20 he's 24. He's an amazing, like one of the best artists I've ever seen, but no one knows it. [00:46:38] And I actually went out and bought his domain, his name as a domain was available. So I bought it and I told him, you either start putting stuff up on this. [00:46:47] We're 60 days from now, I'm going to start putting stuff up drawn with my left hand in your name. He's and only because I'm trying to force the issue cause I care about him. But Yeah. it's super scary and I think that's why we all go try to find a million places to hide no cell one thing. [00:47:06] Jonathan: Yeah. Yeah. [00:47:07] Carl: one thing there's nothing left to hide. [00:47:09] Jonathan: Yep, totally. And there's so many people in my audience who just sold their time. They've never really sold anything. They're just renting themselves out or they have a job without a boss or benefits and they've never priced anything. They've never put a price for something. On a thing and said, this is 50 bucks period, and yeah. [00:47:30] Carl: Can I riff on that for just a [00:47:31] Jonathan: yeah. [00:47:32] Carl: I think there's a reason that's so scary and it's it please. I'm like trying to be massive. I'll actually probably get emotional about it because you, excuse me. When you create something like that, you are literally putting yourself up for judgment, Right. You're taking it's. I think It's the most intimate. I have spent my life studying risk and risk-taking I back country ski and I'm involved with lots of venture capitalists and private. like, I know a lot about risk. I cannot think of a more intimate form of risks. Then, what we're talking about here is because you're literally saying, and I always think of this. [00:48:08] When I hear Seth say this, say here, I made this, I hope you like it. I think of holding something in my hands and extending my arms to somebody else and saying here, Jonathan, I made this. And then the words I hope. You like it. And because, there are going to be plenty of people who don't and they are going to have no problem in an anonymous way being vocal about it, and you're going to hear it. [00:48:33] And you're like, so I think, I don't think there's any more intimate form of risk. So that is art. That's what you're scared of. [00:48:42] Jonathan: Yup. [00:48:42] Carl: And on the other side of that fear is like the most intense, wonderful satisfaction of putting something into the world. And so balancing that I just think is so beautiful. [00:48:56] Like I just it's like that, that, that rift just now, like that's at the heart of the work I want to do more of is like, how do we get more people to say. I made this I hope you like it to the world because we need that. We, I, as a quote, unquote, consumer need that book. I need that print. I need that. [00:49:20] T-shirt because it shows to me there's still people making things they care about. And if that's the only world I want to live in. [00:49:27] Jonathan: Yeah, wow. I don't think we can top that. [00:49:29] Carl: Yeah. Super fun. [00:49:31] Jonathan: Carl. Thanks so much for coming on is sharing your observations and experience and expertise. Where should folks go to find out more about what you're up to? [00:49:40] Carl: Probably the easiest is behavior app.com. And and then, if you're interested in seeing the sort of broadcast stuff on Twitter, it's at behavior and Instagram app behavior, [00:49:49] Jonathan: Amazing. Wow. Thanks again. [00:49:51] Carl: Jonathan, my pleasure. That was really good. [00:49:53] Jonathan: All right folks, that's it for this week. I'm Jonathan Stark and I hope you join me again next time for ditching hourly. Bye.

new york amazon california texas new york city business voice new york times design digital turning ideas iphone forbes utah afghanistan oprah winfrey soundcloud software seo hang consulting soft classic pricing providence swiss rhode island freelance signed business growth positioning gmail seth godin dropbox behavioral cleanse certified financial planners upwork elizabeth gilbert cpas venn santa rosa park city kevin kelly software developers mft geez parsons school sharpie fujitsu derek sivers nfte jitsu carl richards jonathan stark atomico value pricing mansion house shackleford behavior gap sketch guy hourly billing marketplace money stop doing dumb things seth goden marketoonist be smart about your money jonathan yeah kimball art center

Financial Statement Analysis (Part Three of Three)

Play Episode Listen Later Aug 20, 2021 32:41

Join the discussion on Facebook!TranscriptJonathan:Hey guys. This is the third episode in the series. If you've not listened to the first two episodes, make sure you go back in time to check those out first. It should be in the title of the episode which part in the series it is, so make sure you go back and check those out so that you have a full understanding of what it is we're talking about today. I just want to jump in here real quick and let you know that. We'll see you next time.Jonathan:Welcome to the Tooth and Coin Podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now, a very important piece for you to understand is that this is not paid financial advice, this is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. We've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today. To continue the discussion, agree with us, don't agree with us, have a story to tell, have something to share, join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin Podcast, click on it to join it and be able to join us there. Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion to be able to help you a little bit more than what the content is doing.Jonathan:So if you'd like access to that, whenever it becomes ready, all you have to do is text the word tooth and coin, T-O-O-T-H-A-N-D-C-O-I-N, to 33444. Again, that's tooth and coin, all one word, no spaces, to 33444. Reply with your email address and we'll email you instructions on how to get into a Facebook group, as well as add you to lists to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you, as well. On to today's episode. I hope you enjoy it.Jonathan:So we give that number to our clients every month. Here's what your breakeven point is so that they can have the context of, Well, I want to make $30,000, my break even point is $45,000. I've got to be producing $75,000, right now my average is $55,000. I got a lot of work to do. They know they got to influence it. They're not going to be surprised when they don't have $30,000 at the end of the month. They're going to know what that is. So, what about you in terms of breakeven point, things like that, what are some of the things that you like to use a breakeven point in order to be able to use in terms of management and goal setting and things that.Joseph:So I think it's probably important that we talk about the things that go into that break even point. It is a few additions to the calculator and a subtraction. When we look at a break even point, what was all of the costs involved from your P and L for the month? What was your total cost to operate? Then we're going to add back those owner's discretionary expenses, like the owner's wages. We're going to add that back. We're going to add back depreciation and amortization because those are paper entries that go on. And then we're also going to subtract out and say how much were your principal payments on your debt to get to your break even point. Those breakeven points, I find that to be most useful in determining how much cash you need to keep in practice.Jonathan:Mm-hmm (affirmative).Joseph:If I'm looking at a client that has a breakeven point of a $100,000 and they have $700,000 in their business checking account, I'd say you've probably got a little bit too much cash in your practice, it's not working for you. What you do with that cash, there's a lot of things, call your financial advisor and talk to them about that. But, if we've got a client that has a $100,000 breakeven point and their cash in the bank is $50,000, it's Look, we probably should slow down this owner's withdrawals. We probably should slow down all these different things. We need to get the cash to a point where you can sleep well at night, that you've got the liquidity to be able to operate.Joseph:And when we look at that ratio, your breakeven point to the cash in the bank, again, it's very similar to what we were talking about with the balance sheet and looking at their current assets divided by current liabilities. It's not the same exact number, but it's the same concept, how many weeks worth of cash that you have to operate. So if the spicket of income gets turned off today, how long can you operate? Can you operate for a month?Jonathan:Mm-hmm (affirmative).Jonathan:Can you operate for a week? Can you operate for six months, eight months, 10 months, 12 months? So those are the things that I like to talk to practice owners about. And we get the question all the time, how much cash do we keep in the practice checking account? And a lot of that has to do with the comfort level of the practice owner.Jonathan:There are some practice owners that want to empty the checking account out every month and take all that money home. There's some practice owners that say, Hey, I really want to make sure that I keep a $100,000 or $150,000 or $50,000. That number is different, that level of cash and comfort is different for everybody. The thing that I like about the breakeven point is it takes the emotion out of it and it just says, Here's how much it costs to operate your practice, period.Jonathan:Mm-hmm (affirmative).Joseph:Now we can figure out what you want to keep cash wise on hand with that.Jonathan:Completely agree. Honestly, I think that's probably one of the biggest comfort levels you can get as a business owner is to reach that cash goal. Because once you've hit that point, at that point, you can just optimize because and really work towards those goals. I really like using the breakeven point as a goal standard, too. Let's say that I have a personal income goal of $40,000 a month. We'll our average breakeven point is $50,000 a month. Again, we give our break even point to our clients each month. We also give a rolling quarterly average as well as we give a year to date average so that people can understand really kind of how's that breakeven point trending, where's my average, like what is the number that it looks like, so you can have a bit of normalization to that number as well.Jonathan:You have a little bit of a, of a plus or minus on there. Let's say a $50,000 breakeven point's the number that you've been averaging, a fairly consistent number, because obviously things go come up and down. Things will happen that create one time expenses. But, knowing that breakeven point by heart, knowing it's $50,000, if I want to make $40,000, then I know I got to be at $90,000 a month in collections. I know that has to happen. And if I know that we're going to be open 18 days out of the month, the quick math is `that's $5,000 a day.Jonathan:Let's see, $9,000 divided 18, $5,000 a day, yes. My almost a minor in math still works. So, $5,000 a day is what you got to get to in order to be able to hit $9,000 in collections. And all of a sudden, a number quantitative number that we can use in terms of the inside of the practice to quantify what it is we need to be bringing in. And we were to be able to set some type of a standard. If I know right now we're averaging $4,200 a day, I know that number has to change. I have to get an extra a hundred dollars a day in there. If I have that $5,000 a day number in my head, what I would tell people to do is break it into two segments. Break that into hygiene and break the into doctor production collection.Jonathan:Hygiene is usually a little bit easier for people to calculate on because it seems to be pretty standard. Over time, there's a normalization of hygiene revenue it seems like because there's just not a whole lot of extra services that get added into hygiene. You have a prophy and you have x-rays and you have, fluoride, maybe you have some perio treatment or something like that, if your practice is doing that. And, but overall, that revenue is fairly consistent from a hygiene perspective. So, let's say that you got two people there everyday doing hygiene, and you know that your hygiene's going to be somewhere around $1,800 a day in collections coming from your hygiene department. Every practice is going to be a little bit different, but what they do or don't do it in this terms of those numbers.Jonathan:So that gives you $1,800 a day, $900 a hygienist, goal. And it gives you a $3,200 doctor production in a day. And so that allows you to then say, Okay, if my goal is $3,200 in a day, what does that look like in terms of what I am commonly doing in terms of production? Is that two crowns a day, plus some exams and plus other things? What is that number, to you, as a dentist, as a practice? And there's that one new ortho case a day? What is that number? And that gives you a lot of power to set some type of a goal. And once you have those goals set, you can then bring your team in. And again, this is the reason to circle back to the part about having good staff is you want to have a team to be able to help you reach those different production roles.Jonathan:And that's where you start the training, you can start working on those different things. And I think it's a good starting point for allowing you to be able to come up with what you need to do in terms of what the production does. And again, that's just one use of the breakeven point. If I was a business owner, I would always know my breakeven point. Well, I say that, I am a business owner, I do know my breakeven point.Jonathan:But, for all my clients, I urge you to understand your breakeven point because there's a lot of power in that number from in a bunch of different aspects. I wish the breakeven point was just a standard financial statement number. But even though it's really important, to me, it's probably the most powerful number that you get from your financial statements, just not on your financial statement. It's not there. You have to calculate, you have to know what you're looking for in order to be able to look for it. So, to me, the breakeven points of like a magic number almost that everyone should know. So, that's the breaking point. Is there anything else on the P and L that you want to talk about because that went pretty in-depth on the P and L.Joseph:I like to look for trends, I like to see if things look out of whack, I like to look at measures of our percentages over time. I think that those are going to help tell the story as your practice grows or as your practice shrinks. It may be one of those things that you grew too fast, you have too much stuff going on, too much expenses, you hired a couple of associates and you're Man, I need to go back to just being a single practice owner. Those percentages will help you understand kind of what the story is and evens things out over time. So, those are the big things that I'm looking at, for sure.Jonathan:Yeah, same here. So let's move on to the last one. And Joseph and I talked about this financial statement before the call, and I said, You'd probably be surprised by my answer or this one. The last one was the statement of cash flow. And in terms of the statement of cashflow, what is it that you're looking for when you're analyzing the statement of cashflow?Joseph:So, the beginning number of the statement of cash flows is what was your cash in the bank, minus your credit cards, at the beginning of the month. The bottom number on the cash flows is what is that number at the end of the month? The statement of cash flows tells you how you got from your beginning balance to your ending balance. So, there are a couple of different things that go into how we got from A to B. The simplest, easiest way, and I'm not going to use the accounting technical term is number one is what was the profit? What was the net profit of business? And then we're going to add back non-cash expenses, depreciation, amortization, add those things back. And then we're going to subtract out, did we buy any assets this month, cash assets?Joseph:And then we're going to also subtract out and we're going to say, How much did we pay in principal payments our debt? So,, how do we get in cash in the bank from X to Y? So when I'm looking at the statement of cash flows...Also, how much did we take out owner's distributions? That's another pretty key component. When I'm looking at the statement of cash flows, first thing I'm looking for is Did the cash go up or down over the period? And then the next question is Why? As I'm looking at that, and then I also look at that ending cash balance and I'm looking at that breakeven point and seeing whether or not we're in good shape or not. If the ending cash balance is still seven times your breakeven point, it doesn't matter that cash went down $10,000, $5,000, whatever it is.Joseph:That's not a statement of alarm. I also am looking at the cashflow statement because we have a lot of owners that are saying, Hey, look, I'm not paying myself a salary. I'm a schedule C filer. How much can I afford to pay myself? And that's one of the first places that I go and kind of direct them at is to say, Well, let's look at your cashflow statement. Let's see how much cash was produced in the practice last month versus how much came out, let's look at that. I like to look at whether the cash increased or decreased and why and then I try to figure out how much was taken out in owner's distributions and was it enough or too much or that kind of thing in order to figure out where the cash balance is compared to the breakeven point.Joseph:So, those are some of the things that I'm looking for. If cash went down by $10,000, but that's because we paid off our line of credit, that's not a bad thing. If cash went up a $100,000 and it's because we took out a 50% interest, hard lender that's a bad thing. So, how did we get from cash in the bank at the beginning to the end and what makes up all of those different pieces? Obviously, loans are a big part of practice ownership, but if you're taking out a loan in that kind of a way where you're just desperate for cash and you've got to take it out at a really, really high interest rate, that's not something to celebrate because your cash went up because you took out a cash advance on your credit card.Joseph:That's not a good thing. So, cash at the beginning, cash at the end. And then how do we get there? What are those kind of bigger key components? Hopefully you run a net profit for the month, hopefully you took out some sort of an owner's distribution. You probably had some sort of a payment on your line of credit and you may or may not have bought a new asset inside the practice. So, those are like the high level things that I'm looking at. And just to make sure that it makes sense over time. And then comparing that to back to your breakeven point and why it's so important, comparing that back to your breakeven point and seeing what the cash looks like. How about for you? What are you looking for in a statement of cash flows?Jonathan:The first thing that I look at statement of cash flows again, if it's internally prepared by our firm, then I'm actually looking at it. If it's externally prepared, I usually just throw it in the trash because I know it's probably not going to be prepared well. Statement of cash flows is one of the most complicated financial statements to create, for some reason. I think that the reason is because most bookkeepers and most CPAs do not have any need for a statement of cashflow whatsoever, ever, when they're preparing a tax return. You do not need one for a tax return, at all. And so I think that most people just ignore it, they basically just hit the print button on their financial statements and statement of cashflow pops out and they give it to the people and they get along with it.Jonathan:I think that's what the standard is for most statement of cash flows. If it's internally prepared, I know it will be done well, I know that with the software that we use, the way we have it set up, it's going to give us what we need. If I'm looking at a statement of cashflow, like you said, the way the statement of cashflow is set up is a three prong approach as grouped beginning balance, plus or minus operating expenses plus or minus investing activities, plus or minus financing activities and the end is what your cash balance is going to be and there's going to be a delta between the beginning and the end to see where that money went to. If you don't normalize that, that number is going to be worthless, it's not going to make any difference at all, because you may as well have just looked at your bank statement because your bank statement has at the beginning of the month, how much cash is in there, has the deposits, has the expense, and it has an ending balance. Bank statement says the same exact thing. But in the statement of cashflow, it groups things into logical ways to be able to tell what's going on. Yes, the times when I would look at the statement of cashflow, or whenever I'm looking at a year end analysis to say... If I have client saying What happened to my cash? Statement of cashflow is where you typically tell them where the cash went to. You do a rolling number of showing them, Okay, well, beginning of the year you had this much cash you got this much in loans, you pay this much loans back, you took it out this much in extra whatever, and distributions, here's what you paid yourself and here's where your cash went to and that's the rolling number.Jonathan:That's the standard for small CPA firms or when you have small business clients, you have to do that almost every year for most clients, whenever you're a small CPA firm. For us, we don't do that because we do that every month. We do it in a customized way to show people three things. Number one is cash profit. Number two is what your cash profit versus your tax profit is. So, your cash profit is not what ends up on your statement of cash flow but we use that number to help us calculate what the cash profit is. We have to do those add backs, just like we did with the normalization of the income statement. And by the way, this is probably episode 12 now for the time of the cashflow. You have to normalize that to be able to say what happened to your money.Jonathan:I skipped over the third one which is what is your tax profit versus your cash profit? Because those two numbers are very different. And people get those really confused. We talked about on the financial statements, what's at the bottom doesn't make a whole lot of difference because it could be that the owner paid themselves something or another. Cash profits, the same thing. Your cash profit is not going to be anywhere on your financial statements, you got to calculate it in order for it to be reality. And you've got to normalize that cash profit. You find out what your cash profit is so you know how your business is doing, your tax profits really just there so you can kind of understand how much you've made from the IRS's eyes. So you kind of have an idea of what we will be paying taxes on at the end of the year.Jonathan:That's really the only use for the tax profit number. So, we use the cash profit for that purpose, which is derived from a bunch of different metrics inside of the statement of cashflow. We do utilize it because we also have things like the financing activities is the paying of the debt down and things like that. And they always get, even I get them confused. I don't remember the rules because the software does it for us all the time now. I think technically when you take out debt, it's an investing activity, but to repay it back to financing activity or something like that. Or maybe it's the assets go into the investing and then... It gets real complicated, real fast.Jonathan:There's a real reason why we don't look at it again because we never use it. The only time I'll ever use it is when I'm helping someone to understand what happened to their cash. And then you go in and if it's a well done set of financials, those numbers will roll the right way. If there's a bunch of journal entries done to dodo accounting every month, which is what a lot of firms do, the cashflow statement will not work because the journal entries will not be reflected appropriately inside of the table cashflow almost ever. So to answer the question again, the three things I look at is what is the actual cash profit and then what is the delta of cash? And then what does that versus tax profit?Jonathan:Those are the things that I look at a statement. They're not technically on the statement of cashflow, but that's what I look for when I'm using a statement of cashflow, in the grand picture of things. I think I had a client asked me, actually asked me this one time of, What's the standard that should be going into my investing activities inside of the statement of cashflow? Because they were really studious and they heard about statement of cashflow and they'd read some type of book that had said that there was a really important number that nobody talks about or whatever it is. There is no standard for that. In a small service-based business, it's very much what you're doing, not versus what other people are doing.Jonathan:And the ways and means that you get to those things, that isn't something you can normalize. I've used the term normalized too many times. It's not something that you can aggregate and then make an average of and have it be a meaningful number for anyone, I don't believe. Because there's so many different variables that go into it in such as what type of practice it is, what type of patients you have, how old is your practice, what's your production capabilities as a dentist. There's just so many different things that go into that, that it's a fool's errand to try and figure out is my investing activities, I'm assuming cashflow, optimal comparatively to the other practices that are out there, does doesn't exist. And help us, please, if there is a study out there that says that there's some averages that you should be looking at in dental practices, because I can only imagine what type of data they have. That, to me, is the statement of cashflow. So is there anything else that you wanted to add for that topic?Joseph:Back to that question that I got when I sat down and interviewed for a finance job. The guys told me his favorite financial statement was the cashflow statement and he was a private equity investor, so basically he wanted to know how much cash he could skim out of the business... Not skim out of the business, but he could strip out of the business -Jonathan:Sure.Joseph:In owner's distributions every single month. So, the cashflow statement told him everything he needed to know. Did they make a profit or not, add back depreciation, amortization? What were the loan paybacks? And then that's the cash I can then take out because that was the net change in cash over the point in time. I always struggled with cashflow statement whenever I was coming up through the ranks in CPA land and in accounting land. Balance sheet income statement always made the most sense, but I always got confused. You're talking about this financing versus investing. At the end of the day, the cashflow statement is trying to tell you, where does your cash go?Jonathan:Mm-hmm (affirmative).Joseph:Did it go up or down and why.Jonathan:Yep.Joseph:That's what you need to glean off your financial statement of cash flows.Jonathan:Yep, absolutely. And it's there, you just got to know how to read it. And that's another reason why tell dentists to not spend them a lot of time on that because context is so important. And if you don't fully understand the full set of financials in your industry specifically, you really just can't read a book to tell you how to read a statement of cashflow. It's not going to bear fruit. So to me, hopefully you got good advice and people are painting a picture for you rather than you having to know all the ins and outs of the different elements of financial analysis to be able to divine how these numbers are doing. Those are the financial statements.Jonathan:WE've touched over things, believe it or not. Even though we've talked a lot about the financial statements, we've just touched over the things. There's a lot more nuance that goes into the creation of these things. And, it's almost an art, in a way, of the start to finish creation of them and setting them up in a way in which can be analyzed appropriately. And that was something that I struggled with really heavily on when we started our firm was I wanted to teach everyone how to read their financials. That was my goal in life because I was Man, I want to teach them how to be... they're going to, they're going to be putting people at Goldman Sachs to shame because they're going to be able to know how to read the financials.Jonathan:And I quickly realized that there's no reason to do that. Just tell them what they need, show them what they need. And so what we do in our firm is we definitely take those financials and we paint a tapestry of the important numbers. A good set of financials can be six to seven pages along of data per period. And if you do that over a course of a year, you got a hundred some odd pages of data. What we do for our clients every month is we set up all that information by a single page report that lets people understand really well The answer to four questions, which is how profitable are we? How well did we spend our money? How much cash should we make? And where did that cash go to?Jonathan:But that's our goals with our financial analysis to give to our clients every month. And then we help people, if they don't understand what the numbers say, we teach them, we tell them how to read it and show them what happens. And then if they have any questions about the results, they ask us and we can give them our input from viewing that over 250 times a month. That's the way that we've approached this challenge and approached the problem of that there's not a whole lot of education out there about what are on the financial statements. And I'll be honest. I don't really think that there's, I don't know... I'm torn on this one at this point because my thinking has evolved so much over the past 10 years. Would you spend time if you a dentist going and taking a course, a three hour college course about how to analyze financial statements?Joseph:I wouldn't. I don't think it'd be a good use of your time. I think that if you've got a good CPA or a good accountant that can help you understand your financial statements then you can see what's going on month to month and tell you everything you need to know. I think a three hour course... Because it's not going to be relevant. The same metrics that they're going to teach in that they're going to talk about some of these higher level concepts, like the debt to income ratio or the assets to liabilities, or the current ratio. They're going to talk about a couple of those things. They're not going to say, Here's what your supplies and labs need to be each month. They're going to say, Well, this is a typical in your industry how much your overhead should be. If we're a construction business, we've got more going on materials than you do in a dental, right?Jonathan:And then there's also the different the cost to completion method or, what's the other one? There's another construction one. I can't remember it off the top of my head.Joseph:I mean, if you really want to learn this at a high level, go figure out your favorite publicly traded corporation, go figure out when their earnings call is, look at their financial statements and listen to the executives talk about what's going on inside of those businesses. I think that would be a lot better use of your time. If you really love Apple computers, figure out when Apple's earnings call is and go sit on their earnings call or listen to a replay of it and have them walk you through their financial statements. You get a lot more out of that because it's a business that you know and understand. Or any of these publicly traded companies that are in the dental space. They'll talk to you about what's going on in the industry. Those would be a lot better use of your time than taking a college class.Jonathan:I agree. And the other thing that's really important, closing thoughts, is that the financial statements, they tell you what happened from a financial perspective, they don't tell you everything about your business. Like I told you at the beginning of the conversation that there's people out there that thinks that the financials have everything in there and they don't. Like I said, they don't show you a measure of capacity. They don't show you new patient inflows. They don't show you your production per day. They don't show you your open chair time. They don't show you how many patients are coming in, being rescheduled for your hygiene every month or every day. Those are important numbers to know if you're a practice owner, but they're not on your financials. And no amount of financial analysis is going to give you any of those numbers unless you bridge the gap between practice management and financial numbers.Jonathan:And what we tell people is that we are CPAs. And I know there's a lot of blurring of the lines of what CPAs do and don't do, but for us, we're CPAs. We handle financial analysis and we help you with financial analysis. Practice management analysis should be done by practice management consultants. We are not practice management consultants. I know that there's a lot of blurring of the lines in the dental industry for what is a practice management consultant or not. And, yeah, we know a lot about the numbers, but I don't know your hygienist, I don't know your office manager. I don't know your management style. I don't know what type of patients you have every day. I don't know how you like to turn patients over. I don't know how you like to have your tools set up and how efficient that makes your assistant.Jonathan:I'm not going to tell you how to do those things. I've never been a dentist before. I can tell you how to be a leader and things like that, but I'm not going to be able to give you that practice management information. And so to me, in terms of the best financial advice I can give someone is to pay a practice management consultant for that time that you're spending, because you were paying a CPA, you're paying $200, $300, $400, $500 an hour for this advice. And if you have a CPA doing this for you, more than likely, all they're going to find is problems. Probably not going to have any solutions, probably it's going to be problems are going to find. So rather than paying them somewhere between $200, $500 an hour for someone to find problems, pay a practice management consultant between $100 and $200 an hour to find the problems and give you the solutions. Much better use of your money, so to speak.Jonathan:So financial numbers can help you look for areas of focus, but they're not going to be giving you hard, cold facts that this is optimal performance. That's not how financials work, unfortunately. That's a big misconception, too. And I think there's a lot of people out there that they get into this game because business is a game in a way. And they think that If I optimize the financials, I'm going to win this game. And it's not the financials. It's really the people that you got to optimize. It's really the performance that you got to... Practice management. It's a different game, it's a different thing. I want to make sure that I'm putting that out there that financial analysis does one thing, practice analysis, practice management analysis does a whole nother thing. It's a whole other ball game. Any other closing thoughts you have, Joseph?Joseph:Well said, Jonathan. And ditto those things that you said. Financial statements can tell the story, but they don't tell the whole story. They can give you a glimpse of where you're at and where you've been. That's the other thing about financial statements is they're always going to be backwards looking. I had this conversation with one of our clients a couple of weeks ago. Inherently, they are talking about what happened in the past. It doesn't tell you what's going on in your practice today, what's on the schedule for next week. Those are not going to come out of your financials. They're always going to be backwards looking. So the challenge is to marry the two. Come up with what your goals are, figure out what you did in the past and figure out what your future needs to look like to get to the place you want to get to. And I think that's where the beauty is.Jonathan:Exactly. I agree. It's been a fun set of episodes. Hopefully you've gotten a lot of value out of this, listeners. If you have any questions about this, obviously, we talked about this too much already to our loved ones, and they don't want to hear about it. So if you want to come over to the Facebook group and chat about financial statement analysis, we'll be there and talking about it. Maybe if you had some type of a really interesting number you found in your practice or you've had a way that you've been able to affect your numbers we'd love to have you over in the group and be able to hear about it. Or if you have any questions about what your numbers mean, we can maybe give you some context around that in terms from a financial analysis perspective. We appreciate you listening in. Hope you've had fun and we will see you next time.Joseph:Bye, guys.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're requiring, about to be an owner of a practice they are starting up or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoy today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the longterm. Lastly, if you want access to those resources that we are currently building, just text the word Tooth and Coin to 33444. That's tooth and coin, no spaces. T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions to the Facebook group. We'll send you the resources when they're available and we will see you next week.

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Financial Statement Analysis (Part Two of Three)

Play Episode Listen Later Aug 13, 2021 26:08

Join the discussion on Facebook!TranscriptJonathan:Hey everybody, Jonathan checking in here. And just so you know, this is a second part of the episode. So if you've not listened to the first part yet, you want to go back and listen to it in the prior weeks. We should have it labeled on the episode title what part one is and part two is. So you should be able to see that in the title of the episode it is what episode of episode it is. So thanks.Jonathan:Welcome to the Tooth And Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now, a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share? Join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it, and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Again, that's toothandcoin, all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group. As well as add you to a list to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well.Jonathan:So onto today's episode, hope you enjoy it.Jonathan:We work with around 250 offices, and we see there are just differences in dental practices. So a P&L, to me, is a fantastic thing to look at to have an understanding what's happening. But to me, you have to be financially savvy enough to calculate out that seller's discretionary earnings in order to be able to calculate what the actual profitability of this practice is on a dollars and cents perspective. Once that is done, you would then look at those different key categories, which again is another area where I find a lot of dental practices financials don't have things properly segmented inside of their financials. So you can't do that. So the presentation of the P&L for dental practices is just as important as the understanding. Because you and I could look at a financial statement that would come to us, and if it's not a really, really well-defined P&L.Jonathan:I mean, we've seen P&Ls that came through that had 10 expenses on it, and that's all the expenses on the P&L. They have nothing else. And it's just like-Joseph:Wages.Jonathan:Yeah, wages. Like payroll taxes-Joseph:Supplies.Jonathan:[crosstalk 00:03:36] that. Insurance is on that. They have a consultant, probably, in wages. They probably did some recruitment, that was in wages. And it's just all in one big pile, one big line item. And you can't define anything out of that. So presentation is just as important as well. So what about you? What are some other things you like to look at on the P&L? Because I could probably talk about this for another two hours.Joseph:Yeah, no. I like to look at the owner's discretionary expenses and really make sure that you're able to do that. Anytime that you're ever going to buy or sell, it's in everyone's best interest to do what's called normalize the financial statements, which is what Jonathan just described there. Which is like all of this stuff that the owners run through that are ordinary necessary business expenses, if somebody else came and bought the practice out, a PE firm or a bigger company comes out, or DSO, whatever, comes in and buys, they're not going to spend $18,000 on the travel to take you to eight CEs across the country. Right? They're going to come up with probably a more cost-effective way to do that. So I like looking at the owner's discretionary expenses.Joseph:I like looking at labor, and seeing how much are we spending on labor? One of the calculations that we make for our clients each month is: what percentage of your money are you spending on clinical staff, hygiene staff, and clerical staff, divided by your top line revenue? And one of the things that we try to get inside the benchmark of the industry. And if they're significantly outside of that benchmark, like in a bad way, if we want that number to be, let's say, 25%, and that number's at 35%, then that tells us that that's something that we need to dig into.Joseph:Now, some people might just say immediately, "Oh, that just means we need to cut salaries and cut staff by 25%," but then if we just kind of look at the top line and we're like, "Well, the practice only collected like $20,000 this month," it sounds like it's probably more of a collections problem and a top line revenue problem than a production problem, and maybe an AR problem, versus spending too much in wages. So I like to look at that. I think that when you look at your people, and we've talked a lot about leadership inside this podcast, the people that are inside your practice that are helping you make this thing go certainly are a big, huge asset to you. They officially go on the P&L. But I want to make sure that we can it back and challenge the staff and say, "Hey, look, we need to grow the practice in order to justify the money that we're spending on all of the people that are here." That's something that I look at.Joseph:I like to look at supplies and labs and figure out if that's kind of something that's significantly out of whack. If you got $20,000 in collections but you're spending $25,000 a month in labs, anybody could tell you that's a problem. Right? So I look at supplies. Like to look at labs, like to look at wages. And then I'm just kind of looking for like any crazy stuff that sticks out, any kind of big pieces. Like going back to the comparative piece that we were talking about with the balance sheet, I like to look at a P&L and I like to look at this month versus the past three months or four months or five months, so I can see if I can note any trends. And then if all of a sudden I see an $8,000 expense that pops into an expense category, that may be something we need to look at. Like, "What's going on here?"Joseph:It's like, "Oh. Well, I had to replace the roof," or, "I had to replace the AC," or, "I had a piece of equipment that I bought," well, maybe that doesn't need to be on the P&L, maybe that needs to be on the balance sheet. Maybe we've got kind of a bigger problem here if we see huge, huge increases. And the technical term that we call it in the accounting world is that we're going to do an analytical review. We're going to analyze, we're going to look at what all has happened. So those are some of the things that I'm looking at when I'm looking at a P&L. I'm looking at wages as a percentage of revenue, like all the money that you're spending. So obviously that's going to include whatever your 401(k) matches, whatever your health insurance is you're paying on behalf, your payroll taxes. All of that goes into paying for your people.Joseph:I'm going to divide that by the top line revenue and see what that number looks like. And that's one of the reasons that it's important. You were mentioned in the 10 line income statements we've seen, that's why it's important that wages need to be separated out. It's like, "What do you mean you put your doctor's wages in with your doctor's family and with your hygiene staff, and that means that our wages are now 290 ... Well, of course they're out of whack. Right? Because we need to separate those things out to determine whether or not we're spending our money wisely on our staff."Jonathan:Yeah. Completely agree. I was having a conversation with someone on a podcast years ago, and they were like, "Well, taxes are your number one expense as a business owner." And that's a line that has been fed to so many people. I think probably even I heard that in tax class when I was taking a tax one and two in college, or whatever. But in dental practices, that's not the case. Taxes are not your ... Now, if you add up all the different types of taxes, they were talking about income taxes. That's the narrative we're usually give them around that. Your staff is your number one cost.Jonathan:It's your number one investment is a way I'd love to be able to rephrase that, and be able to ... the paradigm change of a practice, because if you're spending 25 cents out of every dollar that comes in the practice, up to 35 cents out of every dollar that comes into the practice, on your people, then your practice that nets, let's say, 40%. And if you're paying 40% in taxes on 40% of what's left over, you're only paying 16% in taxes, 16 cents per dollar, for your staff, for your income taxes. Whereas you're paying 25 to 35 cents per dollar for your staff. Big difference, right? So your people are your big difference. And that's a good thing. You want to pay people to do good work for you. I've definitely ran into CPAs or to clients that have had CPAs in the past that have said that, "Oh yeah, you're overpaying your people by this much money. And this is how you're going to get your payroll in line, is you're going to clean house and lower everyone's wages by this amount."Jonathan:And it just kind of makes me sick that ... that can wreck the practice if it's not done really, really well. I will say it is possible to have an overpaying problem, to pay people a whole lot more money. But to me, and we use this concept in our firm, I would rather overpay for good people and have my life be easier than have to worry about the $1,500 a year that I'd be saving if I was trying to not be competitive with my wages. This is a pretty bold statement, but I would think that, as a dental practice owner, you should be wanting to be the highest paying person in your area for doing a good job. Because you want the best people. You don't want the worst people. The best people can raise you up really, really high. And so staffing costs definitely look at. But from a percentage-base, from an analytical standpoint, yeah, we got to have some type of understanding of how to reign in these numbers on our staff, to be able to give some type of context on how we're doing, how well we are spending our money.Jonathan:And that's what we say we're answering the question of whenever we do an analysis of overhead every month for our clients is, it's literally the question that this information comes in. We have a four questions report, and one of the questions is, "How well did you spend your money?" And we have an overhead analysis that gives you percentages of these things. So definitely staff definitely supplies, definitely labs. But another thing that I really like to look at, after I've looked at profitability and I've looked at the balance sheet and everything like that, is I like to look at growth expenses. What are we reinvesting in? What is going to happen in this practice? And are we seeing growth off of those said expenses? We've got a lot of clients that have 0% of fees or their revenue goes to growth expenses.Jonathan:Nothing. They don't spend anything on advertising. They don't spend anything on consultants. They don't spend anything on big new courses or things that they were trying to learn, anything like that, but they're still growing. And then we have people that will spend 15 to 20% of every dollar that comes in on these things, and they're not growing at all. So effectiveness of growth expenses is a very important number that I like to look at just when I'm trying to say ... Because that's a very quick thing for me to be able to tell our clients, like, "Look, your growth expenses are really, really high, and we're not seeing any revenue growth. Is this an effective use of our spent? Of our money? Because I love that you're willing to invest in the growth of your practice, that's what you're supposed to do as a business owner, but is this the most effective use of that money?" And for-Joseph:[crosstalk 00:12:11].Jonathan:Exactly. So for dentists that can be a really big deal. That's a really, really, really big deal, is effective use of advertising spend, or growth spend, consulting or whatever it may be. And that's something that gets lost a lot whenever you analyze financial statements too much is, what is our ROI? I don't go into such fine detail of saying, "We need to know the cost per lead of everything that happens from every single campaign," or anything like that. I just hope that you've hired someone that's smart to do your advertising that does that for you. And then you can validate those things down the road. I don't think that you should be spending 30 man hours a week trying to figure out just how effective those lead funnels were or anything like that.Jonathan:So from the P&L, those are the big things. Obviously we back out interest, appreciation, amortization, and things like that when we do the normalization and seller's discretionary earnings. I don't put a whole lot of weight into looking at interest, depreciation, and amortization. I'm never going to look at an interest ratio or anything like that for a dental practice. I don't think it's really very fruitful of an endeavor. I might very briefly see like, "Oh, there's $30,000 on interest. This person has a lot of debt." But if I looked at the balance sheet I've already noticed that. So if I'm looking at, "Is this a well ... This is a good set of financials," if I see that $30,000 in interest and I see no debt on the balance sheet, then that makes me just roll my eyes and throw the things in the trash, because I know that it's probably not a good financial statement.Joseph:Not good financials. Yeah.Jonathan:Or interest is [inaudible 00:13:43]. What else have I seen? I've seen credit card fees be put to interest expense. I've seen ... there's just so many things you see get stuck in there. So anyway. Yeah, to me that's what the P&L's for, is show, number one, it has to be well put together just like the balance sheet, just like statement and cashflow, or else it's almost worthless. You're looking at revenue. And then also comparatives. Again, we look at ... Whereas the balance sheet is a snapshot of time, a P&L is a story over a period of time. So whenever you're looking at the stories you have to compare a period over a period to be able to tell that. So in terms of that, of how to use comparatives inside of P&Ls, how do you look at versus the past?Joseph:Yeah, so one of the things we were talking about with the balance sheet is getting a chance to look at some different ratios, right? So we talked about like the current ratio, current assets divided by current liabilities, and how we need to basically figure out a way to create a level playing field. So if your practice started out at $400,000 in collections, you add five more practices and now you're at $4 million in collections, right, that's not exactly the same to look at a top line revenue number. So one of the things that we do on income statements is we look at it as a percentage. So we look at what is the percentage of revenue that we're spending on all of these different things. So if we're just going to hop straight down to the bottom line, we take the net income divided by the top line. So if you made $100,000 in net profit, divide that by a million dollars in practice, your net income was 10%.Joseph:So as mentioned there, we're going to also make the adjustments that we need for the owner's discretionary expenses, probably going to back out depreciation, amortization, and interest. And we'll be able to get like a pretty clear picture as to how we're doing running a $4 million practice versus a $400,000 practice. Obviously the net income, the bottom line, is going to be different. But if you're making a 2% return on a $4 million practice, maybe you were ahead to not be a $4 million practice, and maybe you would be ahead to stay a $800,000 practice. Right? So we're constantly going to look at the percentages of those things. And as you're looking at those over time, you can compare what's the net income look like, what's the staffing look like as a percentage of income.Joseph:You mentioned the growth expenses, Jonathan. So as we grow and as we get established in this market, maybe it doesn't make as much sense to spend as much money on marketing once our, quote, name is out there. Or it may be one of those things we need to slow down the growth in the practice, so we're going to decrease that. So what do all those things look like as a percentage of revenue? So I think those are the things that I'm looking at in terms of kind of looking at things over time. What do those percentages look like, and how are we doing? And what's our net profit dollars look like? Our net percentage look like? And how do we advance it towards the goals that we have in mind, whatever those goals may be?Jonathan:Yep. And that's the reason we started the whole conversation with the financial statements is saying that they're a body of work, but they're not the end all be all that a lot of people think. There's probably some dentists that are listening now that think that we're almost being blasphemous by saying that financial statements don't answer every single question that has to do with the dental practice. And to the concepts that you're talking about, yeah, I mean the concept of diminishing returns versus scale is something that happens a lot in service-based businesses. Which diminishing returns, just a quick explanation of that, is as you grow larger, the effectiveness of things or the profitability of things does typically go down, unless you have really big economies of scale.Jonathan:There's a lot of people trying to craft a narrative about the DSO space, saying that, "Oh, we've got 20 offices and we get this economy of scale on our supplies. And we're going to make tons of money on that." And when you think about it, okay, let's say that you're going to actually save 10% on your supplies if you have economies of scale. Your supplies are going to be like 7% of your revenue. That means you're going to save 0.7% of your total revenue.Joseph:Seven tenths of 1%.Jonathan:Yeah. Are you trying to grow to 20 locations so you can save 0.7%? That's not the purpose of that, right? You want to get it so the whole number gets bigger. The other part about that is diminishing returns are a really easy concept for me to be able to ... or a really easy example of that is, when a business grows to a certain size ... The way I tell people to imagine it is, think of it as a capacity, think of it as like a circle. And your total capacity is that circle. And I've also taught people to think of it as like a glass, like that you fill with water. When you get to a certain size you may be overflowing with water, your circle is about to burst. And you've got to expand capacity in some way. And when you expand capacity, there's a very few ways you can do that. You can add time, which means that you open more hours. You can add people, or you can add space.Jonathan:And if you already have an effective use of people, but you have access to space, maybe space is the best way to do it. If your people are maxed out in what they're doing in a day, a lot of times what that usually looks like is you adding an associate. And the associate is a really good example of a diminishing return, because in order to have someone there that's a practicing dentist, you can see a dental practice's profitability go from 55% all the way down to like 30% almost overnight when they add an associate in because we're paying this associate so much money to be there comparatively to when they were there before. It's one of the reasons why it's super important to not be adding an associate before you're really ready for it. And there's a lot of different things around what being ready for it means. Like new patient flow, capacity, utilization. There's a lot of different things that go into when that's right for the different dentist.Jonathan:And cashflow too. And also, like you said, goals. What is it that you set out to do? And how does this help you address those goals? So the diminishing return concept in that is that there's a point in time where, if you're a full-time dentist that's very busy, say you have 2000 patients, if you've got like 100 new patients a month coming in, you've got 2000 patients already and you're maxed out and you've got two-and-a-half hygienists, and they're maxed out and booked out four weeks in advance, and you've got two assistants that you're already working out of two and a half chairs a day on, and you've got two front office people that are just stressed to the max, maybe the only thing you have left to do is add an associate. And once you do that, immediately after that you're not going to have 4,000 patients. A way that I tell people to conceptualize the capacity of a single dental practice owner, or single dentist, is somewhere between, it depends on the dentist, somewhere between 1500 and 2500 patients. Maybe up to 3000 patients.Jonathan:In order for you to have two dentists there, you have to have twice that number of patients. It's just simple, right? It has to be that way. And to get to that, once you've upgraded your glass, the bigger glass, you've got to have more water to fill it. In order to get more water to fill it, you've got to have a patient flow. And if you've got 100 new patients a month coming in, and you've got a new person coming in, it's going to take you, to get to 2000 more patients, at least 20 months to get that full capacity. Now you're also going to have attrition, so that's going to create a little bit more of a flow, a little bit longer time for you to be able to hit that point. But in that timeframe, between the time you add that associate to the end of that time, you're going to have a diminishing return. You're going to have an investment in that new person.Jonathan:You're going to be making less money usually. Because usually you have what's called the cannibalization of production, or that's a term that I call it. Because in order to feed that person that came in to work for you, you got to give them some of your production, and they usually don't produce as much as you used to produce. And then you're also paying them 30% of that. So there's a lot of [inaudible 00:21:21] that go into it. But in terms of the growth and scale, whenever we're looking at a P&L, if I look at a practice that has had an associate for only six months, and I looked at that practice a year before, it's going to look very different. So to the determination of the growth and things like that, it's really important you understand your path, what you're trying to accomplish with this practice.Jonathan:I talk to dentists every day, one person will be like, "I want to get to a point where I'm doing 1.5 million a year in revenue, no associates, nothing else going on. I work four days a week, and I'm killing it." And I have other people that said, "I want to own, be adding a new practice and a half every year for the next eight years." Everybody has their own path, and everyone's right at the same time. What's right for one person is not right for the other. But the P&Ls will say different things, because the P&L of that guy who's adding an office every year and a half, they're going to have a lot of growing pains. They're going to have a lot of cashflow issues, they're going to have a lot of profitability issues. They're going to have just a lot of issues because the missing component in that is time. And that time usually it leads back to the non quantitative numbers, or nonfinancial numbers, which are more practice management in nature.Jonathan:So those are really important pieces. Another thing that we talked about earlier that I wanted to talk about is the breakeven point. So when I'm looking at a P&L, a lot of the data that goes into your breakeven point comes from the P&L. There are things that come from the balance sheet as well, technically. Or the statement and cashflow technically. But the breakeven point is a really, really good number for you to be able to tell, as a business, like, "If I don't really have a whole lot going on, if I break my arm next month, how much is this business going to cost me to keep open?" Or, "What's the minimum amount of money I can produce in a month and actually start making money?" Or, "If I want to make, say, $30,000 a month, how much do I need to be bringing in collections?"Jonathan:Your breakeven point is a number that would be involved in each of those answers. I was always [inaudible 00:23:16] the people didn't calculate that internally. And then I have a math background, and so I was like, "I'll just calculate it out and be it." The thing is, it's an evolving number, right? Like it's a number that doesn't stay the same. It has variabilities inside of it. And as you grow it has even more volatility that goes along with that breakeven point. But in general, you can usually come up with a ... Over time it normalizes. Right? So we give that number to our clients every month. "Here's what your breakeven point is," so they can have the context of, "Well, I want to make $30,000. My breakeven point's $45,000. I've got to be producing 75 right now. My average is 55. I got a lot of work to do." They know they got to influence it.Jonathan:They're not going to be surprised when they don't have $30,000 at the end of the month. They're going to know what that is. So what about you in terms of breakeven point, things like that? What are some of the things that you like to use a breakeven point in order to be able to use in terms of management and goal setting and things like that?Jonathan:Hey everybody, Jonathan checking in here. Just so you know, this is a second part of the episode. So if you've not listened to the first part yet, you want to go back and listen to it in the prior weeks. We should have it labeled on the episode title what part one is and part two is. So you should be able to see that in the title of the episode [inaudible 00:24:33] what episode of episode it is. So thanks.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth And Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group, talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the long term.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's tooth and coin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions in the Facebook group. We'll send you the resources when they're available, and we will see you next week.

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Financial Statement Analysis (Part One of Three)

Play Episode Listen Later Aug 9, 2021 39:31

Join the discussion on Facebook!TranscriptJonathan:Welcome to the Tooth and Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey. Now a very important piece for you to understand is that this is not paid financial advice, this is not paid tax or legal advice. We are not your financial advisors, we are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share, join us on the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it and be able to join us there. Finally, if you need some more help, we're developing a list of resources that are going to be centering around our topics of discussion to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin T-O-O-T-H-A-N-D-C-O-I-N to 33444.Jonathan:Again, that's toothandcoin, all one word, no spaces to 33444. Reply with your email address and we'll email you instructions on how to get into the Facebook group, as well as add you to a list to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well. So onto today's episode, hope you enjoy it.Joseph:Hello, ambitious dentist. And welcome to another exciting episode of the Tooth and Coin podcast. I'm your host Joseph Rugger joined by Jonathan VanHorn. We are at episode number 10 and today we're going to talk about financial statements. Everybody's most exciting, most exhilarating topic that you could ever imagine is financial statement analysis. Jonathan, welcome to the show.Jonathan:Yeah, exactly. I talk about financial statements at night after dinner with my wife with a big old glass of wine and she just loves it. It's a big topic of conversation in our house. It's amazing. Not really. She does not like it. She does not listen to those things.Joseph:Everybody's topic of conversation right before bedtime is financial statement and financial statement analysis. Well, so Jonathan, we were talking a couple of weeks ago and I was talking to you about a job interview that I was sitting in one time and I was getting interviewed by a guy to take over a financial position for a company. And he asked me a question. He said, "What is your favorite financial statement and why?" So I think that'd probably be a good place to start. What are the three financial statements that are out there? Or are there two financial statements? Or are there one? Whenever we say financial statements, I'd say most of our clients, most of our dentists probably only typically think about one financial statement and that would be the profit and loss. But when we say there's three main financial statements or three recognized financial statements, what are those specific financial statements and what are they called?Jonathan:Yeah. So the three most common are going to be your balance sheet, profit and loss statement, cashflow. All three of those have different names that you can call them. I've had people be confused and like, "What's our profit loss? I've only ever heard of the income statement." Or, "What's the statement of income?" Or all those other things. They're the same thing in general, it's the balance sheet, there's your profit and loss or income statement and then the statement of cashflow. Those are the three main ones. And in terms of your question, to me, the financial statements, while there are three separate ones, really to get a fuller grasp of what's going on from a financial picture, you kind of have to be able to look at all three of those at once and be able to read what each of those are saying intertwined with a bit of education.Jonathan:It's not something that you can just intuitively look at for most situations of I'm looking at the balance sheet, I'm looking at the statement of cashflow and looking at the P&L. And all of a sudden, "I know everything about this business," and that just doesn't exist. And one of the big problems in the dental industry is there's a lot of misconceptions around what's on those financial statements. And on one side of the coin you have people that think that they're completely worthless, and then on the other side there are people that think that the financial statements are supposed to have every answer that exists about your practice. And neither of those answers are correct. The financial statements are great and they tell you a lot about the business, but you have to understand what's going on and you have to understand what you're looking for in each of those financials, in order for you to be able to actually get any value out of those financial statements.Jonathan:And I think that's the reason a lot of people have misconceptions and some confusion around the value the bookkeeping brings and things like that. So to me, the answer "What is my financial statement?" It's all of them. And if I had a choice, I'd have all of them plus some practice management information to be able to look at in order to be able to tell what's really happening in a business in terms of the dental field. I think the most correct answer is it depends on the industry because there's a lot of nuances in this. Not only are there different sets of financial statements, there's different ways those financial statements can be reported. There can be an accrual basis, or it can a cash basis, the income tax basis of accounting. There's a bunch of different ways in which those same things can be reported to people. And if you don't really understand how it's being reported to you, you can make some mistakes and not have the full value of it. So what about you? Which one's your favorite one?Joseph:It's a good question that the guy asked me at the time and he had a right and wrong answer in his head. And his right answer was a statement of cash flows, which as many accountants knows it's difficult to kind of glean a picture from somebody that's not used to looking at cashflow statements. So anyways. Let's say all I had to say my favorite financial statement is the balance sheet. And I think that'd be a good thing for us to talk about. We could probably spend an hour on each financial statement and trying to analyze how it all comes together. But my favorite financial statement is the balance sheet. And to me, the thing that always sticks out to me about a balance sheet is it is a measure at a specific moment in time.Joseph:So what is your balance in your balance sheet accounts as of today, as of the end of last month, as of the end of last year, as of mid-year? It's as a point in time. Which is always kind of one of those things like let's take a snapshot of exactly where our assets sit, our liability sit, our owner's equity sits, at a point in time. And to me, in my small accountant brain, it gets me a chance to figure out what are the assets minus liabilities and what's the book value or the net worth of business. Which is something that I think that a lot of people can wrap their heads around once we kind of put it into some simple terms. So whenever we talk about assets, we talk about liabilities, we talk about owner's equity.Joseph:One of the things that I always talked about whenever I was teaching class and teaching students at the college level and teaching accounting 101, they don't really understand how all of it comes into play. So I use the simple example of a home, right? So it's not specific to the business, but it'll kind of help you understand what an asset is, what a liability is and what is the "equity," the owner's equity in that. So we'll just use easy numbers, Jonathan. If you have a house and that you own a house, and that house is valued at $200,000, that is the asset. $200,000 is the value of that house. If you have a mortgage on that house and the mortgage balance, the liability balance on that house is $150,000, right? So we have a $200,000 asset, we have $150,000 liability, then that means the equity... That's something that everybody's going to be familiar with. The equity in your property, in this one specific piece, in this one specific example is $50,000.Joseph:So if I wanted to look at a position of strength or weakness, I can look at a balance sheet. I can look at the balance sheet on the asset side, I can look at the liability side, and then I've got kind of the difference. What you own minus what you owe is your worth, your net worth, your net equity, your net owner's equity. That's made up a whole bunch of different complicated things. But it seemed to click with my students whenever I would say, "Think about owning a house and there's going to be a difference," hopefully there's a difference and hopefully it's a positive amount between what your property is worth, your house is worth minus what your mortgage balance is, and that's the equity that's in the property.Jonathan:Yeah, exactly. And that's a great way to simplify the assets minus liabilities equals your owner equity, which is what you learn in accounting 101 is A-L=O. There's three main categories that go on the balance sheet. And I agree, the balance sheet is a great way to be able to look at the financial health of a company. It may not be able to tell you trends or net profitability or anything like that, but it can definitely show you the liquidity and it can show you what type of debt ratios are coming into play. And it can also show you how much money is this business actually making from a accounting point of view, not necessarily a cash point of view. That's one of the limitations of these financial things as I said before is that if this balance sheet is set up on the income tax basis of accounting, that owner's equity has a lot of different things that affect it, that it can make those numbers look a little odd.Jonathan:And the reason is because that equity number, it rolls over every year and so it's like a running balance. And some people can get kind of confused on it because you can literally have a profitable well ran dental practice and have almost nothing on your balance sheet. Your assets could be, say, $100,000 and your owner's equity could be $100,000 and that practice could be a $2 million practice. So one thing that's an important concept to also introduce is that value does not technically equal the equity. So to take your home value another step further so that people can understand the balance sheet, if that home skyrockets in value... Let's say you bought it for 200,000 and you owe, let's just say, $100,000 and you have a $100,000 owner's equity.Jonathan:If the value of that home went up to $350,000, you still only bought that thing for 200,000, right? But you now have equity of 250,000 because you still only owe $100,000, but the value is higher. So your basis is $200,000 minus $100,000 in liabilities equals your basis is a $100,000. But your value is $150,000 above that. But in the accounting world for the income tax basis of accounting, you don't write up basis to what the value actually is. You just keep it at what your basis is, because that's what we're trying to track on an income tax basis of accounting. So if you're looking at your balance sheet and you're like, "Oh no. I only got $150,000 in assets and nothing else and then $150,000 in equity." You may have a business that's worth a whole lot more than that. And that's just what we call a book tax difference.Jonathan:If we were being very, very, very, very, very, very, very, very thorough, and spending a lot of time on your books and you're paying us a lot of money to make those write-ups and adjustments to actual value, having evaluation done every year and having everything be written up to the value of the practice, then the balance sheet would say those things, but that can be kind of like a hidden thing inside of a balance sheet.Jonathan:So I think that's an important point to get across too, is that the balance sheet shows you a lot of really cool things and also, there can be things that can be a little bit misleading. So when we're talking about the differences in equity, the equity section is the area that always gets kind of confusing to people. So be careful around that piece. But let's talk about what you look for on a balance sheet to see a healthy dental practice, so to speak. Yeah. Let's just focus on dental practices rather than talk about other industries and things like that.Joseph:Yeah, sure. So whenever you look at a balance sheet, as Jonathan mentioned, there's three sections. There's assets, liabilities, and owner's equity. And inside of the balance sheet, most balance sheets are going to sub-categorize all of those different sections. So in your asset section, you're going to have something that's called a current asset. So a current asset is something that can be converted to cash or is cash, can be converted to cash in a year or less. So this would be how much cash is in the practice checking account. Do you have a certificate of deposit? Do you have a savings account? So these things all can be turned into cash either immediately or certainly in less than one year. So those are current assets. And then you've got your longer term assets and you may have some property, you may have some equipment.Joseph:All of those things are going to fall into a separate section of the asset section of the balance sheet. So whenever I'm looking, kind of initially, and I'm taking a quick glance, I'm going to look at current assets. And I'm also going to look at the flip side of that, which is a current liability. So when we talk about a current liability, it's the same one year rule. So the current liabilities are things that are due in less than one year. So think real simple terms like your credit card, that's due within 30 days, right? If you're tracking your accounts payable through your balance sheet, that would be a current asset because that's going to be due in less than a year. Versus a long-term liability, maybe your ten year practice loan, that's going to be at a different section.Joseph:So one of the financial metrics that a lot of banks are going to look at when they're trying to evaluate your financial strength as a practice... And again, this is an imperfect system, there's a tons of different ways to value different pieces. But they're going to look at what's called a current ratio. And it's very simple, your current assets divided by your current liabilities. So just to give you an easy example, if I've got a $100,000 of cash in the practice checking account and I have an accounts payable balance, credit card balance, all of that, all my current liabilities added up to a hundred thousand, then I have a current ratio of one. And what that simply means is if all of those got called today, all of those liabilities, the bank called, the credit card called, the line of credit, all that stuff gets called today. You can pay all of your bills times one.Joseph:If you had, for example, $200,000 in the practice checking account and a $100,000 in liabilities or current liabilities then you could do that twice. So that would be a current ratio of two to one. I mean, when you look at financial statements, Jonathan, I think that a lot of people look at different pieces. I mean, it's easy for me to say that if you have less cash on hand than you do in credit card debt, that's a problem and we need to work through that. But what are some of the kind of healthier things that you're looking for? And we just talked about current assets divided by current liabilities. Or basically, if we're going to super simplify it down, cash divided by bills that are out there. What are you looking for?Jonathan:Yeah. On the balance sheet specifically, the first thing.... So another thing that is important for people to realize in terms of balance sheets, is that everything is listed in the form of liquidity. So the most liquid assets are listed first instead of the assets in your balance sheet. And the way the balance sheet is set up is there's the assets set, what are called just assets overall, and those are broken up into current long-term assets and other assets. And then there's a liability section, which liability section it's supposed to be listed in order of how soon that debt is due. So the first thing that I look at the very top, which is the most liquid thing, which is cash, cash is always going to be your most liquid thing all the time.Jonathan:Usually, the next thing is going to be something like AR inventory equipment, and then other assets like intangibles and things like that will be listed. But I always look at cash. I mean, that's the first thing. Because if I look at a practice and the cash equals $20,000, unless this is a startup, this practice could have some issues going further. There's a lot we can't answer yet. So in terms of a math concept, this is a not enough information type thing. But if I'm looking at a balance sheet that has very little amount of cash, there's some liquidity issues. What happens if a machine goes down and we're going to have to take on debt? If we do have to take on additional debt in order to do that and that can exacerbate the cash problem.Jonathan:So the first thing I look for is cash. I look at how liquid is this business because that can give you a lot of signs and that gives you a lot of context for what you're going to look at when you look at the other pieces of the practice. So the next thing that I'll look at is the current debt. The liabilities that are likely to have to come up soon. Like you said, if cash is less than credit card debt, then that's a big red flag, we've got some issues here, we've got a cash issue. Because that should not be the case in most dental practices, you should not have more credit card debt than cash. From a financial theory perspective, the interest on your credit card debt will eat away at your cash faster than your cash will sit there.Jonathan:So the value of that cash will go down, the interest on the credit cards would go up and you're going to have a problem that's just going to get worse before it gets better. So yes. That's a big issue for most dental practices. If I'm looking at a balance sheet just to kind of analyze how the business is doing. And another thing that I want to really, really quickly hone in on because we didn't preface this. We're just analyzing a practice in terms of looking at someone who has a practice and how well that practice is doing, we're not looking at this in terms of buying a practice because what the old owner did and how good they were at saving money does not affect the new owner.Jonathan:This is not a specific situation that we're talking about. We're looking to buy a [inaudible 00:19:00] that. Because to be honest with you, I don't think I even look at balance sheets whenever I'm analyzing practices to purchase, but when I'm looking at a clients'... If a client says, "Hey, how's my business doing?" I will look at a balance sheet in that regard because it can help me guide them better with what it is they're needing to do. Whereas if we're buying a business, I don't really care what the old owner was doing, I only care what the new owner's going to do. So there's a little bit different of a situation there. And you don't buy the credit card debt when you buy a business, so who cares if they had $100,000 in credit card debt?Jonathan:That could show us something in terms of a spending issue, but the spending on that liability would be affected in the P&L under expenses, so we'd also be already taking that into consideration when we look at the P&L, which we'll get to that in a bit. So anyway. So yes. Cash and then I'll look at short-term liabilities. And then I look at total debt. I mean, how much do we actually have in debt in this office? Because that's a big thing. It's a big deal. You need to know how much money in debt this practice has because if you don't then it's the same thing. Is this a problem that's just spiraling out of control? Is this just we're investing in the practice heavily and we're using other people's money to do that? If so, that's fine, but I don't like seeing a whole lot of debt and seeing cash and credit card debt being flip-flopped.Jonathan:It shouldn't be a negative balance there and we're taking on consistently more debt. The only way I could say that that would be worth it would be is if for whatever reason you're.... I don't know. If you knew that you bought X machine, X machine would be bringing you more money. That's really the only way that that'd probably be making sense. So that's what I look at on the balance sheet. I do look at equity a bit just because I'll have to see if it's an escort for how much in distributions we're taking. Equity has the net income on there, but unless it's something financially in our firm created, I don't really even look at the owner's equity because I just assume that it's going to be wrong.Jonathan:As you can say, Joseph and I have talked before, before he joined our firm. He was like, "I had no idea that so many firms didn't know how to do bookkeeping," right? And we demand a very high quality of bookkeeping service from our company and for our clients' benefit because we believe in what's on those financials. So basically, unless it's a trusted source for that financial statement, I don't even look at it on the equity side because most of the time it's wrong. And so my assumptions of being correct... Usually cash and liabilities are usually right. We've definitely seen people come in with debt and their debt is negative $800,000 and we're like, "This is great. We're going to have some work to do on this one." So that happens. But anyway. So that's really what I look for on the balance sheet as a whole. What about you? Is there anything else that you look for on balance sheet?Joseph:One of the things I love to do with balance sheets is I love to compare them and see. So most of your accounting softwares that are out there or if you have financial statements that are generated, this is basically a book value of your practice that you can look out over time. When I'm doing a financial statement analysis or a client asks me how I'm doing and I kind of really want to dig in, I'll do a balance sheet as of the 31st of last month, then I'll compare that to the prior three months. Or I may put it at 1231 and compare it to the prior three years, and let's see over time what's going on with cash, what's going on with debt, what's going on with owner's equity. And of course, that's also under the assumption, Jonathan, that I'm looking at a good set of books. As you and I have talked many times, we can take a look at a balance sheet a lot and say, "Something's not right there. There shouldn't be a negative upside down balance in an accounts payable account. That's not right."Joseph:So I like to look at things over time. So hopefully you've got a good set of books that you're looking at and you can look and see what's happened to cash over time. If cash goes up $50,000 a month and equity stays the same and we look down and it's because we've taken $50,000 out in shareholder distributions every single month. That's a good problem to have is cash is increasing, distributions are coming out and we're still increasing our overall position. So I like to look at the comparative and see kind of what's going on and what happens. If I see a big, huge decrease in cash of $25,000 in a given month, I may see, "Oh, look at that. I bought a $25,000 piece of equipment. Well, that makes sense," right? That's not money that went out the door because we spent too much money on overhead. That's a piece of equipment that hopefully is going to increase our bottom line.Joseph:So that's one of my favorite ways to look at a balance sheet is to just compare it to the prior couple of periods and see. And you can look at it, if you wanted to do a quarter by quarter and see what 12 31 looked like, versus 9 30, versus 6 30, versus 3 31, just see how things have progressed over time. Those are the ways that I'm looking at. And I'm also looking at the same stuff that you mentioned, which is looking at the cash position and looking at the liability position and seeing what that looks like. There's a ton of financial statement ratios that are out there. One reason that banks and financial institutions like to look at ratios is it puts everybody on the same level.Joseph:So $900,000 of debt for dental practice is not the same as $900,000 worth of debt for a publicly traded company that's huge like a Walmart or a Google, right? Those are not good indicators, right? If you looked at cash in the bank account, my $100,000 is not comparable to Walmart's $100,000 in their cash account. So that's why banks and a lot of financial institutions look at ratios because we can compare what's the debt to equity? What's the debt to assets? What is the current ratio? What's the quick ratio? All of these different things can basically put everybody account on the same playing field to figure out what kind of cash position they are. So my quick easy one to go on is looking at that current assets divided by current liabilities and making sure that that's more than one. And trying to figure out what's that looking like over time?Joseph:We have clients that start out and for one reason or another they have to take out a practice loan and that practice loan doesn't cover everything that they need. So they've got to look at other forms of debt, whether it's a high interest rate debt or it's a credit card they had to take out in advance on a credit card. We see some of these things that happen over the course of time. What you want to see is as you look back at 2018, 2019, 2020, 2021, 2022, you want to see progress in each one of these things. And if you continue to have an upside down assets versus current assets versus current liabilities, I know that we've got a problem and we've got a problem that we need to fix because we don't have any profitability because if we have profitability, we'd probably be able to pay down some of those debts.Joseph:And certainly a bunch of stuff goes into all of those different pieces. You may be taking too much out in owner's draws are spending too much on CE or any of these other things. And one of the things that you mentioned early, Jonathan, was the concept of all of these financial statements work in conjunction with each other. You can't just look at a balance sheet and know everything there is to know about practice. You can't just look at a P&L and figure out if that's a good office or not. You can't just look at a cashflow statement and say, "Well, that's everything you need to know."Joseph:We were talking before the call, what if they had five huge cases in the month of December that jacked up their P&L, but all five of those cases that came through they were super POd by the time that they left the office and they'll never come back again and we're not going to have those five cases. So there's a ton of different things that you've got to look at and evaluate in the overall health of the practice. I really like the balance sheet because it gives us a point in time. It lets us see what do we own minus what do we owe. And we want to see that number increasing over time.Jonathan:Yeah, I agree. I love the fact that since it is a picture of time, you can look at two different pictures. It's kind of like on Facebook, I look at the pictures of my kids and when I look at them now, I look at the difference that they've had and what changes and things like that, right? It's a fun thing to do to be able to see how they've changed. And the business, hopefully, when you look at the things that have changed they've happened in a good way and they're going to be fun to look at too. So yeah. Definitely look at the balance sheet. And when we do that, I do that for our firm and I do that for a lot of things of comparing it period over period, because like I said, the snapshot in time doesn't really tell you the whole picture. The balance sheet over time will tell you a lot more. So I agree.Jonathan:In terms of the other things, just a really quick thing in terms of when you're looking at cash, a way that I try and take this concept for cash is not only do I like to have more cash than I do short-term liabilities, I also like to have enough cash to equal, at least, one to two times what your breakeven costs are going to be on a monthly basis. And I'll use that. So this is going to be a two-part episode. This is episode 10 of the balance sheet. We'll do episode 11 will be the profit and loss. And so we'll move over to the profit and loss now, but you use the break even point to basically use as a metric to take versus your cash amount, to see how much cash you have to be able to sustain kind of a rainy day fund, so to speak.Jonathan:So I like, at least, a hundred to 200% of your breakeven point being in your business bank account with the caveat of you also need more cash than you have short term liabilities. And so probably honestly, the best thing to do is to have your cash, net cash, which would be your total cash minus your short-term liabilities. That amount should be two times your breakeven point. I think that's a very healthy amount of money to keep in there. Anything extra, then a lot of the times in a single owner dental practice that might get funneled out to the owner and then gets reinvested in other places in their personal lives to be able to help with their wealth building and things like that. So let's talk about the P&L, what do you like about the P&L? What is it that gets you going in the morning whenever you see a really nice P&L?Joseph:Yeah. Good Thought. So the P&L, the profit and loss, the income statement, if we're talking nonprofit, statement of activities, right? There's all these different fancy names for it. But it's basically, are we running a profitable business? Is this business making any money? So I think that there's a couple of different kind of old terms that I've heard kind of mentioned out there. So one of them is that revenue is vanity. Like, "Oh, look at me. I'm a $1.4 million practice. Congratulations. Look at how awesome. Let me pound my chest about my $1.4 million practice." Revenue is vanity and profit is sanity. If you have a $1.4 million top line, Jonathan, but you spend 1.8 a year, that's not a good practice. I'd much rather have a $800,000 practice that spends $400,000, right? So revenue, top line, sales, collections, whatever you want to call your top line, revenue is vanity and profit is sanity.Joseph:So I have a tendency to kind of quickly scan and look at what's top line revenue look like and quickly scan at the bottom and figure out what the bottom line income is. As I'm sure you'll probably be able to tell our listeners like, "If that's just quickly where I'm going, what are some different pieces to that that may not tell me the whole picture if all I do is hop straight to the bottom line in a dental practice?" I mean, the vast majority of our clients and the people we work with for the most part are single owner practices. What's the harm in just looking at top line? Top line's 1.6, bottom line is $10,000 or $50,000 or pick a number. What's missing in that piece of the picture that's not giving them a full picture.Jonathan:So again, I'm probably going to beat this like a dead horse, is that the first thing is that you got to make sure their financial statements are really accurate because if they're not, then you're going to be pounding sand to try and get any actual information off of those things. So to me, the net income or the net taxable income or whatever you want to call it, net profit, whatever it is, it has to be set up in a format that you can understand and quickly pull out information that is discretionary in nature. One of the things that happens super commonly in dental practices is that there's a lot of discretionary expenses. So for example, let's say... Obviously, every person's situation is different, but some people for example take, say, a $290,000 wage.Jonathan:And the reason being is that that's what they think their compensation should be. Maybe it's a percentage of their production, it's a percentage of revenue, maybe it's just a flat amount, but a lot of the times when they have wages of those amounts, when they're paying themselves, has something to do with a 401(k) that's in the practice, so that they can have a profit sharing plan. When the calculation is being done, they get a maximized amount being contributed from their employee and the employer deduction. And then whenever they do the profit sharing amount calculation, they usually get a pretty favorable amount going towards them if they set it up in that way. I've seen dental practices that have came through, they set that up and they are literally spending $150,000 more than they have in profit on the owner's compensation. So the net income says a negative $140,000 in net income because the owner payrolled themselves 290,000.Joseph:Doesn't sound like a net loss to me.Jonathan:Exactly. So that's the danger of doing that is you have to know what's discretionary and what's realistic. If you're really analyzing a business and seeing how profitable is this business, it's a complicated answer because the owner should be compensated, obviously. But if that person taking $290,000 in wages, top line revenue is, say, I don't know, 800,000 and they only produced... I'm not saying only as in it's a bad thing. I'm saying only in terms of the conversation. And they only produce, say 600,000 and they took out almost 50% of their production in wages, not to mention payroll taxes and everything that goes along with that benefits.Jonathan:So that number may not be what... If you had an associate and they were working for you and you had a practice that someone else was working at and they produced 600,000 out of the 800,000 being brought in. Would you pay them $290,000? Probably not. So it's discretionary, right? So what would be more realistic? And if you're paying them a third, you'd be paying them 200,000. And that would cut that $140,000 loss into 60,000. So it all depends on the practice. There's a lot of different things that go into it, but if you're analyzing a practice [inaudible 00:34:12], what I do is when I look at P&Ls I do a head count of seller's discretionary earnings.Jonathan:A lot of people use the term EBITDA in the dental field, which is not really EBITDA because most people never put back in the actual cost of someone to replace the owner. So the correct term of that is seller's discretionary earnings, which basically is you back out whatever was discretionary, which is typically the owner's wages. Is there a family member that's on payroll that is getting 40, $50,000 a year to be an office manager? Are they actually there every day? Are they actually fulfilling all the roles what the office manager would do? Payroll taxes associated with that have to be backed out. Are there any travel expenses for CE, there maybe be more expensive that they wouldn't normally give those same types of reimbursements to an associate to do those types of things with? Are there any types of business entertainment? Are there any types of health insurance that's just for the owner?Jonathan:There's tons of different things that can go into that P&L that will be on the P&L if it's properly being recorded, but needs to be pulled out to be able to compare it to other benchmarks of other practices. So that's another reason why I don't really trust a whole lot of the benchmarks that are out there in the dental field because if I don't have the full faith of every CPA that's out there's financial statements, then how am I supposed to have faith in a study that benchmarks using those financials as their basis point?Joseph:Yeah. And they're all self-reported too, right? [crosstalk 00:35:54] financial statements, they're self-reported.Jonathan:Yeah. So there are generalities and we work with around 250 offices and we see there are just differences in dental practices. So P&L to me is a fantastic thing to look at to have an understanding what's happening. But to me, you have to be financially savvy enough to calculate out that seller's discretionary earnings in order to be able to calculate what the actual profitability of this practice is from a dollars and cents perspective. Once that is done, you would then look at those different key categories, which again, is another area where I find a lot of dental practices financials don't have things properly segmented inside of their financials. So you can't do that. So the presentation of the P&L for dental practices is just as important as the understanding because you and I could look at a financial statement that would come to us and if it's not a really, really well-defined P&L, I mean, we've seen P&Ls that came through that have had 10 expenses on it. And that's all expenses on the P&L. They have nothing else. And this is-Joseph:Wages.Jonathan:Yeah. Wages, payroll taxes is added on that, insurance is on that. They had a consultant probably in wages, they probably did some recruitment that was in wage. It's just all in one big line item. You can't define anything out of that. So presentation is just as important as well. So what about you? What are other things you like to look at on the P&L? Because I could probably talk about this for another two hours.Jonathan:Hey, everybody. Jonathan checking in again here. Just so you know, this episode went really long. This episode is actually a three part episode because there's a lot for us to talk about in these episodes. So make sure you follow up and listen to the following conversations that we'll release over the next couple of weeks. Again, this is a three part episode. This is part one. And we will check in with you on the rest of it going forward. Thanks.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner and you're interested in CPA services head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country. We'd love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. And we'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group. Talk to us about what we've talked about. Join in on the discussion and let's create an environment where we can talk about some of these things, so that we can all help each other get through these things together, so that this adventure of business ownership is more fun, more productive, and better in the longterm. Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Reply with your email address, we'll send you the instructions in the Facebook group. We'll send you the resources when they're available and we will see you next week.

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Team Goals (Part Two of Two)

Play Episode Listen Later Aug 2, 2021 23:36

Join the discussion on Facebook!TranscriptJonathan:Hey everybody, Jonathan checking in here. And just so you know, this is a two-part episode. This is the second part of the episode. So if you've not listened to the first part yet, you want to go back and listen to it in the prior weeks. We should have it labeled on the episode title part one is and part two is, so you should be able to listen to that and see that in the title of the episode of this, what episode of episode it is. ThanksJoseph:We have this global pandemic that hits, dental offices are shut down across the globe for a good chunk of March. We would say, "Well, we didn't hit our quarterly goal for Q1 of 2020. Here are the reasons, it's because we were shut down for eight weeks." It was because we did emergency only, and all of a sudden we're able to kind of add some color around what's going on. One of the things that I've noticed is that the first quarter of 2021 has been really, really good for a lot of the practices that we help. Okay, well, what's going on there? Let's add some color to all of those different pieces. So I'd say at a minimum, you need to communicate that stuff quarterly. You, as the business owner, need to be looking at it at least monthly. And then if you've got folks that you can communicate on your team that can help you reach your goals, as frequently as you can looking at those, if that's even weekly or if that's monthly, but I would say at a minimum, you definitely want to look at it monthly. And you need to communicate with your team at least quarterly. At a bare minimum, I'd say twice a year.Jonathan:Yeah. And for our firm what we've done, we have that quarterly meeting. It's not only talking to the employee about the team's goals, it's also talking about the impact of that person on those goals, right? So it's also about accountability at that point. So how big is your capacity? How efficient are you being in getting these things done? How many clients have we had issues with that are underneath your care? For a dental practice, it could be like what you said, it could be, hey, our cancellation rates are still going up. Why are they canceling? Or whatever we implemented last quarter that we talked about in our last quarterly call or last quarterly discussion, apparently that change hasn't helped. It's actually hurt. And let's think about why that is, and think about something we can do to be able to make it work better going forward.Jonathan:And I know if you're a dentist listening to this, you probably have a team check-in. A lot of practices have a team check in every morning before the day gets going. I think that's fantastic to have that so you can be ready for the day. Systems are ready, hygiene's ready, office is ready, things like that. That's not the meeting we're talking about. We're talking about one-on-one, you're talking to that employee about where you're wanting that employee to progress to as a person, as a member of your team, as a member of the business and how they're accomplishing those goals and things like that.Jonathan:So yeah, I think that's a really logical way to do it. And the way that we did it was, we also did a weekly talk with the leaders and we said, "Hey, we're going to start at a weekly." And we have a tax team and we have an accounting team and we have an operations team. And we said, "Hey, everybody's going to do it weekly in the beginning." And if we find that, I think we started with, say it was going to be a 45 minute call every time, we said, "If we get in there and we've realized we don't need to be on a call for 45 minutes then we can change that to once every other week or we can change it to a 20 minute call." It's easy to decrease it once you start, but you've got to start and you've got to do it in order to be able to move forward.Jonathan:And another good tip I'm going to talk to you about, in terms of the finding the time to do these types of things, the best way to find time to do these types of things is to put it on your calendar and stick to it. I mean, that's it. I mean, I know it's hard to say, well, I didn't want to stay that extra 30 minutes that day, or I didn't want to take a 30 minute lunch or I didn't want to have to take a 15 minute lunch when I usually take a 30 minute one, or I didn't want to have to pay for the meal for the office, but I did, or for this person... That can be done. You can do those types of things. You can be creative with your time. If you search for the time, you will find it.Jonathan:Now the bigger your team you have, the harder this will be. If you're trying to find a 30 minute window or an hour long window for a hundred people, yeah, that's going to be tough to do. If it's five to seven, that's four days out of the year, four eight hour days if you have eight employees, if you're doing an hour at a time. Which, most of these things, they don't always take an hour. Sometimes if you have a lot of brainstorming going on with it, it might have that as well. But maybe that could be something that you do as a part of your team, and having the brainstorming piece of it and the way it goes too.Jonathan:So what else is there that people need to know in terms of how you approach these meetings, these quarterly meetings and do that accountability piece of it? Because like you mentioned at the beginning, we're in this world where we don't really like to be confrontational. We don't like to point out things that are wrong. Most of us like to build people up rather than tear them down. And we may be having blunt conversations, but the purpose is not to build down, its purpose is actually to build them up. It's just, you're building them up in a way that feels odd sometimes. So talk us through that.Joseph:Sure. Well, one of the things that, whenever I have brand new leaders that I'm talking to, or new managers or people that have kind of gotten thrust into this role of being in a supervisory position, which I'm sure many of our listeners will find themselves kind of all of a sudden thrust into this place, a really good book that's a quick read if you haven't read it is the One Minute Manager by Ken Blanchard and Spencer Johnson. So have you read that book, Jonathan, the One Minute Manager, did you ever read that?Jonathan:I have. It was about seven years ago? Yes, I read it.Joseph:Yeah. So one of the things that they talk about in the One Minute Manager is getting a chance to catch people doing things right, and then address things and issues as they can. They [inaudible 00:06:16] little one minute meetings or whatever. So I'd encourage you to go pick up that book. So whenever we're talking about quarterly performance reviews or annual performance reviews, one of the things that I want to make sure that we're clear about is, that's not the time for you to air all of your grievances out with your people. Like, I've saved up all of this bad stuff for you and now I'm going to sit down, you have no idea what to expect, and I'm just going to just lay into you about all of the times where you screwed up Ms. Johnson's stuff, and Mr. Jones was in and you were rude to him and all this stuff.Joseph:So one of the things that I tell leaders is that there should be no surprises in your annual performance review. It should be a review of all of the things that we've talked about throughout the course of the year. It should be a review of all the things that we addressed and the changes that we made and the things that we fixed. So I would encourage you to address things as you see them come up, do it in a respectful way. If you need just kind of a playbook, the One Minute Manager, again, is just a quick read to kind of help you do that and kind of get a little bit of a playbook in order to do that.Joseph:But don't let the only time that you ever give anybody any feedback whatsoever is the annual performance review where you just lay into them. You'll have people that are just not happy with you or they're upset, and then they'll want to go work somewhere else. So it should be a review of all the things that we've talked about all year long. It should be a review of whatever, if you have specific metrics that you want to hit for your hygiene staff or for your front office staff for their collection rates, or our zero to 30 needs to be what percent versus 90 to 120 on our AR or our denial rate needs to be X... Look at all of those different metrics throughout the course of the year and update them quarterly on those. And then you can just review all the stuff that goes on.Joseph:And it's also a really good opportunity for your employees to tell you something that you may not do or may not have thought about. One question I used to add to performance reviews that I did whenever I was leading a large staff, is what unique skill or talent do you have that we're not utilizing? What is it that you wish that I knew that you can do that can help the practice? And they may say, "You know what? I'm really good at calming down upset patients," or somebody may come and say, "You know what? I really like helping children feel more comfortable in the office. You know what I've really thought about, is I really thought we should do X, Y, and Z."Joseph:One of the things in my CFO position that came out of one of these conversations just like that was, we had some logoed teddy bears made. And anytime we would have a child that came in and that child was really upset because they're being fit for this orthotic device, we said, "You know what? Here's your teddy bear." And it's not about the marketing and that kind of thing, here was just this little simple, easy thing that we did. And that all came out of an annual performance review. When I said, "What do you guys think we should be doing?" Somebody said, "What about doing some logoed teddy bears?" And I was like, "I've never thought about that before." Pretty low barrier to entry, it's going to cost us however much it's going to cost us. If we try it and it flops, it flops. And they ended up being this great thing that just was born out of having open conversations with your team and talking about goals.Jonathan:Yeah. It gets really easy as a business owner to get lost in your own head about all the different things that you could or could not be doing whenever there's a... You have a whole team of people that are in the same business that you are, and they have ideas too. They understand a lot of the things that you may get lost in at some point in time. So having these conversations can be difficult, but they can provide a lot more value on your end as the owner than you probably think. If we were to pull up some statistics about training cost and turnover costs per employee, like average amount of time, it takes to get someone trained inside of any type of business, the cost would be really, really, really, really large, not to mention the effectiveness per employee that are likely going to be happening inside of your practice.Jonathan:So I'm not even talking about those things. I'm talking about just having other people that are bought into the success of your business than yourself, which these conversations can hopefully influence that. As a business owner, you are typically the person that is on the largest hook for success or failure, but you can have people that will buy in with you in some ways and carry that cross and that burden with you. So having these crucial conversations, approaching someone who always has excuses about something, or they're just not getting the insurance checks processed fast enough, or they're just not turning into patients over fast enough or whatever it is, having those types of conversations with people are not fun.Jonathan:When we're talking about uncomfortable conversations, that's the type of conversations that aren't fun, because you're talking to these people about the things that they're doing every day, and you're having to come to them and say, "Look, I heard you answering the phone the other day, and my gosh, if I were the one that were calling this office, I probably wouldn't have wanted to book an appointment either, because you were kind of mean to that person. I don't know if you carried something in bad with you that day or what," but that's the type of thing that you've got to, as a business owner, you've got to talk to people about. And this would be something that, like you said, that wouldn't be something that would be in the quarterly discussion, that'd be something that would be done if you heard it, you needed to probably address it fairly shortly after.Jonathan:And then these quarterly performance things, having those discussions can be difficult. The difficult part is if they are not reaching what you set out for them, I guess. And we probably need to stop it at there, because I think that we could probably dovetail this into a very big conversation about how to set a proper team goal, and how to set proper goals on the individual level. And then have that come back to this episode about how you actually address those things and help coach those people through those things as the year goes by. Because like you said, one of the problems is the time management of like, if I've told my hygienist she needs to be able to cut down the amount of time it takes her [inaudible 00:12:44] being from an hour long visit to a 15 minute visit, it can sometimes be difficult, or I'm sure it's difficult to try, and if they're only able to do an hour still going forward to be able to coach them and to be able to get that to have that turnaround time be a little bit faster in some ways. And you, as the dentist, may not have the answers to that, but you may be able to find consultants or people or some type of resources that can help with those types of things.Jonathan:And so yeah, so again, this is a very big discussion. I'm going to try and pull it back into the talking about in the quarterlies, you go in, it's no surprises there. This is not a gripe session. This is a, how do we constructively build you up and how you fit into the overall team goal? So let me ask you this. If you have an employee that is not reaching those milestones or is not doing the things that you would expect of someone who is actively engaged in this mission of the company, how would you address that? Like, what if you had this assistant that just, they probably didn't care that much. It didn't seem like they were really trying a whole lot to get those patients to learn the procedures that you're trying to do on your patients so that you can be more efficient and do it better for the patients. Like, what do you say to someone that is in that situation that just doesn't seem to get it, or just doesn't seem to want to be a part of it? How do you address that topic for conversation and is this the appropriate time to do it in a quarterly conversation?Joseph:Yeah. Good question. I think that there's a lot of different pieces that are into the answer of what you're asking. How do we make an uncomfortable conversation comfortable? How do we actually get to dialogue? At what point do we get to the tipping scale that this is a coaching issue versus not a coaching issue? That's one of the things that I'm constantly asking myself, as you get a chance to lead people, as you find issues that come up is, is this a coaching issue? At some point you have a scale tip that this is not a coaching issue, that this is just the wrong person in the wrong seat on the bus, right? Go back to some Jim Collins stuff about getting the right people on the bus, the wrong people off the bus, the right people in the right seat, and then determine where the bus is going.Joseph:So there's quite a bit to be said about a lot of different ways to approach kind of this confrontation. You want to create an environment... Like at the end of the day, what do we want? We want dialogue. We want to have a conversation. If people are scared, if they're intimidated, if it's not a good way that you've approached them, they're going to go to their fight or flight mentality. And there's a ton of stuff that's written about all of this stuff that's out there kind of in the business books world. Because if they're in the fight or flight mentality, and they think that they're about to get fired, or they're really, really ready to just pick a fight with you about this and argue with you until you're blue in the face, their brain is not working on a deep human level, right? It's called the lizard brain, is what they're doing. And what we really want to do is we want to get to dialogue. We want to understand if it's a coaching issue.Joseph:Maybe a tools issue. Like, you and I were talking the other day about the tools that we have for our team. And do we have the right tools in place to ask them to perform at a high level, yes or no? Okay, well maybe, but let's investigate it. Let's further look into that. So is it a tools issue? Is your hygienists going to come back to you and say, "Well, I can't get it from 60 minutes to 50 minutes because I've got this tool that fails on me about 10% of the time. And that's why this always happens this way." Okay. Well, that's a pretty simple fix. Like let's just get a better tool. Like what is the tool that we need? And then all of a sudden that fixes that, because if you don't get to a place of dialogue, that's when people get really, really upset and they either go to silence or violence, right? They either totally shut down, they're not listening, or they're going to go to violence and they're going to erupt and say, "Well, you're just such a cheap old dentist anyway. I don't even have the tools I need..." They're going to go to silence or violence. So the goal with all of this stuff is we want to get to dialogue.Joseph:And then at the end of the day, as a business owner, you've got to choose whether or not this is a coaching issue or not. If it's a coaching issue, we want to help people get to where they want to be. Nobody shows up to work to do a bad job. That's not why they show up. They don't show up to work to steal money from people. Like, I just can't wait to go be a crook and take people's money from them. Nobody does that.Jonathan:Hopefully no one in your office does that.Joseph:Yeah, that's right. Yeah. They show up to work because they want to help people. They want to do a good job. So how do we get from where we're at to where we want to go, and we want to be able to create some dialogue. I think that that's probably the biggest thing. And that's very, very challenging, especially if you don't like confrontation, especially if you've not ever led people. I had a good friend of mine that was a kind of consultant for me for a while. And he would talk about getting comfortable being uncomfortable, because it is uncomfortable whenever you've got to approach different stuff, or you've got to address different stuff. It's very uncomfortable. But as a leader, you've got to get comfortable being uncomfortable. You got to get to a place where you can have dialogue with your people. And you're not going to do that if they go straight to silence or violence, to use some verbiage from a program called crucial conversations, which is really, really good, by the way,Jonathan:I wonder if these quarterly meetings were called dialogue meetings, if that would help spur... This is when we talk about these issues. I mean, I think the traction book has, it talks about having just a list of issues. And we did that for a while as a company too, is we just say, "Hey, if you have any issues, put them on this tab of the spreadsheet." And every year, we're going to go through all these issues on the annual thing. And there were things that were issues that we need to address at some point, maybe they're not urgent to talk about right now, but they're issues. And let's talk through them and let's have this be a part of this meeting.Jonathan:And that's what we did for a few hours as a team, is we'd address all these issues that were coming up. And it was never that, Kathy's a meany head, it was that this software was really slow compared to the other softwares or computers were getting outdated or just things like that that would need to be addressed, but wouldn't need to be addressed right then and there. So I wonder if these were called dialogue meetings, if you could set those expectations. Because like I said, whenever you're talking to these people, or whenever you bring these issues up, it's really hard just to have it be a part of the year and it not just sound like a bitching and moaning. If you talk to somebody about these things during the day, and you're like, "Man, Nancy, you took way too long doing your insurance," all that is is you complaining at that point. But if you're having a dialogue of like, "Let's talk about how we can maybe have our insurance verification be faster in the day so you don't have to be working overtime," or something like that, you know?Jonathan:Having those be pre-set allows you, number one, to not have those issues bog up your day, every day. It also allows the employees to have a path to discuss those things with you as an employee. And sometimes people aren't perfect and they may have dialogues and issues that aren't really big issues, but at least you can hear them and consider them and you may be surprised. You may not think it's a big issue, and then after it's been communicated to you, you may start noticing that issue. Like, "Oh, that is an issue. I didn't think it was, but it is." And then you can start to address it and things like that. So really important to have that dialogue in those quarterly things. So is there anything else that you wanted to discuss in conclusion? I think this is going to be another two-part episode, episodes eight and nine of the Tooth & Coin podcast. Is there anything else that you feel like we need to address that we haven't, in terms of the communication in those quarterly meetings where you're talking to the team members about their progress, the team's progress and the team's goals, and then how that person's influencing it and how they're doing in reaching those things?Joseph:I think one thing that I would just kind of conclude with is something that one of our leadership coaches told us, and that's that it's worth it. It's worth it. This may sound overwhelming. This may sound uncomfortable. You may get to a spot where you're addressing things and it's uncomfortable, but at the end of the day, it's worth it. Is it worth it to make sure that everybody's rowing in the rowboat in the same direction? Yeah, of course it is. Is it worth it for our practice to meet our goals? Yeah, it's worth it. How do we get there? Part of it is having conversations with our team. So as you listen to this and as you get a chance to kind of reflect and see how it fits into your practice and your style of management ownership, just know that it's worth it. We get the privilege to lead a staff, to lead a team. We get the privilege to help people every day about what it is that we do. And getting that firing on all cylinders, it's worth it.Jonathan:Absolutely. All right, guys. So we're going to call that a double episode of leadership. And if you want to continue the conversation, go over to the Facebook group, by typing in Tooth & Coin podcast into the search bar and you'll be able to find the group, be able to join there. Come talk to us about times that you've had some of these conversations with people. Talk about what's worked for your office, what's not worked for your office. Any hacks that you have and ways to be able to make leadership inside of your practice better. Has this worked to engage our employees? Has it not worked to engage your employees? Why or why not? Different things you could talk about, it'll be really interesting to have you in the group. Until next time, bye.Joseph:Bye guys.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth & Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country, and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up or has become an owner in the past five years. That is our specialty. And we'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoy today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the longterm. Lastly, if you want access to those resources that we are currently building, just text the word tooth and coin to 33444. That's tooth and coin, no spaces. T-O-O-T-H-A-N-D-C-O-I-N to 33444. Reply with your email address, we'll send you instructions on the Facebook group, we'll send you the resources when they're available and we will see you next week.

business man entrepreneur talk goals ms performance owner team finance cfo coins cpa tax accounting dentists dental tooth jim collins ken blanchard spencer johnson one minute manager jonathan vanhorn jonathan so jonathan yeah jonathan that

Team Goals (Part One of Two)

Play Episode Listen Later Jul 19, 2021 28:21

Join the discussion on Facebook!TranscriptJonathan:Welcome to the Tooth and Coin Podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones. Some of them are very specific, but we hope that these episodes help you along with your journey. Now a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is, if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists, that is going to have content talking about what we're talking about today, to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share, join us in the Facebook group. If you go to Facebook, and you search for Tooth and Coin podcast, click on it to join it, and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering in around our topics of discussion, to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin T-O-O-T-H-A-N-D-C-O-I-N to 33444. Again, that's toothandcoin, all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group, as well as add you to the list, to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well.Jonathan:So on to today's episode. I hope you enjoy it.Jonathan:Hello, ambitious dentist. Welcome back to the Tooth and Coin podcast. In today's episode, we're going to be talking about a leadership topic that is one that is just not really talked about very often. And that is how to keep your team engaged when trying to reach the goals that your practice has set. You want to make this seem like some really big, fun, exciting, giant topic, and it is fun and exciting, but at the end of the day, it comes down to engaging with your employees and communicating to your employees and having a feedback between yourself and your employees, so that you can tell them how they're progressing and keeping them engaged with the goals that you've set as a business, as a practice, so that you can actually move forward as a team, keep everybody rowing in the right direction, so to speak.Jonathan:So I'm going to be interviewing Joseph about this topic. Joseph is the leadership guru in our company. So I'm going to be asking him the questions, and he's going to be helping us out with this. So Joseph, let's start with that. Let's start with, number one, why is it important for us to be having these discussions with our employees, and how does that typically look in terms of how these communications are set up?Joseph:Yeah, great question. So I think that, in general, one of the things that is difficult in leadership is to give constant, sincere, appropriate feedback to your team. And one of the things is, as human beings, we just don't like to engage in anything that might be challenging. There's a very small fraction of the population that likes to fight, but that's far and few between. And by the time we're professionals, especially practicing at this level, especially getting a chance to engage and have a team of five or 10 or 20 or however big your practice is and the number of team members, we just like to avoid confrontation. And it feels like anytime that we've got to address anything with our team, it's going to be confrontational in nature.Joseph:And I would say that, while some things are confrontational and may not be the best thing, if you do it in the right way, it can help you achieve your goals as a practice. It can help you achieve your goals as a team member because one of the things that they've found, as they've studied employees and employee engagement, is that a lot of people, when they're disengaged at work, they're a fraction of the way productive as they would be if they were fully engaged. And if you poll your employees, one of the things that they would say is I get no feedback.Joseph:I think the cliche word that we use all the time in our society now is communication. Well, we just don't have good communication at our office. Well, if you look at why don't you like your boss? Well, we just don't communicate very well and that kind of thing. So I think that that's kind of the framework to start from is your team members want feedback. They need feedback. And if you avoid that because you're afraid that it's going to be uncomfortable, what that will eventually lead to is that will eventually lead to employees and team members that are disengaged, they're burnt out, and the big question, mark, Jonathan, is that they're left guessing, how am I doing? Am I doing okay? Am I not doing okay? How is the team doing? How are we progressing in our goals? And they're left to guess.Joseph:And there certainly are lots of people that, whenever they start playing the guessing game, they're very positive, optimistic, and they say, "Well, I haven't heard anything, so no news is good news." And then there's a percentage of people that say, "Oh my goodness, I haven't heard anything. That must mean that they don't like me and that I'm not doing a good job. Well, if I'm not doing a good job, that means that the practice isn't doing well, so that means we're probably going to go bankrupt. And I saw that thing the other day that made me think that the practice is getting ready to close, and we're all about to get fired." And then they start making up all these stories in their head because they just don't know.Joseph:So one of the things that we're going to talk through here is to just give you some tools and some things to think about in terms of how do we keep employees engaged, how do we keep them motivated, and how do we create consistent, constant feedback that is respectful? I would not ever encourage you to be disrespectful with your teammates and the team that you're leading, that you get the privilege to lead. I think that's one of the things we lose a lot is this concept of it's a privilege to lead people and to lead an organization. So I mean, what are some of your thoughts, kind of whenever we kind of bounce some of those things out?Jonathan:Yeah. So you did a really good job of outlining, and I mean, to me, there's a big problem that's as a part of all of this and, number one, I think the root of the problem is that employee engagement and any type of engagement in today's society is really hard to become active. It's hard to actively engage with other people and from a lot of different elements. And I could probably go down a rabbit trail of talking about social media and people's attention being numbed and all these other things that are out there.Jonathan:But at the end of the day, what we're talking about is employee engagement, and if you think about the fact that a lot of dental practices face a very real problem, which is turnover, I really wonder, if they had really effective leadership in all of these practices, if turnover would be helped a bit. And the way that you get about doing that seems to me to be have actively engaged employees that enjoy their job, enjoy what they're doing, and one of the ways to do that is keep them engaged and have them have some type of sense of accomplishment and have some sense of purpose inside of their position.Jonathan:I can already hear kind of the counterpoints to this in my head, which is, well, none of my employees want to be engaged. We just can't find those types of employees and things like that. And there's a real chicken and egg question that comes in there, as what comes first, the leadership or the engagement? And then it could also just be is it an issue in the hiring process and things like that. So for purposes of this discussion, we're going to assume that you have a strong hiring process to where you've weeded out the people that don't want to be actively engaged, and so if you feel like you're in an office that doesn't have those types of employees, just hear us out. You're still going to learn a lot about this process and ways to go about this.Jonathan:So this is something that I have struggled with, and we have great employees at our company, at Tooth & Coin. And that's because I am not, we're probably going to beat this word to death today, me not being a very engaging person on a lot of senses is we have to actively work at this. And this is something that we've been intentional about over the last 12 to 18 months at Tooth & Coin is trying to have more of these types of discussions amongst leadership, as well as with employees, about what it is we're planning on doing.Jonathan:So let's start with how do you set some type of a goal for the whole team to be a part of, and then how do you check in with it? And if you want to talk about how we did, or if you want to talk about the best ways to do it, go ahead.Joseph:Sure. Well, I think that a lot of things in leadership and a lot of things, when we talk about goal setting, they need to have some sort of a why behind it. So at the end of the day, the audience that's listening to this probably, probably work in a for-profit business. So we could say, at a high level, that we need to just set goals that make sure that we are ultra profitable, that we maximize our profitability, and we maximize the amount of cash that we take home. I can also make an argument that says that nonprofit organizations have to run at a operating surplus rather than deficit, no margin, no mission, something that I've heard before. So I think that that is certainly part of it.Joseph:So as I just gave you a kind of a buzz phrase that I learned a couple of years ago, no margin, no mission, if we're running a net operating loss, then we're not going to be able to pay our people, and we're not going to be able to pay them well. We're not going to be able to invest in IT upgrades, or we're not going to be able to invest in clinical upgrades or clinical staff or continuing education and those kinds of things. So if we're not profitable, at the end of the day, we're not going to be able to do the bigger thing that we all decided to get into this business for, and that's that we want to help people. You want to help people with your very specific skillset that you paid quite a bit of money to obtain that skill set. At the end of the day, we want to help people and help people feel better about themselves, about their smile, about their level of self confidence, even if it's a pain thing, help them get through these specific pains.Joseph:I mean, I have some root canals done several years ago. I think I told you that story. I was in pain, and I was so thankful that the dentist was able to perform these two root canals for me. It cost a fortune, right? Because dentistry is expensive. It cost a fortune at the time. But at that point in time, I was able to get help from these folks. So I think that a couple of things, whenever we're talking about goal setting, I think it needs to fit into those two different pieces. How do we continue to remain profitable so that we can do the things that we want to do inside the office clinically, so that me, as a business owner, I'm able to get a return on my investment, my time, energy, and effort, how do I support my family?Joseph:But it's also got to boil back down to the why behind what it is. So if we were to poll our audience, and we were to say, is the reason that you want people coming in for six-month hygiene checks, is the only reason for profit? No. There's a big, huge benefit that comes with having your teeth examined and clean and having a hygiene visit. We can identify problems earlier. We can help people sooner. We can eliminate a lot of this stuff on down the road. So I think that, when we look at the things that are most important, it does certainly have to do with profitability, but that can't be the only thing. That can't be the only reason that it is that we're doing what we're doing is for profit and for bottom line.Joseph:But that's important. I can't underestimate the importance of that. And again, no margin, no mission. We could go run a volunteer clinic and not pay anybody anything and do all of that stuff, and then how would you feed your family? How would your team members feed their family? So we've got to have some sort of a profit motive, but we've got to also focus it back to the why. So we're going to have these goals. They may be subjective in nature. They may be objective in nature.Joseph:So my dad works in retail and has run retail stores his whole professional career. One of the things that's a metric or a goal that they have is a customer service score. So let's boil down to a customer service score and net promoter score or your Google reviews or any of these other things that come out as part of running a dental practice. Why is it that we want to have good customer service scores? Well, there's a couple of reasons, right? If you have an unsatisfied customer, they're not going to come back. So that's the financial reason, right? But at the end of the day, do we really want to run a business that people are mad at us and think that we're just taking their money from them and not helping them? That doesn't factor into the why that we became dentists or CPAs or to run a retail store.Jonathan:You got to get that patient engagement, right? We got to move the engagement away from the employee, as well as have it be to the patient because it's hard. I mean, it's easy for the dentist to make an engagement with the patient. It's sometimes hard for the dentist or the owner to make sure that the employee engages with that person as well and has a reason to do that.Jonathan:And we've talked about social good being tied into being a business, in a prior episode, and I love that. And I can think of almost no better types of businesses to have social goods associated with their business, other than medical. Now, sometimes social goods can be a bit divisive in some ways, and some people may like one social good or another social good, but most people, in general, are going to be happy to be a part of something that is doing that.Jonathan:So, yeah, I completely completely agree with that. So let's assume that you've got your goal that you've decided to make, and we can probably do a whole episode on setting goals as well. And let's talk about now how we are going to engage with those employees, to make sure that that goal is not being forgotten about and that the engagement continues on because this is something that I had ... I think, Joseph, you may have ... I think it was you actually. You, at one point, said to me, "What is it that we're doing here every day? Because I know we're doing CPA services at Tooth & Coin, but why are we doing what we're doing?Jonathan:And it was one of those things that it was in my head, I'd talked about it in the past, and it had just been so long since I'd brought it out at a meeting or talked about it or whatever it was is that people had forgotten about it. And even though it was the same people, that we didn't have staff turnover, it was just one of those things. It was just it had to be re-communicated, over and over and over again. So, Joseph, how do you do that? How does someone do a better job of keeping that goal in the front of people's minds and helping people along the way of reaching that goal?Joseph:Sure. I remember when I was a kid, and I was learning different stuff about spelling and all the different facts and stuff, and my mom made flashcards so that she could help me study all this stuff. And one of the things that always stuck with me is that repetition strengthens and confirms. So I think, first and foremost, is we've got to remind people why we're here. So I don't know that that needs to be something that we plaster all over the wall and the website, which those things are fine, well, and good, and I would encourage you to think about all those different things. What's the mission of the business? What's the vision of what we're trying to do, the mission of the practice? Maybe it's to create healthy smiles.Joseph:I live in the Dallas/Fort Worth area, and there are a number of kind of the big, corporate people that are out there. And there's one corporate group that is out to make sexy teeth, and there's another one, I will make you have a sexy smile or whatever. That's a big part of their marketing push. Right, wrong, or indifferent, I'm not here to judge that. It stuck with me, so it's got some stickiness in there, effectiveness. There's another company in town that says, "We make healthy teeth." Healthy teeth first, before we make them sexy, is kind of the innuendo.Joseph:So I think when we go back to repetition strengthens and confirms, so back to your back to your illustration, if one of the things that we're trying to do as a firm is we want to be their CPA from the time that they get into practice ownership until the time that they retire, if we wrote that down one time and said that at one meeting, two years ago, that is out of sight, out of mind. So at whatever point it becomes relevant, whenever it's timely, whenever it is appropriate, we need to be reminding people of what it is that we're here to do.Joseph:Now, it's not every morning that we stand and do the pledge of allegiance, and we sit and make a pledge to the vision and mission statement, straight out of Office Space or something like that, right? It's not about that. It's about just getting a chance to remind people why we're here. So annual company meetings are a good time to do that. There are a lot of offices that have a holiday party, where there's a couple of speeches and that kind of thing, and then quarterly is another time that people can do it and kind of remind people of why it is that we're here.Joseph:Because it's really easy, whenever you're sitting in the weeds, and you're just work, work, work, and you're getting through, and you've got the patient call list, and you're collecting on the AR, and you're trying to get Ms. Jones scheduled, and we're trying to verify insurance, and we're trying to get a case acceptance rate, and we're trying to get call backs, there's all this stuff, and sometimes, we get so busy in the weeds that we forget to take a larger picture view. So I would say, first and foremost, repetition strengthens and confirms. It's important that we continue to do that in a way that is sincere and appropriate. I think that's kind of first and foremost. What are your thoughts on that? I pledge allegiance to Tooth & Coin, the CPA firm, who's going to be awesome for the time that we're all here.Jonathan:Yeah, so that's, if I had my way, we ... And honestly, it's funny because I joke about it, but I can see now why they do it. So when you're in college, in business, you learn about all of these different cultures of business, and I think Japan actually does that in a lot of their businesses. The lifestyle of person who works in a lot of Japanese businesses is that they do pledge of allegiance to their company. They thank their company, every day, for letting their lives be a part of that, and they work insane hours. In Japan, I think there's actual places where you can rent out a place to take a nap, just so you don't have to go home, and you can keep working.Jonathan:So that's the more dramatic version of it, but yeah. And this is something that I still struggle with because I'm not, I don't know, a fluffy kind of guy, in terms of how I talk to people. I'm not big on talking about feelings, or I don't even have ... I'll just do spirit hands. I don't know how else to say it. So communicating things that are big picture about how we want to help our dentist not have to worry about the tax world, even though it can be really scary, and we know that our dental clients don't know a whole lot about it. We want to be that strong arm that helps them through those pieces, to where they're comfortable knowing they're not going to be ever spending in their taxes. They know it's going to be well-prepared and taken care of. And I want them to be able to understand how their business is doing. And I can say those things on a podcast when I'm talking to the people that are performing those services.Jonathan:Sometimes, if you say that same thing, over and over and over again, me, personally, I get the fear that I'm going to be almost saying that what they're ... I'm trying to convince them that what they are doing is what they were doing, and if I say it too many times, I'm going to be shoving it down their throats too much. And even though we have such a great team here that I know that's not an issue, the communication of that is important because it's really easy to lose the trees from the forest whenever you're trying to figure out where you're going in this path and this way.Jonathan:So for the dental clients out there, the dentists that are out there that have set this goal, they've shared it with their team, I mean, what is the frequency? How often do you say this? I mean, I think that we've set up a system where we have an annual, we have a whole day annual meeting, and then we have quarterly check-ins. We have annual calibrations with our teammates. We have a weekly check-in with your leadership person. What type of frequency would you think is right? I mean, is there a universal one, or is it more dependent on style and communication and personalities and things like that? Or what are your thoughts on that, on a broad level?Joseph:Sure. Well, I'm sure some people are sitting and listening, thinking, man, that sounds all well and good, Jonathan, but I just don't have the time. Like you said this, and you say all this stuff. And that's great, if I had 36 hours in the day, but I've only got 24 hours in the day. I've only got X amount of days that I'm chairside, and how much time am I going to spend kind of having the CEO day or having the CEO half-day or even doing that after hours. I don't have time for all of this. So I guess, first and foremost, my encouragement would be that you've got to start somewhere. So if I come out and say that this needs to happen daily, weekly, quarterly, if you hear Jonathan say, "Well, you need to check in with your team weekly," and you have never done a check-in with your team before, that would probably sound very overwhelming and very onerous. And then you would just kind of get discouraged and decide, I don't have time for that.Joseph:So first and foremost, I would say we need to get started. You're going to have some place to start. So there certainly is, and I'm telling my team all this, all the time, is there are lots of different things that I would call best practice. And then there kind of ends up where reality is going to set and going to be. So I can give you lots of different things. I think that just at a bare minimum, you've got to sit down with your team and talk to them individually at least annually, at bare minimum, no matter what happens. If it's been years since you've done a performance review with any of your team, now's the time. We need to have an annual performance review.Joseph:And there's lots of different stuff. We could probably spend two or three episodes on how to structure a performance review. But there's a lot of different things that are in there, so going back to the company goals, if we've got practice goals, I would say, as far as frequency goes, I think that you run the risk of, in December or January, you sit down, and you make these company goals, these team goals, these practice goals, and then you don't tell anybody, all year long, how we're doing on those goals. And then all of the sudden, it comes December time, you get the email from your CPA that says, "Hey, if you have any year-end payrolls, now's the time." And you sit, and you scramble, and you say, "Oh man, I want to get that tax deduction this year, so I'm going to run a bonus." And then you just randomly give people a bonus, and it's $500, $1000, $100, and they have no idea, where did that number come from? How did you get to that number?Joseph:And be like, "Oh, yeah. Well, we had a great year this year, so here's your $1000 or $500 or whatever it is." And essentially, what we've done, and I grew up playing sports, and I know you did too, Jonathan, is we've asked people to go out and compete and play really, really hard, and we never showed them the scoreboard. Not one time did we say, "Here's how we're doing." We just said, blindly, at the end of the year, January, December, whenever it is that you pay your, quote, year-end bonus out, or you look at those company goals like, oh, we either hit them or we didn't. And we've asked them to play their hearts out and give them everything that they got with no scoreboard.Joseph:And I think that that's providing your employees a disservice, your team members a disservice. So my recommendation, my best practice is to definitely give your team an update on how you're doing on your goals quarterly, and at a minimum, they need to hear from you twice a year. Because at least twice a year, we can have an idea, and we can recalibrate, and we can say, "Okay, well, we've noticed that the cancellation rate is higher than what our goal was, that more people are canceling and not showing up, and we're having a bunch of empty chair time." If you're only waiting and looking at that once a year, then you don't have any time to pivot or to adjust or to come up with different ways to have your team help you problem solve those things.Joseph:So my recommendation is to at least give your team a quarterly update. I know that that's something that we, as a firm, have implemented this year is to kind of do a quarterly update on how we're doing on the different team goals that we've set and practice goals that we've set. So that would be what I would call best practice. You can certainly do it monthly. I think as the owner of the practice, if you have a practice manager, an office manager, or somebody that's helping you do that, look at those things monthly. If it makes sense, and you're looking at patient count stuff, that's certainly something you can look at weekly like, that we're talking about big team goals, things that people can really wrap their arms around and understand, you need to be communicating quarterly with your team how we're doing on the team goals, and what are we're seeing?Joseph:So if you were to come out and have practice goals that you set in January of 2020, we have this global pandemic that hits, dental offices are shut down across the globe for a good chunk of March, we would say, "Well, we didn't hit our quarterly goal for Q1 of 2020. Here are the reasons. It's because we were shut down for eight weeks. It was because we did emergency only." And all of the sudden, we're able to kind of add some color around what's going on. One of the things that I've noticed is that the first quarter of 2021 has been really, really good for a lot of the practices that we help. Okay, well, what's going on there? Let's add some color to all of those different pieces.Joseph:So I'd say, at a minimum, you need to communicate that stuff quarterly. You, as the business owner, need to be looking at it at least monthly. And then if you've got folks that you can communicate on your team, that can help you reach your goals, as frequently as you can, looking at those, if that's even weekly or if that's monthly. But I would say, at a minimum, you definitely want to look at it monthly, and you need to communicate with your team at least quarterly. At a bare minimum, I'd say twice a year.Jonathan:Hey, everybody. Jonathan, checking in really quick here. This episode got a little long, so we cut it into multiple pieces. This is episode one. You can find episode two next week or in the following weeks. So make sure that, if you listen to this episode, you listen to the other episode as well, so you have the full context around everything that's going on. Thanks for tuning in, and we will see you next time.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth & Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country and would love to be able to have the discussion about how we could help your new practice.Jonathan:We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services, with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group, talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together, so that this adventure of business ownership is more fun, more productive, and better in the longterm.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N, to 33444. Reply with your email address, and we'll send you an instruction to the Facebook group. We'll send you the resources when they're available. And we will see you next week.

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Employees vs Independent Contractors (Part One of Two)

Play Episode Listen Later Jul 5, 2021 27:39

Join the discussion on Facebook!Full Transcript:Jonathan:Welcome to the Tooth and Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take, so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey.Jonathan:Now, a very important piece for you to understand is that, this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs, talking about informational and educational content, to help you along with your journey. A very important piece for you to understand.Jonathan:Another thing that you need to know is, if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists, that is going to have content talking about what we're talking about today, to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share? Join us in the Facebook group. If you go to Facebook and you search for Tooth and Coined podcast, click on it to join it, and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion, to be able to help you a little bit more than what the content is doing. So if you'd like access to that, whenever it becomes ready, all you have to do is text the word Tooth and Coin, T-O-O-T-H, A-N-D, C-O-I-N to 333444. Again, that's toothandcoin, all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group, as well as add you to the list, to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well.Jonathan:So, on to today's episode, I hope you enjoy it.Jonathan:Hello, ambitious dentists, welcome to Episode Six of the Tooth and Coin podcast. In this episode, we're going to be talking about a decision you're going to have to make, many times throughout your career. And it's one that almost no one talks about and almost no one thinks about, until that moment in time happens for you. This decision is, how are you going to treat someone who is working for you? Are you going to treat them as an employee or, are you going to treat them as an independent contractor? And the way that you pay them, matters. There are consequences to doing it the wrong way. And it's a little bit tricky.Jonathan:There's a lot of, I don't know, social norms or just industry standards that people seem to follow, but don't really know why. And in this episode, we're going to be talking about four different types of instances, of this. We're going to talk about this on a broad level. We're going to talk about it as, if you have an associate doctor in your office, we're going to be talking about it. If you have a specialist in your office, and finally, we're going to be talking about it if you have a hygienist in your office, and you're considering doing this in a certain way. And it's a big problem, because if you don't do it right, you could end up paying lots of penalties, interest, fines, and just a whole bunch of other mess that you don't want to go through, because it's not fun to deal with the government. We all love big brother, but we don't want him messing with our stuff, as much as we can handle it.Jonathan:Joseph and I are going to be starting, talking about this. So Joseph, talk to me about independent contractors and employees. This is one of the things that I didn't really know was an issue, in the dental world, until I started getting an email once every other week from a client saying, "Hey, I don't know how to do this. What am I supposed to do?" Talk to me about the relationship, what it means and all those things.Joseph:Sure. Well, I think at a high level, there's a couple of things that we've got to keep in mind. Why does the government care about 1099 versus W2, versus not issuing 1099s? So I think we can maybe get a chance to give our listeners a little bit of a heads up, on why that matters. I think we can also talk about, at a high level, what decisions do you make as a business owner? So, as all of the people that listen to this podcast know, every day in your life, in your business, in your career, you take risks. There is not ever a way to completely avoid risk, but what you want to do is, you want to be able to mitigate your risks. So we want to talk through a little bit of this, at a high level, and help dentists understand how to mitigate these different risks and how to make sure that they're staying in compliance.Joseph:And, one thing... Jonathan and Spencer pointed this out on our team, to me, I said to him, one day. I said, "Why is this 1099 thing a big deal? Why do we even care, and why are we having to do all this work?" And he said, "Well, you've seen the checkbox on the return, right?" And I said, "No, what are you talking about?"Joseph:He said, "Well, on every single business return, there is a check box that says, 'Is your business required to issue 1099s?' Yes or no. And then if you say, 'Yes, I'm required,' 'Did you actually issue them?' So every single return that's going out the door, we're clicking that box. And the client is signing, that they agree that yes, that they've issued all the 1099s that they're required to do."Joseph:So those are a couple of things, kind of at a high level, that immediately jump out to me. Number one is, you can't eliminate risk, but what you want to do is you want to do everything in your power to mitigate your risk, and to put your practice in the best situation. Number two is, there are reasons that the government cares about 1099s versus W2's, and we'll talk a little bit about that.Joseph:And number three is that, it's part of your tax return, whenever you follow the tax return as a business.Jonathan:Yeah, that's a great point. So let's start with the first, and the first is that, one of the big reasons why you had to be filing this right, is because you have to say... This isn't something that is not checked. This is something that is a core critical component of complying with some of the government's requirements. What Joseph was alluding to is, whenever you're filing any type of return that has a business component to it, one of the assertions you have to make, and you have to agree to as the signer of that tax return, is that if you had a payment that was going to a contractor that was appropriate, that you issued them a 1099.Jonathan:Now, so you're required to issue 1099s, and you're required to do those pieces. we're not going to really get into the nuts and bolts of how to fill out a 1099, or who gets, hen it happens and things like that. But that is something that we have to make sure that we're doing correctly, when that box gets checked. Make sure that we issue all the 1099s we were supposed to. Was there more that we wanted to expound upon, on that piece/.Joseph:Yeah, just in general, those are the things that matter, kind of at a high level. And the government, the government wants to... Like, if you wanted to be super spiteful, you'd say, "The government wants all of the government money that the government can possibly get." But at the end of the day, what the government's trying to do with our tax system and with tax returns is, they're trying to trace the money that's coming in and out of our economy and make sure that it's appropriately taxed, and that the appropriate taxes are paid on each one of those. And a 1099 is a critical component of that. And there certainly are some pieces that go with a W2 versus 1099 decision, that affect the government, that if the government had their druthers, they would rather people be W2 employees and subject to the FICA tax, and the one half of self-employment and all of those other pieces. So, what are your thoughts in general, at a high level, what the government's trying to accomplish with this topic?Jonathan:So I've always taken a little bit different of an approach. I've always taken an approach of, they're going to... The government is really more trying to protect the individual employee level. So, me as a business owner, they're going to get their pound of flesh from me, but they're trying to protect the pound of flesh that's on the employee's back. Is what I typically feel like, the reason that they're doing, that they get so strict about these requirements. We haven't gotten into the requirements yet, or how they view it.Jonathan:But to me, the way I've always seen it is, that they want to try and curb abuse from the employer side, to try and get the employer out of having to pay their portion of the employment taxes. Because the government's going to get those employment taxes, one way or the other, whether it's an independent contractor or if it's from the employer. They really, honestly, shouldn't care much about where that money is coming from as long as they're getting it. But to me that the reason that they're doing that... So, if that logic holds true, then why are they being specific about it? To me, it's because they want to make sure that the employee isn't getting taken advantage of.Jonathan:There's a lot of... Joseph, you have one that you're going to share, another one that's very, very common right now is, Uber drivers. A lot of them have been independent contractors, because they own their own equipment and they have their own vehicle. They drive around, they make their own hours. They just use the app as a way to coordinate, and things like that. And I believe on a federal level, they've ruled that those people are employees, now. Even though they fit a lot of criteria, to be independent contractors.Jonathan:And the reason is that, all of these people were filing their tax returns and nobody... And they're all like, "Oh my gosh, I've got so much that I owe in taxes. Why is that?" It's because they all owed self-employment taxes. And so, the government still got their money, but it was, the employees were left holding the bag, in terms of paying in money and things like that. So to me, it's always been more about, less about making sure that the employer pays in more taxes and more about making sure the employee is not being taken advantage of, in many different ways.Jonathan:Now there's one caveat to that, and that's on the state level. On the state level, I feel like it's definitely, that they want the employers to be on the hook. And the reason is, is because independent contractors don't typically pay self-employment, they're not eligible for unemployment. And the State is who dictates unemployment, generally. There's a federal unemployment tax that is paid into the system, which is very minor. It's like 70 bucks a year, per employee, where on the state level, it's much higher.Jonathan:And we've had lots of states come after business owners, and just basically, rename everyone as employees. We've had people that literally have had a yard service company, that does their yard in the summer once every week and a half, to make sure that the yard in front of the office is done. They've reclassified those people from contractors to employees. That is, I don't know, like $2,000 a year in services and they're a company. And the reason is, is because those state departments want to raise unemployment tax revenues. And if you're an employee, you're eligible for unemployment. If you're not, if you're an independent contractor, you are typically not able to get unemployment. There are some states that have some provisions and safety nets for independent contractors, as well. But in general, that's how it goes down.Jonathan:So that that's always been my perception of it. Whoever knows, really, what the government wants out of everything. All we know is that they do care about the classification. They have been very strict about it. There have been people that have gone to the highest courts in the nation, to try and defend what their decision was, in terms of making this. So what was the example that you're willing to share, in terms of the story about independent contractor versus employees?Joseph:Yeah, so there are a number of different tests that are out there. There are a number of different rules, but one of the ones that almost always gets individuals versus the company, and puts people on the hook to become a W2 employee versus 1099. The technical term is risk of loss. So in other words, if you're going to have a 1099 contractor, they need to be in business for themselves, and they need to have a risk of loss. So I'll give you a very, very simple example.Joseph:If you hire someone to come and paint your office, paint your dental office. You meet with the painter, he comes out, he tells you this is how much it's going to cost. There's two different roads, and I'll use two different extremes on this, to illustrate the point of risk of loss. And then I'm going to tell you about the famous court case that came out, several years ago.Joseph:If the painter shows up and as the painter shows up, you provide that painter with a uniform, the white painters get-up. You provide that painter with a ladder, and with paint rollers and with paint, and you provide them with the materials to make sure that they don't get paint on the floor, and you do all of those things. And all the painter does is just show up and paint with the paintbrush, paint with the paint roller. Let me ask you this, Jonathan. What is the risk of loss? Is there any risk of loss for this painter whatsoever, outside of their time?Jonathan:Other than maybe falling off a ladder, or something like that. No.Joseph:So there's really no risk of loss. And if you couple that, and look at another scenario, if that painter shows up with his own paint truck, his own paint uniforms, his own crew that he has, that are working for him. He's got his own equipment, he's got his own workers' compensation insurance. He's got all of these different pieces, that enter into his risk of loss, so that is much more likely to be a 1099 person. Where in my first example, when there's absolutely no risk of loss, there's virtually no financial risk of loss in that situation.Joseph:And FedEx and UPS kind of got in trouble for this a couple of years ago, whenever they had all their drivers. And they were doing just exactly what I described. They would provide the uniforms, they would pay for the gas, they would provide the truck, they would provide the maintenance on the truck. They would provide everything. And the driver just had to show up, drive the truck from A to B and deliver the packages. And what the courts determined was that, there was no risk of loss in that situation. So rather than all of those drivers stay as 1099 independent contractors, the government reclassified all those wages and said, "These are all W2 wages. Oh, and by the way, you owe 7.65% in FICA taxes, and the employer portion of Social Security and Medicare on all of these wages."Joseph:And since then, they've made big changes at those companies, and those are all considered W2 employees. But that's a very real case of this risk of loss piece, that basically factors into this decision. So I think I'd just kind of use that as a launch off point for you Jonathan, to talk about these specific situations that we see in dental offices. And as we were talking through some of the bigger questions that we get, this is one of the biggest questions that we get. It's a question that I get multiple times a year, specifically when we're out trying to figure out 1099s, when people are coming on board, when we're having new practice owners come on board. They're like, "Oh, can I just pay them as a contractor?" And I'm like, "Well, it depends." Just like every fact and circumstance is going to, is going to dictate the situation.Joseph:So what are some these specific... I mentioned the painter. I mentioned the drivers for UPS and FedEx. What are some specific situations in which dentists have to face this decision?Jonathan:So, and to be specific, it's every time you have someone that's going to provide a service for you. Whether it be your front office person, whether it be your telephone company, whether it's going to be an associate or anyone else. What we're talking about, we've described the problem to outline how this is going to affect you guys. Whenever you decide to hire anything, you have to decide, is this going to be... Is this a service that someone is providing me? If so, then are they going to be... There's technically another classification. Are they going to be an employee, an independent contractor, or are they just a company that's providing me services that I'm paying them money for?Jonathan:And if it's a company, then they are, if it's an LLC, or if it is incorporated in some way, it is typically... Well, sorry, if it's an LLC, that's been incorporated as a subchapter S, then it will be excluded from this conversation. They could still be, technically, a contractor that is an employee of that. And it gets really convoluted, and really confusing. But for purposes of this discussion, we're going to be assuming that it's not services being provided like AT&T. You're not going to send a 1099 to AT&T. They were specifically excluded, back in I believe 2008, they tried to make it where even those companies would get 1099s. Congress finally said, "This is going to be too big of a headache. There's no reason you should be issuing a 1099 to the Home Depot when you go and buy $800 worth of repair items in a year." And so, that's all not taken care of.Jonathan:Now, that is in terms of the protocol in which how you report what you paid, that doesn't affect how you choose to pay someone. So that's an important distinction, here. We're not saying that, just because you issued someone a 1099, that does not mean they were an independent contractor. What we're talking about is the basis point, the starting point of how you're paying them, whether it be as an employee relationship or as an independent contractor relationship, or again, that third example was a service relationship between yourself and another company. Some people try to conflate or mix the independent contractor with another company.Jonathan:So let's say they have an associate, that owns an S-corp and, "Well, it's an S-corp, and I'm paying the S-corp for those services. And they're trying to get away with," and those types of situations. Assume that the government is logical enough to be able to see through that. I could probably explain that to my second grader, and she'd probably have to be able to see through that. The IRS will be able to see through it, too. So don't try and be, we're not going to be trying to be clever, in this conversation. We're going to be trying to be real-world examples of what will actually happen, if you go down this path.Jonathan:So, specific examples, the most specific example that we get is, we get a new doctor getting out of school. And they're saying, "Hey, I'm talking to this company, and they're saying that I can choose to be either an independent contractor or be an employee." On the other side of that, we have a client that's a practice owner that comes to us and says, "Hey, I've got this associate. Do I need to classify them as an employee, or an independent contractor?" Same exact situation, for both sides of that. And the answer is the same for both of them. So, given that type of a situation. Joseph, what is your typical reaction and answer to that question?Joseph:Sure. Well, I think we go through a bunch of the different tests. The one that almost always gets everybody, is this risk or loss piece. So, do you have an associate that's coming in, and... Have they done anything to get new patients? No. Are they bringing in all of their own tools, and their own equipment in order to do dentistry? No, they're using ours. Do they have any control over their schedule? No. I tell them when to be here. How is it that they're compensated? Based on a production percentage. And I'm like, "That's pretty simple. Like we don't have any risk of loss. This is not an independent contractor." And this is somebody that's basically coming in... That's a pretty clear cut case for me, as someone that comes in as an employee, and is not a contractor.Joseph:What are some of the other tests that you see, that you use, whenever we're trying to give people guidance? And we would certainly encourage you to talk to your CPA about this and make a good decision together. It's not always a really easy, clear cut, black and white. I like to use extremes, so that we can illustrate our point, here. But what are some of the other things that you're looking for?Jonathan:There are a few. The simplest question to answer for a lot of people is, is that associate... And we're talking about, from the social perspective. Is the associate working somewhere else, and free to work somewhere else? And, not under some type of a non-compete, that's super vast. That's a really simple test, as well, because if they're literally not going to be able to work anywhere else, then you've got financial control over that person. The reason we're saying these words and financial control, and risk of loss and things like this, the reason that we're saying this is because you then, as the person who will be paying for these services, have the choice how to pay people. If you're correct or not is determined by a set of tests that is distinguished by the federal government, as well as your state governments. And sometimes, those two governments can disagree on these things.Jonathan:So you need to be aware that, that is a part of it. And what we're talking to you through is some tests that they will be testing you on, in terms of deciding if you were correct in your interpretation and application of these ways that you pay people, and then report it to the government later on. So the IRS, it's like a seven step test for the federal government side, which when I say IRS, I'm talking about the federal government. And as I said, risk of loss is a big one. That's just a bigger concept. It's an easier one to talk about.Jonathan:Financial control is another one. So if you're really in control of that person, like if you're able to fire them without them having a whole lot of say in it, you've got a lot of financial control. If you're the person making the schedule, if your practice is making the schedule for them, if your practice is providing all the ways for them to be able to do dentistry. If all they're doing is showing up and doing dentistry, and have a defined time they're supposed to be there. Then, that's a lot of financial control that you're covering over that person. And you're likely to be classified, that person is likely to be classified as an employee for you.Jonathan:Doesn't matter what you want. Doesn't matter what the person who is giving you the services wants, that is what the government will likely end up saying. So, that is an important distinction. So when I say financial control, the big pieces are that are one, can they work other places? Are they under non-competes? Two, do they make their own hours, or do you set the hours for them? Three, do they bring their own supplies? Do they have their own stuff, their equipment? Is it, they're paying on a machine that they were using? And really, four, are they responsible for their own labs, and things like that? Are you providing the ecosystem for them, or are they doing it?Jonathan:Again, Joseph mentioned earlier, are they going out and getting patients, are they building up a clientele, and things like that? That's really important stuff to interpret and decide on, if they're doing that in your office or not. So I will say, my typical answer to people is that, if ever questioned you will likely end up being classified as an employee- employer relationship, whenever there's an associate dentist that is there, full-time, effectively full-time, they will most likely end up... Regardless of how clever you try to be and say, "Oh well, they're making their own hours, but the hours they're choosing to do just happened to be when we're open every day."Jonathan:No matter how clever you get on it, they're probably going to be able to just be like, "Sorry, we're just going to reclassify you." And you're going to have to pay the back taxes, the penalties and interest that associated with it, and then, just deal with it. Because, I'm going to be honest with you, you fighting that is going... For that one employee, that one time that you're having to do it, is going to cost you a lot more to fight it than it is just to pay the interest and penalties and back taxes. And if it did go higher up in the courts, you're probably going to end up losing it anyways whenever they look at the situation, if you're following that fact pattern.Jonathan:There are some shades of gray in this. Like I said, what happens, what if you're one of those associates that's only working there two days a week, and you're working somewhere else, two days a week? That's a very common thing. A dentist has, not tons of capacity, but they've got a lot of demand and they don't have enough capacity for it, so they need to have someone there two days a week. You're kind of phasing in, and things like that. That's where it starts getting a little bit more gray. It starts getting a little bit more difficult. Does that associate have that financial control, and things like that? In those circumstances, to me, unfortunately again, you're more likely to get reclassified as an employer-employee, even if the government comes in and checks that, than you are to be remained as an independent contractor.Jonathan:More likely, I'm not saying that's a definite, I'm saying, you're more likely. You'd want to have as many of those check marked boxes checked as possible, that you have control of those things. Specifically your hours, some type of financial control, some type of way of dictating how your schedules is made, and things like that. All those things would be really important to have, to be able to try... If you're a really, really worried about that independent contractor level coming up. So those are my thoughts in terms of where that happens, specifically for the associate dentist situation.Jonathan:And Joseph, did you have anything to add, in terms of that?Joseph:I guess the other thing is that, this thing has a tendency to only go one way. We've not ever had somebody that's been classified as a W2 employee, that raises a stink about it, they challenge that, and then they get reclassified as a 1099.Jonathan:Yeah.Joseph:So back to the risk mitigation piece, like this is the duck test, guys and gals. Like, if it walks like a duck and looks like a duck, it's probably a duck. And in a lot of these scenarios and situations, when you really start digging into it, "Sure looks like an employee to me and not an independent contractor," when we start applying these tests and that kind of thing. So, I've not ever seen it go that way, you and I both know and have seen many, many times... There's lots of famous cases where somebody that was classified as an independent contractor gets reclassified as an employee. We don't, we've not... Not that it hadn't happened, but I've not ever seen it happen where somebody was classified as a W2 employee, and it went the other way and they became all of a sudden, an independent contractor.Joseph:So back to the risk question, right? Every day as a business owner, you're taking risks that are out there. What risks are you willing to take, and what risks do you want to take?Jonathan:Yeah, exactly. And, let's talk about what those risks are. Let's say that it does get reclassified from independent contractor to an employee status...Jonathan:Hey, everybody, Jonathan checking in, really quick here. This episode got a little long, so we cut it into multiple pieces. This is Episode One, you can find Episode Two next week, or in the following weeks. So make sure that if you listened to this episode, you listen to the other episode as well, so you have the full context around everything that's going on. Thanks for tuning in, and we will see you next time.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country, and would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they're starting up, or have become an owner in the past five years. That is our specialty, and we'd love to be able to talk to you about how we could help you in your services, with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together, so that this adventure of business ownership is more fun, more productive, and better in the longterm.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444, that's toothandcoin, no spaces. T-O-O-T-H, A-N-D, C-O-I-N to 33444, reply with your email address. We'll send you instructions in the Facebook group. We'll send you the resources when they're available, and we will see you next week.

talk state congress uber llc employees coins irs cpa medicare ups att fica fedex home depot social security tooth assume episode one cpas episode two w2 episode six independent contractors coined n d jonathan joseph jonathan so jonathan yeah jonathan that

The Leadership Skills of a Great Practice Owner

Play Episode Listen Later Jun 28, 2021 35:12

Join the discussion on Facebook!Full Transcript:Jonathan:Welcome to the Tooth and Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones. Some of them are very specific. But we hope that these episodes help you along with your journey.Jonathan:Now, a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey, a very important piece for you to understand.Jonathan:Another thing you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us. Don't agree with us. Have a story to tell. Have something to share. Join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion to be able to help you a little bit more than what the content is doing. So if you'd like access to that whenever it becomes ready, all you have to do is text the word toothandcoin T-O-O-T-H-A-N-D-C-O-I-N to 33444. Again, that's toothandcoin, all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group, as well as add you to the list to be able to send you those resources when they're available. If they're available, we'll go ahead and send them to you as well. So onto today's episode. Hope you enjoy it.Jonathan:Hello, ambitious dentists. Welcome to another episode of the Tooth and Coin podcast. This is episode number five, which is a really good one. We're really excited about it. One of the things that if you've listened into one of the 120 episodes of the Start Your Dental Practice podcast, one of the things that I said that people needed in order to be able to be a business owner is leadership skills. It's one of the things that I always say this is not something that is usually inherent in a lot of people, is having leadership skills. You may believe that you have some leadership skills, and you may not be afraid of leading, but leadership skills are definitely something that once you get to a certain size of a company, it adapts, it evolves, and it becomes even more important.Jonathan:I find that a lot of people think that they may be really good leaders, but they're going off of that gut feeling of how it feels to just kind of push people along and try to go in a certain direction, because they know where they want to go. But that doesn't necessarily mean that you're doing that great of a job of leading everyone. So that's the reason that I said leadership skills are one of the things that is the hardest to come by whenever you become a practice owner to actually have and have to be inherent to actually just understand and know about.Jonathan:So one of the things that I always tell the people, I get a question like, "I am in dental school. What do I need to focus on in order to be able to be ready for practice ownership whenever I get out?", that's one of the things, is leadership. It's not, "Oh, you have to understand exactly how assets equal liabilities and owner's equity." The balance sheet is not super important compared to understanding leadership. So today's episode is going to be about leadership. I'm going to be interviewing Joseph about this. Joseph has a lot of experience with leadership in different programs and lectures on this topic and is someone who's very knowledgeable about leadership in small business. So Joseph, walk us through ... I mean, did I do a good job of teeing up that leadership is important? Tell us your take on leadership.Joseph:Yeah. I think that whenever we talk about the things that we do as a firm, one of the things that we're always constantly hitting on is that dentists spend 10,000 hours or 15,000 hours learning to do dentistry and zero hours learning how to run a business. I think to kind of piggyback on that, leadership's just something that is inherent in owning a business. It's a very difficult thing to understand how to do it and how to do it correctly. I think that's one of the biggest things that dentists can continue to work on, especially earlier in their career, is being that good leader of the office.Joseph:To be fair to dentists, it's really most of the people that are out there that are running businesses. They've got kind of their own what they would call style, and they just think that everybody needs to learn their style and this is exactly how we're going to do it, and we're going to move on. So I think that it's imperative that any business owner knows leadership, studies leadership, understands leadership. I think that that's one of the things that we can hopefully shed some light on today.Jonathan:So in keeping with the theme and the patterns of our episodes, why would it be a problem for a small business owner to not understand or take leadership seriously?Joseph:I think a couple of different things. Number one is that if you don't lead people well, they'll leave. People don't want to just work for money. They want to work for a higher purpose. They want to do work that matters, if I want to kind of pull a key phrase that's out there, and they need to be continually reminded of that, that what we're doing is work that matters and this is why. If you have a whole bunch of turnover, you're going to have a lot higher cost to go along with things, and things aren't going to run very smoothly. If your front office isn't running smoothly, if your chairside stuff isn't running smoothly, then you're going to lose out on opportunities to do well and to help more people and to service more people in your community and to be able to realize the financial dreams that you had whenever you started a business. I mean, leadership is key to making sure that you're able to meet your own goals and to do all of those things that you want to do with inside the practice.Jonathan:One of the things that I've noticed as I've consciously tried to sharpen my leadership skills and do better at leadership is that when I do that, it's not just the leadership of my employees that gets better. It's also the leadership of our clients and potential clients and my family. There's a whole lot of other pieces that go along with it, that leadership is not just about the small business. It helps out in a lot of different ways. So cool. I would probably just highlight a big problem is that a lot of people, you don't get to be a leader until you're leading.Jonathan:I mean, it goes back to one of our first episodes, saying, "You're not an owner until you're an owner." You don't own the business until you own the business. You kind of learn by doing, right? So it's hard to be self-reflective if you've never done it before. So walk us through it. Talk us through a framework for leadership. Talk us through how someone who has started hearing the podcast and understands, "Okay, I understand why I need leadership. Listen to these really smart, good-looking guys, and go with what they said, believe what they said." So talk us through that.Joseph:So when I was in college, Jonathan, I went to a small school and was in a couple of different organizations. I felt like I was a good leader. I just said, "Get out of the way. I'll show you how it's done. Give me all the work, and I'll do all of it. I'm not going to let you do anything. Look at all these great results that I'm producing for my organization." When I was 19 years old, I got selected to take part in a really elite leadership program for college juniors and seniors, sophomores, juniors, and seniors. That really opened my eyes to there's a whole lot more to this than "working hard" or getting the job done. I think that's probably one of the traps that a lot of entrepreneurs fall into. It's just like, "If I just work hard enough, everything will be okay. If I just try hard enough, if I just do all of these different things, get out of the way, and I'm going to show you how to do it."Joseph:So what I was introduced to at an early age that just really was ... I guess they call it an aha moment, right? The light bulb went off. But there was a couple of guys named Kouzes and Posner that wrote the five principles of exemplary leadership or the five practices of exemplary leadership. As we went through this exercise, just light bulbs started going off about my own shortcomings inside of leadership. So if it's okay with you, I'd love to go through these and maybe just kind of bounce some ideas off of you and get some thoughts from you on this, Jonathan. Does that sound like a good idea?Jonathan:Yeah, yeah.Joseph:So the first thing that really hit me, whenever you go out and study or look at leaders, is they have a tendency to have just incredible vision. They can see where things are going. But it's not about just me telling you what the vision is. One of the things that leaders do is that they inspire what's called a shared vision. So not only am I going to inspire you, not only are we going to have vision, it's not going to be my vision or your vision. It's going to be our shared vision. So whenever I say that, inspire a shared vision, I mean, one of the things that immediately comes to mind is what we're trying to do at Tooth and Coin inside of our CPA practice. As a shared vision, we want to be the CPAs from the time that they enter practice ownership until the time they retire. That's something that we can all get behind. I mean, what are your thoughts whenever I talk about inspiring a shared vision, Jonathan? What are some things that kind of stand out to you?Jonathan:Yeah. I mean, originally, that's one of the things that I think is a big pitfall about having a shared vision, is that entrepreneurship, there's a saying that it's kind of lonely at the top whenever you don't really have ... I mean, it's kind of just in your head. I think for dentists, they can usually sometimes think that the vision is, "I've got to get more patients in. I've got to do dentistry. That's my vision, is what my dental practice is." It's more than that, like you stated. People want to be paid for their efforts, but that only lasts for so long, and that shared vision is how you start your team, basically. You're surrounding yourself with people that are trying to do the same thing that you're doing.Jonathan:One of the really big analogies that people use in terms of teamwork is they talk about sports teams. If you're on a football team, your shared vision usually isn't that you're going to create some more social good in the world or you're going to bring a lot of spirit to the school. It's that you're going to win a football game. You have a vision of, "We're going to win. We're going to go to our state championship this year. That's what our vision is, and we're going to work towards that as a team to get to that point." It's not anything other than that.Jonathan:Whenever you're in business, you sometimes think that state championship is just the business is successful. In reality, it has to be something much more nebulous. It has to be a bit more impactful to the people that are surrounded, because what does that mean to be successful, and how do we define what that success is so that we can boil it down into a better vision of, "Okay, the practice is successful. Yes. But the reason it's successful is because it's doing what we want in our community. It's helping the people that we want to reach into our community. It's providing security and happiness to the people that are involved in our community." Maybe there's a certain types of procedures that you prefer to do over other people or other services.Jonathan:One of the things that I've stated before that is a dental moment that's helped me is before I got Invisalign, I would get really bad headaches. I found that whenever I finally got my teeth straightened, I didn't have as bad of headaches anymore. It helped a lot. So that's something that that practice owner did for me that if someone is to surround themselves with, "Hey, we're going to help people. We are a health organization that's going to help" and is very specific in the way that it's going to go about doing that, then that makes it much easier for people to get onboard and be a part of that team so that they can start moving forward towards that state championship, so to speak.Joseph:Yeah, absolutely. So we've got to have a shared vision. We've got to be able to be on the same page with all of that. The second thing that we've got to do is we've got to be able to enable others to act, or you might call that process delegation. So if a dentist starts a practice, they're not going to be able to answer the phone, schedule appointments, file claims, verify insurance, collect payment, do fillings, do x-rays, do hygiene. They're not going to be able to do all of it. That was one of the things that I know you and I have talked about this internally, is we try to figure out and bring staff along and to delegate some responsibility and to pass work down and to basically enable others to act. We kind of have this own self-thought that, "It is only me. I'm the only one that's good enough to do this job." So the second thing inside of exemplary leadership is we've got to enable others to act. I think that goes kind of a long ways. I mean, any thoughts on that, whenever you're delegating, enabling others to act?Jonathan:Yeah. So, I mean, making sure that people can do the jobs that you've assigned them to do is really important. So whenever you're talking about enabling others to act, are you just saying that people have to be able to move towards that vision in their own way? Fill that out for me. Talk to me more about that.Joseph:Yeah. So, I mean, everybody needs some guidelines and some guideposts, or you could call them bumpers in the lane of bowling or whatever. But they need to be able to have a little bit of autonomy to come up with the best way that they have to do the job. Nobody wants to be a robot. It's really about giving them some guidelines and giving them some guideposts. But what you want is you want to make sure that people have ownership in their position and that we're hiring human beings with real brains that have the real desire to want to do a good job. So we've got to give them some space in order to do that. Now, certainly, there's certain ways that you want to have things done. You want to have some uniformity in a lot of things that you do. But in a big picture understanding, you can't do it all, and you need to be able to enable others to act and enable others to help.Jonathan:I think dentists are pretty good about that. I think that naturally, a lot of dentists are pretty good about that, because they're used to, "Here's your role. Here's your role. Here's your role." The dentist doesn't want to be doing the [inaudible 00:14:28]. They're going to let the hygienist do that. They're going to be able to do the pieces that go along with that. So yeah, I get that.Joseph:Yeah. So first thing we talked about inspire a shared vision. Second thing we talked about is enable others to act, and the third thing is that we've got to do what's called encourage the heart. We've got to give people some feedback in how they're doing, and a lot of times, this is something that's absent inside of our business and absent inside of our organizations, is just taking the time to say, "Thank you. Thank you for being here. Thank you for doing a good job. You did a really good job with this." We've got to encourage the heart, in a way, because, again, we're dealing with human beings that are on our team that we're leading. We've got to help them see all of the good that they're doing. "Hey, did you notice that Ms. Jones that was in, did you see the before and after pics on that? Man, look at what we did together. Nice job helping us out with that." So I think that's another big thing, is we've got to encourage people. We've got to encourage the heart.Jonathan:Yeah. One of the things that comes to mind with that is Tom Shoes. If you remember, the Tom Shoes is you buy a pair of shoes, and then they're going to give another pair of shoes to someone in an impoverished country as a way to do social good. So not only are you buying a pair of shoes, you're buying someone else a pair of shoes. You're doing good by buying these shoes. When Tom Shoes came out, it had this massive success, because they shared their vision with their customers, not just the people that were working with them.Jonathan:I've seen dental practices do this, too. So a really good example of this is we had a client that said, "Hey, we're going to do a bonus program for our fluoride." They had a really low fluoride percentage. They're like, "Hey, Jonathan, we've been trying to figure this out. [inaudible 00:16:11], the data consultant on it said to do this." They tried this, and it worked, was they said, "Okay, for every fluoride that we do over the next quarter, we're going to give $5 to this charity." It was a charity that the team had came up with, or I can't remember if the team came up with it or the doctor came up with it. But it was a charity that everybody wanted to help out with. So they said, "Okay, we're going to do these $25 fluoride ... We're actually going to offer them to patients."Jonathan:So they let the employees have more of a reason than just, "Hey, it's your job to offer fluoride to patients," have a reason to do it. They ended up getting something like, I don't know, $2,000 they ended up raising for this charity that was a big help to the charity. So it actually did something. Them doing the fluoride actually did something. An added benefit to that was once that incentive was over, the team had basically self-trained themselves on how to offer fluoride.Joseph:That's awesome. That's awesome. I like it. So we talked about inspire a shared vision, enable others to act, encourage the heart. The fourth piece of exemplary leadership is model the way. So one of the things that you'll hear a lot about in the leadership world is they'll talk about tone at the top. They'll talk about what kind of example are you leaving for your employees? So if you're constantly 15 minutes late to the office, you should expect your staff to be 15 minutes late. If you're on time, if you're early for stuff, if you present yourself in a very professional way, if you watch your language, if you keep things in a very professional way, you're modeling the behavior you want from your team members.Joseph:I think modeling the way is a really, really important thing, and it's not about being a prideful thing, "Everybody's got to be like me" kind of thing. But it's about how are you going to act in front of the patient? How are you going to treat that patient? Are you going to belittle your patient? Well, you should expect your staff to belittle the patient. Are you going to use their last name whenever you address them? Are you going to address them with respect? Are you going to call them. "Mr. Rucker, thank you for coming in today"? Are you going to be grateful? Are you going to be gracious? What is it that you're modeling for your staff in order to present the tone and present the kind of culture that you want at your office? I mean, are you going to belittle one of your team members in front of a patient in a way that's going to be very disrespectful and it's going to make them upset? Then you should expect your team to do that.Jonathan:I'm sure there's a lot of people that are nodding their heads and have seen that in the past, where you've had a boss that acted in a certain way. Then you look at and around you, and even though there might be some contempt about how the boss is handling the situations, that's kind of how all the situations got handled after that point. I've had bosses that lashed out at employees and would yell and scream and curse. Honestly, after I left those work environments, it was hard for me to kind of not think about things in that way, because the person that I had modeled in my mind as being the boss, that's how they reacted to those situations.Jonathan:So I had a lot of times I pulled myself away and thought, "No, Jonathan, you're a calm, collected guy. You're not a hothead. You don't have to act that way just because the other person acted that way. Doesn't mean it was right." That's something that even I have struggled with in the past to reconcile, because all these patterns are learned behaviors. So setting the tone at the top makes complete and utter sense. So yeah, that's a great one.Joseph:Yeah. Another thing is what are you going to tolerate? Whenever it comes to different stuff, how are you going to address things? Are you going to have the courage to address the things that you need to address? Those are all tough things. I think we could probably spend a whole podcast, Jonathan, talking about having crucial conversations and addressing things and what do you address and what do you not address and what's the best way to do that? So I think we should probably save that for another topic, but modeling the way is a big, huge piece of leadership.Jonathan:It reminds me a lot of just the culture conversation of businesses. What is the culture of the company? Even when you said, "How do you address people?," I mean, there are a lot of different ways you can address people. You can be incredibly professional and have that be done in multiple different ways. You be incredibly professional and be casual. You can be incredibly professional and be very manneristic, so Mr. and Mrs., making sure who it is. There's a lot of different ways you can do it, and all those little things are going to permeate throughout the business. They're going to create the culture of the company and the culture of the practice.Jonathan:That's one of the reasons why a lot of people sometimes tend to lean towards ... When I say a lot of people. I'm not saying the majority. I'm saying there's a lot of people out there that their ideal way of going into practice ownership is through a startup process, because they don't want to go into another culture and try and reshape that culture based off of their personality and style. So yeah, I definitely think we could probably have a whole episode about culture, and that's definitely a part of it.Joseph:For sure.Jonathan:So you want to go to the next piece?Joseph:Yeah. So the last piece is to challenge the process. We give you all kind of just cliches that are out there. If you keep doing what you're doing, you keep getting what you're getting. What's the definition of insanity? Doing the same thing over and over again and expecting different results. Insert your own cliche for doing things. We talk about Saly a lot in the accounting world, right? Who's Saly again, Jonathan?Jonathan:Same as last year. She's only got one L in her name, but she's [inaudible 00:21:52].Joseph:Yeah. So number five is to challenge the process. If we keep doing what we're doing, we're going to keep getting what we're getting. So as you get a chance to look at all of the different things that you're doing, are you doing things exactly the same way year after year? Are you having problems with your scheduling? All right. So if we keep having the same different pieces, do we have a lot of no-shows? If we have no-shows that are taken up time on the schedule, what are we going to do differently? What are we going to challenge the process, and how are we going to handle this in a different way? Is it because we're confirming appointments? Well, maybe we need to have a different system of confirming appointments. Maybe we've got all kinds of different stuff that we can try.Joseph:So one of the great things about being a business owner is that you get a chance to try all kinds of different things. If you don't challenge the process, if you just keep doing the same thing over and over again, you're going to continue to beat your head against the wall. So number five is challenge the process. What are your thoughts on that, Jonathan?Jonathan:I think that of all the leadership traits that I have that I enjoy versus the ones that I'm not as good at, challenging the process is the one that kind of is the reason our business got created, was because every CPA firm that I was a part of, I was building up and breaking down every process that we had, because I'm to a fault a person who likes the most efficient way of doing things. If it's not the most efficient way of doing things, then I'm probably going to space out real quick whenever I'm a part of that process. Joseph, you can amen that.Jonathan:So one of the things that I get a lot of eye-rolls about from our team is where I decide to add in a new app to our software stack, because we're always trying to find a better way of doing it. There comes a point where that can be detrimental, but yeah, you've got to be able to keep adapting and moving, or else your business model could end up going to the wayside. If someone else figures out a better way to do it than you that's substantially better, you've accidentally inherited some business risk. In dentistry, you'll probably be fine, but it's a danger to your business.Jonathan:So yeah, definitely challenge the process. I don't know how many times I've heard from so many owners throughout the country that the reason that this is a problem for us is because it's our patient base or it's our software or it's because of this insurance that we take or it's because ... There's a reason behind why this doesn't work for them. Yeah, sometimes it takes 5, 6, 7, 8, 9, 10, 12, 13, 15, 20 different ways until you finally figure out the way to do it the best way, but you've got to keep trying. You've got to keep challenging the process to see if you can make it better and do better at the end. The purpose of doing that is to meet that shared vision. There's a reason you're trying to do that. It's not just because you're trying to add two cents a dollar to your bottom line. It's because you're trying to meet that shared vision. That's how you get the buy-in from the team to be able to do that. So I'd love to hear your insights to challenging the process, working in our firm.Joseph:Yeah. So you mentioned that this is probably your biggest strength in this list, and this list isn't you have to get all of these right 100% of the time. It's really a guide work and a framework for you to determine your own style and to move forward and to help your practice move forward. You mentioned challenge the process as being your best one. That's probably the one that I don't do well at all. It's like, "Man, I've got this tried and true way of doing things. I know it. I don't have to learn a new process. I can just crank through as much as I possibly can. I've been using this same Excel file for this many years, and it's just bam, bam, bam, bam, bam."Joseph:So I think, interestingly enough, if this is what you would call your area of strength, it's definitely my area of weakness, is to challenge that process. It's not that I don't want to get better. I want to get better, too, but I don't want to take the time learning a new software, a new app, a new work process, a new workflow, all of those different things. I guess I've just been scarred over the years. I used to really good at this early in my career, like all these challenges and stuff. So I'd come up with all these different gadgets, all these different ways of doing things and spend all this time on it. Then it just wouldn't work. I'd be like, "Well, see, we should've just done it the same as last year," right?Joseph:So, anyways, I think that's why we complement each other well. When we look at this list, Jonathan, what would you say is your biggest challenge? I mentioned that the challenge process is my biggest weakness in this list, but between inspire shared vision, enable others to act, encourage the heart, model the way, challenge the process, what would you say is probably your most difficult piece in this list?Jonathan:It changes. It's fluid. I think of ones that have been challenges. So initially, inspiring a shared vision, we talked about one of the challenges at the beginning is that you're trying to build something successful. That's what you think the vision might be. I went along with that, too. I made that mistake when I started the business, until we became much more purposeful in the way that we did leadership inside the firm. So at one point, it was that. I feel like we're in a better space than that now. So at one point, that was it.Jonathan:The thing I think I've always been pretty good at, enables others to add, but there have been times where ... I tell my employees this all the time. If I'm handing something off to you, I have to hand it all off to you, because if I'm even touching it, I have to be a part of all of it. I can't just pass over a piece. It has to be all or nothing. So in a way, at one time, I probably wasn't great at it, because probably it was too of a min-max, or what's it called wherever you ... Micromanage people. But I think I've gotten better at that.Jonathan:Encouraging the heart, another one that I think we could probably do a little bit better at that now, but I feel like I do an okay job of that. Modeling the way, we're a virtual company, so we don't see each other every day. Sometimes whenever you've had a hard day or not slept in a few nights because you've got a newborn at home, you come into a meeting, and you're a little tired or something like that. Yeah, sometimes that can be hard to do, too. But I feel like over the time that I've had in this industry, as well as in this specific business that you're never going to be perfect at all of them. So you have to have to give yourself some grace in these things. But you have to be aware that you're working towards doing a better job. That's what I try to do every day, is I just try to be better. I try to be better while allowing myself to not be perfect.Jonathan:So I feel like I have minor weaknesses in all of them, but I would definitely say that my strength would probably ... See, with the one that I said I had the strength in, I said I had maybe to a fault that sometimes I like to challenge it too much, because maybe I'm trying to make something more efficient, and it ends up wasting everybody's time because we look at an app that we end up not implementing because it ends up being only a fraction of a second better or something like that or even be worse off than the other solution. So you're going to have your pros and cons to all of these. It's just you have to try and do as good of a job as you can on the ones that you can and then allow yourself the grace on the ones that you don't. So what about you? Where do you feel like the ones that are ... You mentioned that your weakness was your biggest strength.Joseph:I always like to be a cheerleader. I figured out a long time ago that it's very easy to be the worst part of somebody's day. The person at the drive-through does something bad, you can yell at them, and that five second encounter will be the worst part of their day. So I kind of flipped that on its head, and I said, "How can I try to be the best part of somebody's day?" So mine is encourage the heart. I really like to get a chance to tell people in a sincere way ... It's got to be honest, and it's got to be sincere. It's not just a Johnny good job kind of thing. It's got to be one of those things where it's honest and sincere and it means something and it's not handed out all day, every day. "Hey, congratulations for showing up to work on time today." Well, you're supposed to show up to work on time today. But you can say at the end of the week [crosstalk 00:30:15].Jonathan:[crosstalk 00:30:15].Joseph:Yeah. "I made it through another" ... Yeah. But you can say, "I really appreciate your dependability as an employee. I always know that I can count on you." That's honest, and that's sincere. "The other day, whenever you helped Ms. Jones out, she was having the pain with whatever, and you walked her through that and helped out with that. That really meant a lot. Thank you for putting our patient's mind at ease and helping them out." Having that kind of honest, sincere appreciation for your team members, that's one of the things that I really like a lot kind of to do. I don't know. It was a challenge that I figured out several years ago. I want to be the best part of somebody's day, because it's just so easy to be the worst part of somebody's day.Jonathan:I definitely agree with that statement. So cool. So is there anything else you wanted to add in terms of leadership? Leadership is a big topic, everybody. I mean, this is not a 30-minute thing that you're going to listen to that. "Now I'm ready to lead that Fortune 500 company. I'm ready to be the CEO." While I would love for that to have been the case with what we shared today, that's not going to be the case. But this is a really good framework to start, to start conceptualizing and looking internally on the ways that you're going to be able to impact the lives of your people inside of your practice, not just your employees, again, your patients and your community and your family and everything like that. So Joseph, is there anything else you wanted to add in terms of this topic?Joseph:Yeah, no, I think he nailed it on all of these things. This is a framework. This was the first framework I was introduced to, is learning how to be a leader. It's been very impactful for me, and I'm just glad that we got a chance to share it with our audience today. You're not going to be perfect at any of them. Leadership is a process. You've got to continue to learn and grow and learn as much stuff as you can about leadership and continue to challenge. Going back to challenge the process, challenge the process of how you're leading your team and continually seek out knowledge on that.Joseph:I mean, as you mentioned, we could spend hours and hours and hours talking through different leadership models and theories and all the different experiences that we've had in our life. I'd like for this to just kind of be a beginning, a beginning, the conversation with you about leading, having these five core principles according to Kouzes and Posner about exemplary leadership. Again, inspire a shared vision. It's not my vision. It's not your vision. It's our vision. We want to enable others to act. We want to encourage the heart. We want to be able to help people understand that they're doing a good job. We want to model the way, set the tone at the top, and we want to challenge the process. Saly is not always our friend.Jonathan:Perfect. Well, guys, thanks so much for listening to another episode of the Tooth and Coin podcast. This is episode number five. It's about leadership, where we talked about the problem being that if you don't take leadership seriously, your business just won't be as effective as it should be. It can cause a lot of issues and even cost you a lot of money in the long run. We've shared a framework that you can use and adapt to help conceptualize on how to do these and gain these skills in leadership and maybe even do some planning on how to impact your business on your own.Jonathan:If any of these topics have resonated with you, if you have stories to share about bad bosses, people who've done bad leadership in the past, that can be a really powerful tool to be able to share with people to see how to not do the stuff. One of the best ways to learn how to do something is to learn how to not do it. So if you have any stories about that, feel free to share them in the Facebook group, in the Tooth and Coin Facebook group. Thanks again for listening in to the Tooth and Coin podcast, and we will see you next time.Joseph:Bye, guys.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country. I would love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or have become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:If you enjoy today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the long term. Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions in the Facebook group. We'll send you the resources when they're available, and we will see you next week.

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Fraud in the Dental Industry

Play Episode Listen Later Jun 21, 2021 40:17

Join the discussion on Facebook!Full Transcript:Jonathan:Welcome to the Tooth and Coin podcast where we talk about your adventure of being a dental practice owner. In these episodes we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific but we hope that these episodes help you along with your journey.Jonathan:Now a very important piece for you to understand is that this is not paid financial advise. This is not paid task or legal advice. We are not your financial advisors, we are not your CPA's, this is two CPA's talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand. Another thing that you need to know is that if you enjoyed today's content, join us on the Facebook group. We've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share, join us on the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering around our topics of discussion to be able to help you a little bit more than what the content is doing. If you'd like access to that whenever it becomes ready, all you have to do is text the word Tooth and Coin, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Again, that's Tooth and Coin, all one word, no spaces to 33444, reply with your email address and we'll email you instructions on how to get into the Facebook group as well as add you to the list to be able to send you those resources when they're available. If they're available, we'll go ahead and send them to you as well.Jonathan:Onto today's episode, hope you enjoy it. Hey there ambitious dentists, today on the Tooth and Coin podcast we're going to be talking about the number one most exciting thing in dentistry which is fraud. Everyone's afraid of it, everyone hates it, everyone hears this happening and thinks that it may happen to them. I've seen numbers from really smart people say that something like one out of every three, to one out of every two dentists will at some point in their career, be embezzled upon. It's a staggeringly high number of dentists may actually be effected by this in their practice. I get a lot of questions and a lot of confusion about, "Why does this happen? How does it happen? Is a CPA firm going to help me with this problem in my life?" And things like that.Jonathan:The answer is not... it's a nuanced answer like so many things are, it's not a one size fits all. Today's discussion we're going to be talking about the problem that is embezzlement in dental practices and I've already kind of highlighted what the problem is, people they can steal your money. To highlight that problem I'm going to be asking Joseph, Joseph has actually lectured on this topic before and then we're going to turn the tables around and Joseph's going to talk to me about in terms of the CPA firm helps with this problem inside of our clients and what our perspective is and how we view our service for our clients when it comes to this really nasty thing inside of not just dental practices, but all small businesses.Jonathan:Again, the main problem is that a lot of people are going to be embezzled upon, dental practices for some reason tend to be targeted a lot for embezzlement. Joseph, why don't you tell us why does fraud occur in small business, especially to dentists.Joseph:That number that you just spit out, that's nuts. I don't know that I've heard that. Somewhere between 30 to 50% of dentists get embezzled upon during their career. I guess if you look at the average dentist, we're talking about 30 plus years, we're talking most of them are going to own their own shop or at least the ones that are listening to our podcast are going to own their own shop at some point. I guess when you put it out that long, I guess that increases the odds. The Small Business Administration talks about the percentage of businesses that fail. Maybe dentists are so high because they're such a great business to be in and they've got such longevity with them, I don't know.Joseph:Man, that's a crazy stat for sure.Jonathan:It really is. I think the reason that is is because there's a lot of different forms of embezzlement, there's literally someone stealing tons and tons of money, and then there's people that are stealing supplies. Embezzlement has... or stealing hours even, just putting too many hours down compared to what they worked for. You may be one of those 50% but it may be that somebody padded hours for three months before you fired them. It doesn't necessarily mean that you're getting hundreds and hundreds of thousands of dollars stolen.Jonathan:Yeah, it's a big number and something you've got to be aware of. You've got to be on top of.Joseph:That'll wake you up in the morning. If you're listening to our podcast bright early in the morning, that should wake you up and get your attention.Jonathan:Oh yeah.Joseph:Jonathon, as CPA's we are specifically trained to think a certain way and you may think that this is right, you may think that this is wrong, but one of the things that they've just kind of ingrained in our brain is that everyone's going to steal from you given the right set of circumstances. That's kind of the way we're trained to think is, "How do we think about it in terms of those specific pieces?" Kind of the tried and true piece that we always point to in the CPA world is what's referred to as the fraud triangle. Do you remember the fraud triangle? Have you talked about the fraud triangle since you took the CPA exam?Joseph:Did you wake up in the morning, you're like, "Hey April, what's going on babe? Let's talk about the fraud triangle."Jonathan:The triangle that I usually refer to is the cheat, fast and quality, is that triangle. I don't usually talk about this triangle, the fraud triangle. Talk to me about the fraud triangle.Joseph:There's three sides to the fraud triangle, right? That's why we use a triangle, three sides. We've got three different pieces to fraud. The first part of the fraud triangle, and it doesn't really go in any specific order, but one of them is incentive. "Do I have an incentive to commit fraud?" I'm going to use your example. If I go and I pad my hours, in other words if I go out and I say, "I didn't work eight hours today, I worked eight and a half," but I actually only worked like seven in a half. That's padding my hours and I'm going to have a direct incentive from that.Joseph:Kind of the higher levels of financial management there is the incentive that if our PNL numbers look better, I'm going to get a higher bonus. If my overhead percentage stays under a point, then I'm going to get some sort of financial incentive. Incentive's the first piece of the fraud triangle, anything else that you might think of in the dental world that would be part of an incentive for fraud? Do we have any... I would imagine some of them. Go ahead.Jonathan:Yeah, there are tons of incentives for fraud in this world. There's tons of incentives for people to... really the main incentive that people have inside the dental world is usually just money. That's the incentive for people to try and take it. They want more money. Whether it's money that they deserve or not, that's what they are typically wanting.Joseph:Got it. Maybe you have a new patient bonus to where if you have X amount of new patients that are out there, and if you get those new patients numbers, that may be the incentive that somebody goes and then creates a new patient inside of the software, or something silly like that. Incentives the first piece of the fraud triangle.Joseph:The second piece of the fraud triangle is opportunity. Opportunity is probably the one that is easiest to understand so if I am working the front desk and somebody pays in cash and they give me $80 worth of cash. I have the opportunity to stick that cash right inside my pocket. I was just looking at some financials for one of our clients that has multiple employees that have the corporate credit card. If you're walking around with the corporate credit card in your wallet as an employee or team member of a dental practice, then you are presented every single day with the opportunity to whip that card out at wherever you want to and do that. Opportunity's the second piece.Joseph:The third piece that is I think the more psychological piece that's out there, is what's called rational. The rational basically is a way for our mind to justify that what I'm doing is okay. It may go something like this, "Well Mr and Mrs dentist is just doing so well, they're making all this money. I see all of these deposits come through. They pay me a pittance, I'm making minimum wage or not nearly enough." I've just rationalized in my head that it's okay to take money, to pad hours, to swipe the corporate credit card, to take any form of all these different pieces that are out there.Joseph:That's the three pieces of the fraud triangle that we were trained upon way back when inside of CPA land. Opportunity, incentive and then rational. What one kind of sticks out for you Jonathon?Jonathan:It's almost always opportunity to me is what it seems like to me in terms of why this happens. When it happens in this industry, I guess is a better way for me to say it. Usually it seems to be opportunity. Someone perceives a weakness in, this is CPA talk, internal controls which for everyone that's listening, internal controls are effectively like, "Hey, nobody's looking over my shoulder when I'm doing this, and I can just take that money if I want to. If you've ever seen Office Space, it's whenever they do the thing, they have this computer program that rounds it to the next penny and they're like, "No ones looking at this. All we have to do is round this fraction of a penny up and then put it into a different bank account and literally no one will ever figure it out because it's literally we're talking about hundreds of thousands of transactions. We're talking about a hundredth of a penny per transaction. That transaction will never be looked at or flagged so that money will just be in this bank account."Jonathan:It's opportunity is what typically happens in dental practices, is they think that, "Hey, I'm the only one who writes the checks. I'm the one who receives the inventory. I'm the one who pays the bill. I'm the one who signs the check. I'm the one who receives the patients money. I'm the one who enters it into the practice management software. I'm the one who takes it to the bank." There's no one really looking over their shoulder. Opportunity, usually to me I think is the first path towards... into the dental space of it, is they realize, "Hey, there's a little bit of an opportunity there."Jonathan:I'm fully, fully, fully, fully not going to downplay the fact that there's some type of motivation typically that makes them look for those types of things, but in dental practices, those opportunities seem to arise a lot. I think that's just due to the nature of it being in a smaller business. In your time as a CFO, did you ever have any moments there was the opportunity for fraud at your old place that you could... obviously if it's something that you're not allowed to talk about, don't talk about it but is there anything that you can think of that you've ran into in your career when it comes to fraud?Joseph:I think there are certainly things that as a CFO controller, as a business owner, there are certain steps that you take to try to prevent fraud. One of the things that you were just mentioning there was the same person that's opening the mail is making the deposits and entering stuff into the patient management software. One of the things that we talk about is an accounting term is segregation of duties. You don't want to have the same person that's doing all of those things.Joseph:One of the things that we had to always make sure was that every time a patient came in the door, it was a documented patient encounter that went into the patient management software. What that's going to do is that's going to generate the opportunity to create the coding for that specific encounter. What was the procedure that was done? What was the product that was delivered? Once that whole thing starts, then that really is a good catch about a bunch of different things.Joseph:If somebody came in for a pair of compression hose that were $80, that gets entered into the patient management software, that's then going to give them... they're going to have to pay the $80 because it wasn't covered by insurance. When you think about it in terms of that it's like, okay, if this $80 invoice gets generated, if the patient pays cash and the person that's taking the payment, the front desk person or the clinician or whoever it is, takes that $80 and puts it in their pocket rather than in the company deposit, what's going to happen is because it's in the patient management software, an invoice is going to get generated. Then the patient is going to go ahead and get a bill the next month. If you got a bill for something you already paid for Jonathon, what would be your first thought and what would you do next?Jonathan:If I got a bill for something I already paid for I'd say, "Hey, they've not processed your payment, we need to call the vendor and see what's going on."Joseph:Yeah. Not that that happened regularly, but that was just one specific piece that we had in place. I think the other stuff, I think that probably every CFO's big nightmare or controllers big nightmare is these company credit cards that are out there. Credit card companies make it really, really easy for you once you have a business credit card to order additional card holders and additional probably. I was always real hesitant to have somebody get added to the company credit card because it just creates this opportunity and if you take the opportunity and you take the rational, it may be one of those things where somebody's got the corporate credit card and it's time for them to go out to the lake and go fishing this weekend, and they just whip the company credit card out and fill their bass boat up with fuel on the company.Joseph:That's going to look like a charge to Exxon or Shell or Conoco, whoever it is, it's not going to be one of those things. Obviously if you've got somebody that's looking at all that stuff, they say, "Well typically the gas charge is $25, and all the sudden here's an $85 charge on Friday afternoon to Conoco," that may raise a red flag. I think that kind of goes back into the other piece of it is that if you do have a company credit card and you do have people that have those, you need to be reviewing those charges every single month. I don't want you to get carried away and review it daily and think that everybody's stealing from you but you definitely need to give it the old eyeball test.Joseph:Jonathon, I don't know if you're familiar with the formal term of eyeball test, but I was talking to a client about this the other day, I was like, "Man, you need to give it the eyeball test." He's like, "What's that?" I said, "Well, you just kind of take a look at it and see if things look out of whack." What I just mentioned is if typically your gas is $25, $30, $32 and then you have an $85 charge, that doesn't pass the eyeball test. That's something that you need to look into.Joseph:The other thing is that you've got... the IRS requires that you have documentation for every single thing that you're claiming as a business expense. If you've got these credit cards that are out running around, you've got to have some sort of system to collect the receipts and to document that and to say why it was an ordinary necessary business expense. If it comes under scrutiny, that's what the IRS is going to say. I was told by an IRS agent that whenever they presented proof that this was an ordinary necessary business expense, they pulled out the credit card statement and said, "Well, see right here it says Exxon Mobil $24," and they said, "A charge on a credit card statement is not enough documentation to prove that it's an ordinary necessary business expense.Joseph:Those are a couple of things that jump out. Having multiple people having dual controls and segregation of duties, those are big things. Making sure that every patient encounter is entered into your patient management software. One thing I was talking to a client about the other day was one of the things, if I'm sitting back in my CPA brain and I'm trying to invent ways to create fraud, is to review your adjustments report. Let's say, go back to this $80 compression hose, let's say that that patient comes in and they pay $80 and the person that's working the front gets really, really smart and they say, "Oh, we'll just put a patient credit adjust for $80," which means that that patient won't receive a bill and it'll show up as they had actually paid but the cash didn't make it to the company bank account.Joseph:That's something else that's out there. You need to be reviewing your adjustment reports. What would you think on adjustment reports? Is that something that we recommend that they do daily or weekly or monthly? What are your thoughts on those adjustment reports? We made our software so easy to just write balances off, I think somebody with some authority needs to be looking at those. What are your thoughts on that?Jonathan:There's a few. I don't know if it would be called an adjustment in whatever practice management software our clients are using, whether it be [inaudible 00:17:55] or [inaudible 00:17:56] dental, or soften, or whatever it is that they use. They all have the ability to do those types of things. One of the big dangers that a lot of these practice management softwares have 10 ways to do the same thing and really only one of them may be the right way. It will work on the surface but if you were to dig back the reason for doing it in a certain way, usually there's a reason you do it one of those 10 ways for whatever it was you were doing, and a lot of practices use practice management software incorrectly.Jonathan:One of the reasons we typically recommend having an office manager consultant person be able to come in and teach you how to do those the right way so that you are making sure everything goes in their correctly. In terms of the adjustment piece, yeah absolutely. One of the things that I tell people in regards to one of the best ways they can help prevent fraud, is to have a very solid end of day process in their practice. What I tell them is when I was in high school and college, I worked for what doesn't exist anymore, but a video rental store...[crosstalk 00:19:05]Joseph:You're dating yourself there.Jonathan:At the end of every night we had a countdown... yeah. At the end of every night we had to count down the registers which meant that you open the register, you printed out a report from the little software that was done in MS-DOS or some type of shell station. You print out this report, it comes out in that really big wide paper, it said, "This register had this much in cash. This much in checks, and these much in credit card payments go through this register." We had four registers and you had to countdown each register and make sure that every dollar was accounted for that went through that system.Jonathan:Then you had to, if it was cash you had to tie it up or put a rubber band around the cash and you had to put the checks, you had to have a ten key register printed out of that. You had all the credit card receipts, it's done together as well and you had to have it attached to that piece of paper that got printed out from that report and it had to go into the managers box every night.Jonathan:That was the first time I ever encountered something like this where you'd have two managers and they'd enter in an adjustment in a different way. Eventually one of those managers got in trouble because they weren't doing it the way that it needed to be done in order for the register at the end of the night to be accurately counting everything whenever it did the month end. It was one of those things where it worked for the day, but eventually it messed something up in the calculations down the road that that person didn't see until the manager was trying to do the month end closes and things like that.Jonathan:I tell people, one of the best things you can have in your small practice, because let's face it, a lot of people can't do segregation of duties. There's two people working in the front office and one of those might be the dentist in some of our practices. There's not much that they can do so what they do is it all gets housed under one persons hat. End of day process is really important and one of the things we tell the dentist they need to do everyday, or that we've heard from practice management consultants that are office people, have said that, "Have the dentist look at their day report everyday. Their day sheet and look at literally everything that came through the practice just to make sure that it makes sense."Jonathan:One of the things they said is to make sure that there's no adjustments to any patient accounts. There shouldn't be adjustments or deletions from patient accounts because if they're doing that then they've likely done something incorrectly. The way that it was explained to me, and again it depends on how your practice management softwares set up or whatever it is, is that there should be credits to accounts or there should be charges to accounts and then there should be write offs to accounts. There really shouldn't be adjustments to services after they've already been done unless there's a very valid reason. For example, "We accidentally billed this person for porcelain crown when it was a gold crown, so we had to take the porcelain crown off and add the gold crown charge in."Jonathan:There has to be a very specific reason, there should be an indication by each of those things done in that day sheet that you get that is a part of this. This is one of the things I also heard that you do whenever you're in a larger practice as well, if you're an associate for a larger practice you should be looking at your day sheet to make sure that you got credit for everything that you did that day. You didn't get put to the wrong provider, or you didn't... if you did something it actually got put onto the fee schedule so you actually got paid for it, so that the charge went to the patient account.Jonathan:That's something that I was told needs to be done on a daily basis as a part of that day end close process. That's one thing is the day sheet. The other thing is from the end of the day close, you should have what I mentioned for the video store rental place, you should have something from the practice management software saying, "We had this much in cash come in today, we had this much in checks come in today, we had this much in credit cards come in today." That should be tied together and there should be source documents there. There should be things showing you that those numbers are actually what happened.Jonathan:It gets a little bit complex in dental because you have all these insurance payments come in through electronic transactions. We get a letter in saying, "Hey, we're going to deposit this money into your account on the 24th of the month," and then it does get deposited on the 24th but it doesn't hit your bank account until the 25th. It's kind of hard to see how that happens because you enter it, you get that letter in a week in advance so the person in the front might be entering that notice into the system the week of when they get the letter, rather than the day it went into the account or even the day that it registered in the account.Jonathan:There's some complexities that can happen right there. Another really, really good reason to have a really good office manager type consultant, a person that we recommend a lot is Sandy Pardue, she's out of Louisiana. She's really, really great. There's also other programs out there that can help you with this if you're not familiar with how to do this. There are people that can help with this type of process and get this really set up strong for your office. Really important to have that. Really important to have that. That is not something that our office does. We are not practice management consultants.Jonathan:If you tell us what is happening in terms of the flow of the accounting dollars and cents that are coming into your office everyday, we can give you just a general understanding if we think that that's... where your areas of risk might be but that's really more of an informal feedback discussion between us than being a part of the service that we get paid for from our role as a CPA.Joseph:Interestingly enough, I'm sure that you get this all the time on sales calls but CPA's, we generally don't catch fraud. It's not something that's really a part of what it is that we do. I think the number one way that fraud is caught is by accident and not by something else. What are your thoughts Jonathon? As you get a chance to explain to clients what our role as CPA's is and fraud, what's a message that you're telling them as you kind of get that question, "Oh you guys are going to audit my books and catch fraud, right?" What's your message and what's your thoughts on the CPA's role in fraud?Jonathan:It's a really common misconception and I know that there are people out there that probably propagate that misconception in terms of CPA's that will say, "Oh yeah, we're going to catch that." The AICPA, the American Institute of Certified Public Accountants which for the dentists listening, that is like the American Dental Association for you guys. AICPA is the ADA for CPA's basically. The AICPA is very, very specific in how we as CPA's are to view ourselves in terms of audit, or in terms of fraud. That is basically to say that we're not here to catch fraud, that's not really our job. There are people that are CPA's that try to catch fraud, or to even be slightly more specific, they help track down how fraud was occurred after it's been discovered. Those are called forensic accountants.Jonathan:In general, fraudulent activity, there are very few services that CPA's offer that are actually designed to catch fraud. The most in depth service that CPA's offer small business, it's called an audit. There's actually a prescribed engagement called an audit under the AICPA guidelines and that audit even in that, it states in the engagement letter, or in the opinion letter that our services, even if we're doing an audit which is the most in depth thing, they're going to go top to bottom on your internal controls, and your processes and things like that. That audit will even say, "This is not meant to catch fraud." It's really just more to view how strong your internal controls are that could potentially lead to fraud.Jonathan:If they're very weak or if they're very strong, and as well as to give you an overall understanding of how your business operations are running from a business standpoint. That's the purpose of an audit. Even in the most in depth engagement, under the AICPA guidelines, it's still not designed to catch fraud. A CPA that's engaged with you to help with your tax compliance, tax planning, tax rejections, accounting services, management reports, things like that, those services are far, far, far, far less in depth than an audit would be. They are definitely not designed to catch fraud as well.Jonathan:The way that I tell people is that, "Has our firm caught fraud before? Yes, we have." We've seen credit card payments go into vendors that didn't exist. Someone had not in the office, gotten credit card information, was paying for stuff. We've seen... you and I were talking about this before, we had a client just this last weekend had a check that was written from their... this office was in California and the check was cashed in Florida with a different check number, different everything, it just happened to have their routing and account number on it. It's a $20,000 check that got cashed all the way across the country, it was just somebody had fraudulently found their information and put it down and made a fake check, and cashed this check for $20,000.Jonathan:That would be an example of something that our services are not designed to catch a fraud. One of the things that we do, is we ask our clients if we see a transaction that we don't know who the vendor is or who the payee is say, "Hey, what is this $20,000 for?" That would be an example of something that we would... I can't say that we would catch that as being fraud because what could have happened is we could ask the client, "Hey, who is Shelly Franklin and why did you write her a $20,000 check?" If for whatever reason the client had a mental lapse and just never replied to the email or said, "That was for equipment," maybe they paid Henry Shrine $20,000 and they just didn't connect the dots of being two different vendor names, then we would never know. That wouldn't change.Jonathan:That's a big example. $20,000 is a big number amount. What if it had been a $50 check? What if it had been an $80 check or something, a much smaller amount? The way our service is designed, if we don't know who the vendor is and there's no memo, there's nothing in the memo saying what it was for, then even on a smaller item like that we would ask the client who the vendor was and what the purpose was, but I know there's a lot of CPA firms out there that would just be like, "We'll just put that to contract labor. We'll put it to patient refunds," or something like that and just be done with it.Jonathan:Ours is specifically designed to ask that question the way that we do our stuff, but it's not designed to catch fraud, it's designed for us to ask questions about things that we aren't aware of. None of our services are designed to catch fraud, but it doesn't hurt to have somebody that is really familiar with the dental industry to know who the vendors are, to know, "Hey, Align Technology is a lab and A-L-I-G-N-E is not that same company." We need to make sure if a check gets written to A-L-I-G-N-E that we're going to ask, "Who is this person? Who is this vendor?" So you have that second set of eyes just kind of looking over those types of things.Jonathan:We do help. I interviewed multiple years back, and I've had dinner with him, really nice guy David Harris, he owns a company called Prosperident, it's the number one company in probably the world in finding embezzlement inside of dental practices. They help catch hundreds of people a year that have embezzled in dental practices, they're really, really good. He's a CPA, he's a CFE, he's all these things. He has way more letters behind his name then I'd ever care to have. I asked him I was like, "Hey, how can..." this was whenever we were starting the company I was like, "How can we help with this process of combating embezzlement in our practices?"Jonathan:He said, "Jonathon, we help out hundreds of practices a year catch embezzlement or to put these people behind bars if we can, or make them pay. Maybe one percent of the people that we find, the CPA ever even caught a sniffle of what they were doing." He said, "It's just because the services are not designed that way." It's a big misconception out there guys, but I want you to be certain to understand that just because you have a dental CPA does not mean you're fraud proof or you are embezzlement proof. It could mean that you have a little bit of help in someone else kind of keeping an eye on things for you, but at the end of the day, like Joseph had illustrated saying, "Hey, they used the company credit card for gas in the boat rather than gas in the car," if we asked the employee, "Usually it's a $30 gas charge, this time it was a $60 gas charge." And they say, "It was because I usually fill up when I'm at a half tank and this time I filled up... gas was expensive this week." Or, "Yeah, I ended up buying some stuff in the store," or something like that.Jonathan:We're not going to be able to tell if they're lying or not. We weren't' there. We're not going to go and put a dipstick into their gas tank and make sure that they're telling the truth about how much gas they got. You wouldn't want us to do that type of thing either because it would take us so much time you'd be paying us so much money to do that type of work that it would be a negative value consequence to you. It'd be a negative return on your dollars for doing that.Jonathan:To kind of recap that, we try to keep the episodes to 30 minutes length, the problem is a lot of dentists will get embezzlement done in some way. It occurs because of the triangle of fraud which was opportunity... tell me what they were. Opportunity...Joseph:Opportunity's one, incentive is one, like I'm incentivized to create fraudulent transactions, and then rational. "Poor little old me, I don't make enough money. I'm trying to feed my babies, I've got whatever reason, I'm trying to feed my cats. I don't have enough money because this penny pinching dentist doesn't pay me enough money." So the rational. Opportunity, incentive, and rational. The fraud triangle.Jonathan:Yeah, exactly. Those are the things you have to be watching out for. Your CPA can be helpful in this but they're not designed to be the person protecting you bar none from embezzlement. The only person who's going to be able to do that at the end of the day is going to be your internal controls in your practice, and yourself as the business owner. You're going to have to keep an open eye on what's happening. I don't want anybody out there to all the sudden start thinking that the girl in the front is this international person of mystery that's a spy that's going to be stealing all of your money. The way that you have to go about this is you need to have a lot of trust in the people that you hire, or else you hopefully wouldn't have hired them in the first place. You've got to have verification. You've got to have some tests that you'll put into place over time. Make sure that you have a super solid office set up to where you have a solid close. Make sure that you have a way that you're processing your payments to your vendors in a smart way.Jonathan:Don't give the person who's writing the checks a stamp to write your checks with. Don't...[crosstalk 00:34:58]Joseph:Signature stamps.Jonathan:Yeah. Exactly.Joseph:No, don't do that.Jonathan:Don't do that. Make sure that the person who's receiving the inventory is tying those inventories to... or having whatever's coming in also be verified so that you're getting what you're supposed to be getting, you're getting what you paid for. Make sure that your day sheets don't have too many adjustments on them. If they do have adjustments make sure they're totally verified. Make sure that you have a solid deposit set up going. There's a lot of things that you've got to have, make sure they're solid and strong and then the most important thing probably I would say to do at the end of all that is to randomly test those systems.Jonathan:Test them once a quarter will probably be fine, just pick five transactions to randomly test once a quarter, and you will probably be fine. Then outside of that look for weird behaviors from your employees. One of the more common ones that people talk about is there's that office manager that just they do everything, without them the system would fall over. Even the dentist doesn't know what she does. She's always the first one there and she's always the last one to leave, she never takes a vacation. If she does, she's really, really anxious about who's doing what in the office. That's kind of the tell tale sign of someone who has opportunity because they're the only person who knows what's going on. Doesn't mean that they're going to do it, but that is kind of the tell tale sign.Jonathan:Also, look at spending patterns, if you're paying your office manager $40, 50, 60,000 a year, and they always have a new vehicle and maybe they don't have a spouse or something like that, keep your eyes open on that. And keep an eye on your numbers, make sure that your ratios make sense. If they don't sometimes that can lead to it. This has been the episode on fraud, opportunities, how the CPA helps you and the misconceptions surrounding that, and a whole lot of information in the 36 minutes.Jonathan:Joseph, is there anything else that you wanted to state in terms of this topic?Joseph:Don't let your deposits have cash back on them. That's another one. That's a pretty simple step that you can take at the bank, that's one of the things I tell brand new practice owners. If you're not going to be the one taking the deposit to the bank, don't allow it to have cash back. "Oh, $10,000 deposits worth of checks and I get $8,000 back in cash." That's one thing I meant to mention earlier that I didn't. No cash back on deposits, set your accounts up that way.Jonathan:That's a good one. Yeah, that's a good one. Just as a quick story time in this one, I had an attorney call me and he was like, "Hey, we have a client that..." their controller was writing hot checks or something like that, the person that was inside of the business and they were doing something similar to that. They were like, "The CPA didn't catch it. The business owner took them 12 months to figure it out and the person who was doing it was sending the money overseas." The person ended up leaving the country before they realized what had happened.Jonathan:That's a really good example of after doing all the recording and stuff, there's also that step of getting it to the bank. That's definitely a real thing. Anyway, all right guys, we will see you next time on the Tooth and Coin podcast. This has been one about fraud, if you have any stories about fraud or any types of interesting situations that have happened with that, make sure to share it inside of the Facebook group and to share it with the community. We'd love to be able to hear more about it. We will see you guys next time.Joseph:Bye guys.Jonathan:That's it for today guys, I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner and you're interested in CPA services, head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country and we'd love to be able to have the discussion about how we can help your new practice. We do specialize in new practice owners, so people who are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty.Jonathan:I would love to be able to talk to you about how we could help you in your services with your tax and accounting services. And if you enjoyed today's episode, again go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the long term.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces. T-O-O-T-H-A-N-D-C-O-I-N to 33444, reply with your email address, we'll send you instructions to the Facebook group, we'll send you the resources when they're available, and we will see you next week.

The Challenges of Being a New Business Owner

Play Episode Listen Later Jun 20, 2021 34:47

Join the discussion on Facebook!Full Transcript:Jonathan:Welcome to the Tooth and Coin podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones. Some of them are very specific, but we hope that these episodes help you along with your journey. Now, a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors. We are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So we've got a Facebook group that is active with dentists that is going to have content talking about what we're talking about today, to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share. Join us in the Facebook group. If you go to Facebook and you search for Tooth and Coin podcast, click on it to join it and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering it around our topics of discussion, to be able to help you a little bit more than what the content is doing. So if you'd like access to that, whenever it becomes ready, all you have to do is text the word toothandcoin, T-O-O-T-H-A-N-D-C-O-I-N to 33444. And that's tooth and coin, all one word, no spaces, to 33444. Reply with your email address. And we'll email you instructions on how to get into the Facebook group, as well as add you to the list, to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you as well. So onto today's episode, hope you enjoy it.Joseph:Hello ambitious dentists and welcome to episode number three of the Tooth and Coin podcast. Today, we are going to discuss the challenges that come along with being a business owner alongside me, as usual, is my trustee co-host, Mr. Jonathan VanHorn.Jonathan:Hey, hey you guys.Joseph:So Jonathan, I think what we're going to talk about today is just to get a chance for our listeners to understand what are some of the challenges that come along with that. So I think first and foremost, maybe we start with dental school. So what is it that a dentist, and I'm relatively new to the profession, what is it that dentists learn in school? Like when they're in dental school, what do they teach them?Jonathan:Yeah, I mean, the biggest problem is the easy one. And that's that they go to dental school to learn dentistry and to become a doctor and to be able to help people with their oral health. They do not learn how to become a business owner, which the majority of dentists go on to become practice owners. And so the number one challenge people are facing and being a small business owner in the dental industry is that they got to become a business owner whenever they've never owned a business before, or had any type of training in it.Joseph:It's funny that you say that, I was thinking about when I was a kid and I went to the dentist, I was maybe 15, 16 years old, something like that. And I got to talking and my dentist came in and he said this, that and the other. And he said, "Have you decided if you're going to go to college or not?" And I said, "Yes, I plan on going to college. And he said, "Well, if you go to college, he said, you should major in business." And he said, basically exactly what you just said. And I said, "Business, why should I major in business?" He said, "Look, I'm a dentist now. And they taught me everything that I needed to know about dentistry to get started in practice, except for how to run a business, no matter what you want to do, you're going to need to know how to run a business."Joseph:And I was like, "Okay, duly noted." That was one of the first people that kind of told me that I should major in business, depending on wherever you go. He says, "You're always going to need to know business." So what do you see Jonathan, as some of the different elements that go along with that? I mean, to me, business at that age, I certainly, business seemed easy to me. People come in, they get services, you pay them, you kind of go home and do your own thing. So, as we think about maybe some of the challenges of "the business" or running the business, what are some things that kind of immediately come to mind for you?Jonathan:Well, what's funny is that we went to school in the business world being CPAs we had to have business training. Our school that was related to business, almost like parallel to business. Even having classes so far as in that, where they teach you things like strategic management and things like that. But it's all book stuff really. I mean, it's not real world experience. And there's just so many problems with traditional education of what it actually even brings to the table when it comes to actually being a business person, so to speak. So there's only so much that information or education can give you when it comes to understanding what happens when it comes to owning a business. So all the people that are listening now that are either soon to be practice owners, or even the people that are already practice owners that already know this is that you learn most of this when you first become the practice owner.Jonathan:The education can give you a little bit of background, give you a little bit of an understanding of what you're getting into, so to speak. But if you've spent 15,000 hours learning how to become a dentist and zero hours learning how to become a business owner, whereas us being CPAs, we spend tons of hours in business school. We have more information. We may not have the experience, but we definitely have more information whenever we go into that situation in the first place. So the problems are stacked up on dentists pretty much from day one. The biggest piece is they don't typically have the educational background. Now I talk to dentists all the time. We even have at least one client of ours, Joseph, for Tooth and Coin that was a CPA before he was a dentist.Joseph:Really? Okay.Jonathan:Yeah. So it's not like they found that the secret to success is they had education. It's not necessarily that. It's a lot of being able to learn while doing as well. And it's not just the learning while doing. It's also the ability just to be able to see what you're doing and see if the things are going the way that they're supposed to be. And if you don't go into it with that mindset, you can, a lot of times, get caught in traps of repeating things that have gone wrong in the past. So the first big barrier again is education, which thankfully there's tons of information that's out there nowadays.Jonathan:I mean, people that are listening right now are receiving information about the business of dentistry, so to speak. And so you're learning a little bit about this problem. If you highlight it, if you address it, then you have a chance to overcome that challenge. So the education piece is the first one, is the first big part of it. Add into the fact that in dentistry, you also get tons and tons of debt for the education that gets you to be skilled enough to be a person to do dentistry.Joseph:Wait, wait, wait, wait, wait, wait, wait, wait. So you're telling me you got to go into debt to become a dentist.Jonathan:Oh yeah.Joseph:That's not something that the federal government just writes checks for that?Jonathan:Everybody's really big public health, but we're not that big on it. So much so that the taxpayer money goes towards paying all the student loan debt off for all those dentists out there. Yeah. There's horror stories of people getting out of dental school with a million dollars in debt.Joseph:What? A million dollars for school?Jonathan:Yeah, just for school. Dave Ramsey, if you've ever listened to him talk to dentist on the phone, he's always just completely perplexed by the fact that, that's a possibility. So, that debt is really kind of probably the second biggest challenge is that you're going to have debt for school. You're going to have debt, because you're alive in 2021. And you're probably going to want to have a home if you're in certain areas of the country. You may end up having a car. You may end up having, if you have children, you probably have school. You may have childcare that you're paying for. There's so many things that just stack up against you in terms of your cashflow going out the door on a personal level, none the less, the business level. Everything is kind of stacked up against you in the very, very beginning.Jonathan:And that's before you get to the business side of things. The way dental school happens is there's tons of dentists that get out of school and they're already married and have two or three kids and by the time they're working their first job, just because of the way that the age range works. And so sometimes we even have the spouse's school on there as well. A lot of the times we have dentists that are married to other dentist. That's before you get to the business side. Now, if you get to the business side, your choices are typically to go work somewhere else as an associate, hone your chops for a little bit, get better at producing and things like that. Or learn a bit more about the industry and the real dental world or you can go and become a business owner at some point in time.Jonathan:Most people probably give it a year or two out of dental school before they jump into practice ownership. I think that's generally good advice for the majority of people. Get out there, learn on somebody else's dime for a little while, while you're getting some cash flow in the door. Getting things set. There are dangers around that, because you might get a little too set and you might start getting a little too comfy, not having to do some things, but at some point in time if you're listening to this podcast, you've probably made the decision or have made the decision in the past that you're going to be a practice owner. And so if that's the case, then you're going to have more debt. It's more business debt, which is-Joseph:Wait, they don't give these practices away. They don't just like, let you come in and just take over for free?Jonathan:Yeah. Like I said, we're big on public health in this country, but we're not big enough just to help people pay for getting their dental practice up and running in the areas they want them to be ran in.Joseph:Is it even possible for them to save up cash? How much cash would I have to save up to not have to take out debt for buying a practice? If I just wanted to say, you know what, I'm going to work my tail off and I'm going to save up, how much cash would you think that I would need to save up to even start that process?Jonathan:So we've had people do it and we've had people that they're like, I'm going to wait five or 10 years until after I get out of dental school to start my practice, because I want enough cash. I'm going to live frugally for five years, 10 years, and I'm going to be debt free and I'm going to start this practice and it's going to almost be all cash almost. If you're going the startup route, then I would say budget at least 300 to $500,000. Your market may vary, your practice style and philosophy may vary. A good friend, Jayme Amos with Ideal Practices, how to open a dental office.com. He does startups and they do hundreds or at least a hundred a year. And I've heard them speak on the topic.Jonathan:And they're like, it just kind of depends on, do you want Cadillac brand things? Do you want the Honda brand things? Or do you want the, or sorry, it's like Tesla, Cadillac and Honda. Which of these different choices do you want to have in your practice? And it kind of just depends on your style and your brand and your vision for your business and things like that. So that 300 to $500,000, it's a wide range. Now, if you're going to go buy the real estate that goes along with that, it depends on the real estate process in your area. In Lepanto, Arkansas, a dental practice office, the building is going to cost you probably 150 grand. Whereas if you're in New York city, you were looking at 150 million or something like that. It's a big difference on the real estate.Jonathan:Yeah. So, more and more debt comes up, more and more. If you end up buying a dental practice, it very much depends on what type of practice you're buying. My kind of sweet spot, I feel like most people get into in terms of the buying of the dental ... of acquiring a dental practice. They're usually paying somewhere between 600 and 700,000. Well, that's a little bit too narrow of a range. Probably 600 to $800,000 for a dental practice. It's a one owner practice that has a bunch of patients and they're not doing a whole lot of dentistry.Jonathan:And that's kind of like the ideal situation. So, if you're going into business debt, and then it depends on what all types of upgrades you need, what type of equipment they have and all those other types of things. So, on the safe side, I would say minimum 300 grand to be upwards to anywhere towards a million for the business side of the debt. So [crosstalk 00:12:54] those are numbers ... Yeah. You add that all into the personal debt stuff. And you've got this big mole hill you got to climb up in order to be able to start getting to break even. It's one of these really unique industries where you start with a huge negative net worth.Joseph:We're talking about net worth, what does it even mean to have a negative net worth? What does that even mean?Jonathan:So, whatever your assets minus your liabilities are, is your net worth.Joseph:Okay.Jonathan:So pretty much, and this is, I think it's fairly unique to the US, but pretty much every college graduate starts with a negative net worth in this country.Joseph:Meaning if I add up my car and my bank account and then I take out of that my student loan debt or credit card debt or whatever, I own less than I owe.Jonathan:Exactly. Precisely. If you own less than you owe, which is a great way of saying it. Let's say that you've got a $250,000 house, and you've got $400,000 of student loan debt and $50,000 in credit card debt. All of a sudden, you're up to $750,000 in debt, and you've got $5,000 in your bank account. You've got negative $745,000 net worth, is what your net worth is.Joseph:Would you say that it's common, Jonathan, whenever people are either thinking about going into practice ownership or that they do start and go into practice ownership? Is it pretty typical to see a negative net worth at that point in their career?Jonathan:Yeah. I mean, I would say that's more common than not. And that is something that stacked up against you, but I want to make sure to make the point that people need to understand that debt has different types of meaning. So, if you're buying that dental practice that I was talking about 600, let's call it $750,000 that you paid for a dental practice that had an ample patient base, plenty of production to go around, you're going to be able to turn that thing into something. It's going to be able to generate a return of 350 to $450,000 a year, that you're going to be able to take home. Yes, you're taking on debt, but you're taking on debt in order to be able to attack the debt better. It's an investment.Jonathan:And it's an investment with an extraordinarily low interest rate based on the interest rates as of today's recording. So, that's not ... Ooh, debt bad is what a lot of people like to say nowadays. There is such a thing as leveraging other people's money to be able to make your debt go away faster, which is what I'm talking about whenever you buy a dental practice in order to be able to attack that stuff better on later. So, that's an important distinction I want to make, because I don't want to gloss over ... I don't want people to be thinking, oh, I'm going to have $1.5 million in debt when I start my business day one, but that's like an insurmountable number to get around.Jonathan:It's really not. Because if you think about it in terms of net worth, not only is that ... So you use that debt and you've acquired that practice, but as that debt is paying itself off, you're not building equity into that business, as well as receiving a cash flow from that business. And so you're getting both of them. And yes, there is interest payments going on and things like that, but we've got plenty of clients that have paid off their business debt within five years of being a practice owner and their student loan debt as well. Just because they got in and they didn't really have a lifestyle change and they went on and just paid everything down. So, that's the big second one. So the first one is education, the second one's debt. And it's impossible for us to not talk about debt as being a big challenge that people have to get over.Jonathan:And funnily enough, to me, the solution of getting out of the debt is to take on more debt, which is maybe counterintuitive to some, but if you-Joseph:It doesn't seem like it should make sense.Jonathan:I know, right. But from a math based perspective, if you're in flow doubles, but your outflow grows by 2% or 5% you're going to be able to, once that debt amount is gone, that 5% goes away. So it becomes worth it because your inflows are going to be more valuable than your outflows at that point. There are some people that I've spoken with that have been making a lot of money as an associate. It's fairly rare. Pretty rare that I talked to somebody who had a really great gig as an associate and could make as much as a lot of dental practice owners make, but those gigs do exist. It's just, you got to be a really high producer and get a really, really good position with a really great practice in order to be able to have that be a reality for most.Jonathan:So, anyway, so yeah, so those are two of the big challenges. The other challenges are, is just the, once you begin the experience. So, let's talk about that. Let's get past the decision to become a practice owner. Now, you'll say you are a practice owner, and now there's a problem with the fact that you've never ran a business before. And this happens to everyone. And I want to circle back to the original part of the conversation, talking about how we had business training. Just how many people do we know that went through business school that never owned a business. I mean, would you say it's, in all honestly, it's more than 90% of the people that we've probably graduated with do not own a business.Joseph:Yeah, for sure. Yeah. I think that's a good number. Don't own a business, haven't owned a business, won't own a business. They'll always be sat in the back of a paycheck instead of front of one.Jonathan:Yeah, exactly. So, that education piece isn't everything. I want to just hammer that point home one more time. But once you start that experience of being the business owner, I find that the challenge is that a lot of the times you tend to just do what has been done in the past, especially with the acquisitions. One of the biggest challenges I see people have is that they become a new practice owner and they kind of just fall into what everybody was doing in the past. They just kind of keep doing it and they don't really change.Joseph:Well, it's easier right? It's easy.Jonathan:That's exactly, exactly. Even in the CPA world, a lot of the times, people would just do what they did last year. That's kind of the rule is they call it Saly, same as last year.Joseph:Saly? Yeah, Saly. Say, you do it the same.Jonathan:Exactly. So, in dentistry you'll get into a new place and they have this pegboard system, they haven't gotten those computers yet. Everything's on paper. It works, so they don't want to break it. And some people, most people nowadays don't, but some people will fall into the trap of just being like, well, I don't want to rock the boat. So we're just going to keep doing it, how it was done in the past. That's an extreme example, but that goes down to the minutia of like, this is how we've done it in the past. And so people get stuck into these trends or this idea that the way it was in the past is always going to be the best.Jonathan:And in business, especially in today's day and age, you've got to be willing to adapt. You've got to be willing to do things better. You got to be willing to work on efficiency. You've got to be able to understand that a business is like a machine and it constantly has to be oiled. It constantly has to be tweaked. It constantly can be better. Now, there is an idea, and there is a concept that you could argue that at some point it's not worth it to continue or at some point, you just let it run. But in general, most dentists are going to probably lean on the office manager that's been there forever to learn about how to do AR. And you'll hear about it all throughout the industry and in newspaper reportings or anything like that. Office manager steals $300,000 and embezzles from in the office or whatever it is.Jonathan:And so there's dangers in that. And so, you've got to be learning while doing. So it's a challenge, but it's something that I think that dentists can overcome. I know that most dentists can overcome, because they've gone through dental school and they've got their really hard curriculums and so they've learned. They know how to study and hopefully know how to learn. The problem is, is that that experience comes along with some pretty hard work. And in most businesses, in a lot of small businesses, the owner does, the owner works too. In dentistry, if you're open 36 hours a week, you better hope you're doing dentistry for 36 hours a week.Jonathan:Not learning about how AR works or how the practice management works or handling the computers went down or talking to the IT company or sending an email to your CPA, because they've asked what a couple of transactions were that came through your bank account. Or listening to a CBS or something like that, because there's a new stimulus bill that's coming out that may affect you or may affect your employees or talking to vendors or all the other things that come along with it. There's so much work to be done in the dental space. And so little time to do the business stuff. You know, I admit it, I was one of those people that was like, man, being a dentist would be really cool. You don't have to work on Fridays. They're only open four days a week.Jonathan:And then I got into the industry and I was like, man, that is the biggest misconception maybe in the general public. And that is a danger and don't get me wrong. That's a challenge. Some dentists probably do it that way. They're so exhausted on that fifth day, they go home and rest. But especially in the beginning stages, you got to be willing to start learning about what's going on and adapting and changing and doing things better. So that's another giant challenge is the experience of learning while doing, and having to work while you're doing it. Because literally, if you're not working and doing the dentistry, you're not making any money. And so all those other challenges are going to rack up on you.Joseph:Would you say, Jonathan, that it's pretty typical or not typical for a dentist to have either a half day or a whole day dedicated to CEO day? Is that something that's pretty typical that you see out there? Or is that something that's kind of atypical?Jonathan:I feel like people are trending away from it. So I feel like the pressures of the day, or getting to, well, there's another half day at capacity I could add on there, if I just did dentistry during that half day. And so that does tend to happen in really busy practices, where they're like, well, we don't have any more capacity during the day. So I don't really want to add an associate. I don't really want to add more chairs, so what if I just add hours? And so that gets taken away. But yeah I would like to see more of that in a lot of our clients.Jonathan:I'm not saying that it's not prevalent. Like, it is very common for practices to be open four days a week, incredibly common and not the fifth. And the fifth is hopefully the CEO day. What does tend to happen is over a couple of year period, eventually that CEO day starts becoming a, every other week CEO day and then it becomes in every other month. And then it's like, well, I'll look at this once a year type thing. So yes, I do feel like it's trending away.Joseph:Well, let me ask, I guess back to the CEO day. So if we're talking to a brand new practice owner and they say I think I'm going to have a CEO day. What are some things that you think would be like the best use of their time in a CEO day? And we don't have to get into specifics. We can certainly get into specifics in later episodes, but as you have a day that you dedicate to being the CEO, whether that's a Monday or a Friday, or I have a couple of clients that do it Wednesday afternoons they carve out as their CEO time. What's the best use of their time, would you say, whenever they carve out the time to be at the CEO day or CEO half day?Jonathan:Yeah. That's a great question. If I were in the shoes of my clients, what I would do is I would have, on my CEO day, I would have kind of like my little things pile, which is like you get something in from the Arkansas dental board and you need to respond to it or something like that. Just something that is like a, you got to pay your license review or something like that. You've got your AP, which is accounts payable, which just means your bills are there. You need to take a look at, your office manager has already prepared all the checks for it and if the checks are attached to the invoice, which is attached to the bill, whatever it is. And you're looking at those real quick, signing them off and you just have your little pile of little things that you get done, probably takes you 20 minutes to do all of them and it's done for the week.Jonathan:I wouldn't let those little things pile up. I wouldn't let those little things be things I try to hit while I'm going through the week, because it would just distract me from the rest of the business and the dentistry to be done. That'd be kind of the first thing that kind of just knock out and get some wins in. The next thing I'd probably have any type of employee issues. That would be something I'd be looking at during that timeframe. So any issues in terms of, if there was anything going on with an employee that I needed to address. Training, any type of education that I need to get or anything like that would be what I would be going for. And then finally, and probably the most important thing would be, I'd be thinking about strategy and a bigger concept.Jonathan:What is it that we're doing here in terms of our overall vision as a practice? What is it that we're trying to accomplish and how are we going about doing that and what have our results been? And then I'll be working on goals that our company could set. They could be actionable and achievable and then tracking the progress of those. And that's what I would be doing in my CEO day. What about you, in terms of working in a bigger medical company, what would be something that you saw your CEO do that was effective or things that you did in the CFO world?Joseph:One of the things that they always did that I always wanted to do weekly was look at the numbers. So certainly, if we have a meeting every Wednesday, that was when I got to visit with the CEO, one of those would be reviewing the monthly results. You're obviously not going to review the monthly results every week, but one of those four meetings would be review and how did we do for the month, the prior month? And how does that stack up to the prior year? And then there would always be something else when it had to do with the numbers, either a vendor contract that came through or an opportunity to purchase a piece of equipment or opportunities for different types of discounts or different ways to do things.Joseph:One of the things that that CEO always wanted to do was they always wanted to know where the numbers were. And we got to where we created this dashboard that also helped them understand where the cash position was. And we did that on a weekly basis. If we take our cash in the bank minus our outstanding credit cards, how much cash do we have today versus last week versus the week before? And then we got to a point where we felt like that number needed to be whatever it is, pick a number, 50,000, a 100,000, 200,000, whatever the size of the business is. Obviously if your accounts payable weekly run is $300,000, then you don't feel comfortable with $50,000 in cash in the bank. So each business is different, but those are the things that our CEO was looking at every week and alongside the other stuff that you already mentioned.Joseph:But I think one of the things is that you've got to have time as a CEO to sharpen the saw a little bit. So Stephen Covey in The 7 Habits of Highly Effective People talks about spending time. If you had to chop down a tree, he'd spend seven hours. If you had eight hours to do it, he'd spend seven hours sharpening the saw, and then one hour actually doing the work. So spending time to sharpen the saw for your practice. I think that's something that I've seen really, really good CEOs.Joseph:And I mean, as you and I we're sitting here trying to run an accounting firm here, and it's very, very easy as you know, to get caught up in all of the day-to-day stuff and delivering client care. How much time do we actually spend getting a chance to take a high level view? And that's something that we've had to as a firm, me and you and the leadership team, we had to get together and say, we need to carve out some time to actually talk about all the stuff that's going on and really work on the business rather than just in the business.Jonathan:Oh yeah, absolutely. Yeah. I completely agree. And so we'll talk a little bit more about little strategy piece and what we think you guys should be listening to, or should be considering in terms of strategy. From a business and financial perspective. We are not dentists. So we're not going to be able to tell you, here's how you should do your treatment notes so that you have really accurate notes for all of your patients, because we don't know what that is. We just know that they exist and I've heard other people talk about them. And I know that those are the things that are out there, but we'll talk about it on a level that makes sense from a numbers and business perspective. Joseph, is there anything else you can think of in terms of challenges that I may have missed?Jonathan:Again, the big ones to me is just the lack of business education, which I hope I've highlighted that it's an issue, but it's not the biggest issue out there. The giant amount of debt that comes up with that. And then the fact that you have to learn while doing and working. Those are the three biggest challenges to me, for people that have never owned a business before and are going to becoming a business owner in the dental field. Again, I'm not including the challenge of overcoming the mental barrier that you need to be a business owner. I feel like that may be a different topic altogether.Joseph:Sure. Well, if I wanted to add number four, I would say that oftentimes a dentist will walk into a new practice, not have ever led a team before. And that certainly is a challenge that you're going to walk into an office, and there are going to be five to 15 people that are all looking to you for leadership. And that's something that we'll spend some time on, for sure, inside of this podcast is kind of developing and honing your leadership skills and how to have those different conversations, how to lead your team well, what is it that motivates people? How do you make sure that you're supervising well and doing well, because at the end of the day people want to work for a good place.Joseph:They want to do something that makes a difference. And all of that really boils down to your individual leadership skills as the CEO, as the head clinician, as the practice owner. So I would add number four and say that's one thing that is vitally important. And as you and I both know the ones that we see the most successful practices are the ones that have a really good leader at the helm.Jonathan:Oh yeah, absolutely. And it's not just leading the employees, it's also leading the patients and your community and everything else that goes along with that too. Yeah. That's a great point. So, and one of the harder things for me in terms of leadership and I've been open with this with my team is that whenever you're thinking about being a practice owner, and you're thinking about all of your employees and things like that, you're thinking of it in more in terms of that machine that I was talking about. You're thinking more in terms of like, okay, I pay them money and they do their part. And that transaction is it, that's all it is, but there's so much more to it than just paying a paycheck. Because if you're just paying them a paycheck then all you're going to get as someone who's there for a paycheck.Jonathan:And if all they're there for is a paycheck, then their time there will likely be fleeting. Lots of really good topics we can talk about in terms of that. And employee engagement and leadership and everything like that. We'll get to you in a future episode. So, yeah. So great talking about different challenges that new business owners that have never owned a business before in the dental practice industry. Is there anything else you want to end on Joseph?Joseph:No, that's great. No, I'm looking forward to doing this with you. Lots of great nuggets inside of that conversation, for sure.Jonathan:Well, thanks so much, guys. We will see you on the next episode of the Tooth and Coin podcast, and I will see you all later.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth and Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com where you can check out more about our CPA services. We help out around 250 offices around the country. We'd love to be able to have the discussion about how we could help your new practice. We do specialize in new practice owners. So people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up or has become an owner in the past five years. That is our specialty.Jonathan:And we'd love to be able to talk to you about how we could help you in your services with your tax and accounting services. And if you enjoyed today's episode, again, go to the Facebook group. Talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the long term. Lastly, if you want access to those resources that we are currently building, just text the word toothandcoin to 33444. That's toothandcoin, no spaces. T-O-O-T-H-A-N-D-C-O-I-N to 33444. Apply with your email address. We'll send you the instructions in the Facebook group. We'll send you the resources when they're available, and we will see you next week.

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What is the Tooth and Coin Podcast?

The Remote Real Estate Investor

Play Episode Listen Later Jun 18, 2021 28:37

Join the discussion on Facebook!Jonathan:Welcome to the Tooth & Coin Podcast, where we talk about your adventure of being a dental practice owner. In these episodes, we're going to be talking about problems that you will likely face as a practice owner, as well as give an idea about actionable solutions that you can take so that you can get past this problem in your practice. Some of these concepts are really big ones, some of them are very specific, but we hope that these episodes help you along with your journey.Jonathan:Now, a very important piece for you to understand is that this is not paid financial advice. This is not paid tax or legal advice. We are not your financial advisors, we are not your CPAs. This is two CPAs talking about informational and educational content to help you along with your journey. It's a very important piece for you to understand.Jonathan:Another thing that you need to know is if you enjoy today's content, join us on the Facebook group. So, we've got a Facebook group that is active with Dennis that is going to have content talking about what we're talking about today, to continue the discussion. Agree with us, don't agree with us, have a story to tell, have something to share? Join us in the Facebook group. If you go to Facebook and you search for Tooth & Coin Podcast, click on it to join it, and be able to join us there.Jonathan:Finally, if you need some more help, we're developing a list of resources that are going to be centering in and around our topics of discussion, to be able to help you a little bit more than what the content is doing. So, if you'd like access to that whenever it becomes ready, all you have to do is text the word "toothandcoin," T-O-O-T-H-A-N-D-C-O-I-N, to 33444. And that's "toothandcoin," all one word, no spaces, to 33444. Reply with your email address, and we'll email you instructions on how to get into the Facebook group, as well as add you to lists to be able to send you those resources when they're available. And if they're available, we'll go ahead and send them to you, as well. So onto today's episode, hope you enjoy it.Jonathan:Hello, ambitious dentists. So it is the Tooth & Coin podcast, episode number one, and we are here to discuss this new podcast learning experience that we're going to be creating and developing, and to be honest with you, learning a little bit more about the business of dentistry with everyone that is listening in. I have with myself, Mr. Joseph Rugger, who is a team member with Tooth & Coin, a long time friend of mine as well. Joseph, why don't you tell everybody about yourself, about your experience in the accounting and the dental world, the medical world?Joseph:Yeah, sure, absolutely. So, I always get a chance to tell my story and I get a chance to tell some funny parts of it and some fun sections of it, so hopefully that's of interest to your group. So, I grew up playing competitive baseball and ended up getting a chance to play college baseball at a small school in Batesville, Arkansas called Lyon College.Joseph:Ended up finishing three majors at Lyon: accounting, economics and finance. So, members and money are born and bred into me and formally educated. My first job out of college, I got a chance to go work for my collegiate fraternity, so my job for a year was to travel the country and hang out with college kids. It was a rough job, but somebody had to do it. I ended up doing that for about a year. I always tell people that my salary at the time was $17,000 a year, and I figured out that I was too smart to not make any money.Joseph:So, I went to grad school at IU Indianapolis and did a Master's of Professional Accounting there. Spent about two years working in public accounting in the Indianapolis, Indiana area. Worked for a top 50 CPA firm out of Carmel Indiana, and it was May... I think it was May. And I was still getting up, going to work, and I'd parked my car outside and I was scraping ice off my windshield, well into May living in Indiana, and a buddy of mine called me, and my friends of course, back home in Arkansas were all going to the lake in May and doing things outdoors and hiking, and here I was, scraping ice off my windshield well into May.Joseph:Anyways, so, buddy of mine, his parents owned a prosthetics company and he called me in the middle of the end of busy season in the accounting world. And he said, "Hey, our controller just left. Do you have any interest in coming to work for us in the prosthetics business?" And I said, "Absolutely, would love to come visit with you." And I got a chance to work in the prosthetics business for a company in northeast Arkansas for about 12 years, spent a couple of years as the controller and spent the bulk of my time there as the director of finance and administration, which is a fancy way of saying the CFO and the COO.Joseph:We got a chance to do all kinds of crazy fun stuff. We had four locations when I started there. After I'd been there for a little while, we divested two of our locations, so we went from four locations in two states to two locations, and then over the course of the next 10 years, we opened up a number of new branches, expanded into another state, and by the time I left, we had eight locations across two states, had about 75 employees. Did a whole bunch of work for folks. We ended up seeing about 10,000 patients a year as far as delivered services.Joseph:So, we got a chance to really head up the finance arm, got a chance to really understand the medical billing side. We used HCPCS codes in the prosthetics business, and got a chance to see and learn ICD-9, and then that became ICD-10, and everything in between, and got a chance to understand the difference between a usual and customary fee, or a UCR fee and allowed fee. I was having a conversation the other day with somebody about how to measure your revenue, but got a chance to spend 12 years in the prosthetics business.Joseph:And then, actually, just got reminded on LinkedIn the other day that it's my three-year anniversary at Tooth & Coin. I had all these people say, "Hey, congrats on your work anniversary." And I'm like, "What in the world are they talking about?" Sure enough, February was my three-year anniversary at Tooth & Coin.Jonathan:My wife can tell you that dates are the things that I forget the most. So, I was not one of the people that congratulated you. So that's on mem though. So it's a little dirty laundry for the listeners there. So, cool. So you were in the medical industry. For the listeners, what would be the equivalent of a small to mid-size DSO pro office, somewhere that had eight to 10 locations doing somewhere in the eight figure range of revenue? Is that about accurate?Joseph:I'd say that's pretty close. Yeah. Yeah.Jonathan:Yeah. So, that's what you did in terms of a CFO type role. By the way, one of the episodes that we're definitely going to record is, what is a CFO and what do they do? Because I get a lot of calls about that and I try to explain it, and I'd love to hear what a CFO actually does compared to what I think that they do, since I've never actually been the CFO of somewhere.Joseph:Sure.Jonathan:So, cool. So you're a CFO and you've been at Tooth & Coin for three years now. What else is relevant in terms of your accounting, CPA, financial background?Joseph:Well, I think it's always interesting for me to tell people how I ended up working for you at Tooth & Coin. I think that's always an interesting story. So, I moved to the Dallas, Fort Worth area a couple of years ago, and I was interviewing for a couple of different jobs and working with recruiters. And I ended up getting a call from a recruiter to talk to them about being the CFO for a big dental services organization, or DSO, here in the metroplex.Joseph:I think they had about 80 or 90 offices across Dallas and throughout north Texas. And anyways, Jonathan, you and I have been friends for a number of years, randomly sat next to each other at a continuing education in Little Rock, and struck up a conversation and became friends. That was what? 15 years ago, I think.Jonathan:Yeah.Joseph:But anyways, we'd stayed in touch and stayed friends over the years. So, I had this interview coming up with this DSO and I thought to myself, "Who do I know that I can pick their brain about the different stuff that I need to study and prepare for this interview?" So I called you and reached out to you and said, "Hey, I've got this interview coming up. Would you be willing to share some stuff?" Anyways, and we started talking and you told me... a couple of days later you were like, "Man, if he's interested in making a move, maybe he should come to work for us."Joseph:So that started that conversation. So, been with you at Tooth & Coin for the last three years. Got a chance to do all kinds of really, really cool stuff inside the CPA profession on both the professional level and also on the volunteer level. Education is something that is near and dear to my heart, so I've done continuing professional education and taught continuing education across the country for both the AICPA, and I think I'm up to 16 different states across the U.S. that I've taught in.Joseph:I've taught in two foreign countries. I got a call from the AICPA and they said, "Hey, do you have time on your calendar to come teach in the Caymans?" And I said, "You know what? Something just opened up. I do have time to do that."Jonathan:"I think I can make that work."Joseph:Yeah. Yeah. I got another call to say, "Would you like to come speak at The Bahamas Institute of Chartered Accountants?" And I said, "Absolutely. I think that would be good." So, I've gotten the chance to teach and coach at the CPA level and certainly with lots of other entrepreneurs across the dental industry and across a number of other industries, and I really, really enjoy the educational part of what we do, because... Warren Buffett, I think, said it best, that accounting is the language of business and it's up to us to figure out what the story is.Joseph:The numbers do tell a story, and we've got to figure out, number one, make sure the numbers are right, but number two is to figure out what story that's telling. And one of the things that I'm passionate about is I really, really want to help small businesses grow and succeed. That's something that I figured out early on in my education, is that as an accountant, we're going to have that ability, and I'm trying to simplify that even more, Jonathan. And what I really want to tell them is, "I want to help you win with money," which I think is near and dear to our hearts as CPAs.Joseph:So, I've gotten a chance to travel quite a bit. I've been to, I think, 30 countries or something like that, been to all 50 states, hope to come visit your state, whoever you guys are that are out listening, and come hang out, teach some stuff, and that kind of thing. So I think that's all certainly relevant to our discussion here. At this juncture, I'm getting ready to become the chair-elect of the Arkansas Society of CPAs.Joseph:It's a volunteer organization that I've been a part of since I became a licensed CPA, and we're doing lots of great stuff inside the Arkansas Society, and to get a chance to share that's an honor. I was telling you this the other day, I'll be the youngest chair in the history of the Arkansas CPA Society, which is a really, really great honor for me to have.Jonathan:Another honor that you had recently bestowed upon you was the AICPA Young CPA Leader of the Year Award? Did I get the title right of that?Joseph:Yeah, so that was really cool. It's funny. My wife was kidding with me the other day. She was like, "Are we still young?" I was like, "Yes, we are still considered young." But it's the AICPA Young CPA of the Year in honor of a guy named [Maximum McColloughby 00:11:20], and it was named in his honor. And it's an award that sets out to recognize volunteerism in the profession, who's helping capital markets and who's helping the profession move forward from every angle, both from a professionalism standpoint to a volunteer to, what kind of impact are we making inside of our communities?Joseph:So, I was awarded that in the middle of a global pandemic and we were supposed to go to Las Vegas for this big convention. And of course, all that got canceled, and we ended up having... the AICPA did a great job, and we ended up having a really cool virtual ceremony that went out on Facebook live that you could go check out where I got a chance to come talk about volunteerism and what it means to me and hear some of my friends talk about the profession and the awards and all that stuff. But yeah, that was a big honor that I got from the AICPA.Jonathan:Really was. And just for people that are listening, that's the equivalent of the ADA giving out a Young Dentist Leader Award, and they only give it out to one person a year. It's not like the thing that you get in high school where you get to sign up for the who's who-Joseph:Who's who.Jonathan:and pay some money to be a part of it. It's a big deal, and we're really proud of you for it for be able to do that. So, cool. So, for anyone who has not listened to Start Your Dental Practice or is not aware of Tooth & Coin, my name is Jonathan van Horn. I am the CPA and the owner of Tooth & Coin, which is a CPA firm. We are located in Arkansas, but we help dentists everywhere in the country in the United States. We have clients in just about every state. We have around 250 offices we help out.Jonathan:And our mission is to help bridge the gap between you being a successful dentist and you being a successful entrepreneur. We do that in ways that we can help. We try to not venture outside of the realms of the things that we don't know how to do. We find that a lot of people make the mistake of trying to get their hands in too many cookie jars. We've learned through experience that the best way to help our clients is to give them the advice that we know the most about, and that is the accounting, tax, and business financial world, so to speak.Jonathan:And from a numbers perspective, that does mean a lot of things. And what we hope to do on this podcast is talk about a little bit about those things and help solve some of the problems that are out there in the industry that seems to stem from the fact that most dentists spend about 15,000 hours learning how to become a dentist and almost zero hours learning how to be a business owner.Jonathan:So, this podcast is hopefully going to be informative and help a bit with that problem. So, a little bit more about me. I was driven to the CPA world from a young age. I was from a small business family. My parents owned a small business, my grandparents owned a small business. My parents owned a furniture store, my grandparents owned a manufacturing company. And whenever I was in the eighth grade, my parents sat us down in the living room.Jonathan:My dad sat down on the fireplace, and he said to us, "Jonathan," and my sister and my mom. "The business had failed. We are going through bankruptcy. We're going to have to sell the house. We're going to have to move away from our family home that we lived in since I was born, and leave the place that I had known and grown up and loved."Jonathan:And so we had to move halfway across the state from one Arkansas town to a more rural Arkansas town, and if you think that you live in a rural place, I went from a town of about 25,000 people to about 8,000 people, and moved out of a four bedroom, two bath house that was in a pretty nice area to a two bedroom, one bath apartment that was in an area that wasn't the best. And it was a really rough time for my family.Jonathan:And my dad always said, "Jonathan, the reason that the business failed wasn't because the business wasn't working. It was because I didn't keep up with the numbers. I didn't know about the business side." My dad was the sales and marketing person. He was not the business guy. He was the person that made the sales happen, made the revenue come in, but he didn't ever keep up with the business side of things, the financial side of things.Jonathan:He'd actually relied a lot on my grandfather, the one who owned the manufacturing company, to do those things. But unfortunately, my grandfather died about... I guess it was at this point almost 35 years ago. So, he wasn't around very long to help out with that furniture store. And my dad always said if he had had somebody there that could have kept an eye on the numbers, could have kept an eye on how the business was doing from a business standpoint, that we would have been okay, the business would have survived.Jonathan:It went through a bit of a hard time, but we would have made it out of there if he just had a better eye on the numbers and a better eye on the business side of things. So, he always said that. He even says that today still. Actually, we had a discussion about this about a month ago, and he's still saying the same thing about coulda, woulda, shoulda stuff.Jonathan:So, I grew up thinking that that's what CPAs did, because that was what my dad said CPAs did. And I went into school and I got real close to becoming a math professor. So, a big fan of numbers. Always enjoyed math as a subject and had way too much nerdy fun with it, but did end up going the route of CPA, much like Joseph said. He wanted to make some money in the world. So I figured being a teacher was probably not the best way to make money in the world. So I thought, "Let's go with the CPA route," and also I could also be able to help a lot more people. When I got out into the CPO world, very quickly found out that's not actually what CPAs do, as I find a lot of people are surprised about.Jonathan:CPAs don't typically really help with businesses. The CPA industry was created around compliance. It was created around making sure that you filed and paid your taxes so that you don't pay penalties and interest or go to jail. We call that compliance in our industry, and I didn't want to do just compliance. I wanted to do more. So, after working for five or 10 years in the public space, helping out people with compliance, I said, "Enough is enough. I'm going to go and start this new business." And that is how Tooth & Coin was born, and our mission statement of helping dentist bridge that gap of being a successful clinician with being a successful entrepreneur was born.Jonathan:So, that's the story of Tooth & Coin, my personal story of how I became a CPA, why I became a CPA, and just a little bit more into the mind of who it is that's talking to you through these things. There is a podcast out there that you can go and listen to. It's called Start Your Dental Practice. Our CPA firm does specialize in new practice owners, so we have about 250 offices we help out with as of today, which is the beginning of 2021, and over 200 of those were new practice owners whenever they came on with us and our firm.Jonathan:So if you're a new practice owner, someone who's within five years of ownership, we'd love to be able to talk to you about how we can help you out with your dental practice as well. But to this podcast, the Tooth & Coin podcast, what are we here for? Why are we doing this? Why are we talking today? The purpose is fairly simple. I discussed it briefly before I went with my intro is that there are a lot of problems that need to be faced inside of the dental industry and a lot of the lessons that need to be taught to people in terms of what business is and how to approach it.Jonathan:There's a lot of confusion around a lot of different subject matter, and who better to talk to you guys about those things than a couple of guys that have experience running a CPA firm that helps out 250 offices around the country, someone who acted as a CFO for 12 years for a very big medical organization, and has helped lots of our clients right now that are dentists, help get their way through the business of dentistry and be able to talk about the things that we know how to talk about?Jonathan:So, the purpose of the podcast is that. We're going to be highlighting problems, we're going to be talking about the solutions to those problems, and we're going to be trying to give you resources around ways to be able to solve those problems. I think one thing that Joseph and I do not want this podcast to turn into, just for full expectations for you so that you guys can hold us accountable is, we don't want this podcast to just be informational only.Jonathan:We want this podcast to be actionable. We want it to be something that you can execute based off of. We want it to actually solve problems, not just highlight them. Anytime you do any type of content, it's hard to sometimes bridge the gap between educational, entertainment, and action. And we're going to do our best to focus on highlighting the problems, and then giving you the solutions and giving you the resources to be able to take action on those solutions. So to me, that's the reason for the podcast. Joseph, what are some of the things you're wanting to solve with this podcast, as well?Joseph:I think at a high level, Jonathan, you and I, we've got just such varied and similar experience of the business of healthcare here, and as we sit back and think... I'm as guilty as anybody else. I think everybody knows the stuff that's in my head, and as we have new team members come on, as we have new dentists come on, I find that there's a whole lot of stuff that's inside my head that not everybody knows, that everybody's not read all the books that I've read.Joseph:They haven't listened to all the same stuff that I have. And I forget that. So, I look forward to getting a chance to just really share some insights and some things that we see, and some things that each individual listener can take home with them and can digest and see how does it apply to their individual practice, their individual situation? So we've got all this knowledge and expertise. We want to put it out into the world. We want to help you build a better business, a better practice, a better life, eventually. That's really what we're trying to do, here. We're trying to help you reach your entrepreneurial dreams and goals and help you with all those things.Jonathan:Yeah, exactly. And another important piece of all of it is, I find a lot of the times, when a client asks us a question, there is the book answer, and then there's the contextual answer. And I feel like we're in a unique position to be able to give a lot of context around some of these, about how to approach the book solution versus the real life solution of what we've seen happen. Other things that we're going to be looking to do with this podcast...Jonathan:So, we're going to be looking to have this be an engagement platform with other dentists that are out there in terms of ways that you guys have solved the problems we're talking about. So, this isn't only about us sharing what we know. It's also about you sharing what you know` with the rest of the people that are out there so that we can all have a prosperous and full lives, so that we can all do better.Jonathan:We all can live a life of abundance, and there's always information that can be shared. And so, we're going to be having ability to grow a community out of this podcast, and we're also going to be using real life questions from real life dentists that are having these real life problems, and talk about ways that could potentially have solutions, things that could be answered. We're going to be literally pulling questions from clients of ours, of course, with permission from the client, or have it be anonymous.Jonathan:We'll be pulling real questions that clients are having so that we can answer those things, because if our clients are asking those questions of us, I know that the people that are listening are probably having those same questions. They need to be answered by somebody. And hopefully, we can give that answer and be a resource to the industry. So, that's the problem that we're trying to solve. That's how we're going to try and solve it. Is there anything that else you wanted to add, Joseph, in terms of what we're trying to do here with the podcast?Joseph:I'm looking forward to going on this journey with you, Jonathan. You and I have been friends for a long time, and we both have two things that are inherent in us: we want to serve and help other people, and we want to educate. I'm looking forward to doing both of that to our audience, with our audience.Jonathan:Absolutely. So, to give some of our audience members some ideas of the different topics we're going to be approaching whenever we come down in these episodes, some of the topics that we've already highlighted that we want to talk about. Understanding the business model of dentistry. We want you to know how much cash do you really need to have in your business. How to pay less in taxes while your net worth is more important than you think and why it matters. What's a dental practice's true value?Jonathan:Fixed versus variable expenses and your breakeven point. Analyzing your overhead. Staffing percentages, personal finance. Recurring charges, and do you actually use them? The purpose of continuing education. How to understand your financial statements, and why it's also a total waste of time. How to manage expectations whenever it comes to leadership. How to lead people. How to handle turnover in your office. Training protocols. Crucial conversations. Understanding what your sales and production actually mean in your office. Understanding how to handle new patients and how to measure your growth and how to measure your marketing expenses and calculate your ROIs.Jonathan:And just tons of more things that we're going to try and talk about. Those are the ones that we've literally just brainstormed off the top of our heads over the course of a few conversations that we could give full and really good information on, as between Joseph and myself. For areas where we are not expert subject matters... or subject matter experts, rather, we plan on reaching out to the industry and finding the best people to be able to talk to you about those subjects.Jonathan:So for example, we will not be talking to you about how to increase your hygiene revenue. That's not something that we're going to be talking about because neither Joseph or I has ever had to talk to a hygienist and tell them how to do their job. Now, we could have a conversation about how to talk to an employee and how to manage an expectation, but we're not going to talk to you and say, "Hey, this person needs to be doing... 30% of their patients need to be receiving fluoride treatment, because that's an industry standard."Jonathan:Now, I can tell you that may be an industry standard, but how you go from where you are today to that standard is anyone's guess for Joseph and I. And so we're going to have somebody on that's going to be able to actually answer that question and give you some guidance and help you with those things. So, that is what we'll be doing in terms of the episode breakdown. Again, the current format that we're we're working with is, highlight the problem, talk about the solution, and then give resources.Jonathan:That's what our content's going to be about. We're going to try and keep our episodes somewhere in the 20-to-30 minute range. We don't want you to have to devote a full hour of your day just to listen to our podcast. That is giving us some accountability to keep the episodes on point and not to go down too many rabbit trails in terms of conversation, and so that we can really make the time that you're giving to us and putting us in your ears to be as high-value as possible.Jonathan:So, that is our plans with Tooth & Coin podcast. We hope to have you guys on the journey with us, and if you would, make sure to follow us on all the social media, and we will see you on the next episode.Jonathan:That's it for today, guys. I hope you enjoyed this episode of the Tooth & Coin podcast. If you are going to be a practice owner or a new practice owner, and you're interested in CPA services, head on over to toothandcoin.com, where you can check out more about our CPA services. We help out around 250 offices around the country. I would love to be able to have the discussion about how we could help your new practice.Jonathan:We do specialize in new practice owners, so people that are about to be an owner of a practice they're acquiring, about to be an owner of a practice they are starting up, or has become an owner in the past five years. That is our specialty. We'd love to be able to talk to you about how we could help you in your services with your tax and accounting services.Jonathan:And if you enjoyed today's episode, again, go to the Facebook group, talk to us about what we've talked about, join in on the discussion, and let's create an environment where we can talk about some of these things so that we can all help each other get through these things together so that this adventure of business ownership is more fun, more productive, and better in the longterm.Jonathan:Lastly, if you want access to those resources that we are currently building, just text the word "toothandcoin" to 33444, that's "toothandcoin," no spaces, T-O-O-T-H-A-N-D-C-O-I-N to 33444. Reply with your email address, and we'll send you the instructions on the Facebook group. We'll send you the resources when they're available, and we will see you next week.

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Trading Up From a Local Duplex to an Out of State 14-Unit Building w/Jonathan Barr

Play Episode Listen Later Oct 1, 2020 36:08

Emil: Hey everyone. Welcome back for another episode of The Remote Real Estate Investor on today's episode, Michael and I are talking to Jonathan Barr, who is a friend of ours is also a local resident of Los Angeles like me. And in today's episode, he shares his journey as originally starting out as an investor in the Los Angeles area. And then over time realizing that he could get better returns in out of state markets. And we just talked to him about his journey, how he did it, and he shares a lot of the details so let's get into this episode. Emil: Jonathan, welcome to the show, man. We're excited to have you. Jonathan: Thanks guys. Happy to be here. Emil: You are. You are another person that Michael and I have met on Twitter. You and I have had a couple calls and some stoked to have you on the podcast, man, to talk about. Jonathan: Both LA Guys so. Emil: That's right. That's right. LA shout out another LA guy investing out of state. Michael: The tres LA Amigos on this one. Emil: Yeah. Cool, man. Um, so before we get into what I really want to talk to you about, which is your out of state investing, just give our listeners a little background on you, where you're from, what you do and we'll take it from there. Jonathan: Cool. I'm Jonathan bar, my company's JB2 investments born and raised in LA. Hablo espanol. So come from like immigrant parent background. I love LA for all the diversity and the different kinds of neighborhoods and the endless things to do here, even though we can't really enjoy it right now, obviously, and LA is so damn expensive, so it's hard to invest here as well. Right? I grew up in a real estate family and my parents been doing flips and involve in real estate. And my mom was a real estate agent showing houses with her being my daycare was basically her office. So I've basically been around it all my life, but I started mainly my journey in high school. I got my real estate license when I turned 18. Didn't really use it at the time, but I'd go to like my parents' office after school every day and kind of learn a few things here. And there went to college, graduated 2008 after the great recession, not the best time to get a job. And so I couldn't find a job. My mom's like, come work for us. I was pretty reluctant to go because I wanted to do my own thing. Be independent, all that kind of stuff, but they also got hit pretty hard through the relapse recession. So I kind of felt like a duty to my family to come help out, come rebuild. Folk came back, became an agent for a little bit, was working with buyers. I'm pretty terrible at it. Just wasn't confident, didn't know a lot. And I just didn't really like it, right? It's not really that fun. That part of the business is not fun. At least not for me. Right. And people just have crazy expectations. And so then we started getting into the trustee sales of foreclosure auction. So luckily my parents, you know, have some education there and they luckily had some connections to investors have capital. So we were able to raise some capital and go to the auctions. And so at the beginning I was involved in everything. Like I was looking at the properties running title, I'm going to courthouse steps. And we were also a lot of times it was like breaking into vacant houses to try to get a look at the inside just because it made a huge difference. I mean, if you can get in doors and see like, Oh actually the kitchen is pretty nice. Oh, the bathroom's pretty nice. Oh, I can actually see that the electrical is done or like looking at old permits. And a lot of the times, like one of those properties were going to sale. They were bought in like, ‘04/05 So it was old, like MLS listings. I could kind of like, look at descriptions and look at old pictures and that kind of thing. Emil: I was going to ask you to share one of your, when you're a crazy auction stories, hoping you would, uh, mentioned that. And that that's definitely a crazy auction story. I mean, yeah. It gives you a leg up because a lot of times you're going in blind and you don't even know what you're bidding on. Right? Jonathan: Yeah. And, I remember the first house I bid on. I actually bid myself up cause I was so nervous, you know? Cause like, you know, you have, cause you have like the actual money orders, like in a envelope ready to pay for these properties. And I was like 24 at the time, my first time ever doing this and I was like, Whoa, this is insane. You know? Cause how they do it, they like, they're like, okay Jonathan, your bid. But when they say Jonathan, your bid, that means you're the highest bidder by thought he said, Jonathan, you bid. I was like, Oh yeah, I'll bid. Michael: It's your turn to bid. Emil: Oh man. I can't imagine how like adrenaline inducing an auction must be, especially the first time, like you said. Jonathan: Yeah. We were bidding on like 10 different houses. On one point it was definitely like a rush like every morning was like a big rush analyzing all these deals. And you know, we were at a point where buying three, four homes a week at one point it was insane. One year we did 82 homes. Pretty crazy. Michael: So Jonathan paint this picture for me, you know, listeners, right? I'm picturing a guy on a podium talking about, you know, property one, two, three, $5, $5. I hit $5. Right. And everybody's out there in the crowd, you know, bidding. Is that actually what it's like? Jonathan: Yeah. But it's basically in front of the courthouse steps, super casual. And at that time there was only like 20 people going to the auction. So it wasn't a lot of people. And like we were so super focused in a certain neighborhood. So like we were the only ones that bought and these couple neighborhoods. And when you bid on those properties, people kind of knew to kind of back off. Cause we going to be the most competitive investors. And we were also doing like higher end kind of like trendy designs that a lot of people at that time weren't quite doing yet. So we were able to push the values on the properties that we're buying by, you know, 10, 15%. So we're able to kind of bid 10, 15% more than anyone else. So that's what allowed us to kind of buy these properties over other people. Knowing our pockets and knowing all that. Michael: Knowing your market. Yeah. Jonathan: Yeah. It makes a big difference. Emil: These auction were around LA, right? Jonathan: Yeah. They were mainly in Northeast LA. So if you're familiar with LA, Silverlake, echo park, Highland park, kind of like the hipster havens up that way, I guess you could call it, you know. Michael: Now some of the most trendy neighborhoods in LA. Jonathan: Yeah. Yeah, definitely. And you can't find too much under a million dollars in those neighborhoods now. When we're buying properties at like 250, 300, 350,000, it was like crazy. Like these are like Midwest prices, you know? Michael: Wow. Emil: And now the hottest part of LA. So that's a good segue into like your, your beginnings and how you picked up your first couple of investment properties that we were talking about. Jonathan: Yeah. So I luckily during like the 2010, 2012 period was able to pick up a few duplexes in that area. And one of which I lived in and basically how SAC, cause I rented a room to a friend and, and rented the back house and I was kinda like, Holy crap, these people that I'm renting this house to in the back or paying my mortgage, this is insane. I need to continue to do more of this. And like, all I gotta do is like, they call me every few months to get fixed some minor thing. And I just got to pay a few bills and put it on auto pay and we're good. Right. So that was kind of my aha moment. We also like around that time started getting into some development. So we're doing like small outs, subdivision developments, entitlements, and doing like townhouse style construction because the REO is, and all that stuff was kind of drying up. So that was, don't really want to do that anymore. It was a learning experience. We have a lot of NIMBYs in LA and for your listeners that don't know what an NIMBY is, not in my backyard. So that's a big problem we have here. And that's part of the reason of getting out of California was just all the rules, regulations and problematic things like that. Right. Michael: Makes sense. Yeah. Emil: How did you find that that first duplex is that auction? Jonathan Yeah. That's an interesting story actually. So my mom's first broker she ever had in LA when she was, I don't know, 22, 23, like barely speaking English at the time was this like older, like lady that had been doing real estate, like maybe 10, 15 years before she even started working for, and she was still doing real estate at the time. And she had this listing that she wasn't able to sell. And we looked at it as actually buying it as a flip, but it didn't quite make sense, but I was looking at it and I was like, you know what? I would live here. And then I saw at the time silver Lake was still kinda like getting better. So it wasn't quite there yet. So, and then I saw some girl walking with her dog. I was like, well, this lady is walking with her dog here. It must be all right. You know, but the thing is, the back house was like on its side. So I had to build a whole new foundation, the front, like it was a total fixer and, and luckily the foundation guy was this Jewish guy and I have a Jewish background. My dad's from Israel. So we had like some connection way and he had a lot of funds as well. So he's like, how are you funding this? I was like, well, I'm going to try to do like a 203K loan with which, for your listeners is basically like a FHA loan where they give you money for construction as well. He's like, well, I'll lend you that money at that same rate. And I was like, what? Like amortized and everything. I went to my mom and I was like this like good. Like, like, should I do this? And she's like, yes, that's amazing. Like do that. Cause I thought it was like, I was like, there's gotta be something shady about this. Why is this guy trying to throw money at you? Right. So I went through with it and I fix up the property. He gave me the money for the construction. I paid him and then I refinanced it a couple of years later. So it was like blessing. Michael: That's awesome. Did the foundation issue, I mean, clearly it didn't scare you away, but what were you thinking going into it? I mean, that sounds like a pretty big lift. Jonathan: I mean, I think with the connections that I had, it wasn't a scary for me. I think for someone that's just starting, like, you probably don't want to get into something like that. Cause it was definitely more expensive, definitely more problems. And it was a headache, but that's like my focus, right. I know for your guys' listeners, they're buying, you know, like turnkey houses out of state and that's a good way to go and something that's already done that you just kind of plug and play and just make sure you manage the manager. Well, right. Michael: Yeah. Yeah. Emil: You had a background in real estate. So you'd been doing this for a while before. You're like, all right, I'm going to take something on like that, that is going to need a lot of work. It wasn't like the first, your first run with real estate. And you're like, I'm just going to take this massive project on. Jonathan: Yeah. Usually the more work you need to do, the better deal you're going to get. But the more headaches you have to deal with. Emil: Yeah, absolutely. Jonathan: Yeah. If you have the time and expertise to do it, it works. But if you don't, then it could be a headache that ruins the deal. Michael: Brain damage. Jonathan: Or you just don't know what to do. And it ends up being a terrible deal. Right. Because you can get in the best deal in the world, but then if you're over construction by 200,000 and it takes you a year longer than you thought it could turn into a pretty bad situation, right? Michael: Yes it can. So speaking from experience something, right. I talk a lot about the podcasts this vast development project. I'm working on it. It's like so over budget. And so over timeline, part of the issue is I had two fires in the building during construction, which halted everything. Jonathan: What? Michael: Yeah. And the ironic part is I used to work as a professional fire protection engineer. So the fact that I had to in a building that I owed is like, not only statistically impossible, but like the most embarrassing thing ever. So just dealing with the insurance headache is, has just been total joint.. Jonathan: Did you have tenants or was it just like a random combustion? Michael: I have four tenants. And so one was started in a tenant space. We, the fire department wasn't able to put their finger on like, Hey you did it because they're pretty like blahzay about it. Oh the fire started. We're not willing to say who did it. And then the second was I was having a new roof put on and the fire started on the roof and I'm like, yeah, the roofer started the fire. But the, they weren't able to say conclusively, it was this, that or the other thing. So which would have been so much easier for me. Cause then my insurance company could go subrogate. And if we're going to keep this in, but subrogation is basically someone's my insurance company going after a different person's insurance company to then recover their losses. Jonathan: And they, they didn't want to accept that it was their fault? Michael: Yeah, exactly. Of course. They're not going to be like, cause no, you can't prove it. It's, it wasn't our fault. This is our protocol and procedure for cigarette handling and butt butts and this and that. So they weren't able to, to pin it on anybody. So I had to deal with it. Jonathan: Yeah. And that's why we have insurance, but that's why we have insurance. Michael: Exactly. It could have been so much worse. Um, so I have to keep everyone posted on how the public adjustment process goes. Yeah. It's been over a year since the fires, but in any case. Yeah. So don't get into a project that's too, over your head. It can be a real, real pain in the butt. Jonathan: Especially if you're out of state. Michael: Especially if you'reout of state, it just makes it, it adds a layer of complication. Jonathan: Yeah. Cause if you can't be there to be there, like at least once a week on a big project like that, it makes it difficult for sure. Michael: It makes it tough for sure. Okay. So talk to us a little bit about what made you want to leave LA, what pushed you out of LA and where did you go from there? Jonathan: Yeah. So like I said, I bought these few duplexes and like after the last recession and like 2018, 2019, I am, while the equity on these properties has grown like huge, like crazy. Right. And I started like, my cash on cash was good based on what I had actually invested in cash in these properties. I think a lot of people make that mistake. Sometimes they don't look at the full equity that's in their property. And so I started looking at what my return on the actual equity I have in those buildings. And it was like three or 4%. And I was like, I know I have to do better than this. Right. And so I started looking at LA because I know LA and I know all the vendors and you know, I feel comfortable there. I know it well. And the only thing I saw to do was buy a building that had tenants in it that I have to deal with rent control, relocations, all that stuff. And I've dealt with all of that stuff before, but it is a big headache. You have to try to negotiate for them to move out and pay for them to move out. And it's like, I have a heart too, and it's hard for me to push people like that out. And I know they're going to leave and have to pay like $2,500 now and that's going to have a huge impact on their family. Right. And so I'd have to do that. And then also probably do a whole gut job just to get maybe like six or 7% return after that much brain damage, it's just not worth it. And so I think it was like Christmas 2017. I was in Kansas city with my wife and because she has family there and I was like bored one day. And I started looking at real estate in the area. Yeah. Real estate guy. Michael: It's what we all do. It's like, well, what's your favorite pastime golfing now looking at deals, man. Jonathan: And I just started like doing some math and I'm like, could be something here, you know? And, and then I just started reaching out to brokers and making some connections and doing some touring. And you know, there was kind of like these trendy areas, just like silver Lake echo park and all that. Emil: Nice. All right. So you're looking around Kansas city. You said your wife's family's from there. So what made you finally pull the trigger? Jonathan: Last summer? I finally decided to sell one of those duplexes and January of 2019, I'd been in Kansas city and I had toured a couple of properties. And so I called some of the brokers I had met with and toured properties with earlier that year. And one of the properties that I toured was like halfway done. And by the time I put my place on the market, they had finished that project and leased it up and they sent me the numbers. I did my numbers, I was already familiar with the building. So I was able to secure that off market. So put my duplex in escrow. And then probably two, three weeks later, I put that property in escrow before I even closed the other one because I was doing the 1031 exchange. So for me, it was kind of important to secure something because of time constraints and for your listeners to a 1031 allows you to, you know, move the gains from one property to another property without paying taxes. But there's a 45 day window to select the property in 180 day deadline to close on that property. So a lot of people aren't successful because of those time constraints. But because I did a lot of work on the front end, I was able to secure something and kinda getting into it that way. And because I was in a 1031, they're motivated to work with me and not really push it to other people and kind of make it happen. And so far that property is doing about 10 to 15% better. And it kind of was just like that proof of concept for me that I could actually go out of state and do this successfully. Micheal: I got to ask a quick question before the Lamarck is back on, why did you opt to do a 10 31 as opposed to a cash out refi and tap into that equity? Jonathan: Because a cash out refi would limit the amount of cash that you can get. And I think I would have been more powerful that way and that I just kind of wanted it not be in that investment anymore. It was a small duplex and just made sense to kind of move into something bigger. Yeah. Michael: Right on Emil: With the cash out would have potentially made that duplex, like cashflow negative. Jonathan: I think so that too. Yeah. Cause I was like making me be like 12, 1300 bucks a month before, and then I, I basically more than tripled that going into the new property. Emil: Wow. Michael: Awesome. Emil: There you go. Proof of concept. How many units did you buy into by the way? So you sold the duplex? Jonathan: 14. Emil: Okay. Michael: Holy crap. So a duplex in LA gets you a 14 unit anywhere else. Oh, that's fantastic. Jonathan: I mean, I had a lot of cash to move over and that was part of it, but still yeah, for that. And I sold that duplex for around a million and bought the 14 unit for 1.6. I think. But I'd bought it for like 400. I think I bought it for that. Michael: Good for you, man. That's awesome. Emil: That is so awesome. Serious appreciation. Jonathan: So like I'm not against investing in LA, but right now it's not the time. If you buy something right now, if anything, you might get the appreciation. Cause I think LA might take a hit with everything going on down the line. Michael: Yeah. Jonathan circling back to a metric that you mentioned previously. It's not one that I think is talked about super regularly. So can you share with everybody what a return on equity is a measurement of? Jonathan: Yeah, so like I bought this property for 400 and I probably put like a hundred K into it. So my cash was actually a hundred, but then the equity in it was the gain. So like it was worth a million dollars. Now, now I have in it, like let's say after closing costs and commissions and everything, my equity is like five, five 50. So it's the cashflow on the property divided by that equity gives you the percent return on that equity. Michael: It's basically a measure of how hard your dollars the equity is working for you in that property. You could almost look at it. Jonathan: Yeah. This is my actual cash in the property. And what's my return on that actual cash, even though it's not actual cash, but you could turn it into cash, which I did and moved it over. Michael: It's lazy cash. Right? The equity is often lazy cash and it's not doing anything for you. Jonathan: Yeah. And that's a thing like some people say I want to hold my property forever and I think that's good depending on the property, but a small duplex like that. Once you get to a certain point where you build up enough equity, it makes sense to kind of move it along at that point or do like a cash out refi, but sometimes depends on the bank and where things are at it'll depend how much, like maybe I only got 500 out, but if I did a cash out refi, maybe I would have when he got $300 and then I would have had to buy a different property. Michael: Sure, sure. And when you sold your property, where you, your own agent, Jonathan: I was so that Michael: Perfect! Jonathan: Now the 3% that saved me, like 30 grand. Michael: Yeah. Yeah. That's fantastic. Okay. So the 14 unit was your first deal in KC, right. And where are you now? What's your next deal? What do you have your sights on for going forward? Jonathan: So I could kind of explain like what we're doing now and where I'm at. So I bought that November, 2019 in January. I left the family business to just kind of that proof of concept just gave me the confidence that I could do stuff on my own. I also, with that cash flow on, I had another property. I was gaining cashflow from it. My wife has a full time job and we have benefits through that. So I was able to kind of leave that business and not get the salary I was getting there and surviving and all that. And so my brother and I both left at the same time to start our own business. And so I sold another duplex that I had that I lived in. So, and then my brother sold, just sold his duplex. And so we're looking for a larger deal, like 50 plus units either in KC or we open it up a few hundred miles from KC. So it was like Omaha st. Louis, Tulsa, Oklahoma city, Wichita, some of those kind of Midwest cities. And my brother connected with a property manager in Oklahoma city had a deal on. And then he connected separately with a broker that had that deal. And so that property manager kind of gave us credibility and kind of vouched for us, even though he didn't even know us, but he's still vouched for us. He's like our age. And like, we kinda like sold them our story. And like, we were like, we want to keep on doing this. So he felt good with us. I guess you could say. So we put 72 unit deal under contract and we just closed two weeks ago. Michael: Oh mazel tov Jonathan: Yeah. Thank you. Michael: That's awesome. Jonathan: Thank you. Yeah. And it's not a traditional value add where we're doing a lot of work cause it's in pretty good shape. We're just kind of giving it our touch and doing some rebranding and we are changing management and reducing expenses by 25%. So that's our big value add right there. And it's actually, I think for COVID right now, it's the ideal value add where you're not like disturbing the tenants much. You're not pushing rents much. You're just like getting the operations to work better and be more efficient and less costly. Right. Michael: So cool. A couple of questions. Did you and your brother do 10 30 ones for, for the duplexes that you sold best go around? Jonathan: So the duplex that I sold since I lived there, half of it, I was able to keep tax-free and the other half I turned 10 31 and until the deal, then my brother, cause he lived in the other property, he was actually just able to move his tax free money over into the deal. And then we raised money from one other investor to raise the rest of the funds. And that's another thing we're working on is raising capital and talking to investors. And that's been tough because of COVID and also because it was our first larger multifamily deal. So everyone was kinda like, well invest in that. We want to see how you do on this one. I know that's the next one. Michael: Nobody wants to be the pioneer. Jonathan: We were able to kind of put it together, you know? Got it. And so that's what we're doing now. We're focusing on larger value, add 50 plus units in Oklahoma city or Kansas city. And we're looking to do three or four deals a year and we don't really have like a unit target. We have more like a cashflow target, but it'll end up being probably over a thousand units that we want to get to initially and then kind of see where it goes from there. Michael: Right on. And so with the raising, the rest of the funds from the investor was a finance deal or it was all cash? Jontahan: Financed. So we got a bank loan two and a half percent interest rate, which is insane. No reserves. Michael: Who is this bank? Jonathan: Bank of the West. Yeah. California bank. Michael: That's fantastic. Jonathan: But they're all they're nationwide. Like my banker was actually in Kansas city and that's how I got introduced to him through a broker that I know in Kansas city. Emil: Okay. We always talk about that too like use the people, you know, to ask if they know other people in that area. Super good point. Jonathan: Yeah. Yeah. That's a thing. And you start getting active in certain areas and with certain people and you're doing business with them, they'll refer you to people and it's just, everyone's like, it's kind of a small world and everyone's of interconnected. Right. Michael: So you mentioned reducing the expenses on that building by 25%. And it's a question that I get all the time and I'm a multifamily guy too. So I talk about all the different levers you can pull, which is one of the reasons I love multifamily so much. So talk to us a little bit about what you're doing to reduce the expenses by 25% because that's huge. Jonathan: Yeah. It's a hundred over a hundred thousand a year. So, um, 50,000 of it is, is marketing expense. They were like spending money in all these like different like marketing, like systems and websites that was like completely unnecessary. So we're basically, you're reducing that 50, 60,000 they're spending a year to like $3,600 a year for apartments.com and that's about it. So that's the main one. And then insurance costs where you to kind of tighten that up a little bit because our property manager owns and manages a couple of complexes nearby. We don't have to pay for it, leasing agent. They just have people kind of bouncing around. So we're kind of able to share resources a little bit as well. And they had a lot of turns that they did in the last T 12 basically. Um, and so we won't have as many turns we're going to have, we have a maintenance guy that's there full time to kind of reduce maintenance costs as well. So all that stuff combined is I think it ends up being like a $112,000 in savings in the first year alone. Michael: So for those of our listeners that don't know what a T12 is shed a little light on that for us. Jonathan: A T12 is basically just all the income and expenses for 12 months of the year. And it just details like if the rent income, if there's like a utility bill back income and like breaks down like insurance, property taxes, all the maintenance, everything all in one big spreadsheet. So you can kind of see get an, I get the whole story, you know? And like a lot of times with these bigger, um, apartments, you could get T12 like a few years back. So you can kind of see the progression of the whole story, the novel. Michael: Right, right, right, right. Yeah. So the proforma is looking forward. This is how we projected the property to perform. And I think the T comes from trailing and it's the trailing 12 months looking backward. And how did it perform? So it can be really helpful. I love that. It's, it's a novel, it's the story of how the property. Jonathan: Yeah. Well, I mean, I guess they couldn't make up those numbers, but they technically are not supposed to. Michael: It's bad form. Jonathan: Yeah. But that's why you back it up, you looked at like bank accounts, utility statements, rent, rolls, everything leases. And you kinda like look at everything. Like the due diligence process is huge and lengthy and if you're doing it right, you know, Michael: If someone says it's easy, they're not doing it right. Jonathan: Exactly. Michael: Awesome. So what, having done it now, are a couple of different times, Jonathan, what would you say are some of your top tips for those who are just getting started investing out of state? Jonathan: You mean like what to do when vetting vendors and that of thing, or just to do it in general? Michael: Or it could be, it could be high level of like, Hey, you know what? I've invested, you know, I bought a house ‘cause I think a lot of investors on the marketplace own their own home. And so I understand what that process looks like, but I cannot imagine what it would be like to go buy a property out of state. I have no idea, conceptually, physically, emotionally, how that would work. How would it make me feel? What would you recommend it to those folks? Jonathan: First? From my end, like it took me like two, three years to actually take the jump and go out of state and actually feel comfortable with that because I, you know, I'd done hundreds of deals in LA and I was like, I can't leave LA, this is crazy. Like, why would I ever do this? This is like the sure thing. Right? Yeah. You know, but like real estate, there's some inherent risks and you got to take the plunge sometimes. Right. Emil: I'm always curious to know, like it's really hard to mentally get over that feeling of, okay, I'm going somewhere where I can't just drive to the property. And like you mentioned, you were already doing stuff locally. So I feel like that's a double mental barrier. I'm curious if there's like, what kind of just got you over the hump? Was it the, the potential reward and it was, you know, early enough in your career? Jonathan: Yeah. I mean, another thing too is like in LA we have rent control and the cities, we don't have rent control. So you can, you could give someone a notice to move out in LA you can't just give someone a notice to move out. You kind of have to either pay for them to leave or you're stuck with them. So like for example, like I've just had a lot of like, like scariest situations with tenants, like psychopath tenants that call me for every smudge on the wall and I've come to my office and cuss me out because they're basically a psychopath. And I can't just tell this person to leave in 60 days. I literally I'm stuck with them and I'm like, I should have the freedom and the right to tell someone to leave if they're a pain in the ass. Right. So that was a big one. Um, so not having to deal with that, like in Oklahoma, the property manager basically said I can evict someone in 21 days. I mean, I'm not advocating for just throwing people out, but I'm just saying, if you have a problem person, you can get them out quickly. And that, to me, that was important. I think the most important thing is just picking the right team, right. Picking the right property manager, picking the right contractor, the right broker is all that like vetting them, getting referrals, you know, like one thing I heard someone that they do is they pick like a lot of times that the property managers will have the buildings that they manage on the website. And you'll be like, I want to talk to the owner of that, building, that, building that building. And I want to talk to them to see how their experience has been. Right. So you get like a random, they can't just give you their best referrals that are going to talk the best about them. Right. And then also like shopping their existing listings. So like having like maybe like a burner email where you email a couple of their listings and see how quickly they respond. Cause that's important. Like, I, she just did that with my property manager in Kansas city because they were having some trouble leasing, one of the units and I sent an email to the advertisement and they actually responded in an hour. I was like, wow. Okay. That's, that's, that's really good. You know, as long as they respond within 24 hours, I think that's really important because if you don't then you lose that person. Right. And then I think the other really important thing, like before I would buy anything, I mean maybe if you're buying like a single family home, it's not as big of a deal, but if you're doing like a larger investment, I would just go there, meet these people in person and actually get a feel for the area. Because like any big city, different pockets could be different from each other. So like, if you go North or West from a certain street or freeway, it could be completely different. And then over time, you'll kind of figure out the different areas that are the best and that will work. And that's why it's important to kind of focus on like one or two cities and not being like 10 different cities, I would say. Michael: Yep. I love it. Emil: These a solid, solid tips. I also, uh, I wrote this down. It's kind of a takeaway. I love that. You know, for you, you started small granted it's in Los Angeles, so it's a more expensive market, but you started small. You started with duplexes at the time. Jonathan: At the It was an expensive market. Emil: Yes, exactly. Jonathan: When I first started, it was actually somewhat reasonable. Emil: Yeah. Yeah. But you started small, you were in a good market, you know, you waited this, wasn't like a year down the road that you were able to leverage it. And some of these things… Jonathan: We're talking like a decade here, you know, like I think that's also a big misconception people have. They want it like right now, they want to like have a, you know, and it just takes time. Like real estate takes time. You need to buy it, hold it for awhile. And then that's when the magic happens. Right. It doesn't happen overnight. Michael; Wait, I'm forget this whole real estate thing. I'm out. Emil: If you follow people on YouTube, certain gurus. Yeah. They'll tell you, you can be a millionaire in like six months, but don't listen to them. Jonathan: Don't listen to them for sure. And that's another thing too. It's like a lot of people, another big misconception is you don't need money to do this. I mean, you could raise it from other people, but if you don't have experience or money, you kind of need one or the other, you know, like, it's good to work in a W2 for 10 years and really save up some capital and then get into it, you know? And you learn a lot in those businesses and companies and how the world works and whatever. Right. Emil: A hundred percent couldn't agree more. Michael: Yeah. Yeah. I'm right there with you. Emil: All right. Michael, anything else you want to ask before we do the wrap up? Michael: No, this has been killer. This has been killer. Emil: Cool. So Jonathan, we'd like to kind of ask a random question on every episode, but before we get insurance, what is the best way that people can get in touch with you if they want to get in touch, chat with you? Jonathan: Yeah, just go to my website. JB2investments.com or email jb@jb2investments.com. Michael: And Twitter right? Jonathan: And Twitter. Yeah. You look at me up on Twitter. That works too. It's just my name and then there's some numbers. I think if you go to my website, if you email me, that's, that's probably the best way. Emil: Awesome. Yeah. Cool. Alright. So random question for you. What is something new that you've picked up during, since lockdown started since COVID hit something new real estate wise or, or any, it could be like, no, just in general, general habit. Yeah. Like, I don't know. One of our other coaches started slacklining at home. That was kind of his new thing during COVID. Jonathan: What's slacklining? Emil: Oh dude. It's, it's the best. It's a, where you tie a Slack line between two posts and then, you know, your people like walk across them and do like the balancing thing. You see parks and stuff. Jonathan: Yeah. I've seen, I know we were talking about, I guess a lot of people have time on their hands. This person must not have kids or maybe they do. Emil: He just had a kid. It was, it was when the baby was like brand new though. Michael: So, you know, like before his baby could walk and crawl, you could just set it down and identify where it was going to be when he got off slackline. Jonathan: Um, I think, I think what this time is, I guess taught me or, or maybe not something necessarily new, but just like patience, you know, because like, you know, we left the business in January and then basically started our business and then COVID hit and then we're like, Oh. You know, it basically put like everything on hold for like almost six months, you know? So like filling that time and being patient and keeping at it and knowing eventually it would happen and like taking incremental steps every day. I think that's a big part of being a real estate investor is like the psychological side of it because there's a lot of ups and downs and how to deal with that. And like all the different things that you need to deal with and things that come up and you gotta be mentally strong to be able to handle those things. And so building that, this was a good time to really build that. I guess you could say. Emil: Yeah. That is a very important skill that nobody talks about real estate investing is just having like mental fortitude because you're eating crap all along the way. Like there's just constant things and pain. Jonathan: Yeah. The wins are like only every once in a while. Right. But when the wins happen, they're sweet and it makes it worth keeping going. Right. Michael: Sometimes it's a fire hose of crap. Other times it's just a trickle from a garden hose. There's always something to deal with. Jonathan: And you literally got a fire hose. Right. Michael: That's so true. It's so true. I think a fire easier to clean up than all the water damage from the. It's crazy. Emil: Jonathan. Thanks so much for coming on the show, man. Jonathan: Thanks guys. Michael: Thanks so much, Jonathan. Jonathan: Thank you guys. It was fun. Emil: Alright big. Thanks to Jonathan again for hopping on this episode with us. If you guys haven't already, I'm sure you're tired of hearing it from me, but please go subscribe to the podcast. Leave us a review. We always like to hear what you guys are thinking. Good, bad, ugly. Hopefully not too ugly, but all the good stuff. And we'll catch you on next week's episode. Happy investing.

covid-19 christmas california israel english los angeles real west local holy jewish north oklahoma kansas midwest proof lake picking folk tulsa slack mls omaha barr wichita highland hablo sac silver lake w2 fha duplex nimby reo trading up lamarck t12 203k jonathan yeah remote real estate investor michael awesome

Why Say No to Money and Bootstrap?

Play Episode Listen Later Sep 15, 2020 28:14

Show NotesTo fundraise or not, that is the question in this episode. Angela walks through the decision making process around whether Clinnect should go after institutional money or to bootstrap. Listen to find out what she decided.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)Transcript[00:00:00]Angela: it's a cute chair. Not a ergonomic chair.[00:00:04] Jonathan: Oh, ergonomics. I, so I've come to the conclusion that money should not be spared on shoes, mattresses and chairs.[00:00:18] Angela: I'm with you on shoes and mattresses... chairs, I'm not sold.[00:00:26]Jonathan: we have, their, their retail is like $1,200. The chairs at the office. Yeah. They don't, I don't get them for retail. I[00:00:35] Angela: I would[00:00:37] Jonathan: know, but still they're like 400 bucks, $450 for the chairs.[00:00:41] Angela: expensive.[00:00:43] Jonathan: They're pretty pricey, but they are there. They're very, very comfortable.[00:00:47]I needed something where the, The, the arms could move up and down. Cause I like that that's important to me. And then it's just like a proper arrogance and you can pick and choose the color.[00:00:57] So I've got orange back[00:00:59] Angela: Oh, and a blue bottom[00:01:01] Jonathan: I believe seat and it works pretty good. And then, and then I have an in, at a furniture supply company and she said, no, don't those ones are good, but these ones are way better. And the[00:01:11] Angela: like $20 more.[00:01:13] Jonathan: Yeah, her price was a little bit more. And now we've got all sorts of colours.[00:01:15] So Paige's is yellow and gray and mine is red and gray. Yeah.[00:01:20] Angela: Okay, you guys[00:01:22] Jonathan: I like, I just, it here's a pet peeve of mine, corporate gear that is all black, like hoodies, all black hoodies, like, and then just, here's the standard chair. It's gotta be black. Why can't people have a little bit of expression. So we pick the chairs that are, uh, uh, uh, let us pick the fabric,[00:01:44]Angela: That's cool.Introduction[00:01:44] You're listening to Fixing Faxes a podcast on the journey of building a digital health startup with your host myself, Angela Hapke.[00:01:54] Jonathan: And I'm Jonathan Bowers and I've started Zach in daycare. Yeah.[00:02:03] Angela: How are you feeling? How's Julie feeling?[00:02:06] Jonathan: Uh, it's pretty scary. We were just doing transition. So every, every day, this week I'm going with him for an hour and being with[00:02:15] Angela: Yep.[00:02:16] Jonathan: week, just gets gradually, uh, longer. And I'm, I'm not[00:02:20] Angela: And then you[00:02:21] Jonathan: And then we start on the, the first, uh, that, uh, the eighth or whatever that first day in September is.[00:02:28] Oh, it's scary. It's scary. And, and then, then yesterday[00:02:37] we get a call. Okay. So one of the other, uh, families, has to self isolate. This may have been in contact with COVID and I was like, okay, well, this is the new reality, I[00:02:47] Angela: This is your new reality. This is a hard moment in life in an especially hard time. Oh,[00:02:55]Jonathan: He's doing quite well. He, we went the first day. He cried when we went in there. So one of the, one of the strange things that we've noticed about the pandemic and our, trying to follow the rules, so we don't go anywhere, but like, we don't go into buildings, we don't go places and we don't take Zach[00:03:13] Angela: of course. Yeah.[00:03:15] Jonathan: And so I can't remember where we went once and he was really afraid to go inside a door. He, he looked at this new space and he didn't want to go inside. And we thought, Oh, this is, this is cause he's deconditioned to going places. And then kind of the same thing at, at[00:03:29] Angela: Oh, sugar.[00:03:31] Jonathan: he was. Um, he was okay.[00:03:34] Kind of going in, but he didn't want to be inside the room and it was a little bit overwhelming and he cried a bit and, uh, he, he calmed down fairly quickly. Um, and then he cried again when one of the when, one of the girls that was there, kind of ran ran at him. He didn't like that very much. but he got used to it and yesterday we just spent the hour or outside[00:03:53] Angela: Yeah. Lovely.[00:03:54] Jonathan: that was, that was really fun. Um, yeah, I think, I think he's going to be okay. He's going to be okay. I know he's going to be, yeah. Okay. Um, but it's, it's hard.[00:04:04] Angela: It was about, um, two years ago, right around now is when we drop, started dropping off Nora for the first time. The first time that the actual drop-off happened , I wanted to be the one that did it, I'm going to drop off the girls.[00:04:22]and then I just sat out in my car and cried. Both times, like I was like, so adamant that I was going to be the one that did it. And then I sat out in my car and cried and cried and cried and then phoned Brad both times like, Oh,[00:04:39] Jonathan: it's hard. So I've been taking him because, um, cause I worked from home and I'm like, it's just. You know, five minute drive away. So it makes sense for me to be dropping him off and picking him up. And Julie works kind of across town, um, in our minds, she had planned on being the one to take them through transition[00:04:56] Angela: Of course. Yeah.[00:04:57] Jonathan: but they said like, no, it needs to be one parent for the whole, the whole two weeks. And so we decided it makes the most sense for me to get familiar with it because I'm going to be do to dropping things off. So it was, yeah, it was really hard.[00:05:10] Cause you know, she was kind of geared up to[00:05:13] Angela: she was ready. She was[00:05:14] Jonathan: to go and do it and now she doesn't get to and I'm, I'm the one doing it. So, um,[00:05:19]Angela: it's[00:05:19] okay. If you sit in your car and cry after,[00:05:23] Jonathan: I, yeah, I I'm, I am a more emotional about this than I expected to be[00:05:29] Angela: and it slaps you in the side of the face and you don't expect it and you're just like what?[00:05:33]And good for you for taking time off right now. I think for too often, we don't take time off in these. Um, times in our life where there's some like there's change. We always like, Oh, I'll, I'll take time off for vacations. And I must have vacations and holidays and things like that, but we kind of forget that we need space around big change times[00:05:55]Jonathan: I think I recognized it, but I didn't, I didn't realize it was going to be quite as necessary. Like I thought, Oh, you know, I can, I can do half days or something like, no, I'll do the full days. Cause I got lots of like projects. I want to do some reading and some other things that are like just sort of recharged, but.[00:06:11] Wow. I'm glad I have all morning to just think and stew about taking Zach to his daycare for an hour in the afternoon, and then it's over and done. And then we go play and, uh, it's a lot better.[00:06:24] Angela: Oh, that's amazing.[00:06:26] Oh, so fun. I love it. That's great. You guys are gonna do amazing.[00:06:32]Bootstrapping[00:06:32] Jonathan: I hope so. Funding bootstrapping. What does bootstrapping[00:06:39] Angela: Should one bootstrap. Um,[00:06:42] Jonathan: one bootstrap? I think I understand what the term bootstrapping means, but I, I feel a little fuzzy on it.[00:06:48]Angela: So bootstrapping to me may mean something different than it does to other people. I think bootstrapping, um, is like this broad term. And what I do feel like is it's more what it's not, and it's not venture capital. , it's not going out and fund raising.[00:07:08] Jonathan: right. Okay.[00:07:09]Angela: Um, it's finding a way to do it, uh, among your tight, small team. In a lot of cases. I think for founders, it's probably just themselves, family and friends, uh, things like that, but it's not going out and doing the flashy venture capital parade.[00:07:32] Jonathan: The parade, the pageantry.[00:07:35] Angela: Right. It is a little bit,[00:07:40] Jonathan: so this, so, so CRS and Clinnect is not, um, not venture venture backed, so there's no, there's no institutional money. There's no external money either. I don't[00:07:55] Angela: there's no external money. There's no institutional money. There's no venture money. There's no ink angel money. Um, outside of, you know, co-founders, there's, um, There's none of that, but it was a process to get there to decide that. And I think that's more, what I kind of wanted to talk about today was if somebody like understanding what bootstrapping versus investment looks like capital investment looks like, and then why we went the route that we did. I think it's an interesting process.[00:08:28] Jonathan: Well, I mean, walk me through that a little bit. Like the, so it's not venture funded. I mean, there, there, there certainly is I don't want to say pressure, but there is a bit of keeping up with the Joneses-ness to venture funding, where people celebrate how much[00:08:43] funding you've[00:08:44] Angela: moly. Right.[00:08:46] Jonathan: And, uh, I remember, I think it might have been like Steve again, Steve Wandler said, you know, you don't celebrate the fact that the chef went and acquired all the ingredients.[00:08:57] Angela: I like that a lot.[00:08:59] Jonathan: you don't celebrate that you celebrate the, the meal.[00:09:02] Angela: Yeah,[00:09:03] Jonathan: yeah, not the fact that he went shopping.[00:09:04] Angela: no, but way too often, we are celebrating this shopping. you see, so often all these people celebrating these, you know, seed funding series A, series B, closures of millions and millions or whatever it looks like. And it's attractive who doesn't want to go out and get millions of dollars and say that you did.[00:09:29]Um, but back to Steve's point is. But I also don't want to just celebrate the fact that I went out and got some ingredients who[00:09:38] Jonathan: you still have to, you still have to mix all that stuff together and[00:09:41] Angela: got to do it.[00:09:42] The Pressure to Raise MoneyJonathan: yeah. Still do it. Still make the business makes sense. So did you feel that, did you feel that pressure, that, um, peer pressure to go off and do some external funding.[00:09:52] Angela: it's industry pressure. I think it's peer pressure. I think it's Oh gosh. It even comes to like, it feels like a bit of a popularity pressure. Just like all these kinds of things. Yeah, absolutely. It got, I got caught up in that for a little bit. I figured we could. We had a good idea.[00:10:07]who is to say that we couldn't do that? there was a time when I wanted to go out and fundraise and go down that road. And then a couple of things happened that really changed the course and man Steve Wandler's going to get some shout outs in this episode, but he sat me down and said, um, okay, Angela, First off what's your TAM Tam is your total accessible market. We're dealing with primary care providers and specialists our customers. So it gave them the numbers, kind of Western Canada, Canada. And he just looked at me and he's like, you're not going to get any institutional money with that TAM.[00:10:53] And it was so embarrassing because I was like, yeah, you're absolutely right. How the hell did I figure that I was going to, like, it was just so obvious.[00:11:04] Jonathan: Right.[00:11:05]Angela: Um, So, I mean, that was the number one thing where I was like, well, this is like, why would I bother then? so then that was kind of like the fall of last year.[00:11:16] And I was like, okay.[00:11:19] Jonathan: Sorry, can we just, before we go onwards, so the, you looked at the numbers for, for your total addressable market for your TAM and it's, it's too small?[00:11:28] Angela: Too small. Yeah. For, for institutional money. So institutional money wants to see high growth, high numbers. They want to see millions of users. They want to see, um, the fact that you can be the horse that wins the race in like the money race. Right. And with a TAM, just at this point, focused on Canadian doctors is not a number large enough for institutional investors to be interested in you.[00:11:58]And it was a bit, like I said, it was a bit embarrassing because I probably should have figured that out, but it took somebody to kind of like, look back at me and hold the mirror up and go. How do you figure that this would you're right? It won't. So that w that was a big one. It was also becoming, Oh, how, how do I say that?[00:12:20] It was also becoming, not just a distraction, it was spending so much time trying to learn about institutional money, learn about, um, who was doing what out there, uh, how to do it, how to align, how to find an investor, how to find an investor that aligns with the principles and ethos of your company. And I mean, and that's, you know, we'll get to the kind of that part and the fact that we're a social enterprise and you need that alignment more so than ever.[00:12:55] I wanted smart money. meaning that I wanted an institutional investor that was, that knew about digital health and understood the product and the market and, and it was just becoming overwhelming, distracting and I was spending too much time.[00:13:14] Focusing on that rather than focusing on what the, what the hell did the product look like? What were, what were we building? What did the meal look like versus what ingredients did I want?[00:13:25] Jonathan: Yeah. And at that point you didn't have a sense of, um, yeah, there wasn't, there was no[00:13:31] Angela: There was no product. We had ideas. We had nothing, and that was the other thing we were going to go out. And what was I thinking? I was going to go out and sell, uh, an idea. Uh, with a small TAM to institutional investors, I would've got laughed out of rooms. that was the first reason that we were just like, no. Up until last year, around this time we had floated ourselves on government funding.[00:14:00] Uh, we did fine. Like we paid salaries. So that was like, well, some salaries and that was partially paid for people.[00:14:10] Jonathan: To be clear. You haven't, you don't owe people money.[00:14:14] Angela: Oh, no, no.[00:14:17] Jonathan: weren't drawing a salary is what you're[00:14:19] Angela: Yes, exactly.[00:14:21] Jonathan: Okay.[00:14:22] Angela: We also didn't have, like, it wasn't really employees at that point, they were all contractors. it was a project. If you very much look at like, you know, um, the idea of a project and that's what we were doing, then the next thing I thought was, well, we have to look for venture capital.[00:14:37] That's what people do in my position at this point. We're running out of money. So what do we do? Well, we go out and find money. Um, so then that, that reality check last fall was a harsh one, but an incredibly important one. And then that's when I decided, well, we need to make this work, um, by bootstrapping.[00:15:01] And so bootstrapping is in my, in my definition in Angela Hapke's definition of bootstrapping it is you find money. Among your, um, very close group of people. So in my case, it was, um, co founders and, uh, and I think it's typically they're founders co-founders or maybe a small friends and family. I don't even know if that's, is it friends and family round con I guess, would that be considered bootstrapping?[00:15:29] Jonathan: I mean, I would think so.[00:15:31] Angela: I feel like it's on the cusp,[00:15:32] Jonathan: your friends and family, certainly they don't have the sophistication to invest like an institutional investor would. I think it's more like, it's more like they're investing in you, not[00:15:45] the business. So I think that would be.[00:15:48]Finding Money When You're Running Out[00:15:48] Angela: So we got, yeah, so we got to the point where it was about January, February, we were running out of money. I think we had, you know, And I have no problem saying this because it is, it's kind of humorous and I think people need to hear the reality of all of this is I sat my shareholders down and I said, we have, um, one more payroll left in the bank account and that we're done.[00:16:13] I was like, so I don't know what to do next. I've done everything I can up until this point. And, and now, now I'm looking at you guys to help out. And, uh, that's when we bootstrapped, we got some people from the group that said, yep, we will help fund this, uh, for the next year. It was the best thing in so many ways.[00:16:36] What it did is it reengaged the group of people that I was, was working with, um, had skin in the game again, and I think for me, what it was too, is these are smart people. And they believed in me and the idea, and that was so empowering and just allowed me to, to kind of have the confidence to make the decisions again and like move forward.[00:17:04] So it was, it was honestly, the best thing that could have happened for us was to just say, No more going after institutional money. It's not going to be there. It's going to be a distraction. It's going to be overwhelming. You're probably not going to be successful. Your failure rate is high. Um, what else can you do?[00:17:22] And I was lucky enough to have a few people that were willing to say we can help.[00:17:27] Jonathan: Yeah, I think also, uh, it would be a very strange conversation with a venture capitalist to go in and say, um, our cofounders who are surgeons didn't put in any money of their own.[00:17:39] Angela: Now let's be clear. They like everybody had put in money at this point. Yep. Yep. But, um, to, to go to them and say, uh, they're not willing to put in anymore. Maybe, uh, it just would have been a really awkward comfort. Like there's so many reasons it would have been a bad conversation.[00:17:56]Jonathan: Like this so much money that you're a founders and co founders and friends and family can kick[00:18:01] in. So if you were successful at getting some institutional money that would be maybe multiples or orders of magnitude more money, perhaps. The founders and friends and family are writing much smaller checks than venture capitalists would. So does does not having that in place. What does that change for you and for the plans of the business?[00:18:21] Angela: I think for us, it made us focus on the business plan itself, focus on the cashflow models. I ended up having to build out a very detailed three-year cashflow model and understand it so well. And really, really focus on the, um, the minutiae of, of the, the product and the company and understanding that that has helped me make better decisions.[00:18:48]it's also helped us, hopefully, because we still know are not sustainable, but hopefully create a sustainable business model in the end is B because we are kind of penny pinching. it's forcing us to be really, uh, resilient and really kind of tight with our, with our money, like make really good decisions.[00:19:07] We're not going out and just hiring a bunch of people.[00:19:10]I think at the end of the day is the big question is, um, and I, you were alluding to it is, is, does this inhibit the growth of the company does not taking the big check mean that you're on a different trajectory than if you were to take that big check.[00:19:26] I think it's so individualized to the company, the founders and things like that that, you know, to answer that question, I think for us, I think it would have put us on, um, not a great path. I truly think that the one that we're on is the right one and the one that we should be on.[00:19:45] I think there's a lot of people out there that don't think you can grow without institutional based money. and I think that's wrong. I, I think, I think there's so many other reasons that you can grow, attracting the right talent, having a sustainable business plan that makes sense. And having a product that people want.[00:20:02] I mean, the list goes on. It does not have to do with how big, the size of the check that you got was.[00:20:08]Jonathan: we're not trying to be a Facebook or an Instagram where that growth, that growth is so expensive because it's yeah, like you acquire customers one like without even necessarily having a business model. the business model makes sense.[00:20:23] Right? You're the business model is you're getting money from customers, not, not from somewhere else or some imagined other place that you haven't figured out yet. So that seems pretty clear.[00:20:34]you're not going to get that hypergrowth, which I don't think you were going to get anyways.[00:20:39] Angela: Exactly. I don't think we, we had the model for hyper growth anyway. Why, which would have been another reason that I probably would've got laughed out of rooms. Right? Like it would have just been like, no, thank you very much, but carry on. we're not the pony that's gonna win the money race.[00:20:57] Right. And that's what, that's what institutional money is really geared towards. There's also a, like for us, we're a social enterprise. We have values and ethos at the epicenter of what we're doing and how hard it would have been to maintain those at the epicenter with, um, a really large check and an expectation with that large check to grow, grow, grow at all costs.[00:21:28]Jonathan: you wouldn't just be taking on money, you'd also be taking on some new bosses[00:21:32] Angela: Bingo. Yep. And that's another reason w uh, would have, um, been a really difficult path to find the right person. Um, we would've needed somebody that understood, uh, the industry understood the world that we were kind of in, that also had money that also was okay with us having, you know, security, privacy, and patients at the, at the center of our model.[00:21:58] Not, return on investment.[00:22:01]Finding Money In Kamloops[00:22:01]Jonathan: I think one of the other issues that might be interesting here is that like being in Kamloops, there's very few, there's very few people in Kamloops that are writing checks.[00:22:12]Um, I can. Count on my hands. The few that I know who might, but they also don't have the experience like, so, so who in Kamloops can one write a check to, has some understanding of operating a digital health company? And three is interested in some of the social side of things.[00:22:34]Angela: I don't even, I don't, I don't even know. So no one in Kamloops for sure. BC would be even a question mark. And then getting out of that, I mean, I'm. I haven't been in the tech industry for decades. I don't know all the names of all the people. And so just getting in front of people would have been absolutely hard.[00:22:53] High effort, low success.[00:22:56]Jonathan: because you're kind of the only founder, I mean, that's not true, like you have other founders, but you're the only one that is, um, operational. Right. So, yeah, you're, you're the one that is building the product, finding customers, managing the whole, the whole thing.[00:23:16] So then to free you to spend half or all of your time trying to find the, you know, that one or two individual investors who would make a difference, seems like, like a flat. Yeah, like you said, like an extreme amount[00:23:31] Angela: an extreme amount of effort. Yeah, exactly. Yeah. And I mean, when I put it, you know, and I put it back to my co founders to say, Hey, We're we're in a really tough spot right now, and this is what it's going to take to get us out of it. Um, and they said, yes, that might have been like, I mean, in this whole journey of Clinnect, that might've been one of the highlights for me the day that we launched the product was amazing also.[00:24:03] But when they like, literally came back and said, absolutely, we got you. Wow.[00:24:10]Um, and to be honest on it, then I was scared to ask because it was a big ask and these people, I consider friends and it was a really hard thing to ask, but then I also come back to, well, if I can't ask my co founders and they can't explain it to them , do I think I'm cocky enough to then go walk into a room of strangers and pitch it to them maybe, but like, probably shouldn't if I can't even pitch it to my own, you know, founder group. It's such a tough decision. Like even when you know, Steve was like, I don't even know why you're considering this.[00:24:50] I was a fit like. But maybe I could, like maybe I could come up with and why I can convince you, you know, but it's such a journey. All of this is such a journey, hoof. This one's been a really eyeopening.[00:25:11]Having a Startup Confident[00:25:11] I have a friend who's also like, so she's a co founder of a tech company in Regina and we are so similar in where we sit.[00:25:20] Like we are both the co founder the operational co-founder she's. She sits as the CEO also. we both are building a team. We launched our products within two months of each other. Uh, we both have little girls that are like roughly the same age. Like we're just, like I found, I found my, like my, my tech BFF and she went after, uh, institutional money.[00:25:49] So this has been a really interesting journey. And we like, we have FaceTime coffee every Tuesday and we talk about life and the products and just everything. Like we talked about everything and it's been so interesting to hear her journey around going after the big checks and going after, um, yeah.[00:26:10] The institutional money. And I tell you the amount of time that she spends doing that is her. Yeah,[00:26:20] Jonathan: Does she regret it?[00:26:21] Angela: no, no. She has a product that makes it makes a heck of a lot more sense. Um, uh, but it's been really interesting to like, have our like, compare worlds around that yeah, it's just, it's, it's an interesting world and I'm not, and I, I'm not saying that she shouldn't have gone for that money. I think, I think what the, what it's done is it's made a lot of sense for her. It's introduced her to a lot of people that have helped her too.[00:26:49] So even the introductions themselves have been amazing. it's so individual, but I think it's so attractive to go after institutional money that sometimes we have to just pause and really understand is this the right thing for the company is the right thing for, for you as the founder too, because it can change everything. Yeah. And I'm glad we I'm glad we didn't. I'm glad we are on the path that we chose.[00:27:21] Ask me in a year though. Maybe am I still happy with my decision?Outro[00:27:30]Jonathan: Thanks for listening to Fixing Faxes, building a digital health startup.[00:27:34] I am Jonathan Bowers. My cohost is Angela Hapke. Our music is by Andrew Codeman. Follow us on Twitter @FixingFaxes. You can find us wherever you like to listen to podcasts. We'd love for you to do us a favor and tell a friend. Thanks for listening. boop, boop, boop[00:27:56] Angela: We had Nora's birthday, third birthday.[00:28:00]She wanted for a cake.[00:28:02] it was, I would like a rainbow farm cake.[00:28:06] Jonathan: Yeah, of course like a farm that grows rainbows.[00:28:09] Angela: I have no idea.

covid-19 ceo money canada technology canadian healthcare startups pressure focusing funding bc say no lovely facetime bff tam bootstrapping joneses digital health western canada bootstrap kamloops crs running out tamtam woman ceo jonathan yeah angela how angela it andrew codeman

What's Keeping Angela Up At Night?

Play Episode Listen Later Sep 8, 2020 27:01

Show NotesAfter taking a few weeks off of recording Jonathan and Angela discuss everything from Star Wars to passwords to what keeps Angela up at night. There are some bloopers to keep it real and difficult conversations about balancing the users wants with the integrity of system. Angela and Jonathan deep dive into conversation to talk through a difficult product feature decision. In this episode listeners get a peek into real conversations behind the scenes of building a digital health product.Password hygiene is a topic that we discuss a lot in this episode, there are some great articles if listeners wanted to dive into that information. Here are some articles:Cisco MagF-Secure BlogPassword managers are a great way to use unique passwords as Jonathan mentions in this episode. Examples of password managers are 1Password and LastPass.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)Transcript[00:00:00] Jonathan: oh yeah, we got change to not Thursday.[00:00:03] Angela: It's like perfect timing.[00:00:06] Jonathan: changed the lawnmower now it's a different kind of lawnmower.[00:00:08] Angela: louder.[00:00:11]Jonathan: Uh, hi, I'm Jonathan Bowers is wait, I'm doing the intro.[00:00:17] Angela: Oh, no. Okay. Okay. Okay. Okay. Okay.[00:00:20]Intro Jonathan: Hi, you're listening to fixing faxes. And I'm your host Jonathan Bowers[00:00:26] Angela: and I'm Angela Hapke. And so I haven't watched any of the Star Wars movies.[00:00:37] Jonathan: at all?[00:00:39] Angela: Ever at all. So I've watched bits. Like you, you always see clips of them or maybe bits and pieces, but I've never seen a full Star Wars movie.[00:00:50] Jonathan: At all? And you are, you are, you are a member of society?[00:00:56] Angela: Okay![00:01:01] Jonathan: Did, how does, how did you manage to avoid watching any Star Wars[00:01:05] Angela: I'm not even sure. To be honest. I, I I'm unsure of how this has all came about. And I'm one of those people that don't want to jump in in the middle. So I always felt like I had to watch the previous ones before I could watch the new ones. And because of that, I've just never put in the effort.[00:01:23] Jonathan: It is a lot. It's a,[00:01:24] Angela: It's and it's an effort,[00:01:26] Jonathan: it's a saga.[00:01:28] Angela: I've started watching the Mandalorian.[00:01:31] Jonathan: Oh, good for you. Do you like it?[00:01:34] Angela: I really like it.[00:01:36] Jonathan: It's really good.[00:01:37] Angela: is, only, I'm only on episode three, I think three or four. And, um, I really like it.[00:01:47] Jonathan: Why do you like it?[00:01:49] Angela: Oh my goodness. Well, it was. I don't know. I like it. It feels like an old, like, it feels like a Western,[00:01:58] Jonathan: It is, it is a[00:01:59] Angela: right yet to set in some time. And, um, I don't know. There's something charming about[00:02:13] wait, are you a big fan[00:02:16] Jonathan: I'm a big fan.[00:02:17] Angela: or a big fan? Okay.[00:02:19] Jonathan: I mean, I wouldn't say I'm a big fan. I would say.[00:02:22] I'm a pretty big fan. Yeah. I really like, I like star Wars. I like, uh, I've played some of the video games. Um, I have a board game, this like cool X-Wing game. That's that's quite fun. I bought just, just before COVID and now I have no one to play with. Um, Zach's too little and it's not Julie's kind of game.[00:02:35] Okay. Um, yeah, I'm a fan.[00:02:38] Angela: So I find fans always have an order that they suggest that other people watch the movies in.[00:02:47]Jonathan: I, I, my belief is to watch it and it's how I think I want to watch it with Zach when he's old enough is, uh, four or five, six. one two, three,[00:02:57]Rogue One, uh, then four, five, six, again. Yeah, that's seven, eight, nine. Then you can go back and watch Solo and whatever the other one was.[00:03:08] Angela: Okay. So I think I'll just watch them in release date order.[00:03:13] I think I might watch it with Alex. I think she's old enough to watch all of those.[00:03:18] Yeah.[00:03:19] Jonathan: You never, you never not old enough. Yeah. Yep, two.[00:03:25]Password Resets[00:03:25] Angela: But that's uh, what are we going to talk about[00:03:29] Jonathan: I have no idea. Honestly, I have no clue. Um, I would like to get to some community stuff at some point and some interviews or some guests, but, um, we can just talk about like, what's going on in product land. Uh, we can talk about password resets.[00:03:47] Angela: Password resets.[00:03:50]Jonathan: so , uh, it was hard to read your emotions in that meeting just now that we had, when we were talking about password resets. so I wasn't sure if you were upset, if you were disappointed, um, in like the way that product has been built, if you were disappointed in users,[00:04:03] Angela: God, you're going down a rabbit hole, Jonathan.[00:04:05] Jonathan: Yeah, no, it's just, it was very difficult to read you to read you on the video call. Like w there was very little, uh, body language to go off of. Um, and I was, I was watching, like, I flipped to, like, I often just flip to like see everyone mode so that I can, like, I just find that better.[00:04:20] Angela: Oh, I like the gallery view better on[00:04:21] Jonathan: yeah. Gallery view. Thank you. And, uh, yeah, you just, you were just seemed like maybe something was going on. I thought I'd check in.[00:04:30] Angela: this is so funny. my nonverbal can be quite loud sometimes.[00:04:34] Jonathan: Sometimes.[00:04:35] Angela: Yup. And I think when it's not, people tend to be like, What's up. What's going on,[00:04:43] Jonathan: The silence is just as[00:04:45] Angela: Okay. No, no. I think for me what it is is, um, Things have gone relatively smoothly with product development thus far. We have always kind of had this good, a flow of, of maybe not knowing exactly what our user needs next, but having a really good idea of what they need next.[00:05:12] And I feel like with this password reset, um, or lack of due to the the encryption, the end to end encryption that we have on this, on this product is I, not that I feel like we're letting our users down because I think there's massive pros to this and we have to communicate that somehow. But I also feel like this is like a bit of a disappointment factor with them that we can't just do a password reset.[00:05:41] Jonathan: Yeah, it seems like uneasy feature. Like it seems like something that everything does. I forgot my password. I'll just reset it.[00:05:48] Angela: Exactly. And maybe talk a little bit about why we can't just do that because I don't think I can talk that well about it.[00:05:56] Jonathan: That's fair. Um, yeah. So the previous episode, I think we talked about the fact that this Clinnect is encrypted end to end. We, we, as the builders of the product, can't see anything. There's, I mean, there's bits of stuff that we don't encrypt because we need to, like, we need to know who the referral goes to, that sort of thing, but we can't see any patient information.[00:06:16] So all of that information is completely hidden from us. The only way to unlock that is with the password from the user that unlocks that data. Right. So if they that's the key, that's literally the key. If they lose that or forget that they've lost the key. And so we can't go in and recover that data for them.[00:06:37] Angela: Exactly.[00:06:38] Jonathan: So it different than, uh, and the example that Chris was giving like Facebook, right? Like if you lose your password on Facebook, you just go in and request a password reset. Really, all they're doing is just verifying that you are who you claim to be. So they follow up with maybe a message on your phone or an email or something, and they give you a little link.[00:06:59] That's just proves that you still have access. Like you are. Still Angela. Um, the person requesting this password reset is Angela. So they go through something that they trust, like an email to send you a link, and then you click on that. And then that's like, okay, cool. We'll just throw away their old password, give them a new password, except that for us to do that, um, that would literally mean throwing away the key.[00:07:21] We don't have another key like that. That was the key. And so if you've forgotten the password or. Um, lose, you know, lose that password. You have lost the key to accessing the system. That's that's its strength. Um, but also the weakness from the perspective of the user, because now they can't access the data and we can't get it back for them.[00:07:43] Angela: And we, and that's the key right there too, is Facebook can give me back my password because they can see everything.[00:07:49] Jonathan: They see it all.[00:07:50] Angela: We don't see it all. We can't give you back your password. So we've had some users that have bumped into this, and we've had users that have reached out to me personally and gone we need this feature.[00:08:00] We need a password reset on, on, um, this application. And I think it's the first time that, you know, It seems like you say an easy fix. It's not an easy fix. It's not, it's not. Yeah. Um, it would compromise the integrity of the whole application if we just allowed a password reset. So we can't do that. Um, we've built this product, um, to be as secure and private as it is.[00:08:28] I mean, we just can't compromise that. So we're stuck in this really hard place where we have users that want to feature that they're used to seeing on many of them, their applications that they have without, you know, without even the need to understand why they, they don't have it here. Um, yet frustrated that they don't.[00:08:49] And so that was what you were seeing today in the call, I think was just my, my inner turmoil around really wanting to please the customer on this, but knowing, um, that pleasing the customer would, um, would degrade the integrity of the product. And I'm just not going to allow that.[00:09:05] Jonathan: Yeah. I think that's a good stance as uncomfortable as that can be sometimes, um, is to do what is right for the product. And in that, in that case, it's actually what's best for the patient.[00:09:17] Angela: exactly. And we do have to, we do have to go back to that. Um, and I think you often see that in our meetings is, you know, I'll kind of go, okay, well, hang on at the end of the day, what we're doing is we're ensuring a very safe product for our patients. We're ensuring that their information is being handled in the most appropriate way.[00:09:39] And, um, that's what it comes back to with this one again. Um, yeah, I'm just, I'm not compromising on the quality of the product on this one. But damn, it makes it hard to have that conversation with the users when it's, they don't understand it. They're not supposed to understand it. That's not for them to, I don't, I don't want to expect them to.[00:09:57] Jonathan: I don't think that they need to understand the technical details, but I think, I think there is an opportunity here to really show the users what good password hygiene looks like and why that's so important[00:10:10] um, we still, we need a way to allow them to recover because it's equally, it's equally bad for the patient. If,[00:10:17] if a specialist has received referrals and they can't get access to them[00:10:22] Angela: Exactly. Exactly. So, yeah, we, and I think that's why in the end, what we ended up talking about was, um, a multilayered approach to this in that we have like plan A, B and C around account recovery.[00:10:39] And how are we going to ensure that our users can get back into their account? Um, cause like you say, if you know. We can't just reset the password because that compromises it. But we also, can't not let them get back into it. Cause that compromises too.[00:10:57] Jonathan: Yeah, and it, it just brings up so many interesting problems in this space and it it's the, it's the intersection of sort of, of technology and security and, um, the users, um, you know, the ease, the ease of[00:11:10] Angela: Exactly and that's yeah, that was what was frustrated with is I'm like, Oh, we are the ease of use.[00:11:19] Jonathan: I do think though. I really do think that if you can somehow treat this as an opportunity to show our users why this is important, um, that will benefit them, not just for this product, but across all of like other,[00:11:35] Angela: Yup. Yeah.[00:11:36] Jonathan: if they're reusing the same password, um, that's not great if they're also using pastors that are just easy to[00:11:41] Angela: Too easy to forget.[00:11:43] Jonathan: Yeah. That's and that that's that hints at this like weird problem in, in, in security, which is you want passwords that are very secure. but you also want them to be usable,[00:11:54] Angela: but not too usable, but somebody could pick to guest them.[00:11:58] Jonathan: Yeah. So it's, it's very, very tricky, but there are, there are tools that exist to help you with this. So we require everyone on our team to use a password manager. And so, um, like no one, no one on our team knows any of their passwords.[00:12:13] Angela: Right.[00:12:14]Jonathan: It's, it's managed by a tool that generates this randomly long, like this random string. That's very long. It's very, very hard to guess. I have a high degree of confidence that, um, all my passwords are unique.[00:12:26] I don't even know what they are, and even if they were to, even if they were to, uh, find my password, you know, say, say my password for Facebook was compromised. Like somebody, all of Facebook's, um, the database and. Like let loose all of the passwords. And this has happened lots of times.[00:12:43] There's lots of examples of large sets of data being hacked. And you can go and look like, look up your passwords and see if they've been hacked. Um, but the only thing they'll be able to get into is that one account, they won't be able to then get into a bunch of what other things, um,[00:12:58]Angela: you're not using the same password for[00:12:59] Jonathan: not using the same password for everything.[00:13:01] Yeah.[00:13:01] Angela: So the, um, I think the interesting part here though, is you guys are a sophisticated tech company.[00:13:15] Our users are not sophisticated tech company or sophisticated technology users and, um, almost most cases too. Right. And so that's where yes, that's where the turmoil was that you were seeing on my face in their meeting today is just really trying to figure out what's the best thing for our users and how to manage.[00:13:33]And I think the solution that we came up with is a tailored solution to the users that we have. If we had some very sophisticated users, we would probably suggest something like you just mentioned that you guys use for them. It's not going to be the case. It would be more of a sophisticated account recovery,[00:13:56] Jonathan: Yeah,[00:13:57] Angela: but it can't be this time. Um, it'll work, it'll be secure, but it's tailored for our users to, yeah. And so, yeah, that was an interesting one though. Like I say, up to this point, we were. I think we've really, we've really like, kind of had like some bumps, but not, not too many bumps.[00:14:16] And I feel like this one was the first like bigger usability bump that we've had.[00:14:23]Jonathan: I'm going to come back to the, like the education piece here. I actually think that if, if, uh, if someone is relying on password reset, um, That like, that's not good practice regardless. Like you shouldn't be doing that. So, so, you know, if you sign up for a thing and you're like, wow, just whatever, I'll just put in a password cause they make me, um, and I'll rely on password reset. Um,[00:14:46]Doing a way with it passwords is, is actually a pretty good sss arguably that's an interesting take on security is you just don't have passwords every time you want to log in. We just send you a special thing in your email because we trust that your email hasn't been compromised.[00:15:03] So we just send you a thing, an email, and you just click on the thing and it opens up and that's, that works for certain types of applications. It doesn't work for us because, because everything's encrypted and we can't send you that thing, because we can't get in.[00:15:15] Angela: Yep. So you're, you're wondering, is this a really good education opportunity or an awareness opportunity for our users to say, Hey, what'd you call it? Password hygiene[00:15:28] Jonathan: Yeah. Good password[00:15:30] Angela: Yeah. Here's some ideas. So. Um, the only reason I hesitate and don't jump, I think that is, I just feel like, Oh my gosh, is it another thing that we're going to have to awareness, educate, et cetera, et cetera about, um, do we have the bandwidth to also do that[00:15:50]does it take a lot of bandwidth? I don't know, but I think when you're so heads down in a startup and then you realize your is bumping into something like this. And then someone like yourself is like, this is a great opportunity to teach them password hygiene. I just feel like, Oh my God, another thing really, um,[00:16:09] you're not wrong.[00:16:10] I'm just like, I feel like I've just fatigued a wee bit.[00:16:14] Jonathan: that's fair. That's fair. And it's a funny, it's a funny piece though. Like it's different if it was, you know, if, if, if users were, you know, boy, I wish it did this feature. Right. And we can, we can kind of talk about how, um, okay. I mean, we don't really see the value in that, at least not right now, but this talking about access to the whole thing.[00:16:34] Angela: Yeah, like this is integral[00:16:37] in into the application. Yeah, I know. Yeah.[00:16:44]What Keeps You Up at Night?Jonathan: what else keeps you up at night?[00:16:48] Angela: You know, so this was a, um, somebody said to me the other day, when I was explaining to them what Clinnect was and what we were doing. And he says to me, he's like, Oh my gosh, all that patient data. Doesn't that keep you up at night? And do you know, because of that, what we were just talking about with the systems that we've put in the fact that no, you know, it's very hard to get into an account.[00:17:16] And even if you're just to get an account, you get into one account know, that's it like, because we've put up, we've done privacy by design. That actually does keep me up at night. What keeps me up at night now is like, We got to get more users.[00:17:35] Jonathan: Okay.[00:17:36] Angela: what's keeping me up at night right now. I'm like, we've got to get more users and we're at a weird, um, balancing point because we have specialists and we have primary care providers.[00:17:47] So we have two sets of users. One type of user wants more of the other type of user on before they jump on both ways.[00:17:57] Jonathan: chicken and egg.[00:17:58] Angela: Chicken and egg. And so, so, you know, like, and I think that's why you just kind of use the double barrel approach and just kind of push both at the same time. And hopefully you get to that balancing point, but that's, what's keeping me up at night right now is everybody's just a little bit sitting back and waiting and I'm like, no, just do it.[00:18:25] Jonathan: And it's, it's funny, like back, we talked about this eons to go, how there is this, it is kind of a marketplace. in that you've got specialists who need to receive referrals from a primary care providers and primary care providers who want to send a specialist and you're right. They both want more of the other because it becomes more valuable. If there was all the specialists on the system, then all[00:18:48] Angela: All the primary[00:18:49] Jonathan: providers would be like, Oh, sweet.[00:18:50] This is, this[00:18:51] Angela: And if all the primary care providers were using there'd be specialists, clamoring to get on.[00:18:57]Jonathan: it does feel like a little bit more weighted towards one, like one way, like the primary care providers have no reason to sign on if there's no specialists. So, but the specialists can sign on, even if there are no primary care providers. Right.[00:19:16] Angela: Correct, but what would be the value for them if there's no primary care providers[00:19:20] Jonathan: No, I, yeah, I get that, but, but there's also no risk.[00:19:25] Angela: Correct? The idea is to get all the specialists and all the primary care providers from our area on. And if we can do that, we can accomplish a couple of different things we can accomplish. Um, I mean, I think eyebrows would be raised in other areas to go, Whoa, what, what are they doing in Kamloops?[00:19:43] They have all the referrals going through one portal. It's all tracked. It's all secure. What an amazing, um, system that they have happening there. Um, what it also starts to do is you start allowing your specialists and your primary care providers to accurately track the referral management and numbers.[00:20:07] So we actually start to see, um, an really interesting thing happening with specialists. They're able to look at it and as a group go, Oh my gosh, the demand for our service is here and it's even broken down by these categories. And what that arms them with is really interesting data if they ever want to sit at tables.[00:20:29]Um, you know, when they're talking about, uh, additional resources for their hospital or additional resources for their area, and, and when you have, I have a whole geographic region on one system where they can start actually pulling accurate data from that becomes really, really interesting. So that's our focus right now.[00:20:49] Our focus is to get the users on from both sides specialists and primary care provider from our area on and, and really, um, you know, that's why we call Kamloops our beta community is because we've, we do truly want, um, that, and I think it would be powerful.[00:21:06] Jonathan: Do you think that there's a feature that we could build that would entice the specialists? Even if there wasn't, there wasn't a primary care providers and possibly never going to be primary care providers[00:21:22]Angela: I've never thought about a system that didn't have both.[00:21:25] Jonathan: Well, I like the, what you just described, you know, being able to analyze some of that demand data. Um, and that's, I mean, that's kind of what you started doing in the way back in the beginning was looking at the demand[00:21:38] Angela: we still, we still do like the consulting arm of central referral solutions. We'll actually do deep dives into your offices and EMR, and actually pull out that demand data. It's hard, it's expensive and it's labor intensive. Um, Clinnect is a product that was introduced that would help you do that a whole lot easier and a whole lot cheaper.[00:22:04] Jonathan: Right, but it, but it relies on the data coming through from primary care providers. Could, could we build, is there something small that we could build that, that lets the specialists sort of retroactively start, like putting in some of this data, like, like it's not hard for them. Well, maybe, maybe it is, but, you know, could they take, could they take the referrals that they've had in the last month or quarter or whatever, and then just like, okay, I'm going to, I'm going to put these in and just see, you know, see where our demand is.[00:22:35] If that's, if that's valuable, then can we just, you know, type in all the referrals that came in and start to see some of that demand to data. And so use it as a bit of an, uh, a bit of an analytics tool, um, without, without actually getting any of the referrals coming through.[00:22:50] Angela: so Jackie has kind of built that. she has built programs that do the analytics around. So what it involves is, is us going into each individual office. And there's a reason for that to like, to actually physically go in their space is to understand how do they receive referrals?[00:23:09] Like as soon as you get a referral, is it put into your EMR right away? Is it not. Yeah. Like how do you manage those? And, um, with that tailored and customized approach, then you get true demand data. We've gone the, I like the extra hundred steps to actually analyzing wait time data along with that. So it's not just referral and demand data.[00:23:35] It's wait time data. But this is when we also get back into what we've talked about in a previous episode around categories. There's no categorization right now.[00:23:45] Jonathan: right.[00:23:45] Angela: Remember these, all these, all these referrals come in with no standard categories. So we do that in on top of, so like the, the, the consulting that we do is highly tailored and highly customized.[00:23:59] Um, it comes at a price, but it is very much worth it. judging from the results that we've we've had with giving that data back to the users themselves. So we're armed, we're literally just arming them with their own data. Jackie has built that, that tool. I'm not sure that it would be valuable in a, in a, like a smaller tool or a paired down tool.[00:24:27] Jonathan: Right.[00:24:28] Angela: I'm not sure how that would even look. And like I say, there's so many, so many things that we've learned through this, and this is why Clinnect came out of that. Mmm.[00:24:39] Starting this fall, we're going to do a big marketing push. Um, we, because we are focusing on the geographic area, we are literally going to go door knocking. Um, we're we have an intern that we've hired. Um, her whole job is, is to like, just go door knocking, have people understand what Clinnect is, why they want to sign up and then just literally help them sign up.[00:25:02] Just walk them through the process, which isn't a hard process, but it's, it's um, I think at first to get those numbers, so we talk about chicken and egg. We need one of those. We need the, we need one of those to tip. And I think to get us to the tipping point, we need to do a very tailored marketing approach where we go door to door[00:25:28] Jonathan: When you say one of those, you mean that like the primary care providers[00:25:31] Angela: or the specialist we[00:25:32] Jonathan: I th but I think it's, I think it's gotta be the specialist. Like what, like, there's no reason for, uh, like there's no use to it. As a primary care, but there's no use to anyone if neither one neither side is on that, but there's less use for the primary care provider to sign up because they can't, they can't do anything.[00:25:50] Angela: Correct. That being said, we already have one specialty on, so they are there and we do have two more specialties. Queued. If anybody knows anything about healthcare is that July and August are like classically slow down[00:26:08] times.[00:26:09] Jonathan: for everything like everyone's on vacation. No, one's responding to emails.[00:26:14] Angela: So then we're battling that right now, too. So yeah, I think that's why that's keeping me up at night right now. Password resets and user numbers.[00:26:26] Jonathan: Nah.[00:26:27] Angela: Yeah.Outro[00:26:30] Thanks for listening to Fixing Faxes, building a digital health startup. I'm Angela Hapke. My cohost is Jonathan Bowers music by Andrew Codeman. Follow us on Twitter @fixingfaxes. You can find us wherever you like to listen to podcasts. And please do us a favor and tell a friend. Thanks for listening.[00:26:47] Jonathan: It's it's almost as if you haven't, uh, been gone for three weeks, not practicing this.

covid-19 god starting technology star wars solo western healthcare night startups wars honestly mandalorian gallery rogue one passwords digital health mmm lastpass emr x wing kamloops 1password woman ceo queued jonathan so what keeps you up jonathan yeah angela you jonathan that angela it andrew codeman

Privacy by Design w/ Chris Foster

Play Episode Listen Later Sep 1, 2020 34:02

Show NotesWe've deliberately chosen to design privacy into Clinnect. This means using cryptography to ensure that only the intended recipient is able to view patient data. In fact, as builders of the software, we can't even see the patient data.For the curious, Chris suggests these articles to better understand cryptography: Crypto101 is a great book for learning cryptography basics. It's very long but thorough and free: https://www.crypto101.io/ The API we use to do this securely in the browser is the WebCrypto API: https://developer.mozilla.org/en-US/docs/Web/API/Web_Crypto_API Two of the models we based our cryptography on were the Firefox sync model and the Lastpass model. Breakdown on those here: https://hacks.mozilla.org/2018/11/firefox-sync-privacy/ & https://enterprise.lastpass.com/wp-content/uploads/LastPass-Technical-Whitepaper-3.pdf We highly recommend using a password manager like Last Pass to keep yourself safer on the internet. Many are free, including Last Pass.Fact CheckThe LifeLabs hack was one of the largest data breaches in Canadian history. An estimated 15 million Canadians were affected.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comChris Foster - @chrisfosterelli - https://fosterelli.co/CreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)TranscriptJonathan: Check this out, Chris. So we've got these new pop filters. This is it. Without the pop filter, Peter Piper picked a Peck of pickled peppers.[00:00:09] And with the pop filter, Peter Piper picked a Peck of pickled peppers[00:00:15] Chris: So much better.[00:00:16] Angela: Isn't[00:00:17] Jonathan: then better.[00:00:17] Chris: I feel a little bit like the black sheep, because I am I'm that person who joins the podcasts and does not have a high quality bike. And I know as a listener, whenever I hear that, I'm like, Ugggg![00:00:30] Angela: Do you? Because I'm more like, Oh, thank God. Not everybody has everything in their house.[00:00:38] Chris: I usually just skip podcasts that, that are guests like me.[00:00:45]Introduction[00:00:45][00:00:45] Jonathan: Hi, I'm Jonathan Bowers[00:00:49]Angela: and I'm Angela Hapke. And I went camping for the first time with my family. Last weekend, we bought a[00:00:57] new tent trailer[00:00:58] Jonathan: the first time ever.[00:01:00] Angela: with all four of us. Yup.[00:01:02] Jonathan: Oh, wow.[00:01:03] Angela: Yeah.[00:01:04] Jonathan: anyone get any sleep?[00:01:05]Angela: So we bought it a popup trailer and Brad and Alex were on one side and Nora and I were on the other side. One half of the trailer got sleep. It was not my side.[00:01:19] Oh, I promptly when I got home ordered memory foam, like two inch memory foam toppers for the mattresses, because both Nora and I were like, Oh, heck no, we're not doing that.[00:01:34] we joke that our children are like drunk octopuses, trying to search for their keys when they're sleeping at night. Like that's a bit how Nora is. So yeah, it was a lot of like toe kicks to the kidneys and moving around and yeah, it was tough.[00:01:51] Today we have a guest, uh, the chief technology officer at Two Story Robot. Can you introduce yourself?[00:01:58]Chris: Hi, my name is Chris Foster. I'm like you said, the chief technology officer at Two Story Robot. I have been building web applications for about a decade now. Um, and before that I was into computer security, pretty heavily. I have a degree in computer science with a specialization in software engineering, as well as a graduate degree in computational neuroscience and artificial intelligence.[00:02:29] Angela: Oh my goodness. A lot of those words didn't make sense to me, but that's[00:02:36] okay.[00:02:36] Jonathan: you said, computational neuroscience, that's an obscure term that. So what, what does that mean?[00:02:41] Chris: yeah. We use machine learning models to better understand how language is processed in the human brain.[00:02:47]Jonathan: How did you do that?[00:02:48]Chris: We put some people in a very uncomfortable machine. It's called a EEG machine. So. They put a whole bunch of goop in your hair and sensors. And then we make you sit in a dark room or of what feels like a very long time staring at symbols on a screen, as you learn to map those to English words. Uh, we tried to replicate sort of replicate an experiment that was done with a much, much more expensive machine.[00:03:12] And then we showed that you don't necessarily need the $1.5 Million machine and said, you can do it. Uh, with something that's more in the range of $60,000. We did it while trying to learn kind of a language that we made up, which was something that was new too.[00:03:25]Jonathan: That's cool.[00:03:25] Angela: That is cool.[00:03:27] Chris: it was a fun project, but yeah, I definitely nothing like graduate studies to also make you feel like you have no idea about computational neuroscience, more questions than answers at the end of it, it often feels like.[00:03:39]Jonathan: You've expanded your knowledge a bit, but you've also expanded that surface area of things, you know, that you have no idea about. Um, which I like, I like that feeling. I like knowing that there's all this world of things that I don't know, uh, it feels like a better place than not knowing that that stuff exists.[00:03:55]Um, It's it's something that I talk. So I talk about this with the team every now and again. And I like my goal for our team is not to not to expand the circle of knowledge of things they know. It's to expand the circle of knowledge of things they know they don't know because that stuff you can go and learn.[00:04:18]you don't need to know all that, all that stuff. You need to know that it exists and that you can go and find it.[00:04:23] Angela: I think you're right. And I think that's probably a good segue into what we're talking about today. Ah,[00:04:29] Chris: It is because computer science follows a very similar learning curve. I think.[00:04:33]Angela: As the CEO of a digital health company. I know we're about to find out about how much I know about the topic of encryption and how it is more about knowing what you don't know and either finding the right people, uh, to do it or to understand what you don't have an idea of what you don't know.[00:04:58]What is Encryption as a High Level?[00:04:58] Jonathan: Yeah. And so, yeah, that's the topic of today is, well, we wanted to talk about encryption, um, because clinic is, um, what's called end to end encrypted. Which practically means that only the person who sent a referral and the person who receives a referral can read or see any of that data.[00:05:20] No one else can see that including, including us as the builders of this software. Chris, how would you characterize that encryption is discussed in terms of products and things that exist now?[00:05:30]Chris: encryption comes up all the time. And maybe from, from a layman's perspective, it can often seem like encryption is encryption, which I guess it's technically true, but how you're using that encryption really matters for how private your data is. Um, and it kind of fits into three broad categories.[00:05:52] Uh, the first type of category is the most popular of encryption. The, when that, um, whether knowing it or not, you use this all the time in your day to day life, which is communication encryption. So this isn't encrypting data between two end points that are talking to each other. So a good example of this is when you open up the Facebook application and Facebook goes and fetches your profile data, or your timeline data from facebook.com.[00:06:17] It's doing that in an encrypted way. So your internet service provider, for example, can't read that data, but Facebook can. So although there's encryption in place, there, it's not the same as other types of encryption that might protect your data from everyone, even including Facebook.[00:06:32]The second type is encryption at rest. So this is maybe if you have a file on your computer and you've decided to encrypt that file and you've used a password to do that. Or if you're using something like Mac's operating system's encryption feature. No one can actually open up your Mac and read all the data on it without your password. So if you're using that feature, then that's kind of encryption at rest while your Mac is actually unlocked, someone could certainly come over to your computer and access all the data.[00:07:00] But if you had your computer turned off and someone stole it and ran away, they wouldn't be able to read any of the data off the hard drive. So that's another way that is Christian has often used. And then the third way, which is. Probably the most privacy preserving, but is less common is end to end encryption.[00:07:19] An end to end encryption is similar to what, and you're using a tool like Facebook, but it's even if Facebook, as the person passing the data around, even if they couldn't read it. So for example, when you use Facebook messenger and I send a message to someone else on Facebook messenger, That person is receiving it.[00:07:38] And both of us are encrypted when we talk to Facebook, but Facebook in theory could read those messages. Um, Facebook does actually have an end to end encryption model. And if you were to turn that on, what it's then doing is the encryption is directly between me and whoever I'm messaging. So if I'm messaging Jonathan, that would mean that even Facebook can't read those messages because the encryption is directly between us and it's a little bit harder to set up and certainly more complicated and it makes building an application.[00:08:05] Have a lot of interesting limitations and technical challenges and all sorts of feature problems that can come up when you, as the company, can't read the data, but that's what we've tried to do with Clinnect to protect patient privacy. Um, just because it's so important, right? So that's what we've done here is when someone sends a referral to someone else, us a Two Story Robot or Clinnect, we can't actually see that data. It's directly encrypted between the members of the sending medical practice and the members of the receiving medical practice[00:08:35] like to be secure, like even, even like the baseline requirement is that the internet service providers should not be able to read your data. That is like the bare minimum for building a web application today.[00:08:45] But being end to end encrypted is definitely being a lot more forward thinking.[00:08:49]Jonathan: I have some questions. I don't think they're relevant.[00:08:51] Chris: I love irrelevant questions.[00:08:53]Jonathan: I was thinking like, are there, are there still cases of, of applications or services that aren't even hitting that baseline requirement[00:09:07] Chris: I mean, they're not, they're not right. Like the, the phone line provider could in theory, uh, re read your data. Um, I mean, there's, there's some advantages in some ways in that the phone line provider, isn't, isn't storing that fax but ultimately you have to trust them when they say they're not doing that.[00:09:23]Jonathan: one of the things about encryption is that it does it, it adds that layer of trust, or maybe, maybe the right word is you don't have to trust, right? Like a fax machine. You have to trust that the carrier, that telephone company is acting in a way that is not, um, privacy invading.[00:09:41] encrypting that communication. So it doesn't matter. Like we don't have to trust, like the fax operation could be run by bad person company.[00:09:50] Um, and they, they, you know, they can record all they want. It doesn't matter because they, they wouldn't be able to read it.[00:09:56] Angela: exactly, that's it? Yeah. And I think too, um, what we're also forgetting around the fax machine privacy issue is that. You could send it to the wrong fax number because there's no verification on the other end that they are who they are.[00:10:16] Right. So it could end up on any fax machine.[00:10:19] Chris: Yeah, I think that that's also has an interesting corollary to, to building a web application cause the internet works a fair bit different than the phone network and it say we had built this without that end to end encryption. There's lots of interesting problems that can happen. Um, now again, I've said that kinda like encryption to the server is the bare minimum, but it also becomes like even more important when you start talking about the internet, because with the phone line connection, if I was to call you Angela, it's probably pretty likely that like how that call is going to get routed is controlled by the phone network.[00:10:56] And it's pretty likely going to go to you where the internet doesn't quite work that way. Um, the way the internet works is through the system called BGP. Basically an ISP or an internet service provider or someone who's a big player on the internet. We'll sort of just say, Hey, I'm handling the traffic for all of these addresses.[00:11:14] And it's very brittle. There's actually been mistakes in the past where, uh, say something, I don't remember the exact countries, but, um, say someone, an internet service provider in Brazil has said, I own all of the google.com IPS. And then everyone starts sending all of their traffic to Brazil, even if maybe they were already right beside, at Google data center.[00:11:35] So it's also difficult to ensure how our traffic is even routed through the internet, which is why, like, of course there's people monitoring this and if you behave, you're, you're a bad player they're going to boot you out. But ultimately it's important to have that even that baseline encryption and end to encryption on top of that is even more helpful.[00:11:54] Um, Just because the internet works so much differently.[00:11:57]Jonathan: we've deliberately chosen to build Clinnect in an end to end encrypted way, which is kind of the, the most encrypted, the most encrypted way we could, we could build it or is there another, like, is there an even more encrypted way that we could build this?[00:12:13]Chris: I think everything is going to be a compromise. There's probably some things we could do that would have been more encrypted, but anything you do is going to come with a little bit of a sacrifice to user usability, right? So one, one thing we've done is when you send a referral, anyone at the receiving practice can access it.[00:12:34] That is the doctor or their MOAs as well. We could have made it more encrypted by sending it specifically to the doctor,[00:12:43] um, and never allowing you have to be sent to anyone else in the future ever again, and encoding it directly for the doctor's keys. If we had done that, that would arguably be more more encrypted because you're reducing the number of people with access to the unencrypted version of that file.[00:13:01] But that would obviously come with very large considerations for the user experience. So I think ultimately with these things, it's going to be a trade off between the level of thoroughness in your encryption architecture and the user experience. And I feel like for something as important as patient data, we still have to make some product compromises, but we're right on the balance and the sweet spot where it's an effective and a usable product, and also highly secure compared to alternate approaches.[00:13:31]An Analogy to Boxes and Locks[00:13:31]Jonathan: when thinking about it from the user's perspective, like we always have to. We have to explain this to them sometimes and help, help guide them to why this is better, why this does protect them, them like as, as, um, practitioners and patient data. Uh, and so we've, tried to come up with analogies to explain this.[00:13:55] So. Um, in explaining this in the past. So Chris kind of explained what we did in a very technical diagram. I tried to bake that into a different analogy and then Angela took that and also tried to explain that to some potential customers. So I'm curious to hear that replayed back to us.[00:14:14] Angela: Oh, my, okay. So what I tell people and let's go back to the primary care provider is putting together a package. This package is a referral. So this referral package contains like every thing about this person. So highly sensitive patient data. What I say is that when you take this package it gets put into a box that is locked. But depending on how many people can open it on the[00:14:52]Editors Note[00:14:52] Jonathan: Okay, Jonathan here. Uh, I'm editing this and listening to Angela and myself, trying to explain encryption through an analogy and we go on and on and on about boxes and locks and putting boxes inside of boxes with locks inside of locks and boxes and boxes and locks and boxes and locks. And it's very confusing.[00:15:13] Um, very hard to listen to it. So I'm going to save you all the trouble and we're just going to skip all that part and just suffice to say, we butchered an analogy for trying to explain encryption. It was terrible.[00:15:27]Back to the program[00:15:27] the receiving team gave us. And so that lock gets put on that box and that whole box gets put in another box with the key, uh, uh, damn.[00:15:39] Chris: built this and I'm not, I'm not following.[00:15:41]It's a good analogy. And you're, you're not. Wrong per se, but it's a struggle to use an analogy to explain the system because anytime you try and be even remotely, correct, the analogy starts to break down to the point that you might as well just teach someone cryptography.[00:16:03] Angela: don't[00:16:03] Jonathan: Okay. How does it work, Chris? What's this[00:16:08] Angela: And you really don't need to use.[00:16:10] Chris: Can I abandon the[00:16:12] Angela: Yes, please. Please do this, the analogy. So this all started from me saying to Jonathan, like the cryptography that we've built into Clinnect is sits in the background. As a user, you have no idea actually how secure it is, but it's privacy by design.[00:16:32] This is what we've done with Clinnect. And, um, but I wanted to showcase that I wanted a really easy analogy. Apparently there isn't one a really easy and okay. Okay. Well then, then go ahead. Yeah. I wanted to share with users, so they were like, Oh yeah. Cool.[00:16:50] Chris: There is an easy analogy. I think that the thing is, is you have to trade off being correct. Um, both of you, I think, are trying to be like, actually correct in the explanation, in which case you might as well just talk about the cryptography. I think if you don't mind quite a bit of oversimplification an analogy is actually not too bad.[00:17:11]Jonathan: So what's the oversimplified version of[00:17:14] Angela: Yes, please do.[00:17:15] Chris: The oversimplified version is I would say, imagine a lock that has two keys and one key can lock the lock and the other key can unlock the lock. Each key only turns one way, so you can only lock or unlock it. So the key that unlocks it is your secret key. It's the one that you just want to hold on. You don't want to give that to anyone else, but the one that locks it, that's fine because all it does is lock it. You can make as many copies of that, of, of that as you want and send that to as many people as you want. So when you send a referral. What you're doing is you're asking the Clinnect server, you're saying, Hey, can I have the public key and Clinnect server saying yep. Here you go. Here's what copy of that? And you use that to put all the referral data in this box and do you lock it, but you can't unlock it and neither can we, and then you give the box to us. And then when the receiving specialist logs in. We give them the box and they have the key that can unlock, which is derived from their password.[00:18:20] And we don't know their password. So we don't know the secret key. But they have that secret key and they can use that to unlock the box. That's the core. Now of course, the parts where that's over simplifying is there's actually multiple people that can unlock this box. Everyone at the receiving specialist can unlock it.[00:18:39] So that includes their MOAs, um, and that's, that's where things start to become complicated because what we actually do is we give keys to each user and then keys that represent the practice. And then we take the practices secret key. And we use each user's public key to then encrypt it for them so that they have their own kind of double wrapped copy of the practices key.[00:19:02] But now you can see that now it's starting to get complicated and you can see where it breaks down. So you don't that you, that's why you have to trade off the accuracy. We could talk about asymmetric versus symmetric encryption. And, and if you could explain it, um, it's actually not too hard, but maybe maybe a bit longer than, than 30 minutes.[00:19:20] Um, But it's honestly not quite that daunting, but I think, yeah, if you, if you want something for, for a nontechnical audience that is okay with a little bit of inaccuracy and simplification, then I like that analogy for it.[00:19:34] Angela: Okay, Chris, so people are going to be listening and then there, you're going to peak their interest. They're going to go. Huh, but this guy's talking about is really interesting. And maybe I do want to know a little bit more, where would you point someone who let's say is like me knows very little about this, but is really interested in learning a little bit more about it.[00:19:55] Chris: Google is a great resource. I think part of the, where the analogy breaks[00:20:00] Jonathan: it.[00:20:00] Angela: Just freaking Google it. God, I want to do something better that we, where we can like link in the show notes or[00:20:07] Chris: Oh, I can link in the show notes, but if you ask me offhand, I mean, I learned most of this a decade ago, so it's a little bit challenging to put yourself in the beginner's shoes, but I could find some resources. Um, yeah, I think part of it is that the analogy, the analogy, it skips the actual names of these things, right.[00:20:26] Which is asymmetric cryptography[00:20:29]Jonathan: it's it's hard to explain without explaining cryptography, how hard is it to implement? How hard is it to build this stuff?[00:20:38] Chris: It's simultaneously easier than you would expect and harder than it should be.[00:20:44] Angela: If that wasn't the classic Chris Foster answer, I don't know.[00:20:49] Jonathan: I'm going to sit firmly on the fence.[00:20:52] Chris: There's some parts, like the core concept of it feels quite simple when we approached it and we first started talking about the end to end encryption thought through some of the ideas and I thought, yeah, this, this feels pretty approachable. Um, but the devil's in the details with this thing, I think for sure.[00:21:07]it's easy in the sense that we've leaned on a lot of existing models. With cryptography the less you can do that looks like something new, the better. So the one rule of cryptography is kind of that you should never implement your own cryptography.[00:21:21]So we based this on a whole bunch of similar models, like the Firefox Sync architecture, as well as, um, Last Pass' security model. Basically anything we could find in existing systems that were established and have been around for years and had lots of people looking at them and were built by teams of experts.[00:21:38] We wanted to try and copy as much as we could from those architectures. Some of the complicated bits have been that, doing this in the browser was a little bit tricky. Some of the APIs are pretty new. We've been using what's called the web crypto APIs, um, which have just reached a stage where they are appropriate to be used, but they definitely differ quite a bit between each browser.[00:22:00] And it's pretty hard to get them to work for some things that you need in some situations. So, when we write out the whole plan feels very approachable, sensible. We're basically doing what everyone else has been doing. But then actually implementing it comes with lots of little gotchas that we had to work through. So. So I would say, yeah, I think like there's no other way to put it other than to say it is easy and hard.[00:22:24] Jonathan: I like that answer. I like that answer. what are some other reasons why we wanted to build end to end encryption into this product?[00:22:32]Angela: maybe I'll take you back to like when we were first talking about doing all of this, and I remember, I actually remember the day that I kind of dropped the bomb on you, Jonathan, where I said, I don't think I want Clinnect to see like anybody that works in Clinnect to see any of these actual referrals.[00:22:48] And I remember you kind of going. Oh, okay. That changes things, you know? There was a couple of different business reasons behind this. It seemed like the most appropriate way to handle patient data.[00:23:03] We don't need to see what's in those referrals. We don't want to see what's in those referrals. That is a hundred percent patient data that we should not be entitled to. Clinnect is a really small company right now.[00:23:16] I mean, there's only a few of us that work there. Uh, I trust everybody that works there. I think they're amazing. Um, what if Clinnect was to balloon into a team of hundred hundreds of people and I all of a sudden had an application where you could go in and see anybody's personal health data. That's not okay in my opinion at all.[00:23:41] It would've felt weird to add that in after the fact too. And I think a lot of the discussions that we had was, well, if this is the way that you want to do it, let's, let's build it right from the get, go that way, rather than trying to add that in later, which I think probably would have been a nightmare.[00:23:54] Chris: Borderline impossible.[00:23:56] Angela: Or borderline impossible. There you go. So glad we made that decision[00:24:02] We're a startup, we're a young company. We do not know where this company is going. We know who owns it right now, but what does it look like in 10 years? And would that have changed the direction that we went to?[00:24:15] If we had access to that data and to be honest from a social enterprise perspective, it is not the world that I want to get into with having access to personal health data and managing the risk around that.[00:24:31]Jonathan: We own it now. And what you're saying is that there's the potential that the Clinnect gets acquired and that acquirer could do something else with the data, even though our intention was, if we had an end to end encrypted it, like our intention was yet, we're not going to do anything nefarious with this data.[00:24:48] Um, but now we've protected against that from happening in the[00:24:51] Angela: in the future and I mean, that's not a protection for me or Clinnect. That's a protection for every user and every person that has their data going through us. It was a decision that I didn't make lightly that's for sure. But it also was something that it wasn't a hard decision to make either as soon as we kind of ran through a couple scenarios and I was like, Whoa, why, why are we even considering not doing this?[00:25:16] Chris: And also even as like technical lead, like I like that, like that feels a little bit of weight off my shoulders. Um, then knowing that, that we are creating this repository that is going to be such a massive target of personal data. Now I absolutely think, especially as we continue to grow, we should treat it as if it is personal data, put all of those safeguards in place, and operational policies and treat our security with the importance that we would as if we were holding patient data.[00:25:47] But it sure makes me feel a whole lot better knowing that, that we,[00:25:52] Angela: exactly. Yep.[00:25:53] Jonathan: And ultimately, like, what is the, what is the risk here? Like what is our exposure to, to somebody doing something bad? What's the worst that can be done?[00:26:03]Chris: if we're talking about absolute worst case scenario, is that someone could. Compromise our servers, or if there was a very malicious acquisition and replace the version of the application that comes out with one that has bad code in it, and it could wait for the user to enter their password and then start decrypting data and then push it somewhere else.[00:26:23] Un-encrypted that's a potential risk. It's. There's practical limits on that. So for example, you would only be able to compromise individual users and the rate at which you could extract data would be much slower than if you just had a giant database of say hundreds of gigs of private data. That's, that's just a database you can download that has all the private data where this must be a targeted attack against individual users.[00:26:46] Right. You have to set up a server to receive that data. And then you have to also store all of that data . So, so that is in theory, something that could happen, which is sometimes why end to end web applications kind of get some criticism, but is it a whole lot better than if we didn't have that stuff encrypted?[00:27:02] Absolutely. so I would say that there's still, there's maybe targeted attacks that could in theory be at risk, but. Again, that's why our responsibility should be to still treat the security of the application as if it was personal data. And I would say that certainly from a, hacker's perspective, I wouldn't say that that that's a, that's a small feat to pull off that sort of attack.[00:27:23] Um, it's definitely far more complex than, than some of the other than say, just like getting access to a database and downloading all of the data. Um, it's definitely quite a bit more complex, but.[00:27:35]Angela: when you talk about a targeted attack on Clinnect, it would be relatively unfruitful. Cause it would take a long time, whereas there's a lot of other low hanging fruit targets. And so even that alone, right. Is decreasing risk there too.[00:27:51] Jonathan: Yeah, we make, we make ourselves look less attractive than another[00:27:56] than another potential target. Like, I mean, and, and that, that has happened already in, in our world. Like the, the life LifeLabs was hacked and breached, and I don't know how many, how many patient records were exposed, but.[00:28:11] Angela: I can't remember. We can take a look and we'll put it in the show notes, um, link an article to it, but it was, it was a significant amount. I mean, I was one of the people that received, uh, a notification that. That my stuff had, had potentially been[00:28:31]Chris: ultimately nothing is a silver bullet, right? Um, I think also one of the other things is that cryptography is not a replacement for user education. Um, the users are certainly probably the more likely weak point, uh, would be someone attacking an individual user's machine or even trying to social engineer them.[00:28:49] Um, which is say, for example, calling them up and pretending to be Clinnect staff or emailing them and saying that they need their password. Um, those sorts of things that, that our user might fall for are probably the most likely risk[00:29:03] Angela: Yep. Yeah, a little PSA do not give your password over the phone to anybody[00:29:12] Jonathan: Ever ever[00:29:13] Angela: ever don't do it. People[00:29:17]Recommendations for building an End-to-End encrypted app[00:29:17]Jonathan: if someone wanted to build an end to end encrypted app, do you have any recommendations?[00:29:23]Chris: like we said, the core of it is pretty easy, but the hard bits are the hard bits. I think something that we already touched on, which is of course the first rule of cryptography is that make sure you, you feel confident in what you're doing and familiar and like, make sure you have some sort of expertise in these systems and don't ever create your own cryptography. Um, yeah, you want to, you want to always lean on, on what experts have done. So, so yeah, I would always say that like, if you are working with sensitive data and your goal is to build an end to end encrypted app and make sure that that you're not doing anything new.[00:30:03] Angela: I like that. I actually feel like you're demystifying. Um, the work that you're doing a little bit with the average, like. General population listening is I think we commonly think that you build everything from scratch, but that's not the case. And as you mentioned it's, and in this case, it shouldn't be the case.[00:30:25] Chris: Yeah. Yeah. There's absolutely some, some small adaptions. Like I said, that we've, we've kind of made like the Firefox Sync architecture or Last Pass are different products ultimately than Clinnect. So there's, there's some small adaptions, but ultimately, the architecture is basically really heavily leaning on what people have already done and then the encryption themselves, or the encryption itself, the act of actually encrypting the data.[00:30:47] Um, we wrote none of that code. That's all handled by the browsers through the web crypto API. So yeah, we, um, it's, it's not quite as simple, but in essence we say like, Hey encrypt this, and that's, that's the extent of what we've implemented for encryption. So the browsers handle all of that portion. Um, and if we had say implemented that ourselves, it just, it opens up so many doors for something potentially going wrong.[00:31:11] So, um, in some respect, it is, it is better to take the easier route.[00:31:17]Jonathan: A two story robot. We take the easy path.[00:31:23] Angela: It's all hard and simple at the same time.[00:31:27] Chris: and it's not the easy route in some respect, too, right? Like the easy route would be no end to end encryption that's easiest.[00:31:32] Angela: that's actually a really good point, Chris is that we could have done this , without any of this and law doesn't require us to do what we are doing. We are taking the extra, additional step and protecting patients and users. Been an interesting journey for me because I originally just thought, well, I just don't want to see any of it. And if we could build it like that, that would be great. And I[00:31:58] had no[00:31:59] Jonathan: an off the cuff[00:32:01] you just[00:32:02] Angela: off the cuff,[00:32:03] but it was a thought out decision, but it certainly wasn't thought out to the point of what does this mean from a development perspective at all?[00:32:13] I didn't know what I was getting our team into. So[00:32:15] Chris: Yeah, absolutely. That's and that's a fair point. The, uh, the non-encrypted end to end version of this application is a much smaller application. That is, would it have been much faster to put together? Um, but I mean, yeah, we, we also, we don't know of any other provider doing something like this for medical referrals.[00:32:34] So it's it's because patient privacy is so important that, that we wanted to ensure we took the time to think about the system and make sure we got it right. So.[00:32:42][00:32:42]Jonathan: taking the time to get things right. Uh, Chris, where can people find you and follow you? If they're interested in.[00:32:49] Chris: Um, I have a Twitter account and a blog with a mailing list. If you're interested in more technical details on stuff like cryptography or artificial intelligence, um, if you Google chrisfosterelli, it comes up with all of my profiles. Don't Google, just Chris Foster. I'm not the most popular Chris Foster, but.[00:33:07]Jonathan: how many more years until you're the most popular?[00:33:10] Chris: Oh, is that a goal? Do I have to commit to that?[00:33:13] Angela: Yeah, Yeah, you do.[00:33:14] Chris: Yeah. Decade 10 years.[00:33:17] OutroAngela: Thanks for listening to Fixing Faxes, building a digital health startup. I'm Angela Hapke and my cohost is Jonathan Bowers. Our guest today was Chris Foster. Our music is by Andrew Codeman. Follow us on Twitter @FixingFaxes. You can find us wherever you like to listen to podcasts. And please do us a favor and tell a friend. Thanks for listening.[00:33:41]Jonathan: I wonder, I wonder if the memory foam topper is like the pop filter[00:33:46] of camping.[00:33:47]Angela: Maybe takes that edge off[00:33:49]Chris: My camping tent barely has enough room to sit up. So I feel like I am the laptop mic of camping.

god ceo english google technology canadian healthcare brazil startups mac decade recommendations psa compromise breakdown api boxes apis locks ips high level firefox peck digital health analogy encryption eeg isp lastpass bgp credits produced moas peter piper privacy by design editor's note chris foster woman ceo chris yeah christ here chris so chris oh jonathan so crypto101 jonathan how jonathan yeah jonathan that angela it angela do andrew codeman

Design Sprints

Play Episode Listen Later Aug 25, 2020 26:13

Show NotesAt the beginning of the episode Jonathan talks about watching Hamilton, which was recently released on Disney+. Here is a link to the streaming service and the filmed version of the original broadway.This episode delves into the design sprint that Two Story Robot led Clinnect through, we talk about the ups and downs and how valuable it was. Check out the blog post about design sprints and the design sprint we did with Clinnect.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)TranscriptJonathan: Can you do this? I can't do it just a second. I can get it.[00:00:04] Angela: sounded like a drip.[00:00:09]Jonathan: Yeah. It's, I'm not very, I'm not very good at.[00:00:12]Intro[00:00:12] Hi, I'm Jonathan Bowers.[00:00:17] Angela: And I'm Angela Hapke and you're listening to Fixing Faxes.[00:00:21]Jonathan: And I watched Hamilton this[00:00:24] Angela: was it?[00:00:26] Jonathan: so good.[00:00:27] Angela: watched it yet.[00:00:28] Jonathan: so good. It's it's so we've read a little bit about shaming for people who don't like it. Um, which I think is a little unfair. I mean, I enjoyed it a lot cause I like, I liked the style of music and it's really neat to see that in a musical also, we would never go see Hamilton.[00:00:49] Like, there's just no opportunity for us to go to Chicago or New York or London,[00:00:53] Angela: And especially right now.[00:00:55] Jonathan: Yeah. So it was really cool to watch. We had to watch it over two nights. Um, just cause it's, it's quite long, it's like two hours and 40 minutes. Um, but I didn't know. I didn't know that it was pretty much all rap and R and B and um, yeah, like it was really,[00:01:09] it was really cool.[00:01:10] Angela: well, I didn't know that either Brad will love it. I'm[00:01:14] Jonathan: It's so great. It's I really enjoyed it. It's very fast. It's hard to follow in ways because it's one it's like, it's just very quick. So you gotta, like, you have to be paying attention and it's a lot of American history, which I'm not, I don't, I don't know. I don't have any of the background knowledge for anyways[00:01:32] um, but it was still, it was, it was really cool. I really, I really enjoyed it.[00:01:35] Angela: Okay. I'm definitely going to check it out.[00:01:37]Jonathan: one of the YouTube videos I watched said that if, if it was paced the same as a, a regular Broadway musical, it would have taken six hours because of how many words they cram into two hours and 40 minutes.[00:01:51] Yeah. It's very[00:01:53] Angela: Wow.[00:01:54] That's very cool.[00:01:55]We Launched The Podcast[00:01:55] Jonathan: We launched the podcast too, that has come out. Um, I've listened to it. I've listened to it a bunch of times. Cause I edited it edited. I listened to it a bunch of times because I edited it and then I listened to it when it came out and I've since listened to episode five, which we recorded last week with our new mics.[00:02:16] And I hate, I hate the first four episodes. I don't like that. Uh, I don't like the way they[00:02:22] Angela: of course not. Well, of course not,[00:02:23] Jonathan: but we have four, I think four five star reviews. Yeah. There's well, one from your husband.[00:02:32] Angela: I was like beyond my husband.[00:02:34] Jonathan: Yeah, I think there's, I think there's some other ones, because if I look at the average yeah, we've got an average of four stars and then that one, one star review that they didn't leave.[00:02:45] Yeah. They didn't leave a comment, your husbands and then some other five star reviews. Um, but have you heard any, have you got any, any feedback from people.[00:02:51] Angela: Um, yeah, so I, I. Put it on my Facebook, like, just like, Hey, we're we're doing this. Wow. I, so heartwarmed by everybody. And people I haven't talked to in years, like sometimes decades that, um, have gone, like have saw the post gone and listened to it and then come back to the post to write me something.[00:03:19] Jonathan: That's[00:03:19] Angela: so lovely and[00:03:22] Jonathan: creeping on your Facebook a little bit. I was a little jealous of how many people were commenting on your, on your post about it. Cause no, one's no, one's commented on mine at all. Uh, that's fine.[00:03:34] Angela: it is like, honestly, there's a lot of my mom's friends that are going.[00:03:38] Jonathan: Oh,[00:03:41] Angela: Yay. Thank you. Friends of mum.[00:03:44] Jonathan: that's great. Everyone's everyone's dream is for their, uh, for their friend's daughter to become a podcast host. I think[00:03:52] Angela: Yeah, right.[00:03:53] Jonathan: it's just a proud, just a moment of pride. That's so great. I love it.[00:03:57] Angela: It's been really cool. And then like just the engagement factor around that has been really, really fun. Um, so it's, I mean, mostly the people that are listening, um, as of today are really just friends and family.[00:04:10] Jonathan: Yeah. It's not a lot of, not a huge audience at the[00:04:13] moment. Um,[00:04:15] Angela: so, thank you. If you're listening to this and you've made it to episode, whatever this is six[00:04:20] Jonathan: Episode six, if you're just joining us though now, because he couldn't deal with the poor audio quality. Uh, we get it.[00:04:30] Angela: I'm glad you rejoined us. Ah, yes. So we we've launched the podcast. We've got some reviews, some listens more, probably more downloads than I thought we would have.[00:04:43] Jonathan: Um,[00:04:45] Angela: Or did you, or[00:04:46] Jonathan: I was kind of hoping for a bit more. We have a, I went in this morning, we have a hundred total downloads across both the team, the teaser, and the first episode, I think there's, uh, like 30 or 40 downloads for episode two. And, um, yes, 60 or 70 downloads for the teaser. Um, but it's, it's interesting.[00:05:04] The pattern is different. The, the pattern is more stable for episode two, whereas a big spike on day one for the, for the teaser, and then it quickly, quickly dropped off. So, but it's only been out a couple of days, so we'll see. We'll see what today[00:05:18] Angela: And it's so much easier to listen to a three minute a teaser than it is to commit to a half an hour.[00:05:24]Design SprintsJonathan: uh, so we were thinking about talking today about, um, some design stuff.[00:05:29]Angela: before we started working with you, I had no idea what the design sprint was and I think that's, uh, it's super fun thing that we did. And I think we should talk about what that was and how we did it and why maybe what it was like from your perspective, my perspective and things like that.[00:05:51]do you want to talk about what the design sprint is to get us started?[00:05:57] Jonathan: Yeah. So a design well a sprint. There's this, there's this term that comes from agile product development and agile methods in, uh, software, but also other aspects of, of building things and this idea of a sprint. And it's this like short time window, sometimes two weeks, sometimes a week, sometimes a month.[00:06:19] It sort of depends on the project where you focus on a thing. And I don't love the term sprint. I think it, I think it connotes this idea that you are like constantly running the entire time. And then in, in the agile world, you sort of divide up your, your iteration cycles into sprints And so sprint one for focus on essence sprint two, we're focused on this and I've talked with people who kind of get the wrong idea and they think like, Oh, like, why isn't everyone just sprinting the entire time? All the time and I think, well, that's not sustainable. You can't, you can't, sprint every single day.[00:06:54]even sprinters, don't train by sprinting all the time.[00:06:56] Angela: exactly. Yeah, no, you're[00:06:58] Jonathan: So, um, anyway, so it's, it's a way of dividing up time. Um, and you kind of call it a sprint, but it's meant to be really focused on. You know, one thing or if there's a goal in mind. And so a design sprint, which I do like the term sprint for a design sprint, because it is it's short.[00:07:16]Um, it's a, it's a predefined time window. We don't do it like over and over and over again. We do one of them, maybe two of them. So our, our design sprint is. Basically three mornings. So usually Monday, Tuesday, and Wednesday morning. It's very, very intense. It's very structured. We have a script that we follow and it leads us through a bunch of exercises. Um, some of which is just to like get the creative juices flowing. So we've got some sketching exercises that we do. Um, this fun thing called crazy eights, where you take a piece of paper and fold it in[00:07:53] Angela: I remember that.[00:07:54] Jonathan: Until you get eight pages and then every minute you have to draw something new on each one of those panels. Um, we don't share that stuff, but it's, uh, it's just to like get the creative juices flowing, but the goal is to, um, bring together, you know, the I'm the product expert. So yourself, um, the people that would be responsible for building, building the product, uh, like, uh, our team on Two Story Robot and it cramp them in together into this quote unquote room. Cause we don't do it in a room. We do it remotely and forces, through very short time windows, to like be creative and come up with things. And it's a really good way of getting information exchange happening, back and forth. Um, so we, we can quickly learn a lot about the domain in three days, we've become, um, we don't, we don't become like your level of understanding at it, but we get really close.[00:08:49] And then as an. And as an output to this entire process, as we collect collaboratively design, a bunch of features and screens that we think are the most priority, highest priority things to work on. Um, and then, and then at the end, we have a design that we can kind of start implementing with, which is, which is really cool.[00:09:07] Angela: From a Clinnect perspective. Um, when we started out with the design sprint, um, what we had was simply an idea. We knew the features that we wanted to add in, but we had no idea what this would, this product would look like. Um, Jackie and I had kind of sketched out some ideas cause we're super visual.[00:09:29] The both of us, um, just to kind of get on paper, what we thought we might want to see. And then we headed into this design sprint, which I knew nothing about. I w uh, I was like, okay. Yeah. And I think you sent me an email and you're like, Hey, do you want to try this? I'm like, sure. Let's, let's try this. And it was like, you know, three full mornings.[00:09:52] And, and so from what I would say is from where we were on the Monday at say eight or nine o'clock to where we got by end of day, Wednesday was mindblowing. The amount of work that we were able to push out in that sprint and get our heads around was unreal. It was super high value from our perspective.[00:10:21] So that was really, really cool.[00:10:24] Jonathan: Yeah, we've had, we've had that feedback, uh, cause we've run them a few times now and the feedback has always been yeah um, surprise at the end of how, how much, how much value came out of it and just how much understanding and how much tangible, like tangible design came out of it. I mean, it doesn't come out with fully fleshed out really high quality designs they're, they're pretty rough, but the, the, um, like they're really good bones on the skeleton, and then we can, then we can take that and start adding, adding all the flesh to it and it's um, but it's yeah, it's in three days, um, a lot gets done[00:11:01] in three days.[00:11:02] Angela: So when coming into it in February, we had like ideas and little sketches and it was cute to nice. And then by the end, I was like, Oh my gosh, we have all of this, which helped us push for the next thing too.[00:11:16] Because we were able to do that so quickly. And then we're kind of a bit on a roll that I was like, okay, like, let's get this going. So that outside of just getting the tangible designs and things like that done, it also helped just fuel the, the builds for the, the product too, which I found super valuable also.[00:11:34] Jonathan: I mean, another thing that it helps do is it, it really ruthlessly prioritizes what needs to get done because you can't, you can't, he can't address everything in three mornings. So there's a bunch of things that we really want it to do. But, um, you need to focus on the things that are most important or have maybe the most uncertainty.[00:11:52] Angela: I think, and I think the other thing I wanted to mention too, is it is. It's exhausting. Like, I was really tired after all that. Love it. I mean, I also being like the quote unquote customer in this, um, my brain was tapped a lot, like, okay, Angela, what do you think about this? Does this make sense? That, and so it was making like really, really quick decisions, which for anybody.[00:12:19] Can be really exhausting. And so I know, I remember after the three days, it was really, really tiring, um, highly valuable, but it goes back to what you said about a sprint. Shouldn't be like, you know, it's not sustainable. And it was like, mentally, it wasn't sustainable for me at all.[00:12:37] Jonathan: It's exhausting. It's exhausting. There, it's a lot of demand on you as the, as the expert. Um, because we, you have to download a bunch of information. You have to think and respond quickly to questions because you kind of facing a squad of everyone else on the, on the sprint. I think there was six of[00:12:56] Angela: Yes, there was[00:12:57] Jonathan: Um, and so everyone has questions. You say something and it triggers thoughts in other people's minds. And so they have questions now. So you've got to respond to that. So there's a lot on you. Um, there's a lot on, uh, so myself and my Maja a facilitated it it's, it's really it's. It has to be a tag team in order to facilitate the thing.[00:13:15]Um, cause there's a lot of this, a lot of stuff happening all at once. One of us is writing notes. One of us is sort of leading and facilitating the discussion and leading through some of the exercises. We, you know, it's a bit of a production too, is we've got music that we're playing and,[00:13:28]Angela: Oh my goodness. The music.[00:13:30]There was so many, there was so much commentary on the music. So Jonathan decided he was going to be the DJ. I don't know. And, uh, there was, you got so much flack for the, for the music that you were choosing.[00:13:44] I think it was mostly from Chris and I, but.[00:13:46] Jonathan: Yeah, we have some playlists that we use and I think one of them doesn't resonate very well with, uh, with everyone.[00:13:53] Angela: I was one of those people. It didn't resonate. Well,[00:13:55] Jonathan: It's it, but interestingly, so it's, that process has spurred me to, um, change, the experience I'm trying to create in all of my Zoom calls now. So having, having facilitated a few, a few design sprints, um, and getting some really good feedback about the experience, obviously I'm not going to put that much energy into , every zoom call that I'm on, but I've got a new camera now.[00:14:18] I've got a good sound. I've got to figure it out how I can, how I can quickly add music to the call. Um, so, um, I'm not a DJ by any means. No, I just like go hit, play on Spotify, but sometimes I can, I can find a song that actually reflects the meeting well, and then I play it. I play it out. I play us out and I've gotten some good feedback on that.[00:14:38]Uh, it's been fun.[00:14:40] Angela: Is that going to be like a job in the future[00:14:42] Jonathan: I think it could be a job now, I think.[00:14:45] Angela: But yeah, what I mean, I guess future being now, because we're all can, you know, meeting via virtually is that that becomes a new, a new skillset.[00:14:57] Jonathan: Yeah, at our all hands meetings, we have like a question that we ask. And it's just a fun question to just think about and discuss and just create something else to talk about. Um, One of them was what, what's a thing you'd like to learn. And mine, I decided was improv. Yeah, because I mean, I had just finished watching a, that long format improv on Netflix, uh Middleditch and Schwartz, which I highly recommend. It's really funny. I've always enjoyed improv. And so I was reflecting a little bit on what the design sprint is and sort of running, running, engaging meetings.[00:15:34] And I was like, this is it's improv. Like, how can I, how can I be, how can I, how could I improve that? I could be an improvization person, an improv comedian, or[00:15:45] like an[00:15:45] Angela: improv artist.[00:15:47] Jonathan: An improv artist. Right. I could be an improv artist. I haven't taken any efforts to like go and do that because I don't have any time, but it's something that I think about a lot.[00:15:55] And I w I really wish there was a maybe like a podcast I could listen to, to like, help me become a better at improv.[00:16:04] Angela: I love it. So anyone listening that has suggestions on how Jonathan can become an improv artist, please message us.[00:16:15] Jonathan: I think it would be a cool skill to have. It would be great for interviews on the podcast for, yeah. Anyways, I I'm, I'm excited about the idea of it. I don't know what I'm going to find time to go and do it.[00:16:26] Angela: Oh my goodness. I love that.[00:16:30] Jonathan: the other thing that I wanted to like share about the design sprint process that we have is that it, it kind of only works remotely.[00:16:38] Angela: You know what I would agree at first I was very, and this is pre COVID, so we could have met in a room and thought nothing of it. And we all. Mostly, except for Maja who was in Poland at the time, we all actually worked in the same building. So it would have been very easy to do this. And, and, um, the old school part of me that like, you know, has spent years in healthcare where meetings are, um, at first it was a bit like, Oh, No.[00:17:07] I want to, like, let's all get in a room and let's do this together. And you're like, no Angela, this is all virtual. And at first I was like a little bit disappointed, but then once we got into it, I probably didn't tell you that at the time. Um, but once we got into it, I totally got why we were doing it virtually and it made a lot of sense and it worked out really well.[00:17:34] Jonathan: Yeah, there's, there's so many things that you can do when you don't have the constraints of a physical world. Um, we use, we use some tools that allow us to very, very rapidly work on the same thing at the same time. And it gets really messy. Like we do this, um, we do this organization process where you're. You know, you're putting virtual sticky notes on a whiteboard and then somebody grabs it and moves it on you to somewhere else. And you're like, okay, whatever. And it's really fast. And so we can take seven minutes and, and categorize and organize a hundred sticky[00:18:08] notes and, and surface some meaning out of that.[00:18:11] Angela: And there was, um, there was a lot of getting used to that.[00:18:17] Jonathan: Oh, yeah. Yeah. The tool, the tool is we're used to the tool, um, others, uh, when people use it for the first time, uh, it, it, it can be a bit overwhelming and it[00:18:27] Angela: It was a bit. Yeah, but it was quick to learn. So it was overwhelming at first, but quick to learn, but I think it was more like my, my own control issues where I'm like, Nope, I put that sticky note there. Why is it moving? Somebody is moving it. And, but as soon as I kind of lost that need for understanding everything, because you can't during this design sprint, especially as a newcomer to it, as soon as I kind of lost that need to.[00:18:56] Understand and control, then it worked really well, but it was hard for me at first, but it didn't take, like, I like you adapt really quickly. I guess.[00:19:07] Jonathan: Yeah. Yeah. Yeah. It's, it's a, it's a really messy. It's a very messy process. It makes people feel uncomfortable, especially. I think, I think you sort of hinted that you were a bit of a controlling, um,[00:19:22] Angela: Oh,[00:19:22] Jonathan: freak. You're just someone who likes to have control over things. And I remember thinking, I don't think she's going to like this very much.[00:19:32] Um, but like it's, it has to work this way. Like you can't control it because it's so it's, it's quite organic. Um, and it, it needs to be[00:19:39] Angela: And I think it's that, um, you know, we're talking a lot about this these days about leaning into uncomfortableness and that's where, um, beautiful, messy, creative things come from. And that's exactly what this design sprint was at first. It was, it was, it was a bit. Um, chaotic messy, but from it, if you just allow yourself to be uncomfortable and okay with being uncomfortable in that moment, you can create some really beautiful things.[00:20:06] And, um, that's where I think we were able to get. And I was probably one of the bigger barriers at the beginning to doing that. If I'm going to be perfectly honest with myself, but it was good.[00:20:20] Yeah.[00:20:20] highly recommended design sprint. Um, like I say, didn't know what it was, went into it unknowing definitely, you know, was, was pushing back at first and then so proud of what we came up with out of it.[00:20:35] Jonathan: Would you say it was fun,[00:20:36] Angela: Yeah. some of the best things are, you know, like they just. They tire you right out, but there's, there's fun. Um, yes, it was fun.[00:20:45] Jonathan: Yeah, I really enjoy them. They're they're so exhausting, but there's so much fun.[00:20:51]Angela: Um, so our software, uh, developer, Jackie, that, uh, works at Clinnect. Um, I remember at first she had a real hard time with it because she is the kind of person that loves things to be beautiful and nice and organized. And you can see it from, you know, she's a photographer and her pictures are gorgeous. Um, you should see your notebook.[00:21:16] It's.[00:21:16] Jonathan: Our notebook is[00:21:17] Angela: It's amazing.[00:21:19] And so then when you're doing this design sprint, like, and you talked about this, like the eight square, is that, what am I calling it? The crazy eights or something? Yep. Uh, Oh, Jackie hated that. I remember. She was so frustrated because you have to draw something in a minute and then you flip it over and draw something else in a minute and you kind of keep iterating on what you had drawn last and you get, you know, and it's, it's just, as Jonathan said, an exercise to start opening up your mind.[00:21:46] Well, I remember the grumbles so funny. Yeah. But because she's also this person who thinks about things and it's very particular. I also feel like she, once we kinda zoned in on what we were, what we were looking at a little bit more, she was able to take it to like a next level, because then she was able to focus in on those details and things like that.[00:22:10] And that's why it's so great to have a super diverse team when doing it and allow everybody to go through their grumbles and bumps and. It'll come out the other side better for it. . I had actually liked to do it again with something[00:22:28] Jonathan: What we had planned on, we have plans to do another one. Um, we had discussed it.[00:22:33] Angela: Oh, right. I forgot about it.[00:22:38] Jonathan: I don't remember what about, but we had identified something that we thought needed some additional,[00:22:43] Angela: Well, it's probably our premium features. No.[00:22:47] Jonathan: and I thought there was something else.[00:22:49]We are always looking for other opportunities to do design sprints, because they are so effective. They're really hard to describe though. Like they're almost impossible to describe to someone cause we say like, Oh, it's really, it's really weird.[00:23:02] It's really uncomfortable. It's very messy. And it's, it works really well.[00:23:07] Angela: Yeah. And people like myself are like, no, thank you. But I trusted you. That's actually, maybe the, maybe the piece that we haven't talked about is that trust piece is I trusted you to guide us through that. And I think you need to find a team that you, that you ha you have to have that trust there, or else that does not work.[00:23:28] I don't know. Have you ever had a, have you ever had a client where. It's like it went a little bit sideways.[00:23:35] Oh, that's nice. You must be so trustworthy. Everybody's just like, okay, Jonathan.[00:23:41] Jonathan: it's, it's always produced very good results and, and it's always, it's always. Kind of the same experience. So maybe that's just, we've like we have really great customers, um, which, which is true, but, uh, yeah, I don't know how much of it is because it just works or that we have customers that are sort of willing to work, willing to take that chance a little bit.[00:24:02] Angela: Probably a mix of all of it. Um, what we'll likely do in the show notes is link to maybe a little bit more information about design sprints.[00:24:12] Jonathan: Yeah, so we're doing, um, we're going to do a blog post on design sprints that this can, this can relate to, . Anyway, so, so hopefully we get to do another design sprint, um, on Clinnect, on whatever, whatever feature we think[00:24:24] Angela: Oh Lord.[00:24:25] Jonathan: What else is, what else is coming up? What else is next?[00:24:28] Angela: what's coming up. Uh,[00:24:32] Jonathan: Hopefully, well, hopefully, hopefully on the next recording, we're going to have Chris come in guest and explain to us how all this encryption stuff[00:24:44] Angela: Yes. Chris is wildly smart.[00:24:49] Jonathan: I'm very excited to hear you describe it as well, because I've, I've given you a, um, a metaphor or an analogy or a way of describing it, which you took, and I think you change to give to someone else. So I'm, I'm curious to hear all of it, all of it, and then do it in front of Chris for him to shake his head at and say no, no,[00:25:11] Angela: you have it all wrong. Yeah. That is a hundred percent what is going to happen? And I'm[00:25:16] Jonathan: Yeah. So you've been listening to Fixing Faxes, building a digital health startup. I'm Jonathan Bowers. My cohost is Angela Hapke. Music by Andrew Codeman. Follow us on Twitter @fixingfaxes. You can find us wherever you listen to podcasts. And please do us a favor. Tell a friend. Thanks for listening.[00:25:33]Camping with the Family[00:25:33] Angela: I'm taking my children camping in our new trailer for the first[00:25:38] Jonathan: You[00:25:39] Angela: weekend we bought a popup trailer, like[00:25:42] a, a tent trailer.[00:25:44] Jonathan: yeah.[00:25:45] Can you fit a family of four in that?[00:25:48] Angela: yes, apparently we bought a very large one. Yeah. I didn't have a clue. We really, we didn't know what we were doing when we bought it, but we bought it and our children are so happy.[00:26:01] Um, but they're so excited to take it. So we're going to take it four on Friday night for the first time. Wish us luck.[00:26:07] Jonathan: Uh, good luck.[00:26:11]

covid-19 love music american new york family spotify netflix friends chicago disney technology zoom dj healthcare startups broadway hamilton poland camping schwartz maja digital health design sprints middleditch woman ceo jonathan so jonathan yeah angela you jonathan that angela it andrew codeman

Financial Supports for Canadian Tech

Play Episode Listen Later Aug 18, 2020 26:11

Show NotesIn this episode we talk about different grants, contributions, tax incentives, and non-equity financing that there is available in Canada, specifically British Columbia and how it has helped our businesses. Here is a list of the grants/programs/incentives that we discuss and links to find out more information:NRC-IRAP - Industrial Research Assistance ProgramYouth employment grants through IRAP- Youth Employment, Venture for Canada, & New Ventures BC & Innovate BC.SRED (Scientific Research and Experimental Development) Tax program The company Angela mentions in the episode which specializes in SRED claims is Infinity SREDThere are many contests & competitions to apply for, if you are interested in more information we suggest starting to take a look at organizations that support the type of contest/competition you might be interested in.Incentives and contributions are great, we have used them along the way when they fit with work we were already undertaking. Just remember, it is better to focus on your product and less on distractions.Fact CheckJonathan mentions he is into a new marble league, if you are interested in checking it out it is in fact called Jelle's Marble Runs and can be found on YouTube.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)TranscriptJonathan: When you move, when you move the arm, it makes this like sound like, check this out. Like when you hear that, Oh, whoops.[00:00:10] Angela: Totally.[00:00:10] IntroductionYou are listening to Fixing Faxes, a podcast on the journey of building a digital health startup with your hosts, myself. Angela Hapke[00:00:22] Jonathan: And I'm Jonathan Bowers and we have been infatuated with Marble League.[00:00:30] Angela: I don't know what this[00:00:30]Jonathan: it is the best sports to watch while there is no sports. Although the risk sports now, I actually discovered it last year, but I didn't watch it until, COVID times.[00:00:38] Cause I didn't think Julie would enjoy it, but she really likes it. So imagine, imagine, imagine the Olympics, but if if the athletes were marbles. Yeah. So they, they like set up these, these courses and they put marbles at the top and the marbles just there's a machine that like releases them at the same time and the marbles go racing down the track.[00:01:00] Angela: Okay.[00:01:01]Jonathan: but, but they have teams, so they have teams that are named.[00:01:04] So I'm a fan of the O'Rangers. They're the orange team. And Julie likes the Misty maniacs because they look like, or know the minty. minty maniacs. They're minty colored. Cause she likes mint and it is phenomenally exciting to watch and you get very emotionally involved in it.[00:01:22] If you pick a team it's so much fun. Yeah. And there's like there's drama[00:01:29] Angela: I'm so confused about like, given, okay. So, Oh, there's so many questions I have. Where do I start? Given the race? Like the track or the course?[00:01:44] Does a team pick a certain marble.[00:01:48] Jonathan: Yes. So some of them, some of them are, like there's some, some events that require the whole team. Like there's, um, there's a, a push event. Like it's a strength event and they all raced down and they have to push this thing along the track. And the further it goes the higher your rankings are.[00:02:03] Um, but then there's ones that are just, Like you're competing with all the other teams. And so there's just one marble and all the marbles have names. Yeah, they do. my favorite team names is team Momo and I don't understand marbles at all, but there's a team called team Momo.[00:02:16] And one of the, the team captain, his name is Momo. but then there's Mo Momo. There's another marble on team. Momo. It's super fun.[00:02:25] Angela: so captains are real people?[00:02:29]Jonathan: No everyone is marbles. they're all marbles. The referees are marbles. There's a whole like stadium of marbles, I that cheer and they hold up a little marble signs[00:02:36]Angela: And what, sorry, what is it called again?[00:02:40]Jonathan: It's it's called, Jelle Marble League. I think it's the name of the person who created Jelle's Marble League.[00:02:51] Angela: I want to say that I'm going to go check this out, but I'm really not sure that I'm going to[00:02:55] go check this out. Do you think my daughter would think this is funny too?[00:02:59] Jonathan: I think so. I think if you watched it with her[00:03:01] Angela: Like there's no bad words in it.[00:03:03] Jonathan: no, it's[00:03:04] Angela: Okay.[00:03:05] Jonathan: Um, You need to pick a team though, like go from the opening ceremonies. There's an opening ceremonies. Pick it. Yeah. There's an opening ceremonies. Pick a team, like decide on just some random team and that's the team you're going to[00:03:17] Angela: You got to stick with[00:03:18] Jonathan: It's awesome. Like, there'll be a, there'll be a moment where your team like comes back from the, from the back of the pack and overtakes, and you're going to cheer. I promise you you're going to cheer. So I think, I didn't think Julie would think this was funny or fun or anything, but she really likes it.[00:03:32] And, uh, we've been watching John Oliver and he he's sponsored the whole season. Yeah. So it's, it's a marble league presented by the, uh, Yeah, John Oliver, and every, every episode, a $5,000 donation gets made to a food bank in the name of one of the marble teams that wins[00:03:54] Angela: I love it. That's actually quite cute.[00:03:56]Grants and Goverment Funding[00:03:56] Jonathan: Yeah. It's super fun. Love to see how we transition out of marbles into something.[00:04:00] Angela: Oh, Lordy.[00:04:01] Well, so today's episode might put you to sleep. We're going to talk about grants, not equity, funding, and taxes incentives.[00:04:13] Jonathan: I mean it's okay. So it's not that[00:04:19] bad.[00:04:19] Angela: It's not[00:04:20] Jonathan: it's super boring, but it's an interesting, it's an interesting thing to talk about because, Canada, and in some ways, particularly BC is a very, is a really great place to start a technology company because of all of the government incentives.[00:04:36] Angela: exactly it. There's a lot of people saying that, Canada is going to be like the up and coming leader in tech, a lot of it has to do with the way that we welcome the way that we welcome tech firms, but also the way that we welcome tech talent too. Probably more importantly.[00:04:57] So that's, that's kind of cool. And I know for us, there's a there's, there was a couple of grants that we got that. It really got us over some super important bumps along the road. Like the only reason that Jackie's with us is because of the grant that helped, right from the get go[00:05:16]Jonathan: Tell me a little bit about the, about the grants that you received.[00:05:19]Angela: Backing up to about a year and a half ago now I was in contact with our local IRAP representative. So IRAP is the Industrial Research Assistance Program put on by the national research council in Canada here. And they have different types of pots of money. And maybe actually you should probably talk about, you know, kind of like more of the IRAP grant program, but what we accessed through them was a youth unemployment grant.[00:05:51]They had some certain qualifications that they had, and it was to be, like a relative recent grad from a post secondary institution. Um, so, and, and youth, so under 30, and I'm sure there was a couple other things like unemployed or underemployed. And right at the same time that I was talking to Kevin about that, I was also talking to Jackie who was still in university at the time about her honors thesis that she was doing, which was aligning beautifully with what we were doing. And then I was, I was thinking at the time, man, if I could afford to hire this young woman coming out of university, that would be great.[00:06:33] And right at that, But I think within that week or the next week, Kevin informed me that there was some, some money available around youth employment. And I was like, Oh, well, I have the perfect person and, uh, that's how we hired Jackie right away.[00:06:47] And I think they covered. I want to say it was 80% of her salary for like six months. And that was the only way I could have hired somebody. And I don't know what I would do without her. So thank goodness.[00:06:58]Jonathan: I don't think they're called grants.[00:07:01] Angela: am I calling it something wrong?[00:07:03] Jonathan: Well, I think, no, I think they call it a contribution. So[00:07:09] Angela: You're right. They did use that language a lot. Sorry,[00:07:15] Jonathan: yeah. There's a lot of, there's a lot of restrictions on[00:07:18] Angela: what we can call it. Yes. Thank you for, for clarifying that for me,[00:07:24] Jonathan: a lot of these funding opportunities, these government funding opportunities exist to help de-risk some of these investments, particularly that small companies might be making, like, you know, making a hire[00:07:37] Angela: is such a huge cost to, um, startups.[00:07:42] Jonathan: Well, it's the biggest cost usually. Yeah.[00:07:45]Angela: and in our case It would have been a harder road. Had I not. we found a perfect fit and, we had more momentum with that hire than we would have otherwise.[00:07:57] Jonathan: Yeah.[00:07:59] Yeah. And it, it, I liked those ones. They also incentivize you to hire, you know, take that chance on someone relatively new. So it's, it's also de-risking that, right? Like, you don't really know if a new graduate is going to perform at the level that you need them to, or want them to, or be able to grow into that.[00:08:18] But if, if, if you're taking some of that risk off the table and, you know, giving them a little bit more opportunity to grow into that role, that's I get, like, I really liked the grants for that.[00:08:29] Um, just, you know, just let's de-risk this opportunity, hire someone, hire someone new, give them their first job. and I think that aligns really well with, our, our culture a bit too. Like both of us, both you as CRS and us as Two Story Robot.[00:08:46]Angela: because you're more familiar with IRAP's other programs. Did you want to talk about that at all? Or.[00:08:53]Jonathan: So the one, the one contribution that we receive from IRAP was a, was a small project. So it's under $50,000 and same, same kind of deal. Like they cover 80% of salary costs. but it allows us to explore a product that we wanted to build, with very little risk and we still had to, we still had to sell it to show the ability to actually pay for the entire project without the grant, or sorry, without the contribution. Uh, but once you got the contribution, then you're just kind of on the hook for the 20% plus whatever overhead you'd have to pay to keep that, you know, keep the lights on and then you get to you just kind of just get to explore this product and try and build this product, without, without a lot of that risk and it may not have ever happened.[00:09:41]downside is we, you know, we ended up. It just didn't work. We didn't have market traction for that, for that product.[00:09:47] Angela: but it allowed you to try.[00:09:49] Jonathan: yeah. And yeah, it allowed us to try and we learned a ton about just the process of building, building products, which led to getting hired Fresh Grade and some other things.[00:10:01] Angela: I think the, the whole idea of, de-risking projects to allow the creative freedom, to really explore and research and, and develop new things, is the idea behind it. But I know for us it's, it has been exactly that. We should say that also the, the process to accessing these types of contribution is a bit as a competitive process. There's limited, contribution availability out there and that, uh, like we've, we've asked a couple times for projects to be considered and we haven't been approved.[00:10:39]But anybody that I've spoken to that has access to IRAP money has said very, very good things about it and what it's done for them.[00:10:48] Jonathan: It's a great, it's a great program. It's, it's not overly burdensome to[00:10:53] Angela: No.[00:10:54] Jonathan: it's actually pretty, it's pretty easy. Um, we, when we had our agreement, it was right at the right during the time that, NRC got hacked,[00:11:05] um, and then we had to do everything by mail or by fax and it was, Oh, it was, it was, it was unpleasant. Yeah. I remember at one point yeah. Fax. I remember, I remember cause we didn't have a fax machine cause why,[00:11:23] Angela: Well, no. Why would you,[00:11:25] Jonathan: and it took me all day to figure out how to send a fax.[00:11:29]Angela: so you should have just gone to your local doctor office.[00:11:33]Jonathan: Yeah. I tried like our copier, the copier in the building had the ability to fax that didn't work. I w went up to Staples and said, Hey, can I fax this? And they said, uh, yeah that's going to cost you a hundred and some odd dollars. So why? Cause we charge by the page differently for a long distance fax.[00:11:52] And this is, that doesn't make any sense, like[00:11:54] Angela: Oh my goodness. Yeah.[00:11:57] Jonathan: so. Ridiculous. and then I came back and like explored all these things. But by the time it was all said and done, I had spent an entire, I wasted the whole day.[00:12:06] Angela: day[00:12:07] Oh, my word. Oh, my word,[00:12:10] Jonathan: machines[00:12:11] Angela: fax machines. No.[00:12:14] Jonathan: know. So silly.[00:12:16]Tax Credits[00:12:16]Angela: the other thing I did want to talk about was recently we received, like SR&ED tax credits. And so it's our, our first year, because 2019 was our first tax year where we were, we would have had activities that would have qualified for SR&ED. And I wanted to talk about that a little bit because.[00:12:38]number one, I was so impressed with the whole, uh, like I, we had a company that helped us out and they were amazing. I hardly did anything and yes, I paid them to, you know, a commission to do this, but, um, I didn't even think we would have qualified until a friend of mine she owns a tech company and Regina had told me about how[00:13:03] she also did the same thing and she's like, how's it just, just contact this guy and see if, if, uh, you know, maybe, maybe CRS has some activities for, for last year in blah, blah, blah. And it was amazing. He was just like, got me started and filled out the application for me, submitted everything for me. And I was just like, I w I was amazed at how slick the process was and, um, what a great tax incentive.[00:13:31] So SR&ED is Scientific Research and Exploration and Development[00:13:36] Jonathan: Scientific Research and Experimental Development.[00:13:39] Angela: development, um, tax credit. So anybody that's doing, um, Just new, new specifically. It can be in the resource sector too. Right. So like mining and, and, you know, like engineering and things like that. But also for tech back it's, it's building something new, uh, which what we're, which is exactly what we're doing and as a majority of our time and effort.[00:14:01] And so, yeah, we did that through them and I mean, you have to. So when you have contributions through IRAP and then tax credits top of it, it just like, I was, I'm just so impressed with how, um, how well that all came together for us. And a couple of them were surprises too. And I was like, Oh, thank goodness.[00:14:21] Cause this year was. tight year, so it continues to be a tight year. So very like, and these are the kinds of things that help us go through these first few years as a tech company. I mean, you're really not profitable until typically year three. And so it makes it, uh, it makes the tough times a little easier.[00:14:41] So that[00:14:42][00:14:42]Jonathan: so one of the really interesting things about SR&ED is there. They're trying to incentivize technical uncertainty. And they, they don't care if it succeeds or not. Like that's not, that's not on the metric. So you don't have to do something that is successful. You just have to try to solve a problem that has never been solved before.[00:15:00] Angela: I think this is why I'm so impressed with these types of, incentives. Let's just call them incentives and blanketed. That way is so much of what we're trying to do. Has a low success rate. Yet there's so many spinoff benefits of it. Even if it does fail, we learn things. We can try new things. Um, like all, all of those, all of those spinoffs are amazing.[00:15:29] And we have, um, Um, incentive programs and, and either government or non-governmental bodies that are supportive of that, that at least trying, even if you fail, we know that there's going to be learnings from it. We know X, Y, and Z will come out of it. Um, and they love that. I love that because, so I'm such a big proponent of systemic change and how hard systemic change is and can be that the failure rate is so high when it comes to trying new things and trying to change things, um, that it's. So it's so nice to feel a bit supported in a way that is meaningful around that, like financially[00:16:17] Jonathan: Yeah. Yeah.[00:16:19] We did our own SR&ED claim in the first couple of years that don't rec I don't recommend doing that[00:16:24] at all. Um, But I, I did it. I sent it off and the, the person from Canada Revenue phoned me up and said, okay, you've done this kind of wrong in some spots.[00:16:36] Here's what you need to do. You need to fix this part here. And I need some other documentation here and send it to me whenever you can send it to me, send it to me here. And I sent it and they come back to me like, yep, this looks good. Um, I need you to change this piece here.[00:16:49] And I would change that and send it back. It took, it took a long time and it was really complicated and I was really frustrated with it because I waited too long. but they were so helpful[00:16:59] Angela: They were cold. They were collaborative.[00:17:01] Jonathan: Yeah. Yeah. I mean, he wasn't like, he wasn't helping me game it in any way. He would just like pointed out the fact that I probably filled this out wrong and I needed to clarify that, but gave me the opportunity to fix it. And didn't say like, why you did this wrong? That[00:17:14] Angela: wrong. Send it back[00:17:15] without help.[00:17:17] Jonathan: just reject it.[00:17:17] They just, like, I recognize that there was a problem[00:17:20] Angela: That's so lovely. So my first SR&ED claim was done and I'm going to plug this guy cause I think he's amazing. His name's Daniah and it's Infinity SR&ED. And, um, so he helped my friend Kristy. So Kristy connected me to him and literally with, I think. I don't know, three phone calls, quite a few emails, like, you know, a few emails back and forth.[00:17:43] She got all the information that he needed. He made our first shred claim. And, and literally like then Daniah emails me and he's like, okay, Angela.[00:17:53] So they've processed it. Um, you're expecting this much back. And then he like connected like my accountant, um, directly. And I was like, it did honestly very little and then just like money in my bank account. The company's been counting on mine[00:18:12] Jonathan: Yeah. Yeah. And it comes as a check. Like it's not like a rebate on future tax[00:18:19] Angela: Yeah. This is not, uh, a tax. Yeah. Uh, re is that what it's called a rebate or whatever? Yeah. Like it's not like a tax credit. Oh no. It's[00:18:27] called[00:18:28] Jonathan: is a tax credit, but you just get it as a[00:18:30] Angela: It's a check.[00:18:32] Jonathan: It's not deducted from your tax filing later on in the year. You just get it back right now and you can, you can like, there's no stipulations on what you spend it on. You're probably going to spend it on salaries, but, um,[00:18:43]Angela: yeah, I just, I thought that was really, really slick. It was a bit of a surprise to me that we were even going to be SR&ED-able last year. Um, now that we look back on it and I'm like, Oh, well of course we were, but just at the time, I had no idea. So it's always worth looking into, even if you don't think that you might qualify for it yet, because we didn't even have a product at that point.[00:19:02] Right. We were in the midst of building one[00:19:04] Jonathan: that's, that's good. Right? And There's some great programs like the Venture for Canada, which is a new program that I didn't know about. Um, they will back 50% of a, of, uh, uh, co-op student. So they have to be enrolled in co-op. Um, And they will pay for 50% of their salary up to like $5,000.[00:19:27] I think it is. Um, that's a super, super great program.[00:19:31] Um, but you can also stack that against another grant that BC has as in the, so Innovate BC has a, has their ISI grant. And then they have this other thing called co-op they're funny.[00:19:41] One is you must be corrupt students. The other is you[00:19:44] Angela: You must not be a CO-OP. Exactly. Yeah, we'll be hiring an intern for the fall semester with the, she is not a co op[00:19:54] Jonathan: The ISI that's the innovative innovation skills initiative[00:19:58] Angela: exactly. And it's a, it's a collaborative program between Innovate BC and New Ventures BC[00:20:04] Jonathan: Yeah. Yep.[00:20:06] Um, have you hired the person yet? Have you identified the[00:20:08] Angela: Yeah, we have, yeah, September 8th or ninth.[00:20:13] Just part time. So they, because, because they are in school right now also, so they're going to be going to school while they do this.[00:20:20] Jonathan: local or? Sweet, that's exciting.[00:20:24]Are Incentives All They Are Cracked Up To Be[00:20:24] I actually have a, kind of a, also like an opposite view to grants and tax incentives. Um, and it's, it's something that, a bit of a mentor of mine had sort of pointed out was that it may actually disincentivize companies to do the thing that they're supposed to do, which is get revenue from customers.[00:20:45] Angela: Oh, okay. I can see how that can be distracting.[00:20:50] Jonathan: you can get, yeah, you can get really distracted with pursuing grants and because there's all of these available incentives, it becomes a bit of a distraction to pursue them all and, um, you know, to go and, you know, try and get your IRAP grant.[00:21:03] And if you can't get it, then, well, you know, don't try. But really like if you just, if you took it, the approach to building your product a little differently, you might not need the grant in the first place. I still think there's lots of room for, for grants in certain applications. And obviously if they're there, you're going to go and try and take advantage of them.[00:21:19] But I think it creates a, a weird, um, I don't want to say like a lack of hustle, but like a little bit of a lack of a hustle in companies, because they just think that the government will just support them[00:21:31] Angela: Oh, that's and you know what? That is a, that is a totally fair perspective. As a company that has emerged from a government funded project, we could have gone down that rabbit hole or real easily. What I think helped us is focusing on the product that you want to build, focusing on what the users want.[00:21:55] And in our case, you know, the other stakeholders being the patients, what makes the most sense for that? And. Pairing that with, I have a bit of a background in grants and funding and kind of knowing what's out there. So that was more organic for me is that the focus was build this and then[00:22:15] is there anybody out there that has some incentives to help us build this? And if not, we're building it anyway. But anything and maybe that's the way I've approached it is everything is a bonus to me. The SR&ED was a total bonus. I mean, didn't, didn't expect that one at all.[00:22:33] The youth employment grant was probably more pivotal. Um, because I knew I did want her, I, I, I don't, I don't think I could have hired her without it. So that was huge. But when you're talking about IRAP money, that is an interesting one because you have to be very, very specific on what you're doing. So here's a really good example of we've been in talks with IRAP about potential projects and things like that.[00:23:01] Just as, as advisors through IRAP are supposed to have conversations with companies like us, about. And, um, there's been a couple of times where we've moved ahead quickly enough that the program wouldn't have caught up with us. Like we would have had to apply for a program, but by the time the money had come up, we would have already built it.[00:23:22] It would have already been done. Like we're like now we're beyond that. We're going on to the next thing. but that could have been a spot where we could have delayed it. Cause it was like, Oh, we'll just wait for that IRAP money. Yeah. Wait for the grant, wait for the incentive to come out and then yada, yada.[00:23:37] So I think you're absolutely right. As, um, specifically someone in like my seat, you can get so distracted and that was actually leading into the other thing I wanted to talk about too, was these contests. And these, um, purses and pockets of money were like these pitch contests[00:23:57] and I will tell you, especially as a female founder, there are so many that are targeted at me. Like in any given week, I am getting probably five to six emails about something that somebody would like us to apply for and be part of, and I'm that, that can be[00:24:22] Jonathan: Oh, yeah. Cause I mean the, yeah, it's the point of every business is to enter pitch competitions and.[00:24:29] Angela: I can't I can't I'm so, um, and last year he got caught up in that a little bit. I will say, like, there was a couple, I probably entered four or five, um, unsuccessfully in most cases, but. This year it was one thing I told myself. I was like, you're not doing that this year. You're not entering these competitions.[00:24:49] You're not entering these contests. Um, you're focusing on the work that you need to do. I believe that the success will naturally come if it's meant to be. Um, but by distracting me getting up on stage and giving pitches and trying to sell me and the company to a bunch of people is just.[00:25:09] Who are not, let's be very clear. These people are not my customers at all. Like not even close, um, just there was no value in it for me, or very little value, I should say, because there, there is, there is monetary value to it, but, and the chances of success are so low.[00:25:26] Jonathan: Yeah.[00:25:27] Angela: Yeah. So anyway, 2020 is the year where we focus on a product and we do not focus on contests.[00:25:34]The Oppression of Pants[00:25:35] Nora. my youngest went horseback riding for the first time when she was out in Saskatchewan[00:25:41] Nora doesn't like to wear pants a lot and she's potty training.[00:25:44] So she's in panties all the time. And so she, so she rode a horse for the very first time. Bear back in panties. It was so cute.[00:25:59] Jonathan: why should we have to live under the oppression of pants,[00:26:02]Angela: Nora's words,[00:26:05] I no like pants

covid-19 love canada technology olympic games canadian tech development healthcare startups financial bear sr bc british columbia pants exploration venture coop ridiculous incentives oppression saskatchewan grants momo staples john oliver pairing tax credits digital health fax nrc scientific research crs isi jelle lordy irap woman ceo jonathan so jonathan yeah marble league angela you angela it

The product development journey of Clinnect

Play Episode Listen Later Aug 11, 2020 27:21

Show NotesWe talk about being a social enterprise, how long the journey can take for start-ups, and Angela reports back on the pricing exercise that she undertook to find the "right" price for Clinnect. Starting out initially as a government funded project, this company had a few roadblocks to overcome in becoming an incorporated for profit business; along with the typical issues to overcome like sustainability, scalability, and revenue.Healthcare issues are complex and Clinnect had to learn to focus on issues, we delve into the pros and cons of trying to find a niche product to address a narrow, but important, issue.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)TranscriptJonathan: Wait, I want to get one of those. Um, I think, do you think in the audio world they use those, those clacker things like in the movies, those, um,[00:00:07] Angela: It's called the castanet.[00:00:09] Jonathan: it's called a castanet? You know the word for that?[00:00:12] Angela: Like the clackers like that.[00:00:14] Jonathan: No, no, no, no. The thing at the beginning of a movie where they go, you know, act one or scene four, take three.[00:00:19] And they[00:00:20] Angela: Oh, I don't know what those are.[00:00:21] Jonathan: Uh, I think[00:00:22] Angela: Sorry. I couldn't see you when you were, when you were saying it. And that's[00:00:27] Jonathan: a castanet are those tiny little symbols on your fingers, or that we should get one of those cat little castanets[00:00:35] Angela: I have. I have some, because my, um, my daughter uses them for music class.[00:00:42]Introduction[00:00:46] Hi, I'm Angela Hapke.[00:00:47]Jonathan: and I'm Jonathan Bowers and you're listening to Fixing Faxes, building a digital health startup[00:00:53] Angela: and we just got some new mics.[00:00:55] Jonathan: New Mics! Uh, This is episode five. We've recorded the first four episodes on our headphones. No, what are these called?[00:01:05] Angela: headphones[00:01:06] Jonathan: No, these aren't, these aren't[00:01:07] headphones.[00:01:08] Angela: like the standard headphones that you get with your Apple iPhone.[00:01:12]Jonathan: Right?[00:01:12]but now we've got these great new, uh, very cheap, the cheapest ones. We could find Audio-Technica 2005USBs as recommended by basically every podcast blog I could find. Um, but they were sold out.[00:01:27] Angela: Well, and I didn't do any research. You did all the research and you, I just said, tell me which ones to buy.[00:01:33] Jonathan: Yes, but you found where to buy them because they're sold out everywhere.[00:01:38] Angela: I know, I know the weird places to buy things.[00:01:43] Jonathan: So that was helpful because I was starting to panic that we were going to have to buy $300 microphones instead of a hundred dollar microphones.[00:01:50] Angela: well, the package was $200.[00:01:53] Jonathan: Yeah. Yeah. Well, it comes with the, it comes with the boom arm and the monitoring headphones. Um, the Princess Lea headphones. They, they hurt my, hurt my ears just a little bit. Cause I like, do you notice[00:02:07] Angela: The glasses. yeah, they dig into your head.[00:02:10]Jonathan: I've been wearing them a lot the[00:02:12] Angela: Oh, have you,[00:02:13] Jonathan: doing all my Zoom meetings like this with the microphone.[00:02:16] Angela: Is everybody commenting on the quality?[00:02:18] Jonathan: loves it. Uh, Yeah, everyone is saying Wow it sounds so good. And now Chris wants to get a microphone. He's he's got microphone envy.[00:02:27] Angela: That's definitely a thing in, in, and Zoom COVID days. Microphone and camera envy.[00:02:35] Jonathan: I, uh, we had a client meeting this morning and, uh, cause you can see the boom and the mic in the video call. And he says, Hey, what's that? I told them about the podcast and he holds up his really expensive microphone and say, well, let's. Let's compare. This is not, that's not[00:02:51] Angela: You're like, no. How about not?[00:02:54] Jonathan: he's got one of those pop filters and I think it's like a really cool condenser mic.[00:02:58] It is just sitting on his desk though. So he doesn't have the arm,[00:03:02] Angela: see, I don't know. This arm is like I'm that's most of what I love about this.[00:03:09] Pricing RevisitedJonathan: Uh, you know, what we need to talk about so speaking of the prices of things, so this being $200 and us thinking about, um, wanting to buy cheap. So this felt like the right amount of money to spend for where we are at in terms of our journey as podcasters. Um, but in the, in, uh, I think episode three,[00:03:29] Angela: I think it's episode three.[00:03:30] Jonathan: gave you some homework to go and use the Van Westendorp.[00:03:35] Pricing meter or price, price, sensitivity,[00:03:39] Angela: Price sensitivity meter.[00:03:41]Jonathan: Which is basically four questions that help you understand the pricing of a product. What are the results?[00:03:48] Angela: Okay. Uh, so, so we made the survey and I put it in linked it in an email, and then I just use my, my personal contact list and sent it out to a bunch of primary care providers and specialists that I know that I would hope that I could kind of ask a personal favor to[00:04:04] um, I sent it out to about 30 people, uh, nine or 10 of them got back to us. And there was some big trends showing up. So what you, what you have to understand is the four questions really kind of give you an idea of like the absolute basement. I wouldn't buy this because it's, it would be so cheap that it doesn't have any value all the way up to ,this is way too expensive for what I think the product is. So those are two questions and then the other two questions help kind of narrow in the, the, the sweet spot. So, um, just, , like what would you pay that's I, I think they use the word bargain and then what would you pay? And the, they use the word expensive.[00:04:44]And so what we did is we took all the responses, we plotted them on the sensitivity meter and before I say what the, it came out to be, I think last time, I guess, that it would be around $25.[00:05:02] Jonathan: Yes. I don't remember if that's recorded, but you guessed that it was going to be $25.[00:05:07] Angela: Well, and I I just figured it would be cheap enough that I could like, and I think maybe I was thinking that would be pretty, a pretty cheap price. So the price sensitivity meter put us in a large enough range of people, like on a, like a distribution graph. That would pay for Clinnect on a monthly subscription based model, between $50 and $75.[00:05:35] Jonathan: more than what you had thought.[00:05:37] Angela: A little bit more than what I thought now let's back that up. I think the original guesstimate that I gave, um, didn't have all the features that we were going to include in the basic model anyway. So we've upped the basic model to be kind of a basic plus model. And then what we did is we gave a really quick video on what we have in the product right now, and what features are coming within that basic model.[00:06:04]Then ask them to do, to answer the four questions. So we gave them a really good idea of what they're going to get for, for their money.[00:06:10] Jonathan: I love that you went out and talked with people[00:06:12] Angela: yeah,[00:06:13] Jonathan: feedback that was, uh, w would you say it was more encouraging to get those answers back the way you did?[00:06:20] Angela: I think when you build a product, your scared to price it, I think that's a scary thing to price it because now you're building a product, but now you're actually asking a very specific amount of money for it and asking people to take that out to their pocket and give it to you. So it was, it was a very, very vulnerable exercise for me.[00:06:42] And, um, yeah, I was nervous to do it. So happy I did though. Like, yeah, just so yeah, really, really good feedback really. And actually. Even since then it's caused a couple of people to come back at me and ask me like further questions and things like that, which is really great. Yeah. Like one of them was asking about, um, and not to get into the nitty gritty of it, but, well, how many users are you going to have per account?[00:07:09] And are you going to charge per users? Are you going to cut charge per account and with so many users and yada yada yada. So she had already started to get it into her head and was asking really good questions. And I said that I was like, Ooh, you've zeroed in on something that we've been talking about a lot.[00:07:23] And so I used that interaction then to ask her, I said, well, we're thinking about this. What do you think? And she was like, Oh yeah, that makes a lot of sense. And so just like stealing more information out of, out of everyone was yeah,[00:07:37] Jonathan: It's not stealing information.[00:07:39] Angela: not. It's it's asking your customer what they want. Yes.[00:07:44] Jonathan: Yeah. No, that's that's that's so cool. I think it's exciting that you have gone out talk to some folks, got some real feedback and got some additional feedback.[00:07:53] Angela: Yeah, highly recommend that anybody who's thinking and being scared about the pricing process, just ask.[00:08:00] Jonathan: I like that the, that price sensitivity model a van Westendorp is, is those questions. Cause you can just take it kind of copy and paste it, put it in there, remove some of the emotion a little bit, because it's not like you're on the phone talking with someone. You can just send this out somewhat anonymously.[00:08:15] It's not really anonymous, but you kind of send it out and it just removes that awkwardness and weirdness. And that anxiety, anxiety that you might feel.[00:08:23] Angela: Yeah. And I think that's exactly what I was feeling. So when I put it into a survey and I just, I think I threw it into Google forms or something like that and sent it out and just said, and I didn't ask for any identifying information. So, and actually said that right away, like, I'm not asking for your name.[00:08:38] Will you, you know that I know you were like participant number one, you can kind of anonymous anonymously do it. And I think that felt good for both myself and who I was asking to do it because these were for my personal contact list. So they know me quite well.[00:08:55]3 Years in the Making[00:08:55] Jonathan: what you want us to talk about today was the product development journey of Clinnect.[00:09:03] Angela: I want to talk about that today because. Up to this point, we've been talking a lot about like either current state or, um, like what we're doing right now. Hence the pricing thing and things like that. But I wanted to give a little bit of background about how we got to where we've got to and how long that journey took and how we've navigated along the way.[00:09:28] Um, just so maybe people listening can understand what that journey typically looks like, because so often we read, you know, success stories and you kind of get the story from the success on and not so much the really nitty gritty crap that led you up to that. And I'm not saying that our journey has had a lot of crap in it, but it's been a lot of, a lot of bumps along the way.[00:09:52] And I think talking about that, um, is hopefully good for people to hear. And, and maybe if they're in the middle of that keeps them, keeps them motivated to keep going.[00:10:05]Jonathan: how long of a journey has it been?[00:10:06] Angela: It has been three and a half years to now.[00:10:13] Jonathan: Till now, and we've[00:10:14] Angela: And we've just launched.[00:10:15] Jonathan: launched.[00:10:16] Angela: Yeah.[00:10:17] Jonathan: And we've only, we've only really been building, building the product, uh, for three[00:10:23] Angela: Three months. Yeah. Two or three months. Yup. Yup. Yeah. And we just launched three weeks ago.[00:10:30] Jonathan: you didn't have the goal of creating Clinnect[00:10:34] Angela: Nope. Nope, absolutely[00:10:36] Jonathan: w What was step one?[00:10:38] Angela: Uh, at the time I was working, um, at the hospital here in Kamloops as a project manager. And there was a, there was some government funding coming out for innovative projects that were led by physicians. And so there was a group of physicians in Kamloops, uh, the general surgeons that wanted to apply for this money.[00:11:01] But they needed to have a project manager attached to it. And at the time I was working four days a week, um, and was recommended to them too, that maybe I could take this project on for the fifth day.[00:11:15]Jonathan: This was a side hustle.[00:11:16]Angela: Total side hustle. And so what it started off as. Was the general surgeons in town really just wanted a place to centralize all of the referrals and pool them.[00:11:29] So equally distribute, distribute them or unequally distribute them purposefully, uh, among each of them. And so I thought, Ooh, that's kind of a cool project. I would love to try something like that. So that's where we started out. We got funding, um, in the beginning just to kind of do. Like analysis stuff, like typical government funding, you know, go out and do your, your SWOT analysis and your needs analysis and understand, you know, current state, blah, blah, blah.[00:11:58]We already kind of knew what we wanted and it seemed to fit with the analysis. So then we started to build a very manual process for centralizing referrals from primary care providers in the Kamloops catchment area, um, for general surgery. So we started that in August of 2017.[00:12:20] So that's coming up on three years ago. It was by December that year that we realized that we were, we might be onto something. The process that we were building along with the data that we were grabbing was becoming talked about a lot, not necessarily our data, but, um, in the, in the way of like wait time, data and referrals and centralized processes and things like that.[00:12:44]We also thought that maybe it would get absorbed by like a health authority or ministry or something like that. So we built it in that way that we thought, well, somebody else will take this on in the end.[00:12:55]Jonathan: As in, like, just take over, take over whatever process you've defined?[00:12:59] Angela: And there was a lot of advisors even advising us down that road was that if you build a good enough process, the, the health authority of the ministry will, will likely, um, grab that and integrate it into some kind of workflow that they already have. So we got pushed back on that.[00:13:18]Jonathan: From the health authorities?[00:13:21] Angela: So what ended up happening in about the same time that we were doing all of this, we incorporated Central Referral Solutions. So when a government funded project gets incorporated, some eyebrows get raised sometimes, and it wasn't an overly popular thing to do. Um, but we needed to do it for ourselves.[00:13:45] Like we were, there was a lot of us that were, that were, you know, shareholders in it or like stakeholders at the time and shareholders now. And we, yeah, we just kind of thought that we were onto something. So we incorporated, and so then we were seen as this, like this corporate entity that, you know, and there was just this push pull.[00:14:06] We were also starting to talk about wait times in a way that wasn't overly palatable at the time, because we wanted to talk about the whole wait time journey. And I think we'll probably do we'll deep dive into that at another time. Yeah. Yeah, because there's, that's a whole episode in and of itself, I think right[00:14:28] Jonathan: Well then we'll save that for another[00:14:30] Angela: Yeah. and then at the end, you know, when we started to bump into things, people weren't really overly welcoming to take this on from a health authority or a ministry, um, perspective. Uh, we decided to monetize it because that made the most sense. Um, and in a way that we knew we were a social enterprise, uh, we still incorporated and things like that.[00:14:52]A For Profit Social Enterprise[00:14:52]Jonathan: So you're a for profit[00:14:54] Angela: Yup.[00:14:55] Jonathan: company, right. Your company. So that by definition is for profit, but a social enterprise[00:15:00] Angela: but a social enterprise. So a social enterprise has not investors and making money at its core ethos, but rather, um, a social good at its core ethos and its core philosophy. And for us that we're not out to make a ton of money to make a change in a system.[00:15:22] And so that's why we call ourselves a social enterprise, but we are for profit. And I think that's another reason that it's been so hard to try and explain who we are and what we are. And especially in the beginning, because we weren't maybe even comfortable in her own skin in saying that. And I'm, now that I'm like saying it, I'm like, I don't even know if I still am.[00:15:41]Um, but. We knew that we knew that we were onto something, but we also knew that we could make a lot of good with it and do a lot of good with it.[00:15:48] Jonathan: Um, I mean, I, I agree with you, like I've, I've, I, I've done a bit of mentoring with social enterprises, mostly in the non profit side of things. And one of the things that they often struggle with is how to be sustainable, how to, how to do what they're doing. And, um, yeah, I guess scale that up. Right? So there's, so they're often so dependent on grants and they spend so much time just applying for grant money and not revenue from some product or service that they're offering that can, that can sustain the growth of this social thing that they're trying to do. Some, some organizations are very, very good at this. Most struggle. So you're describing, uh, an organization that is almost engineered in a way too, to be sustainable. There's the profit side, which sustains itself and sustains its growth activities. And then the the impact of the, um, of the activities you do have, have a social good. But you do have to monetize that, which you talked about, uh, just a second ago, you said you're trying to monetize it.[00:16:55] walk me through that a little bit. at a basic level, I think people can understand, like we're charging for the service,[00:17:00] Angela: Yes. So maybe what I'll do is I'll talk about a little bit about how we got there and I, what you just summed up doesn't happen easily and quickly, um, it's not as, as, as pretty as the summary that you just gave. Uh, it's usually ugly and bumpy along the way. And it has been a little bit ugly and bumpy for us along the way.[00:17:22] So what we started with was general surgery in town and I call it kind of like our R & D department is, um, we've created the central intake and the central referrals, um, to go and then be pooled among the groups of surgeons. And so in doing this, we were able to trial like a whole bunch of different types of workflows.[00:17:41] We were able to even trial, like the way we say things, which in healthcare can be the, be all and end all of things. Yeah.[00:17:48] Jonathan: Say things to, to patients or[00:17:50] Angela: okay. Well even just like literally the wording that would be on a referral form. Yeah. The impression that that word gives when you read it versus what you, the intended meaning versus what maybe the reader means.[00:18:04] And we've actually had a couple bumps along that way. Also the development of categories, referral categories. And we've talked a little bit about this in the past, but like Clinnect itself has started to create the idea that we should have a very strict set of categories that referrals come in. And like, even that we trialed with general surgery. Just really help in helping us understand what does a wait time mean? And then we've also done a little bit of consulting to help us gain even further insight. And we always say that. You know that this further insight will just help us develop the product even more. So in doing all of this with general surgery, kind of being our R & D department, we were able to go, okay, we have this, we were able to get a really nice workflow going, except.[00:18:53] It wasn't scalable. It wasn't sustainable. We were hitting we're bumping into exactly what you're talking about with, you know, the social enterprises and not being able to maybe get over that hump. We were able to get over that hump with Clinnect. And so that's where we were able to say, you know what, now we are, we are an incorporated company.[00:19:12] We are a social enterprise and we are going to be charging for a product. And that is Clinnect. And we were able to kind of take all of the learnings. Through doing this with general surgery over the past three years and finally build something.[00:19:25]Jonathan: When you say it was not scalable. I imagine that means, uh, it's very dependent on manual labor?[00:19:32] Angela: Yeah. Almost entirely dependent on manual labor. So when the workflows were, um, disjointed, so it required somebody to do one thing in this one software, take it over here and do another thing in this other software and then take it over here and do X, Y, and Z with it from there. nothing was automated, nothing was overly efficient.[00:19:55] There's room for error when you have a human doing all of this. So, it was way too expensive to have somebody doing this. So learning all of that is why we built Clinnect. Because we knew we were onto something and then just taking all those learnings and then automating them.[00:20:10] And it took a long, took really long time to figure that out and what that should look like.[00:20:15] Jonathan: I think, I mean, I think it's interesting to tie that back to the pricing a little bit like the, um, what Clinnect can do for 50 or $75 a month, how much work would that take a person to do?[00:20:27]Angela: So we priced that out because we were looking at doing exactly that and it sits around the 400 to $450 a month.[00:20:34] Jonathan: Right. So, so the, I mean, ultimately the value that's being created here is around $300 a month.[00:20:45] Angela: Which is pretty neat.[00:20:46]Jonathan: okay. Think back to my economics. What does that piece, when you draw the, when you draw the diagram and in that difference there that's the[00:20:55] Angela: I know exactly what you're talking about, but I cannot remember[00:20:59] Jonathan: We've forgotten so much of our MBA,[00:21:01]Angela: I think you learn about that in first year, business degrees.[00:21:06] Jonathan: I know my MBA was a lot of first year business stuff cause I didn't take business.[00:21:11] Angela: neither. Oh, my goodness. I love it.[00:21:15]Lessons Learned in 3 Years[00:21:15]Jonathan: So this has been a three year journey. We've we've really just started it's. Um, but it has been three years. So what, what are some of the other, um, some of the other lessons that you maybe have picked up in those three years, besides, you know, besides some of the domain specific stuff around the problem that you're solving.[00:21:37]Angela: I think what we learned big time as there's no quick fixes in healthcare. I was a little bit naive and we first did the project that I was like, Oh, we're going to do this and we'll fix this right away.[00:21:48] And there's just, yeah, there's just no quick fixes. good fixes take a long time in healthcare. They require a lot of thought and a lot of understanding because the, the problems can be so complex. Um, and it's hard to narrow in on problems because. In healthcare, there's so many other problems gleaming around that problem.[00:22:13]So that was kind of another thing that we learned is, you know, laser focus on the one thing that you want to change and go for it. And there was a few times, even you, would I be sitting in a meeting with you and I would have another idea for something else. And you would say, okay, you need to be laser-focused, Angela. I was like, right, right. I need to do that. So that was, that was.[00:22:36]Jonathan: Clinnect does feel very focused. even in some of the, planning meetings, it, we start talking about some features and some things that start to start to lose some of the focus, but yeah, it starts to broaden, broaden that scope of it. But at its core, it's a very focused product.[00:22:51] Angela: And I like that. And I think that that's a really hard thing when you're getting into healthcare solutions. It is really hard not to go for a bunch of things at the same time, but I think you're going to have a better success rate. If you really laser focus on, on kind of one solution, one problem, one solution, and then go from there and you can always build out afterwards, but, you know, try and try and focus on that first.[00:23:17]Um, there's also this thing around solving problems in healthcare that can be really distracting. And especially when you're maybe working with government bodies and things like that is solutions tend to be. Um, system centric versus versus like a patient or provider centric. And you can go down kind of rabbit holes.[00:23:41] Um, That maybe at the time seemed like you're solving a solution, but you might be talking to the wrong people about what that solution should be looking like. And I think this, once again, goes back to talking to your users and talking to the real stakeholders in this meaning, patients, providers, people that are going to actually be using this stuff.[00:24:03]For us at Clinnect we definitely had the opportunity to go down that system centric solution road. It would not have felt nearly as good as what this does, because what we're doing right now is we're really working with a solution that's going to benefit, um, the broader, good, not just the system.[00:24:25] So, so there's that.[00:24:27]Ruffling Feathers in Healthcare[00:24:27] Jonathan: does that ruffle some feathers a bit?[00:24:30] Angela: Of course it does. Yes. Yeah. Um, it can be hard because healthcare is so riddled with what we've always done it that way, which can be a real big barrier to systemic change. But then it's also layered on what I found a little bit with. Um, not just, we've always done it that way, but a pride in that way that maybe they've done it.[00:24:58] And so when you're asking people to start changing workflows and changing the way that they look at it, it's a, it feels personal when it's really, it's not it's, it is systemic change, not personal change, but, um, in something like healthcare, Right. I just feel like there's so much passion in their jobs and their work and their, and, and things like that, that people can get really defensive very quickly.[00:25:24] Um, when you're suggesting maybe bigger changes. Yeah. I think also for me, it has been surrounding myself with people that know way more than me.[00:25:38] In multiple facets. I think of, you know, even my, my, so my cofounders are general surgeons and, obviously they know way more than me when it comes to medical stuff. Then, , I partnered with, uh, with you guys at Two Story Robot and you guys know way more than me when it comes to tech stuff and yeah, just surrounding yourself with people that, that are amazing experts in their different domains really helps.[00:26:07] And it also like it doesn't put the pressure on, you know, the founder or the CEO to come up with all the solutions, but rather just, if you surround yourself with people who know better than you, then it, it helps also surrounding yourself with really good people because you will get beat up and you will fail and you will have to get yourself back up and you might sometimes need a need, a hand to get back up and[00:26:30] Jonathan: Yeah, I need a little reminder that, uh, why you're in this in the first place.[00:26:34] Angela: Yeah, yeah, for sure.[00:26:38]We Have Great Reviews![00:26:38]Thanks for listening to Fixing Faxes, building a digital health startup. I'm Angela Hapke. And my cohost is Jonathan Bowers. Music by Andrew Codeman. Follow us on Twitter at @FixingFaxes. You can find us wherever you like to listen to podcasts. And please do us a favor tell a friend. Thanks for listening.[00:26:55]Jonathan: Did you see the other review that we have?[00:26:58] Angela: My husband.[00:26:59] Jonathan: it came up.[00:27:06] Angela: He is, he's like her biggest fan .[00:27:08] Jonathan: I'm going to steal a joke from Bronwyn, uh, he's such a fan, he married one of the hosts.

ceo music google starting technology zoom healthcare startups mba lessons learned pricing microphones product development digital health apple iphone swot bronwyn kamloops woman ceo jonathan so jonathan yeah angela you angela it andrew codeman

Who is Angela and Jonathan?

Play Episode Listen Later Aug 4, 2020 28:57

Show NotesThis episode finally delves into who Jonathan and Angela are, a bit of our backgrounds and how we both took very different paths to get to where we are. We give shout outs to our team, mentors, friends, and family.We talk in this episode about non-medical fabric masks and we wanted to give a shout out to Sew the Curve Kamloops. We also mention a local company Desert Lily Clothing that made the custom masks for Two Story Robot.Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)Transcript[00:00:00] Angela: Just buy a mic.[00:00:00] Jonathan: You're just going to buy a mic anyways.[00:00:03] Angela: Why not?[00:00:03] Jonathan: Okay. Well tell me if you do, and then I will also buy the mic and[00:00:06] Angela: Well, okay. I don't want to make you buy a mic,[00:00:09] Jonathan: Well, no, no, no. Cause I, I will, um, I kind of want to[00:00:12] Angela: Let's just buy my mics then[00:00:15]Intro[00:00:15] Jonathan: Hi, I'm Jonathan Bowers. I'm the CEO of Two Story Robot and we're helping Angela build a digital health startup. And we had a bunch of masks, custom made masks that I delivered to my team yesterday. Yeah, it was super fun.[00:00:34] Angela: do people like them.[00:00:35] Jonathan: Yes. Uh, Lindsey posted a picture of her wearing our branded mask, the branded hat, some chainmail, and a sword to vanquish COVID[00:00:50]Angela: that's awesome.[00:00:52] Jonathan: I'm excited We made a, I think there's like 35 or so. Um, so we're distributing everyone on the team gets one, it's the Olsen[00:01:01] Angela: The Olsen mask[00:01:02] Jonathan: got. Uh, I had her use some scrap fabric, whatever scraps she had for[00:01:07] Angela: well, that one has hello,[00:01:08] Jonathan: This one is Hello Kitty.[00:01:10] Angela: That's cute. That's perfect.[00:01:12] That's super fun.[00:01:13] Jonathan: Yeah, it's super fun. We're going to sell them, sell the extras, mark them up a whole bunch and give a, give the profits to charity.[00:01:21] Angela: That's great. Awesome.[00:01:23] Hi, my name is Angela Hapke and I am the CEO of Central Referral Solutions. The company that has launched Clinnect the digital health product, um, that Two Story Robot is helping us with. And speaking of masks I made masks for. Sew the Curve Kamloops, which is a grassroots organization that made over 10,000 masks for, our geographic area around Kamloops and, um, not just mass, they made scrub caps and, um, bags.[00:01:58] So like healthcare workers could put their, their scrubs in their clothes, in a bag that had like a drawstring. So they could just dump them in the washer when they got home and things like that. But it was really, really cool in the beginning of COVID to be part of something that was, um, that was really.[00:02:14] Making an impact like that. So I think I ended up making about, I want to say about 40 scrub caps and about 25 masks.[00:02:26] Jonathan: Yeah, the, uh, we hired a business out of the Sew the Curve to make our masks, somebody new who is just starting a business for the first time. Um, and she, you know, she wanted a Desert Lily Clothing.[00:02:39]She is going to make children's clothing, but then became really active on the Sew The Curve. And so we reached out to her and she was super excited about it. So yeah. Yeah, that's fine.[00:02:49] Angela: Hence the Hello Kitty uh, scrap fabric[00:02:51]yup. There we go. Somebody we can talk about today.[00:02:57]Getting to Know Each Other[00:02:57] Jonathan: Well, I wanted to, I wanted to get to know Angela. I already know Angela.[00:03:03] Angela: But do we like, so this is an interesting part is so we've known each other for a few years now. and I feel like, um, we know each other from like the last five years of our career, but I don't actually know the Jonathan pre.[00:03:20] Pre age 30 or something like that.[00:03:23] Jonathan: How old do you think I am?[00:03:24] Angela: I know exactly how old you are, because you're the same age as me.[00:03:27] Jonathan: Oh, am I?[00:03:28] Angela: Well, you're a few months older[00:03:30] Jonathan: Oh, okay. When's your birthday? What? In December. Oh, so you haven't,[00:03:35] Angela: I[00:03:36] Jonathan: you haven't[00:03:36] Angela: the big four. Oh[00:03:38] yeah, but I mean, you turned 40 during COVID.[00:03:43] Jonathan: Yeah, it was, uh, not the birthday I wanted, but it was still, it was still enjoyable. It was still fun.[00:03:49]Angela: Brad and I will be married 10 years. This December, I will turn 40 this December Yeah, we had plans to go to France. I really lovely trip. And none of that's going to happen now. So no I'm adjusting expectations as is everyone right now with life.[00:04:11] So, yeah. So, so how do we segue into the, who are we?[00:04:17] Jonathan: talk about it. Who, who, who is Angela?[00:04:20] Angela: how far do you want me to go back?[00:04:21]Jonathan: well, I was thinking about this. We met, um, when I was working at FreshGrade. Um, I was, one of the first employees and I can't remember how big the team was at that point, but you, knew one of the founders, Steve, Steve Wandler, or you knew Steve from some other thing and you were doing some kind of project through your MBA.[00:04:44] And I remember that, but I don't remember much about it. I just remember that. That's what you were there doing. And then, I dunno, you went and finished the MBA. I went and did some stuff. And then, and then you were back in Kamloops and you came, I think you came through, um, the innovation center. And I think that's how we got reintroduced.[00:05:04] Angela: I think that was I actually, I think it was Steve again. So Clinnect is, is a long journey. Forget about overnight successes. Long journey has been about three years in the making. We started off as a government project. Um, and we thought we kind of landed on something really interesting.[00:05:24] And I wondered if we couldn't make it some kind of digital health product of some kind. And so I sought out Steve, um, Just because previously I lived in Kelowna, I worked for what at the time was the Okanagan Science and Technology Council, which is now morphed and grown up into Accelerate Okanagan and I, so I knew Steve through that and we remained in contact.[00:05:51]Uh, I helped him, um, with his very first Metabridge events. Metabridge is at its root , um, uh, a series of events that would connect, um, BC and the Okanagan to the Silicon Valley. So I was helping him with that. Uh, we moved to Kamloops, um, because Brad got offered a job up here in Kamloops. It was a great one. We need, we were looking at a transition at the time. Anyway. I started working at the hospital as a project manager at Royal Inland hospital, first in the emergency department and then for the hospital itself.[00:06:25] And that's how I got introduced to a group of surgeons that wanted to do a pooled referral. Um, what we soon found to be unscalable and unsustainable way? And we thought, you know, I think there's a better way to do this.[00:06:38] Hence Clinnect was born. And at that point I reached out to Steve to say, I need a technical team um to do this and I actually I actually bounced the idea that we were bouncing around the ideas of whether I build it in house or um find someone[00:06:58] Jonathan: to do that and right away he mentioned you he said um[00:06:59] oh really? Oh, that's cool. I don't, I don't recall that, but, okay. Yeah.[00:07:03] Angela: And so, and I think that's how we met. And then it just kind of morphed organically from there is I realized like, Oh my gosh, trying as a nontechnical founder to build a technical team would be a little unruly.[00:07:19] And so then you came along and we're like, perfect. You guys can build it. And then I hired a software developer anyway, because she's brilliant.[00:07:28] And,[00:07:28] Jonathan: Oh, she's awesome. Jackie's the, Jackie's the best?[00:07:31]Angela: yeah, so she's been working with you guys straight out, straight out of university.[00:07:36]MBAs[00:07:36]Jonathan: you did the MBA at both the university of British Columbia and Thompson Rivers University[00:07:41] Angela: Correct. So I did my core MBA through UBC Sauder School of Business.[00:07:46] And so you had to, like, I was flying in every other weekend for three days. And it was just getting too much on my relationship with Brad and I just, I couldn't do your number two right away. And then they changed it so that you couldn't take off, you had to start all over again. And I was like, Oh, that's not going to happen.[00:08:06] And the price had gone up in the time that I had started to when I wanted to go back and do my second year. So we went to TRU or Thompson Rivers University, and they were like, Oh yeah, Come well, we'll give you all these credits for your core MBA classes and you can finish here.[00:08:24] Jonathan: Yeah, I did. So I did the same. I did the same MBA program at UBC a few years before you, I think, um, and we had the reason why I chose it was because they had a, they had one that had a part time program.[00:08:39] And then, and they said, Oh, and you can, you can do this from Kelowna. I was like, Oh, that's, that's an easier drive. But when you get into it, it was just, no, you've got to come down for pretty much everything. But I remember those, those, it was like every other weekend I would, you know, leave, leave work at lunchtime ish on Friday[00:08:59] Angela: and wouldn't get home until,[00:09:01] Jonathan: Yeah, like a late Sunday night and just the whole, the whole weekend in that basement. Just[00:09:08] Angela: in the basement. No, I don't think I even remember windows in that[00:09:11] Jonathan: no, but I remember I enjoyed it. I loved it. I[00:09:14] Angela: to say the programming was unreal. It was very, very good.[00:09:20] Jonathan: And my, yeah, the classmates, like I still am in touch with, uh, not as in touch as I should be or wants to be, but I'm still, still in touch with a lot of my cohort. Um, Just, yeah, I had a much better experience in my MBA program than I did in my undergraduate, um, computing science program. It was just so much better just could have done with the driving and, um, yeah, it was also a pretty heavy strain on the relationship.[00:09:46]Undergraduate Degrees[00:09:46] Angela: Um, where did you do your undergrad?[00:09:47]Jonathan: I went to SFU, Simon Fraser University in Burnaby. So I did my undergraduate in computing science.[00:09:53] Angela: Did you go straight from high school to university or did you take some time off?[00:09:57] Jonathan: No. Well, I went, I, not exactly. Like I there's a university college in Salmon Arm. So I did my first year there. Cause it was cheap and they actually had a very, very good science program and, and computing science instructors,[00:10:11] the physics, the math and the computing science instructors at Salmon Arm were just very, very good. Like I remember, I remember in one of our first year computing science programs, doing stuff that. We never even came close to doing in the four years at, at SFU.[00:10:28] Angela: Wow.[00:10:29] Jonathan: Uh, I really liked it. And then yeah, I went to SFU for the remaining six years, six years of my degree.[00:10:38] Angela: Sorry.[00:10:39] Jonathan: six Yeah. I took like seven years to do my undergraduate degree. Yeah. Yeah. I took a year off, not quite a year off. I took basically a year off. I took her a couple of semesters where I only took three or four courses.[00:10:53]Working Through University[00:10:53]Um, I also worked through through university. I had a, I had a very, it wasn't a, it wasn't a hard job, but it was, um, it was very relevant.[00:11:02]Somebody referred me to this, to this person in Hawaii who, uh, was like, who needed help doing, doing some work on websites and stuff?[00:11:11] I was like, okay, well, I'll sure and, uh, he just employed me through through university and it was. No, not a lot of work. It was maybe maybe 10 or 20 hours of work a week if that, but it was in US dollars and pretty good, pretty good wage.[00:11:27] So yeah, I was, and the stuff that I got to do was kind of, um, wouldn't say over my head, but the clients were not the clients I should have been interacting with.[00:11:38] Angela: Right. You're a little bit out of your[00:11:41] Jonathan: they were big.[00:11:43] Angela: That's awesome.[00:11:44] Jonathan: I worked on a pharmaceutical for a large pharmaceutical company helping with some of their, some of their website.[00:11:50] I worked, uh, at one point we had a client that was, um, going to be featured on Oprah. And so they said, yeah, we're going to get an onslaught of orders to our eCommerce site. So we just want to make sure that things are like tickety, boo. And so.[00:12:09] Yeah, he phones me. He's like, Hey, can you, can you spend the next couple of weeks getting ready?[00:12:13] I'm like, okay, sure. And I go in there, I'm like, Oh man, there's a whole bunch of stuff that needs fixing. And I would fix a bunch of things and report back. And then, uh, yeah, it was, it was a neat, it was a neat, like, very, very odd job for me to have as a university student. But, um,[00:12:28] Angela: That sounds like a perfect odd job to have.[00:12:31] Jonathan: it was, it was, uh, I could one work remotely, which in 2000 whatever. um, was a strange thing, right. Working, remote and working on the types of things that I was doing, which I was very excited about. Um, yeah, it was a good, it was a good job.[00:12:47] Angela: Did you, so, okay. So like 15 year old, Jonathan. Did he know what he wanted? Like, did he know that he was going to be doing what 40 year old Jonathan is doing right now?[00:13:01]Jonathan: Um, maybe not exactly, but, uh, pretty close. I think I was doing lots of programming classes and I was doing stuff like that on my own time. Um, it wasn't really though, until I got into maybe grade 12 that I was really doing, like taking it more seriously. And I had, I mean, I, I had basically started this, not this company, but this version of version of this, when I was in grade 12, I had made friends with this, um, with someone in a game who lived in New York, who happened to be a really good graphics designer. Uh, and then one of my other friends from high school and we started building, management information systems for people, for other companies.[00:13:41] They were like, it was really, really small potatoes. Like they were, we built the theaters, um, the, uh, like a system for the theater to update their what's what's playing.[00:13:50] Um, and so we built that and we like learned all sorts of technology and ideas. And then, so yeah, it was, it was great.[00:13:56] Uh,[00:13:57] Angela: is so cool.[00:13:59]Linear paths vs Z-shaped paths[00:13:59] I like your linear process.[00:14:03]Uh, well, if you want to, I have what we call it, like the, the, the Zed. Uh, path[00:14:08] Jonathan: Okay. Your, Oh your Oh, my path was linear. Oh yeah.[00:14:11] No, my path was very,[00:14:13] Angela: Yes. Yes. Sorry. I meant your path. Not your, yeah. Your path. Like, I feel like 15 year old Jonathan, you could potentially see, okay. Where[00:14:23] Jonathan: Oh, yeah. Yeah, it was, it was pretty clear from when I was fairly young and that, I mean, that comes from some pretty significant privilege, right? Like I've got a computer when I was quite young and then never, um, I didn't feel like I was missing anything.[00:14:39] I mean, I also, I also had to like save up and buy some, buy some things, but I, you know, I had some jobs, which again was some privileged cause my dad helped me get those.[00:14:49] and uh, yeah, and then I just got like a lot of experience, very, very young and very relevant experience. But yours was a Z yours wasn't straight like an arrow like mine was?[00:15:02] Angela: Oh, Oh boy, uh, grew up on a ranch in Saskatchewan. Um, and then I left for university when I was 17,[00:15:12] Jonathan: Oh,[00:15:12] Angela: because, well, because I'm a December baby. So I was actually, uh, 17, my whole first semester of university. I moved four or five hours away. Um, Lived in an apartment with two friends and had just way too much fun, um, applied to university, got in, uh, for a kinesiology degree.[00:15:31] actually, sorry, I applied and got in under a business degree. So a marketing degree is what I was going for. And then I went to one economics class and one statistics class and hated it. And so I went down to the student counselor and said, I don't think this is for me.[00:15:51] Like, I don't even like where was my resiliency? No idea. Um, went down to that basement. Said to her. I can't like I can't do this. And she goes, well, what are your interests? And it was like, I really liked sports when I was in like in high school. Like, that was my thing. I loved sports. And she goes, well, have you looked at her kinesiology program?[00:16:10] I looked at it and it involved a lot of, a lot of classes that were like, I took fencing,[00:16:18] Jonathan: Yeah. As a class.[00:16:24] Angela: Oh, Tai Chi. Ooh. I took Tai Chi, like just random. And I looked at this and 17 year old[00:16:30] Jonathan: You went through the like parks and recreation catalog and thought that,[00:16:35] Angela: Yeah. She could have handed me the parks and recreation catalog. I was like, yep.[00:16:39] That's for me. Um, yeah. Seventeen-year-old Angela was, was. Going to do that and pair it with an education degree. So now I went from marketing and I was going to, because Lethbridge was the university of Lethbridge was well known for its education degree. And you could get a dual degree in five years.[00:16:58] And I thought, well, that just makes a lot of sense. And so I was on the path to be a phys ed teacher[00:17:06] Jonathan: I don't imagine you being a phys ed[00:17:08] teacher at[00:17:08] Angela: no, I would have been an awful teacher period. so third year I've now decided I just want to go do something different for the summer. So I decided to move up to Lake Louise and worked for whitewater rafting company, which I did. four months turned it into eight months and then they decided that I had to go back and finish.[00:17:29] I had 15 classes to finish and I had a goal of finishing the by September. So January to September, I was going to finish 15 classes.[00:17:39] Jonathan: that's that's ambitious.[00:17:40] Angela: So I went and I told somebody this, and she goes, Angela, you can do this.[00:17:46] but you cannot go below B in any of your classes. Well, 21 year old Angela was up for the challenge and I did it. So I finished by September and they phoned me and they were like, Angela, we're really impressed with your work ethic and how you came back and you really upped your grades and you kept the up blah, blah, blah. We'd like to invite you to do your master's program with us. And then all of this, I'd never got into the education program because I didn't have a 4.0 GPA.[00:18:19] And like four kinesiology students get into the ed program, they forgot to mention that to me when I was like, this is what I want to do. Uh, so then, uh, I got this phone call and I said, thank you very much. Um, but I have a job in Banff and I'm just going to go be a, like a, uh, gonna go be a ski bum for the winter.[00:18:39] And she just laughed and she goes, okay, have fun? So that's what I did. And what was only supposed to be eight months in Banff, turned into four years.[00:18:47] Jonathan: Cool. You ski bummed for four years.[00:18:53] Angela: In a way. Yeah, but I actually got like a pretty grownup job at a pretty young age there. So I was, I was a project coordinator for a destination management company. So it was managing these big corporate events and vacations and things like that. That's where I learned, like everything I kind of needed to learn for project management in the future, because I worked for this amazing woman named Laurie who had this really cool company, but she was like, she was really tough on , on, um, internal workflows and what must be done so that you could hand over projects really easily.[00:19:30] So she kind of trained us all to, and that set the stage for, so for me, kind of in the future. So then we met, I met Brad, we moved to Kelowna. I started working for the Okanagan Science and Technology Council, as I mentioned. Um, got into tech, which I like, then I was like, Ooh, this is fun. Um, in all of this, I've like, I've done wedding planning.[00:19:52] I've I've, I've worked like you talk about what you worked during university. I worked at the Nikka Yuka Japanese gardens. Like as a tour guide wearing a, um, a yukata. So it's not a con kimono, but it's a yukata. And like, it was just like Zed path. And then, um, moved to Kamloops, got into health care. And then I blended those two passions of healthcare and technology.[00:20:20] And here we are,[00:20:23] Jonathan: That's so funny. It is a Zed path, but I like that, like I like.[00:20:27] Angela: the ridiculous it's Zed path.[00:20:29] Jonathan: No, I feel, I feel like my path is a little restrictive. Like it's, it's good. It's focused, but I don't have a ton of breadth of experience.[00:20:40] I mean, I have, I have different experiences, obviously. I'm not totally, uni-dimensional, but where you, you know, you've got these other things that you can draw on that are okay.[00:20:52] Roll your eyes.[00:20:53] Angela: I rolled my eyes because it's like, yeah, I guess I can, you know, you're, you're right there at different experiences. That's for sure. But, Oh man, I also feel like I delayed. My career by at least four years by sidetracking and going to, you know. Like Brad always jokes that my time in Banff was my never, like, it was never, never land.[00:21:17] So it didn't age or gain[00:21:20] Jonathan: Gain anything. You're stunted by four years,[00:21:24] Angela: I'm stunted by four years. So we would joke about when, how old I'm turning. We minus four, because[00:21:29] Jonathan: you have the emotional maturity of a 30 something year old, not a, not a nearly40 year old.What Do You Want To Do When You Grow Up?[00:21:38] Angela: Yeah. And Brad, so Brad has a similar path to you and I just find it so fascinating when I meet these people that are like, okay, they were in high school and they could see themselves doing what they do now.[00:21:50] Jonathan: Yeah, I don't, I don't see that a lot. Like I've I talked with not a lot of high school students, but a fair number of high school students and, and they, you know, some, some of them are like just clearly like, yep, I want to program.[00:22:03] I want to be, I want to do this, but most, most just have no clue.[00:22:09] And it's hard, like, and the pressure to the pressure to have made all those decisions in grade nine, you know, what do you want to do when you're in your late twenties? When you're in grade nine? I don't[00:22:20] Angela: I don't have a clue. Why should I know that?[00:22:24] Jonathan: it seems unfair[00:22:26] Angela: I think I, I even think like at 17 or 18, when you're heading into university, even then, like the 30 year old Angela was dreaming of what I'm doing now, but it wasn't ever really sure if that's even like, and that was just a decade ago.[00:22:44] Jonathan: yeah. I think, I think my, I was fortunate in that I I understood what I wanted to do, maybe. Well, not, not specifically, but I understood the direction that I wanted to go in. And always, I mean, I always felt this desire to, to start a company or to start and start a business. Um, and eventually got there.[00:23:07] I had rose colored glasses though, when I was 18 or 19 thinking, thinking it would be a lot easier and a lot, like a lot more financially successful than I would that I am.[00:23:20]It's Mostly Luck[00:23:20] Um, but I think we both, and I think we both need to check that for a minute though, because you and I graduated, maybe you less. So just, it took a little bit longer to graduate from university. But when I graduated from university, it was, um, so it was 2002 and I was in Alberta. Everything the world was my freaking oyster.[00:23:43] Angela: I could, I could have got a job in five minutes there, anything, and, and, and now, so I look at, you know, the environment and the work environment that we graduated into versus these kids that better. I shouldn't call them kids. These young, young people are graduating into right now. And I'm, I, I can't even[00:24:04] Jonathan: So, yeah, I can't, I mean, yeah, like I did, I did school right when the tech crash happened and, um, it was a great time to be in school and, uh, a very, very fortunate time to have a job that was. I'm paying for it. Like, I, I came out of, came out of university with very little debt.[00:24:26] Angela: awesome.[00:24:28] Jonathan: like, yeah. And then, and then also managed to get, uh, get a job in public sector, um, which paid quite well.[00:24:35] Uh, yeah, as my first job, I, as my first job out of university, I, within three months was a manager of an IT department. I mean, I had, like, I had nobody to actually manage. It was just a title. I didn't have any, I didn't have any experience managing anyone, but they needed to put me in excluded staff.[00:24:55] Angela: This is what us as we, because we sit on the cusp of gen X and millennial. Um, wow. What an amazing time to be born.[00:25:04] Jonathan: Yeah. Yep. Super lucky. I think I it's, I've reflected on this a little bit and I mean, there's, there's a ton of luck that is unearned completely, you know? My dad introduces me to some folks and says, Hey, you should hire my son and go and do the, you know, go and hire it. Do a good job. Like I'm not, I'm not saying like I didn't deserve to work there, but I probably didn't deserve the introduction.[00:25:32] Um, I didn't earn that, but earned my keep once I got there. And then, and, but everything, everything up until up until now feels like it's just luck. Like, I've just, I've just been lucky. Right? Like meeting, meeting Steve at FreshGrade was pure luck. It it, you know, there wasn't there wasn't, I didn't go off looking for it.[00:25:53] I just happened to be in the right place at the right time and was doing, doing the right kind of thing. And he said, Hey, we should, we should chat. Uh, okay, sure. Let's let's chat. And then, um, you know, everything's, everything's like all the clients that we have is luck. It's just people, people show up and we happened to be there and.[00:26:14] It happens. I think the skill is maybe recognize not, not squandering that luck, not, not,[00:26:20] um, not letting that opportunity pass because I do see that happen a lot where people, people, people are in the right place at the right time. And, you know, I've taught with mentored these people and. And they just don't have the, they don't, they don't, they don't see it either.[00:26:34] They don't see the opportunity or they're missing some, some skill to actually, uh, be able to take advantage of that opportunity and then they miss it. And so I think that's some, one of the skills that I've managed to figure out is that I can recognize that luck is happening. Try to increase my surface area of luck and, uh, hopefully, um, hopefully turn that into, into[00:27:00] Angela: I like that. Um, I also love where we're at right now in the fact that we're now at the experience level and the age and the, um, just time in life where we can start handing the opportunities down like to, to others that are like, you know. When I take a look at, um, hiring Jackie was pure luck, I found Jackie by pure luck, that being said.[00:27:28] when I, you know, kind of got to meet her and understand, you know, where her passion was and, and her interests and things like that, I was like, Oh my gosh. Like if you got to come work for us, like, I can't afford somebody to be hired yet, but like, I gotta, I gotta find a way to get you on board. And just being able to give that.[00:27:47] You know, to be able to give her her first job out of university, what it felt so amazing. And, and those kinds of things, where we get to give the opportunity now to those that are exiting and graduating at a time, that is just crap. And now we're in the positions where we can give those, you know, um, help them out in, in some ways just feels.[00:28:11] So amazing.[00:28:12] Our Families are Our Best Fans!Alex and I were listening to Spotify. And I don't pay for the premium. and of course the ads pop up it was an ad for a podcast that was, that was being released on Spotify.[00:28:27] Comes running into my room and she's like, Mama, somebody else is releasing a podcast too. She's like you, I thought that was pretty cute.[00:28:43] Jonathan: Oh, she's so proud of her mom. That's so cool.[00:28:48] Angela: like, Aw, warms my heart. She was so excited for me

covid-19 ceo new york spotify business technology france healthcare hawaii startups mba silicon valley oprah winfrey mama ecommerce bc british columbia lived seventeen curve saskatchewan olsen gpa tai chi linear digital health aw hello kitty ubc simon fraser university kelowna banff zed tru kamloops lethbridge okanagan sew burnaby sfu lake louise technology council thompson rivers university our families woman ceo salmon arm ubc sauder school jonathan how jonathan so jonathan yeah jonathan that freshgrade

How do we price a digital health product?

Play Episode Listen Later Jul 28, 2020 28:03

Show NotesPricing a new product is hard to do and requires that you step outside your comfort zone. We talk about freemium and why we don't want to build a free product. How we might figure out a good price. And the 4 Ps of marketing.Warning. We say "pee" and "poop".Fact CheckWe discuss the"P's of Marketing", despite both having an MBA we cannot remember which they are. The term we are discussing is Marketing Mix, which is the 4 P's of marketing: Product, Price, Place, and Promotion. Developed by E. Jerome McCarthy in the 1960's, and has been a staple of any University Marketing class.The term "Freemium" is used a lot in this episode, a good introductory read on the topic done by the Harvard Business Review. It is a concept introduced in the 1980's but gained popularity around 2010. Clinnect briefly considered this route with the product until we realized the product was too valuable with the minimum feature set to be a free product.In this episode we delve into definitions around patient referral intakes, such as central intake vs pooled referrals vs directories, etc. The Canadian Medical Association uses a policy statement to define the use, however it does not take into account the use of algorithms, which Clinnect has now introduced this into landscape.The pricing strategy exercise that we discuss at the end is the Van Westendorp Pricing Model. The exercise includes surveying potential customers to see where the "sweet spot" for pricing is, the questions are worded well to incite the right responses, yet you have the flexibility to tailor to your product. The final results are in as of the time this episode airs, but you will have to wait a couple episodes to find out!Find Us OnlineAngela Hapke - @angelahapke - https://www.clinnect.caJonathan Bowers - @thejonotron - https://www.twostoryrobot.comCreditsProduced by Jonathan Bowers and Angela HapkeMusic by Andrew Codeman (CC BY 3.0)Transcript[00:00:00] Jonathan: So I'm wearing, um, Hokas. I don't know if you're familiar with the brand of shoe.[00:00:05] Angela: Nope, but they look very nice Jonathan.[00:00:07] Jonathan: They have, they have these really thick, thick sole, I just don't wear them running very much. So they're just kind of sitting around and I thought, Oh, these shoes are good. Like they're good shoes.[00:00:17] Angela: are good podcasting shoes.[00:00:18] Jonathan: Yeah. So they're my podcasting shoes, I put them on before we record a podcast in case I need to stand. Hi, my name is Jonathan Bowers. I am the CEO of Two Story Robot, a software development company, helping Angela and CRS built a product. And my son just pooped in a potty for the first time.[00:00:37] Angela: That's amazing.[00:00:40] Jonathan: willingly. Well, so not willingly.[00:00:43] He. Just before bath uh bath time is like my routine with him. So we go in the tub and he's bathing and he's kind of squatting in the tub playing around and he's pooped in the tub, three or four times. And I try not to make a big deal out of it, but when I do, I often like just kind of yell and it scares them a bit. So I tried not to do that when he started to grunt, as he was squatting down in the toilet, like, Oh, okay, let's get out, do a quick, dry off.[00:01:10] And then we put him, put him on the potty and he sits there and plays with his toes and plays with the handle and and out comes, a poop.[00:01:17] Angela: And Jonathan, how old is Zack?[00:01:19] Jonathan: He's 17 months old now.[00:01:22]it's pretty fun.[00:01:22] Angela: so happy for you.[00:01:27] I am.[00:01:27]Hi, I'm Angela Hapke and I am the CEO of Central Referral Solutions. The company that has launched Clinnect and I cleaned poop out of my almost three year olds pants, five times in the last few days.[00:01:46] Jonathan: Oh my goodness. Is this a regression? Is this some kind of anxiety induced thing because of some change in school or is it[00:01:55] Angela: yeah, you don't, you don't know my daughter is pure, "I don't give an F. I am way too busy. Digging for worms and playing and in the sandbox to worry about the poop I've just had in my pants. " But then she's upset with herself afterwards. So we do have progress. The shame is there. Oh yeah. So we just want her to not feel that and just go poo on the potty[00:02:31] Jonathan: So tell me, tell me, uh, how can I, how can I segue[00:02:36] Angela: are we segueing from peeing[00:02:38] Jonathan: and pooing pants?[00:02:40] Into pricing. the three P's pee, poo, and pricing.[00:02:45] Angela: I'm very sure I learned that in my MBA.[00:02:47]Jonathan: I think it's product, um, product pricing and position no, position pricing and p-p-p-p . So tell me about pricing. So you originally originally Clinnect, maybe not originally, but one of the ideas was that Clinnect was going to, there was going to be some free aspect of, of Clinnect[00:03:09]Pricing[00:03:09] Angela: Definitely! We were about, um, just over a year ago. We were discussing this. And at that time, the whole freemium idea was, um, I don't want to say it was hot because it was a little bit old by then, but it was definitely something that was well understood and well used in the, in the, in the tech industry was the whole freemium idea.[00:03:35] So we wanted to take that idea and shifted over to, um, healthcare software, which isn't really done except in more like the, the consumer, um, models.[00:03:46]Then I had a few conversations with a few people about this. And while, you know, we had floated it by the, the users, the future potential users and they were all for it. but I had like a conversation with a, a bit of a mentor of mine and he had very strong opinions about freemium products and, um, he kind of just said to me, Angela, Why would you ever give anything away for free?[00:04:13] Like, could you at least just charge 30 bucks a month for it? Why would you ever just give it away for free? I just think that model's so ridiculous. I kind of hit me a little hard because I was like, wow. Geez, everybody's doing it. That's what I thought we would do too. But it got me thinking in and about the users that I, that I have. And, um, it did make a lot of sense. I was like, yeah, honestly, to my customers, what is 20 bucks a month to them? You know, it's a few Starbucks coffees.[00:04:46] Jonathan: Well, and I think, I think also if they're not, if they don't see the value in it enough to give up the 20 bucks. Or 30 bucks or whatever it is, then either the value isn't enough or, you know, maybe it's, you know, maybe the customers are just not great customers[00:05:03] for us. and[00:05:04] we don't, you know, we don't want those.[00:05:06] We don't want the people that don't recognize that it's valuable.[00:05:09] Angela: exactly. Exactly. And, and it was. I don't want to say it was a bit insulting to our customer to give it away for free, and then just give them like the bare, bare, bare minimum. Um, but I felt like it kind of was because we do have a bit of a sophisticated customer. So, uh, so that's when I decided that I would launch with a free trial period.[00:05:37] And especially for our first users, because they're just there, they're our beta customers that were there working with us and figuring a lot of this out.[00:05:45] Jonathan: The value in that first, those first few customers is heavily slanted towards us and less so towards them[00:05:52] because we're[00:05:52] Angela: why, that's why the original groups are getting along free trial period with us. And then, um, that'll shorten as we get, uh, kind of just different tweaks and things smoothed out. so I figured when we launched, we would go with a, like a, a low cost model basic model first and then have premium, uh, features that we would add on for an additional premium price.[00:06:18] And so that's actually how I went out and sold it to groups is I said, I said to them, we're going to give you, , like six months a free. Free for you guys to use for six months. , and then, you know, right away through like, well, how much is it going to cost us when the free trial is over?[00:06:36] And I haven't never given, a stuck price on it. I haven't given a firm price on it at all. I've said it'll be anywhere between kind of that 10 to $25 a month, which nobody has batted an eye at. 10 to $25 a month for the basic product.[00:06:54][00:06:54] Jonathan: The market size for this at the moment doesn't appear to be super huge. So, you know, to have, uh, Even a hundred dollars a month as the base plan. That's not that doesn't, that doesn't make a very sustainable business.[00:07:08] Angela: No, I mean, it's one, it's one product and it's um, yeah, it's not going to make us millions and millions of dollars, I think that's when it gets interesting as to, yeah, it might, it might, it might anchor us to low. I'm willing to take that risk at this point right now, given, the forward momentum by a lot of companies to do the type of thing that we're doing.[00:07:37]Central Intake[00:07:37] Everybody's running towards central intakes, but not really knowing how to do them or how to create a sustainable model around them. What we're doing is central intake in a really easy to use fashion. Um, While others are trying to figure out how to be, how to do it, how to do a central intake and how to be sustainable.[00:08:01] Jonathan: Who were you talking about as the others? Like, do you mean like competitors or,[00:08:05] Angela: some competitors. So like some EMRs are looking at to creating what they call a central intake. But when you do a deep dive into what they're calling a central intake, it's not really a central intake and it certainly isn't a pooled referral.[00:08:21] Jonathan: Right. Yeah. what would be the differentiator between Clinnect and some of these other attempts at central intake? So you mentioned, you mentioned like, um, pooled referral. Yes. But like in what other ways are they not really central intake?[00:08:37] Angela: Okay, so let's back up and we'll talk about define these. So central, what is the central intake? It's one place for patient referrals to a particular specialty to go.[00:08:50]If you need to send your patient for a knee like a knee consult, you would send it to a central intake would be considered one fax number that all the ortho surgeons use to get all their, um, referrals in one spot. That's a central intake.[00:09:11] So that's handy-ish for a lot of groups. Who are just trying to track some wait time data, understand what the referral demand is, blah, blah, blah.[00:09:22] A pooled referral is typically paired with a central intake. So it's kind of like central intake's, like baseline and pooled referral's like the next step that you take. And that's where I, as a primary care provider want to send him my patient referral for a knee. I can send it in on typically a standardized form.[00:09:44] That has like a choose for me button or box that I check off where I don't have to choose the surgeon. I don't have to know all the surgeons in the region. And it goes into a pooled referral of which somebody assigns, um, a surgeon to that referral. So Clinnects differentiator, is it as both a central intake, a pooled referral.[00:10:11] But we do not rely on someone and their potential biases and things like that to assign it, or even just like kind of a picking like next, next, next. But we have a specific algorithm that runs in the background that can be, um, controlled by like tweaks of the dial to ensure that that referral goes to the right surgeon.[00:10:42] And has a way to balance or purposefully imbalance those referrals to each surgeon. The the other, the other one is the confirmation that the primary care provider receives. Some competitors or are starting to do that a little bit, that kind of that back and forth.[00:11:00] Um, but with ours, it's central intake, pooled referrals, and confirmations back. And then plus hopefully a whole set of other features in the future.[00:11:12]Jonathan: So the, on the topic of pricing though,[00:11:14] Angela: The basic plan includes the ability to send a referral to a specialist in a pooled way. So you have a choose for me option. So you don't have to know who's who So we're doing a Clinnect is sending referrals in, um, a far more secure way than we've seen in the past.[00:11:36] Um, certainly over fax machines, but even more so over some, um, the way that, uh, some competitors are using it. so it's a secure way to send a referral. You don't have to choose a specific surgeon and you receive a confirmation back with the surgeon's name or a specialist's name.[00:11:55]and then on the specialists end they have the ability actually, sorry, on both ends, you have the ability to historically track those referrals as to when it was sent, who it was sent to. And all that data is incredibly important when you're looking at wait times and things like that, because it captures that go date and that go time.[00:12:16] And then on the surgeon is, um, specialist's end you have a dashboard that shows you all your referrals that you have received. They're categorized their urgency coded. Um, and in our basic product, we are allowing the ability to re categorize and re urgency code or switch urgency codes on those referrals to ensure once again, because we have an algorithm running in the background that everything is copacetic on the, on, on the backend too.[00:12:52]Meaning if a a primary care provider sent through a whole bunch of hernias and only like two of them were hernias, they're going to initially get allocated as hernias in a balanced way. Um, but they weren't hernias. So when we recategorized, then it can, can change that.[00:13:10] Jonathan: And that I know, I know we try not to use the word triage, but is, is that what you would have considered triage, where they're coming in and, and you're sort of re categorizing things that were mistakenly categorized and, and adjusting the urgency.[00:13:27]It's not Triage[00:13:27] Angela: So , we are careful with using the word triage because triage assumes that there's been medical eyes on it. So meaning that the, the surgeon has taken a look at it, or the specialist has taken a look at it and actually done their categorization and their urgency. So we don't know for sure that that's being done so we don't call it triaging. We call it categorization.[00:13:46] Um, so the baseline product includes your, um, your login to our secure system that has dashboards with historical referral tracking an algorithm that runs in the background and ability to choose a surgeon or have the, the, um, system choose for you. And on the specialist end the ability to accept or reject that referral. So, that's huge because in the past, Uh, in kind of like old workflows is that acceptance or rejection of referrals was a long antiquated process of either getting something, on your computer or your fax machine.[00:14:29] And you're looking at it and you're like, Oh, this doesn't apply to us. We need to send it back and having a phone call and that re faxing and yada, yada, yada. So[00:14:39]Jonathan: So what's the plan for some of the things that we know will be in the premium? Cause I think, I think a lot of the premium features are yet to be discovered because people aren't using a system like this yet, which is exciting.[00:14:50] Right. We get to, we get to be at the front of this and see, you know, you know, moving to a more digital process. Um, A more secure process and a lot of, you know, a lot more efficient process. We get to understand what some of the, some of the new pains that, uh, MOAs and specialists will start to encounter and primary care providers.[00:15:10] But what are some of the things that we know are going to be part of that more premium[00:15:17] Premium Feature SetAngela: I think number one is, is, um, a communication method or a messaging system back and forth because of the, the reason that I just exp or the example that I just gave to you about, maybe you receive a referral. And it's inappropriate or it's missing pieces, or it's not a complete referral and you're, you're trying to put it together and you just need to do a quick message back to the primary care provider.[00:15:43] So instead of picking up the phone wasting, you know, maybe a few more minutes of your time interrupting the very busy person on the other end of the line, you can just send a quick message within the system back and forth. And, uh, potentially allowing attachments with that messaging system. We haven't talked about that as to whether that'll be included in this, in the next premium release or not, but doing something along that line.[00:16:12] Um, and then, so that's a big one. That's huge. That would be, um, I think something that people would find incredibly valuable[00:16:22]Jonathan: and at one point we were talking about the, pooled referral and being able to be deliberate in balancing or imbalancing, those referrals is that and giving the specialists the ability to tweak the dial, so to speak.[00:16:36]Angela: And that's the one that I'm waiting to hear feedback from the specialists on after using our product for a little bit is what does that exactly look like? So I can think of lots of examples where you'd want to tweak the dials. Um, I'm going to go off on mat leave. I am, slowing down my practice. I'm on the verge of retirement. we have, we have a specialist right now that goes away for a few months, um, per year on, he does like doctors without borders for.[00:17:07] I think it's three months, every year. And so he wants to turn off all urgents and then turn them back on. Um, there's just a whole bunch of examples. And then, and then once we get into being able to tweak the dials, then we get into some interesting conversations around wait times and how groups can work together.[00:17:30] To start balancing their wait times based on the categories that they've already defined. And those referrals are already coming in at. So they have that tracked data and they know their demand for each category of referrals and starting to get some balance around wait times they can't do that right now because number one, it's, um, referrals don't come in categorized. When a referral comes into a specialist office, it's not given a category,[00:18:00]Jonathan: the category comes in with the referral. That's something that the primary care provider needs to specify[00:18:06] Angela: correct. There would be, um, a reason for referral.[00:18:13]So a lot of EMRs, would kind of autofill a, um, an initial diagnosis for them. But EMRs, are different. Doctors are different and sometimes you wouldn't put the same wording in as your counterpart.[00:18:31]And so it's kind of all over the map. It helps the specialists because they, they understand it, they see it and they go, Oh, okay. Then, you know, that looks like it's urgent, we should get them in right away. Or, ah, you know, I think that's a bit of something that could wait a few weeks and, and whatnot, but there was no standardized categories for referrals.[00:18:52] This is, what's what we're starting.[00:18:55] Jonathan: So we've got a standardized list that the primary care provider picks from, but it's still, it's still on them to make that initial categorization, which they could get wrong.[00:19:04] Angela: Oh yeah. That's why this is why it's important for us to have the feature in for the specialist to re category something, categorize something. So something comes in. this, um, kind of all encompassing category that because they're not really a hundred percent sure. So they're going to put it as, you know, abdominal pain. Um, whereas, you know, specialist's going to look at it and be able to even quickly look at what's happening in the history and go, Oh, that's, we're specifically this, um, which is important because then that helps define their journey and.[00:19:42] You know, helps us get better with, predictions and wait times down the road. it's actually something that I kind of, I guess, now that you've, you've brought it to light, I kind of took it for granted that we were doing this referral categorization.[00:19:57] Jonathan: I just assumed that was happening. Like the way, the way we built it, I assumed that was just mimicking an existing practice,[00:20:04] Angela: No. The first beta users that we have coming on from specialty groups are building their own.[00:20:11]There are Two Customer Groups[00:20:11]Jonathan: Um, I want to, so one of the things that we've talked about, which I think might be important to highlight is, is we have two customer groups on, in this product. And so there's the, there's the specialists where that premium feature set makes sense for right. We're charging the specialists to have access to these features.[00:20:33] there's another user. There's the primary care providers who are primarily sending, sending referrals to the specialists. How does it work for them?[00:20:42]do they pay for it?[00:20:43] Angela: Yup. Um, and this is why I've been wavering on what the price is and that's kind of why I've given it a range. Is it, may, it may happen. Likely happened that the primary care providers are a different cost than the specialist. So if you look at it from a primary care provider perspective, they get great value right off the get go.[00:21:09] They don't have to know all the surgeons in town and who's who they just have that choose for me option. They know that their, their patient referrals getting through it's confirmed. Yay. It's kind of done after that. From a referral perspective, which is the piece that we're focused on. Specialists get a little bit longer term value from that, the ability to look back at the historical, um, the algorithm that we talked extensively about, the category, the urgency, the, just the ability to almost wait list manager referral , is a longer term value. So there might be a higher cost for the, uh, specialists versus the primary care providers. We'll see. I haven't figured that out yet.[00:22:00]Jonathan: Yeah, it will be. I'm excited to, I'm excited to gather some feedback from both sides of that from both sides of that exchange. And just see, you know, see how valuable it is to have that list just there. So you don't have to think about it or look it up. Yeah. I'm hoping that there's some value in it being easier as well.[00:22:25] And it's not, I mean, I think sending a fax is probably pretty easy[00:22:29]and the confirmation, the confirmation is, that feels like an obvious value,[00:22:33] Angela: Exactly. The way that fax machines work typically with EMR right now is a lot of it is e-faxing. So there isn't a ton of, you know, the physical paper paper shuffling around and it is, they have you EMRs have made it very easy to fax it. Let's really just kind of hit the fax button.[00:22:54]I think, and that's why from a primary care provider perspective, it is very patient centric because yes, it's maybe easy to send to the general surgeon that you send to every single time, every single patient and hope that they do all the things that you're sending them, because you don't, you have built a relationship with them and you don't really know who else is in town.[00:23:18]But that could mean a very long wait list. Whereas this takes away all that guessing[00:23:26] and all that, um, kind of pigeonholing and, and things that have happened in the past around that. So it is very patient centric from the primary care provider perspective. Uh, the confirmation back is huge because then that's like time not wasted. In the future so that there is, there is the value proposition there for them.[00:23:50] Jonathan: We talked a lot about pricing.[00:23:51] Angela: we talked a lot about pricing.[00:23:53]Jonathan: I'm excited that you have decided to not do a freemium model.[00:23:58] Uh, I just, I think it's, I think your mentor friend is correct.[00:24:04] Is it Steve? Okay. I think this is more valuable than to just give it away. We can give other stuff away. We can give away the podcast we can give away, you know, things that, that are valuable, but the day to day value that you would get out of using the software is significant.[00:24:25] And so that. You know why we need to be able to keep the lights on . We need to be able to be motivated, to continue to provide that value and to innovate on innovate even more on the value that's being provided.[00:24:41] If it's free, then what's the reason like. What's the reason to keep it's just a cost. Like it's not, it's not, it's maybe free to them, but it's not free to us.[00:24:48] Angela: Exactly. What's the motivation for us to make it better.[00:24:51] Jonathan: Yeah. It's just costing time and money or time and resources to continue. Mmm. To continue supporting free users. So I'm, I'm excited by that. I think, I think that's a much more sustainable way of building a business. I mean, there's, I think, I think one of the, one of the interesting things to come out of COVID is a bit of a rejection of that old way of doing things, which is growth at all costs[00:25:19] Angela: Oh, are we seeing that? Isn't that interesting? The shift in forget about unicorns[00:25:27] Jonathan: yeah,[00:25:28] Angela: enough. Yeah.[00:25:31][00:25:31] And so then when we did finally launch and I was doing, you know, demos, one of the first thing people ask is how much is it going to be? And to be honest, we haven't priced it yet. So come up with a guesstimate at the moment. Not that I hadn't thought about it before, because they certainly had, but I hadn't come up with anything firm.[00:25:56] Pricing ExerciseJonathan: So there's this, there's this pricing exercise that I really like[00:26:00] Angela: I don't think I like anything with a word exercise in it, but[00:26:03] Jonathan: it's not an exercise, it's just like a method.[00:26:06] Angela: You're just rebranding it.[00:26:09]Jonathan: I don't know how to pronounce this person's name, Van Westendorp's price sensitivity meter.[00:26:15] And it's it's, um, four questions that you can ask that kind of help you gauge what the price might be. So you ask at what price would you consider the product to be so expensive that you would not consider buying it? So that's the, that's the high side. That's too expensive. At what price would you consider the product to be so low that you would feel the quality could not be very good. So that's the too cheap price. and then at what price would you consider the product starting to get expensive so that it's not out of the question, but you'd have to give it some thought before buying it.[00:26:54] And that's the, uh, on the expensive for the high side. And then at what price would you consider to be the product, to be a bargain, a great buy for the money? And that's the, the sort of cheaper or the good, the good value, the good value side. And I think if you ask those questions and we've done it, we've done it on a couple of, uh, on a couple of projects and have been surprised by the results in a good way.[00:27:17] Like surprised that the, the pricing that we had maybe come up with in our minds was a little low.[00:27:25]Angela: should I try it? Should I like try a few customers and then report back?[00:27:30] Jonathan: I would love to hear that[00:27:31] Angela: okay. I'll report back.[00:27:34]3 Ps Jonathan: wait, just wait. I'm going to look up the three Ps. Is it three Ps,[00:27:38]Angela: I'm going to go product placement and price.[00:27:40] Jonathan: you think product placement and price?[00:27:41] I think. I don't know. Uh, it is, uh, product place, price and promotion. There's four Ps. So the four Ps pee and poo was not one of the four Ps of marketing, so, Oh, MBA.[00:28:00] Sorry.

covid-19 ceo marketing technology doctors price healthcare startups meaning mba product starbucks ps promotion pricing digging harvard business review developed specialists digital health mmm triage geez emr crs freemium marketing mix emrs moas canadian medical association woman ceo hokas jonathan so jonathan yeah angela you

Launching with Silly Bugs