Podcast appearances and mentions of scott well

In today's episode of the IC-DISC show, we had Scott Abels on the show to discuss his work as the owner of Precision Valuation Services. Scott has been in the business valuation game for over a decade and has helped over a hundred companies with business valuations. He fills us in on his two-part strategy for boosting a business's value. First, Scott runs the numbers to give owners an accurate picture of where they stand today. Then, he guides them through personalized steps to substantially increase that worth over time. Beyond the valuation nuts and bolts, we also dig into Scott's role as a business coach. How he really takes the time to understand each client's unique situation and goals. Plus, Scott keeps things straightforward with transparent, flat fees. All in all, If you want to learn how assessing and growing your business from the inside out can pay off big time, give it a listen.   SHOW HIGHLIGHTS Scott Abels specializes in business valuations and operates Precision Valuation Services, aiming to increase a company's value through a two-step process. We discuss Scott's expertise in conducting over a hundred business valuations and his 13 years of experience in the field. Scott's approach involves a formal valuation to determine current business worth followed by a strategic process to enhance that value. We cover Scott's background as a CFO and how it provides a unique perspective on business valuation compared to traditional CPA views. Scott shares real-life examples, such as identifying profit leakage due to incorrect pricing and over-delivering on customer service. Scott details how a comprehensive valuation and growth coaching can help businesses plan for a more profitable future and prepare for potential exit strategies. We explore the value of Scott's flat fee structure for his services, which helps eliminate surprises and empowers clients financially. Scott offers an initial consultation to deeply understand client needs and is willing to invest his own time to assess the potential to help them. Scott is open to answering listener questions about his services and expresses a strong passion for helping entrepreneurs grow their businesses. We highlight the joy of working with business entrepreneurs and the fulfillment that comes from helping them succeed and contribute to economic growth. LINKSShow Notes Be a Guest About IC-DISC Alliance About Precision Value Services GUEST Scott AbelsAbout Scott TRANSCRIPT (AI transcript provided as supporting material and may contain errors) Dave: Hi, my name is David Spray and welcome to another episode of the ICDisc Show. My guest today is Scott Abels. Scott owns a company called Precision Valuation Services and they work with privately held entrepreneurial companies who are wanting to increase the value of their organization. Scott does it with a two-step approach. The first is he does a formal valuation to see what the current value of the business is, and then he has a process that he takes his clients through to help them increase their enterprise value. It was an interesting conversation. Scott's got a great background and he's laser focused on helping entrepreneurs be even more valuable and have more valuable companies. Good morning Scott. Welcome to the podcast. Good morning Dave. It's good to be with you. So are you in the mountains somewhere or are you here in Texas somewhere? Scott: No, I'm just bragging about my summer trip to the Smoky Mountains. Here as the background, I'm talking to you from Flugerville, Texas which is just outside of Austin. Dave: Awesome. Well, I'm glad that you could make it. So let's get right to it. You are. I believe you call yourself, or some of your clients call you, a enterprise growth coach, or did I butcher that description? How do you describe yourself? Scott: Yes, the growth coach. That's exactly how I describe it. And what does that? Dave: mean, do you help them, like go to the gym and lift weights and get bigger and stronger, or is there something different? Scott: Well, it's kind of lifting weights for your business. Is that maybe a way to finish that analogy? So what I try to do is to help business owners first of all figure out what their business is worth today and then figure out how to make it worth more in the future. And this is especially helpful, as you can imagine, for a business owner who is maybe planning to exit his business. You know, eight or 10 years, whatever down the road, that's going to be his retirement, and so he knows what he wants his retirement income stream to look like. But maybe it's not quite there today, Maybe the value of his business is not quite where he needs it to be. And so the growth coach program is to help business owners like that or any other business owner who just wants to take his business today and grow it and make it more valuable in the future. Dave: Okay, and is it a whole comprehensive program, or can they just start by having you do the valuation first and see where it goes from there? Scott: Yes, dave, usually where we start is with the valuation to see where the business owner is today, and then the growth coach program is done on a month by month basis, but there is a structure to it where we walk the business owner through working on the key drivers of their business that drive value, that either improve value or that help to eliminate negative value, if you will. So it really is done on a month by month basis. It's not a long-term commitment or anything like that, and I find, dave, that really puts the focus on me helping them to achieve results quickly. So if they're not seeing the results that they want, they don't have to continue with the program. But it is very helpful and it definitely helps business owners to get to where they want to be Okay. Dave: And so if they want to just start with the valuation and then go from there, they can right. Scott: Yes, and actually a lot of clients do come to me for the valuation first for various reasons. It could be to buy or sell their business, it could be to transfer shares of interest to family members or to key employees. It could be for any variety of reasons, and often what happens is the natural discussion that we have about hey, here's the value of your business, mr Business Owner, and here's a couple of things that I see in your business, using my CFO background, that if we could improve these, your business could be worth even more. And oftentimes then it involves into, it evolves into a growth coach program or a growth coach opportunity. Dave: Okay, and it seems like one of the biggest complaints of that our clients have shared with me when they have the valuation done is that it just seems to take forever. They needed the valuation yesterday. They really don't have 60 days to do it, which I understand that 60 days is kind of a normal turnaround time, but do you have any options where you can have, like an expedited turnaround time? Scott: Yes, absolutely, and so I should go back, I think, first Dave, and just also add so my background is really as a CFO, as a leader of a financial leader, a executive of a business division of a larger business, so really in corporate America Dell and Motorola. So my background is kind of unique in that I approach that business valuation from the perspective of a CFO as opposed to the perspective of a CPA, who may be a tax CPA or something. To answer your question, the typical turnaround time you're right for the industry is probably 60 to maybe even 90 days. But we really strive to be able to provide expedited delivery to these business owners because oftentimes there's some kind of an event, there's some kind of a deadline that they have. So I offer pricing that is pressing for a standard valuation with a 45 day delivery timeframe, and then I also offer pricing for expedited delivery as little as two weeks, and of course the prices is more when you need that kind of option, but it is there for the business owners who need it and who are really pressed for time. Dave: Okay, well, that is good to know. Okay, so have you done many valuations? I mean, is it a couple, is it a dozen, is it more than a hundred? I mean, is this your first rodeo at doing this valuation stuff? Scott: Actually, I've done more than a hundred of these things and I've been doing business valuations for about 13 years, when I originally I left corporate America after about 25 years, started my own business and initially I started out as a fractional CFO and I enjoyed that work. What I found was it was very competitive and very price sensitive, very much driven by the price. But I had clients who needed help with business valuation and so I went off and got the CPA credential which is essentially a CPA for business valuators went off and got the credential and started doing business valuations for some of my clients and figured out a couple of things. I really enjoy doing these. The valuation is like a business puzzle and having a CFO's mindset. It just naturally fits with what I enjoy doing, and there's also not nearly as many people who can do these things and do them well. There are some folks who dabble in these, but there's very few folks like myself who do nothing but business valuation. That is solely what I do, so I spend almost 100% of my time working on either business valuation or the growth coach which evolves out of that. Dave: Okay, so what are the characteristics of a company, who you are best positioned to help and add value? You're either kind of revenue size or other characteristics that somebody's listening to this they think, oh, he's describing me. Scott: I need to call Scott, so I would say that the size, the kind of the sweet spot is maybe from two to $10 million, is where I see the revenue yes, that's annual revenue. That's where I see the majority of my clients, but I see some there smaller for sure, and I see a number that are bigger as well. This is for the valuation is usually driven by some kind of a need that the client has and again, like I said, it may be a buy-sell need, it may be a tax-driven need, it could be a divorce, it could be any number of reasons that they need that. So oftentimes it doesn't so much matter even the size of the business if they really have that need to get the business valued and they have to have a third-party valuation. That's what really kind of drives the valuation side of things On the growth coach though what we're really, what we really are most successful there is. As I said, business is probably between two and $10 million generally, but they could be larger and businesses that are maybe doing good today, but they'd like to do even better, and ideally they're looking down the road and saying, hey, my business is $2 million in sales today, but I'd like to get it to $10 or $20 million and more profitable than it is today. How do I do that? And so growth coach is a perfect solution for those types of business owners who maybe they're doing okay, but they'd like to figure out how to do better, especially with an eye towards the future. Dave: Okay, that is helpful. Do you have an example that you could share with someone, either just on the peer valuation side or the growth coach side, somebody who came to you with a challenge and you were able to, you know, add value? Just, I just find personalizing and having stories helps the whole message resonate better. Do you have a success story or two you can share? Scott: Yeah, I've got a couple I've got one on each side there today that I can share. Let's talk about the growth coach side first. So I think about a client recently that has a service business, and they are here. They were here in Austin and it was an established business that was making several million dollars a year. They had a couple of different product lines or service lines, I should say and they had been pretty profitable for a number of years. And just over the last 18 months or so their profitability had just started to dry up and they were doing more revenue than ever. So the business owners came to me and they said hey look, our revenue is growing and we got this new cool service that's really profitable but for whatever reason, we're just not seeing the bottom line profit. Can you help us figure this out? And so by doing some analysis for this business, we were able to quickly help them figure out a couple of things. Number one this new service that they were really touting and trying to sell as much of this as they could. It was not priced. It was actually priced at below break even. Dave: Oh no. Scott: And the reason was because, obviously, the business owners are not cost accountants, so they figured out what the direct costs were that were related, you know, the technicians and their time, but they didn't factor in any of the overhead or some of the other indirect costs, and it was a pretty significant amount that they were missing, and so they weren't fully collecting the you know the fully burdened cost for this service. And so the answer and they're busy bidding these projects as fast as they can, and so the answer was really very simple. For that we were able to calculate a new, better hourly rate. They would bid these projects based on the number of hours and an average hourly rate. We were just able to say, hey look, your hourly rate was X, and so you need to add this much to it, and if you do, then you're going to be profitable again. The second thing that they had going on, though, was on the other revenue stream, the old revenue stream. They had one customer that was pretty big part of that, and this was their quote, unquote their great customer, you know their cornerstone customer, and what I found out is I did the analysis was I found out that they were selling this customer a certain level of service, maybe here, but the actual service they were providing was way up here and as you talk to the actual technicians and the folks who served that customer, you realize that the customer is getting whatever you want to call it deluxe level service, but they were paying for standard level service. So this customer is really not profitable at all. Dave: No wonder the customer, no wonder the customer loved them so much, no wonder they're their favorite, most happy customer. Scott: So I was able to show them, you know, that this customer was really not again, was not profitable, and they thought this was their poster boy, if you will, customer. And this had just happened over time. Is what we noticed, dave, was that over time, you know, the technicians or the folks who serve these customers had just kind of been, you know, just generously adding in a little bit of this and a little bit of that, a little bit more of my time, and so over time, this customer really evolved into an unprofitable account. So the combination of those two things made a huge difference for this business and they quickly found their profitability again, even better than it was before, and as they were growing, you know, their profits really accelerated quickly. So that's an example on the growth coach side of things. Dave: That's great, I can give you one on the valuation side please. Scott: This was a lot quicker. So I had a client who the client was the I guess it was the surviving children. The father had owned a business interest it was like a 1.9% interest in a successful electronics business there in Houston, and so the father had passed away and the children were just simply trying to liquidate his interest so that they could just divide his estate up and close out the estate. Well, the business had some super high-powered attorneys I think it was Vincent and Elkins actually was their attorneys and they came back to this family with a value for that interest of like $40,000. That's what they wanted to pay him. And so the family said, okay, well, if that's what it is. And so luckily, their attorney talked them into getting evaluation and what I found very quickly was the value that business interest was over $400,000. So it was a 10x difference in value. Dave: Maybe it was an honest mistake. Maybe they just forgot a zero. You know those honest mistakes never seem to be to the benefit of the person not making the honest mistake. Scott: Well, I'm not going to say that there was ill will, there was negative will there on the side of the business, but I will say that the difference was huge and for the cost of evaluation, for a few thousand dollars, they were able to realize a 10x return on that, which was a fair return in the first place. So you know, stories like that are there especially make you feel really good when you're able to really help people that they wouldn't have been able to do this on their own. Dave: Sure, yeah, those are two great examples. I like that. That first example their most profitable line and their most profitable customer that they're so excited about, turned out to be not their most profitable customer and not their most profitable service line. Scott: Yeah, and you know, dave, the thing that I find in working with business owners is, like I said, that unprofitable customer evolved over a number of years so that customer started out being their best customer. Maybe they're only customer, I don't know, but over the years it just the pricing and the service, the way that they provided the service, just got a little sloppy. And a lot of businesses that I see don't have a lot of discipline in the way that they price their services. They priced it at whatever it was priced at 10 years ago when they made it up, and plus 10% or something. But they haven't taken the time, maybe lately to go through there and really say, okay, what should it be priced at today? Is it at a reasonable price or not? And maybe if their bottom line is positive, relatively positive, they may feel like it's that it's where it needs to be. But a lot of times when you do that kind of analysis around pricing which is one of the things that we would do in the growth coach program you may find areas of opportunity there that they didn't even know existed. Dave: So it sounds. I hear your enthusiasm and passion for this work. What is it about this? You know, just aside from the dollars and cents, did you find so satisfying about serving these clients? Scott: Well, I like I may have said this earlier to me this is a business puzzle and I just enjoy the challenge of being able to unravel what may seem like a really complicated thing to the business owner, but to unravel it for them, to explain to them what's going on and then to help them, to help them to be better off at the end of the day. And so part of it is just, intellectually, I enjoy the challenge of these, of the business puzzle, if you will. And secondly, it's just it's nice to be able to to walk away from helping a client knowing that you've done something for them that is added value, that they're ecstatic about, that they couldn't have done for themselves. And so, just like you and I, would go to a specialist for whatever it is that we might be doing, business valuation for a lot of people is a specialization that they really need. They need somebody on their side, somebody to help them understand this stuff, and I just enjoy doing that. Dave: Yeah, that really resonates with me because that's how our business is, that, yeah, we add value. But the part I find most satisfying is just the sense that you've made a difference, you've helped. And, of course, my heroes are entrepreneurs. So the fact I get to work with entrepreneurs all day is I find to be just very satisfying that I feel like I'm helping the heroes of the economy. You know, just do a little bit to help them, be a little better at it. Scott: Yeah, let me add. I want to add on that too, dave, I completely with you on that. You know, having spent 25 years the majority of my career really in corporate America, I saw some really sharp people and some hardworking people. But I can tell you now, having spent 13 years with business entrepreneurs, people who they don't get a paycheck from some company on a, you know, bi-weekly basis, they have to go out and do it themselves, and I can't tell you how enjoyable it is to work with these types of people. They're usually, they're usually intelligent or they're, you know, studious people. They're driven and passionate about what they do. They're very positive and upbeat people and it just feels like a good crowd to hang with. Right, I mean, it's a positive, uplifting experience working for these clients, as opposed to, you know, working in a post office or something like that. Dave: Right, yeah, just being a cog. Scott: Exactly, I can really understand your point about working with these entrepreneurs and just how, how enjoyable it is. You know, it's just good to work with people like that. 0:19:01 - Dave: Yeah, and I think, if I'm correct, I think the data shows that the vast majority of new jobs in this country come from those smaller entrepreneurial companies. It's not the Fortune 500 companies that are creating the net jobs, and I hesitate to think that an additional government job is progress towards anything. Scott: Yeah, agreed. Dave: So what's the best way? If somebody wants to reach out to you, can they reach out on LinkedIn? Is that a good way to? Scott: LinkedIn is a great way. I've got all my email and the phone numbers and things on there on email on LinkedIn, on my profile page. That's probably the easiest way. I've also got a website that they could visit precisioncfosolutionscom, and that's, like I said, linkedin is probably the easiest way to reach out to me. Dave: If they just want to cut to the chase and just give you a call, what's the number they should call? Scott: 5.30 and that's my cell number. It comes directly to me, okay. Dave: Now, if somebody calls you, though, do they need to be careful that the clock's going to start ticking after the first minute and they're going to get a big bill for you if they only talk to you for half an hour? Scott: 45 minutes, no, and that's another pet peeve of mine, Dave. I think you and I may be on the same page on this one too. I don't charge for the initial consultation and, frankly, I don't charge the client until we both agree on the scope of work, whatever that is, and we both agree that we want to do it. And oftentimes that means that I have invested some of my time already to get there. Things like an initial phone call just to understand whether or not I can even help them with what they've got, or whether we need to maybe refer them to someone else if I can't. Things like initially looking at their financials. So oftentimes, to figure out the fee structure for the particular client, I need to see what the financials are and ask a few questions about what's going on there, how complex is the business entities and that sort of thing, and I don't charge the clients for that. So the other thing that I really I think is really beneficial to my clients as well is everything we do is based on a flat fee Okay what the fee is going to be, and it will never be more than that. It may be less than that, but it will never be more, and I think this really empowers the client because they know what they're going to spend. It's not going to be a penny more unless we both agree that we want to add something to the scope of the work. But otherwise I believe the flat fee structure really empowers the client, gives them a good feeling that they know what the cost is going to be. The other thing is it does. Is it really? Again, I think it incentivizes me to get my work done as efficiently as I can. But ultimately, like your original question, there's going to be there'll be a fair amount of conversation I may have with these clients before we ever even talk about what the fees are and the fee actually starts Okay. Dave: And if you're anything like me, that's probably your. Maybe the favorite part of your day is getting a phone call from somebody out of the blue that starts with hey Sunso, gave me your name. They said you might be able to help me. All right, don't you love those calls because you're like what's going on? Tell me what's up, what's the story, drill down, figure out if you can help them or not. Scott: Yeah, exactly Exactly. I enjoy getting those kinds of calls and you know, dave, I just tell my clients look, if a 10 minute conversation with me will save you a couple of hours trying to figure it out on your own, I'm happy to do that. Whether it's on the front end of engagement, whether it's on the back end of an engagement later on, or whether it's a client that I'm not even going to do work for, I'm happy to give a few minutes of my time because I think it. Number one, I just enjoy being able to help people solve problems and number two, you know, as we know, it all you know evens out. In the end it all kind of pays, pays itself forward. I think when you do the right thing for the clients, they can't wait to tell their friends hey, this guy did this for me and he didn't even charge, you know. And ultimately, you and I are looking for happy clients who get what they need done. Dave: Yep, I agree. Well, as we're around in the home stretch, I've got a couple of questions for you that I'm hoping will be a little bit curveball likes. I'm hoping to kind of put you on the hot seat. All right, go. So the first one. It's real simple, it's one sentence. I'm not going to clarify what I mean. You just have to give me your gut answer. Okay, tax max or barbecue? Scott: That is really close. I'd say tax max. But barbecue is probably 1B, so yeah, tax max. That's where I usually go for on the weekends. Dave: The best answer I received to that question. I'm going to get who it was and they said it depends. If I know it's going to be like top 10 percentile barbecue, I'll take the barbecue. If I know it's just going to be average, I'll take the Mexican food, because the tax max has more tolerance for imperfection. Would have to agree with that. Scott: It sounds like an engineer's answer to me. Dave: I mean a tough old piece of brisket. That's like chewing an old piece of leather. Scott: I mean no matter how tasty it is. Dave: it's not a great experience, but, heck, I can go to Taco Bell and make do right, if I'm hungry. It doesn't have to be world class, okay well, that one was pretty easy. This one's a little tougher. This one may make you think so. If you had a time machine and you could go back in time and give advice to your 25 year old self with the knowledge that you've had over the last you know, few decades, what advice might you give to yourself? You? Scott: know I get to do that, something similar to that, with my kids who are of that age now. The advice I would give to myself is I would have started my own business much sooner, when I was younger, you know, before I had kids to provide for and such. Start early building the value of that business. Whatever it is, you're going to learn so much from that. You may fail along the way You're going to learn, but you're going to learn a tremendous amount and by the time you get to be our age now, the benefits of that would just pay off dramatically. I think my background in corporate America is really good, but a background as a business owner, I think, is it cannot be matched. If you want to do the things like you and I, you want to run your own business and ultimately, if you want to generate wealth. You need to own your own business right Because if you're working for somebody else you're generating wealth for them, and then you have an income stream that will end when you stop working. And if you own a business, you have generated wealth and you have other options. You can. You know you could sell that business if you want and take the equity you built. But yeah, I would. That's what I would do. I would have started my own business much sooner and learned the ropes. Dave: That is probably the most common answer to that question oh, interesting, yeah, they had struck out on their own sooner. Well, I think we've covered a fair amount. Is there anything that we didn't talk about that you think we should talk about? Anything that you think we should have? Scott: I think we've covered. I think we've covered most everything and I appreciate you having me, having me on the podcast with you here, and I would love to you know, to help any of your listeners If they've got questions, however big or small, I'd love to be able to help them with that or point them in the right direction. So thank you so much for having me and my pleasure, I enjoyed it. Dave: My pleasure. I appreciate you carving time out of your day and I hope you hope the rest of your day is great and I'll look forward to catching up with you another time. Thank you, Dave. Thanks for having me All right. Special Guest: Scott Abels.

Scott Dennis, Assistant Superintendent of the Maryland Division of Rehabilitative Services (DORS), joins Carol Pankow in the VRTAC-QM Studio and tells us about how Maryland DORS increased recruitment and decreased resignations by raising salaries to compete in the regional job market. Learn how they opened the door and proved the case.   Listen Here   Full Transcript:   Music} Speaker1: Manager Minute brought to you by the VRTAC for Quality Management, Conversations powered by VR, one manager at a time, one minute at a time. Here is your host Carol Pankow.   Carol: Well, welcome to the Manager Minute. Scott Dennis, assistant superintendent of the Maryland Division of Rehabilitative Services or DORS, is joining me in the studio today. So thanks for joining me. How are things going in Maryland, Scott.   Scott: Things are going well, Carol. I appreciate the opportunity to join today's podcast. Excellent.   Carol: So a little background for our listeners. I did have some familiarity with Maryland DORS. I had worked with Sue Page. She was the former director and a national level. We were on the executive committee together and Sue and I also did a couple panel presentations and that was super fun. And I was so disappointed, you know, when she had retired in '18, I had just worked with her. And then like the next week she goes, I'm retiring. She had sent me a note and I knew you had been her deputy and I think you were named right in 2019 to replace her, was that right?   Scott: Yeah. I came into this position an acting role in 2018. Sue left in June of 2018 and I was named, the Acting. Was permanently placed into the position in January of 2019.   Carol: Gotcha.   Scott: Almost five years now.   Carol: Nice. Well, it was really fun because early in '19 you and I, we were working on that RSA workgroup around Rethinking Performance. So I liked getting to know you and realizing, Oh, you're the fiscal guy too. You were the fiscal guy for the agency. So it's been fun to have that kind of a little lens into your agency. So I know you've had some unique challenges that we're going to get into later. And I understand that there had been some previous runs at trying to get employee wages increased, which, you know, had failed. So this was all prior to you being at the helm. And the state of the recruitment and retention issue nationally has been front and center for every VR agency, I think. And you were able to more recently secure a rather significant employee pay increase. So I am sure our listeners are on the edge of their seats and are anxious to hear, How did you make that happen? So let's dig in. So Scott, can you tell our listeners a little bit about yourself, like how long you've been with DORS and how have you got to the position you hold today? What's kind of the path you took?   Scott: Well, sure. I kind of happened into VR. I was working in a private sector in retail and was looking to do something different than that. And as anybody who's ever worked in retail, there's a lot of long hours that are very odd and so forth. So I was looking to do something different and happened to come across an advertisement in the paper for a director for this program called the Business Enterprise Program for the Blind.   Carol: Oh, wow.   Scott: It kind of struck me. And so I said, Well, I've got a retail background, I've got a business background, let me get my shot at it. And so I put in my application and went through the interview process. And about four months later in 1990, I became the director of the Maryland Business Enterprise Program for the Blind, which was kind of unique because my background was not in the area of either VR or in blindness, but I did bring that business background, which is what the agency at the time was looking for. It was a great experience. The business enterprise programs for the blind bring their own unique challenges and so forth, and trying to operate a business environment inside of a state government. And you've got some real challenges in trying to do stuff fast and an organization is trying to slow you down. But it was a great experience. I was the director for BEP for six years and then our state director, who was Bob Burns at the time, said, I need some help over at DDS. And I went, What's a DDS? Because my focus had been strictly on BEP. And so he sent me over to the Disability Determination Services as the assistant director over there, and I oversaw sort of the administrative side of the DDS and did a number of activities over there. We moved into a much larger facility. We also at that time moved off a state legacy system onto *Levi. And for any of those who have been around a long time and have a program, you understand how far back that went. After about five years of DDS, moved over, back over here to the side of the shop and became the director of business services, which included all the administrative functions of the agency and sort of the financial piece of it. And so I was that until 2018 when I became the assistant state superintendent.   Carol: Very cool. I had no clue. Your days started with BEP. That is amazing. Good for you. You have a definitely a great broad history there. Paint a picture for our listeners about DORS and what agency you live under. What's your designated state agency and how many staff do you have in VR? And you already said you had DDS, but is that service under your purview as well?   Scott: Yeah, we're  housed within the Maryland State Department of Education. We're probably one of the first big divisions of the Maryland State Department of. We were created in 1929 and we at that time the division had two employees and a budget of $15,000. And the only reason I know any of this is because we've got the enacting legislation sitting out in the hall. We had two employees and $15,000 worth of state appropriation at the time. And of the two employees, one was the director of the agency and the other one was his secretary. He was also the counselor at the time as well. So obviously but we've been here ever since. The Division of Rehabilitation Services is comprised of two main programs that we operate are the VR program, obviously, as well as the program. In total, we've got 648 employees in total, of which 416 of them reside in the VR program and the remaining 232 reside in the DDS program. Within that VR program operates an Office of Field Services, which is very much operated the way the general agencies operate and then we have an Office of Blindness and Vision Services, which operate very much as a blind agency. And so we have a director of each one of those offices. They have their own budget and own staff and so forth. Then we also operate our Workforce and Technology center, which does a lot of our training and so forth, as well as a number of community based services out in the field and so forth. So yeah.   Carol: Yeah, you have a large operation. Holy cow. I didn't realize all of that. That's a bunch.   Carol: So let's talk about your unique position as far as the state. You border other states, as does every state. You know, people probably think duh, but there's something special about where your state is positioned in this country, because I always hear people say that you're the training ground for people that move to RSA. Can you talk about like what that geographical situation has played for you as far as your staff?   Scott: Yeah, and appreciate that. It does provide a unique situation for us. We border Delaware, Pennsylvania, Virginia and West Virginia as well as D.C. We do have some challenges, especially when we're competing with the federal government. And so because of the federal agencies that are housed here, it has become a real challenge because obviously the states don't pay as much as the federal government does, in particular around the Washington, D.C. area. The salaries are much higher than what we as an agency was able to offer. I mean, in some cases we'd have staff leave and they would nearly double their salaries as a result of that. In some cases, you just can't blame them. It has been a challenge having some of that federal government around, you know, as especially the presence of it, you know, large presence and so forth.   Carol: So we all know about this great resignation, you know, that's been talked about in the news. VRs experienced that itself. So how has that impacted what was happening in your agency? What were you facing for vacancy?   Scott: We were facing a high level of resignation. It was almost I hate coming in in the morning and turning on my computer and opening my email to see how many people resigned that particular day or week. And so we got hit pretty hard. We had about 40 counselors and supervisors, so it was about 30% of our workforce. We had vacancies in and that's on the VR side, on the side. You know, for those agencies that operate that, we had 59 vacancies and our examiners, which was about 45% of that. And, you know, the big culprit was they were going elsewhere, both private and public, to organizations that were paying them substantially more money than what we could afford, at least at the time. It hit us bad.   Carol: Well, I know your number's up there. I'd heard from some other directors talking about you like a 60% turnover in counselors and all these crazy numbers. It's hard to imagine how the work is able to get done. So obviously, you've got this geographic situation, you've got the great resignation going on, and you decided to embark on a journey where you wanted to get these wages increased. Can you tell us more about what went into that?   Scott: It was more than just me. I mean, it was a total agency effort. And I'm talking about from the top. In 2021, we got a new state superintendent who was from Texas. And so he was obviously very new, very young and high energy. And so being one of the large divisions and he wanted to have a one on one with me. And so we sat down and we talked. And what he wanted to know what DORS was to begin with and what VR was because he'd always been in education and so forth. And so we, you know, we talked and his first question, you know, real serious question was, what's your biggest challenge? I said, I can't hire, I can't retain because our salaries are so low. And I gave him an example. I said, we've had a recruitment out for three weeks now and we've got one person who is applying and they don't even meet the qualifications down in Montgomery County and Prince George's County, which are two largest counties in the state as far as population, but they're also the two counties that encircle Washington, D.C. And so the obviously the wages down there are extremely high because of the federal government. And so getting any staff at the wages that we were paying was next to impossible. We couldn't recruit, period. That was just the part of the problem. And so, you know, after I told him what the wages were, he even coming from the south out of Texas, even by his standards, the wages were low. So he put together, you know, he tasked the senior management, not only of the Maryland State Department of Education, but also of DORS to start working on a salary adjustment. Obviously, with something like this, it takes all hands on deck because it's just not one person who's doing all the work and guiding this. And so he tasked us and so my staff started doing feelers out to other states to find out what they're going for. We looked at the federal government and some of the positions that they were hiring for that had sort of equal entry level requirements. We looked at our counties. Some of our counties were paying way more than what we were. And so we took all that into consideration in looking at what is it that we wanted our salaries to look like. The other piece of this that was probably sort of the saving grace for us. Our counselors are in a classification series in this state that's only unique to DORS. It doesn't cross other state agencies or anything. And because of that, our Department of Budget and Management allowed us to do what they call an off cycle adjustment. Typically when they take a look at their salary adjustments and so forth and see whether they need to rescale them, they're looking across all the state agencies. They've got to balance who's got money and who doesn't, money when they start to raise salaries for, you know, let's say, an office secretary. Well, every agency has an office secretary. So they've got to have to balance this all out. When they say, okay, we're going to raise the office secretary's levels, well, they only had to look at us. They didn't have to compare us to anybody else, which made it a lot easier. And because a lot of our salaries, the way the state funds us, they put most of our state match dollars into our case services budgets. And so we've got just a small amount that actually goes towards salary. And so when we kind of pulled this together and say, okay, where can we go with this? We said, Hey, for a little bit of investment from the state side, we've got more than enough appropriation and federal funding over here. We can support this without any problem. So the meeting started in September. We kind of got going in earnest just after the Christmas holidays. We spent basically from October through December polling just gathering information. And then in from about January on, we started writing this up, getting everything put together. And then by late April we had the package ready together and we presented it to our Office of Budget and Management and Director of State personnel, and we suggested a threshold that we thought we could go to. They didn't quite agree with that. So there was some negotiating with the Department of Budget and Management, but we landed on a on a figure that was acceptable that they could live with that wasn't so far off that they were going to have problems with other state agencies as well, once they learned about what we had done. Our superintendent really wanted to push our salaries. He wanted it to be the highest in the nation.   Carol: Wow!   Scott: And he was pushing very hard to get us there. Didn't land there.   Carol: So how far did you get? How high did you get to go?   Scott: We got a substantial pay increase for them. We got, depending upon where they started, it was well over 20% pay increase for our counselors and examiners, which really stabilized it. I mean, it kind of gives you an idea, our salaries, starting salaries for what we call our VR counselor ones, which are individuals who come in with just a bachelor's degree, no experience. So we kind of have to build them up. We were starting at like 41,000 between 41 and 42. Our VR 2-counselors are individuals who have come in with a master's degree, no experience or some experience. And they were starting around 44,000 at the time and we were able to get them up. I mean, today our starting salary for counselor one is 57,000 and a couple of months with the new fiscal year will go to 58. Our twos were starting them at 60,000 and they'll go up to 62 in July. And then we have a technical specialist series and these are for individuals who again, have master's degrees, have been here a couple of years. They're starting in the upper 60s and low 70s now.   Carol: Yeah, good for you. That's pretty amazing. So were there other positions included? So it's not like your examiners or counselors. Were there any other types of positions in the agency include?   Scott: Well, we had to go back and do a readjustment because it affected both our counselors and our supervisors because it's a series of counselors, one, twos, technical specialists and supervisors. Then we have our regional supervisors and our regional directors. Well, because of it went up by grades and steps. Basically our regional supervisors were making the same thing as our office supervisors now. And so we had to raise them. When we raised the regional supervisors, they were making the same thing as the regional directors. So we had to raise the regional directors, but it had to happen over the course of time. The first push was the counselor series and so forth, and then we had to come back about a month later and do the rest of the others and so forth. So yeah, it's been sort of a work in progress and we still have some other classifications to take a look at as we kind of move down this path.   Carol: I wondered about that. If you had some work left to do.   Scott: Yeah, yeah, we do. We have to kind of go back. I mean, our support staff, we've got to go back and we've already started that work already to start looking at that group as well, because again, those classifications go across all state agencies, so we have no authority to raise those salaries. So we have to go back and do what we call a reclass them, which means we have to take a look at their classifications, see whether or not it still fits the job duties and so forth. So that's the only way I can raise that series, those individuals up. I just can't do what we did with the counselors. And in some cases, those salaries and all that are all controlled by the union.   Carol: Yes.   Scott: And so you've got to kind of have to work through all that stuff. So those positions take a little bit longer to kind of get through.   Carol: That makes good sense. So how long did that take you for this?   Scott: The first like I said, we started in 20. We started in September when I first met and we started in September. Late October.   Carol: Was that 2021?   Scott: Right.   Carol: Okay.   Scott: And then the pay raise went into effect on July 1st of 2022. So it took us nine months to kind of get it all put together and work through all the processes and doing the negotiation and so forth. So yeah.   Carol: And it's interesting because you are a union state as well. I came from a union state too, so there's extra things that go into play because I know some other folks have been successful across the country, but they didn't have that added complexity to it. So it was good to see you were able to do this in that environment.   Scott: Yeah, well, I mean, one of the things is even though we're part of a union, because the series is strictly DORS, we brought the union in once we had kind of got everything kind of worked through and said, okay, here's what we've done. They could have said, Yeah, no, we don't want you getting a pay raise. We worked at it that way just because and we had to cross even within our parent agency, if our parent agency, the Department of Education had a classification series and some of the stuff that they did, this would have never happened.   Carol: right.   Scott: Because of that uniqueness, we were able to get it done.   Carol: Yeah, the stars were aligned for you, for sure. So how have these increases impacted your staff recruitment and retention?   Scott: Oh, yeah. Big. I mean, it's like I mentioned earlier, we couldn't find staff or if we did, our supervisors and directors were making the decision of, I got to have a body, and so in some cases you're just getting a warm body. This has nothing to do with the person or anything like that. But they were probably individuals that this may not have been the best fit. But because you're sitting there as a supervisor and you've got 3 or 4 empty caseloads sitting on your desk, at least if I can get them in and get them do some work that's less work that I've got to do and so forth. So we were making some decisions on trying to sort of balance whether this was the right fit for people, but also looking at the number of people that are actually applying for the job was extremely low. I mean, we might come up with 4 or 5 individuals that make like really good candidates. And then when you made salary offer to them, they went, Uh, no thanks. In some cases we actually had made salary offers to individuals who had interned with us and wanted to work for us. And then we made the salary offer and they went, no thanks.   Carol: They're like, I can go work at Target instead.   Scott: You're exactly right. Because the salary, especially down in Prince George's and it is extremely high. Maryland has the highest median income in the country. You know, it's driven by about 3 to 4 counties in this state that drive that. And so that kind of shows you how tough it is in some other jurisdictions to find people and retain people is extremely difficult. Like I said, you know, one of those recruitments was just before we put out the salary change where we had gotten one individual. We got the permission to start publishing the new salary and we went from 1 to 40 in about two weeks.   Carol: Wow. Good for you.   Scott: For example, we had a recruitment out for this for about a month and maybe have gotten 25 to 30 applications. We re-advertised and got 170 in 3 weeks. So we went from 30 people to well over 200. So it obviously had a tremendous impact. In fact, I just had a regional director in talking with me earlier this week, talking about the quality of individuals that we're now seeing, because I haven't seen this high level of quality of people that we've gotten in years. So yeah, the impact has been immediate.   Carol: That's terrific. Have you had any staff want to come back? Maybe that left?   Scott: Well, actually, funny you asked that. We went back out to we had several staff. members who left 3 or 4 months earlier, and these were good staff. Sometimes you have staff leave and you go, thank God. Other times, you know, you see staff go out the door and you go, What a loss. And so we had about a half a dozen staff that had recently left that were sort of, oh, man, I hate to lose them. And so we reached back out to them and we were able to get four out of those six back. We almost got five back. But when they went to talk to their new employer, they went, Oh, we'll give you a pay raise. So she ended up getting a pay raise out of it because we told her what we were going to give her and they went higher. That's the benefit of a private sector situation versus, you know, state government type of situation. So we were able to get some seasoned staff back really quick. I mean, literally within weeks after the new pay plan went into effect. So yeah, it's stabilized. I'm seeing right now what I would consider sort of normal turnover. Now you're back down to 5 to 6% turnover rate versus 25 to 30% turnover rate. It's really made a made a difference in the world. It's stabilized the agency. We have a wait list. We had to basically shut it down because we had so many vacancies. I mean, we have had one and we were bringing people off the wait list. We just had to literally just shut it down. We couldn't handle. The individuals that were coming in the door that met the criteria for Category one. We were struggling with that along with our pre-employment. We just couldn't handle. We couldn't do it. So we shut it down.  Once we got stable. Our regional directors and director of Office Field services came to me and said, We can handle bringing people off the waitlist now. And so we've been able to start bringing people back off the waitlist now.   Carol: Good for you. That is terrific news is a big win all the way around. I just wondered if you had any advice for other directors and leaders across the country as there may be interested in doing something like this in their state. What advice would you give them?   Scott: The biggest advice is you've got to get buy in from your senior secretary, superintendent, whoever is your most senior, most person in the agency, because at the end of the day, they're the ones that are really going to have to go to bat and particularly when you start dealing with the counterparts over at your budget office who are always going, Oh, that's going to cost us a dollar. No, I don't think so. That's where you really need to have sort of that political clout to kind of push some of this stuff through, because it's not, it's not easy. And again depending upon the environment, to some degree, we benefited from the environment itself because obviously we weren't the only state agency losing people. And so the state, I think, recognized that they had to do something. Because even other state agencies around us couldn't hire people because of the state wage. And so I think we kind of hit it right at the right time, so we were able to do it. So I think the combination of two. One, we had a superintendent who had no problem to go banging on the secretary of budget management's door and say, I need this in order for this program to function and opening the door and then letting the rest. of the team go to work and prove the case.   Carol: I Like that you said that, prove the case. So if folks wanted to reach out to you. What would be the best way for them to contact you? Because a lot of times our listeners will say, I want to talk to Scott Dennis about what he just said.   Scott: Yeah, I mean, anybody can reach out to me. My email address is Scott Dot Dennis (D e n n i s) @maryland.gov.   Carol: Excellent. I really appreciate you joining me today and congratulations on the win. I just wish you continued success as you're working through your other positions. This is very cool. Thanks, thanks much.   Scott: Not a problem. Thank you, Carol.   {Music} Speaker1: Conversations powered by VR, one manager at a time, one minute at a time, brought to you by the VR TAC for Quality Management. Catch all of our podcast episodes by subscribing on Apple Podcasts, Google Podcasts or wherever you listen to podcasts. Thanks for listening!

About ScottWith more than 28 years of successful leadership in building high technology companies and delivering advanced products to market, Scott provides the overall strategic leadership and visionary direction for Azul Systems.Scott has a consistent proven track record of vision, leadership, and success in enterprise, consumer and scientific markets. Prior to co-founding Azul Systems, Scott founded 3dfx Interactive, a graphics processor company that pioneered the 3D graphics market for personal computers and game consoles. Scott served at 3dfx as Vice President of Engineering, CTO and as a member of the board of directors and delivered 7 award-winning products and developed 14 different graphics processors. After a successful initial public offering, 3dfx was later acquired by NVIDIA Corporation.Prior to 3dfx, Scott was a CPU systems architect at Pellucid, later acquired by MediaVision. Before Pellucid, Scott was a member of the technical staff at Silicon Graphics where he designed high-performance workstations.Scott graduated from Princeton University with a bachelor of science, earning magna cum laude and Phi Beta Kappa honors. Scott has been granted 8 patents in high performance graphics and computing and is a regularly invited keynote speaker at industry conferences.Links Referenced:Azul: https://www.azul.com/ TranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: I come bearing ill tidings. Developers are responsible for more than ever these days. Not just the code that they write, but also the containers and the cloud infrastructure that their apps run on. Because serverless means it's still somebody's problem. And a big part of that responsibility is app security from code to cloud. And that's where our friend Snyk comes in. Snyk is a frictionless security platform that meets developers where they are - Finding and fixing vulnerabilities right from the CLI, IDEs, Repos, and Pipelines. Snyk integrates seamlessly with AWS offerings like code pipeline, EKS, ECR, and more! As well as things you're actually likely to be using. Deploy on AWS, secure with Snyk. Learn more at Snyk.co/scream That's S-N-Y-K.co/screamCorey: This episode is sponsored in part by our friends at AWS AppConfig. Engineers love to solve, and occasionally create, problems. But not when it's an on-call fire-drill at 4 in the morning. Software problems should drive innovation and collaboration, NOT stress, and sleeplessness, and threats of violence. That's why so many developers are realizing the value of AWS AppConfig Feature Flags. Feature Flags let developers push code to production, but hide that that feature from customers so that the developers can release their feature when it's ready. This practice allows for safe, fast, and convenient software development. You can seamlessly incorporate AppConfig Feature Flags into your AWS or cloud environment and ship your Features with excitement, not trepidation and fear. To get started, go to snark.cloud/appconfig. That's snark.cloud/appconfig.Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. My guest on this promoted episode today is Scott Sellers, CEO and co-founder of Azul. Scott, thank you for joining me.Scott: Thank you, Corey. I appreciate the opportunity in talking to you today.Corey: So, let's start with what you're doing these days. What is Azul? What do you folks do over there?Scott: Azul is an enterprise software and SaaS company that is focused on delivering more efficient Java solutions for our customers around the globe. We've been around for 20-plus years, and as an entrepreneur, we've really gone through various stages of different growth and different dynamics in the market. But at the end of the day, Azul is all about adding value for Java-based enterprises, Java-based applications, and really endearing ourselves to the Java community.Corey: This feels like the sort of space where there are an awful lot of great business cases to explore. When you look at what's needed in that market, there are a lot of things that pop up. The surprising part to me is that this is the direction that you personally went in. You started your career as a CPU architect, to my understanding. You were then one of the co-founders of 3dfx before it got acquired by Nvidia.You feel like you've spent your career more as a hardware guy than working on the SaaS side of the world. Is that a misunderstanding of your path, or have things changed, or is this just a new direction? Help me understand how you got here from where you were.Scott: I'm not exactly sure what the math would say because I continue to—can't figure out a way to stop time. But you're correct that my academic background, I was an electrical engineer at Princeton and started my career at Silicon Graphics. And that was when I did a lot of fantastic and fascinating work building workstations and high-end graphics systems, you know, back in the day when Silicon Graphics really was the who's who here in Silicon Valley. And so, a lot of my career began in the context of hardware. As you mentioned, I was one of the founders of graphics company called 3dfx that was one of, I think, arguably the pioneer in terms of bringing 3d graphics to the masses, if you will.And we had a great run of that. That was a really fun business to be a part of just because of what was going on in the 3d world. And we took that public and eventually sold that to Nvidia. And at that point, my itch, if you will, was really learning more about the enterprise segment. I'd been involved with professional graphics with SGI, I had been involved with consumer graphics with 3dfx.And I was fascinated just to learn about the enterprise segment. And met a couple people through a mutual friend around the 2001 timeframe, and they started talking about this thing called Java. And you know, I had of course heard about Java, but as a consumer graphics guy, didn't have a lot of knowledge about it or experience with it. And the more I learned about it, recognized that what was going on in the Java world—and credit to Sun for really creating, obviously, not only language, but building a community around Java—and recognized that new evolutions of developer paradigms really only come around once a decade if then, and was convinced and really got excited about the opportunity to ride the wave of Java and build a company around that.Corey: One of the blind spots that I have throughout the entire world of technology—and to be fair, I have many of them, but the one most relevant to this conversation, I suppose, is the Java ecosystem as a whole. I come from a background of being a grumpy Unix sysadmin—because I've never met a happy one of those in my entire career—and as a result, scripting languages is where everything that I worked with started off. And on the rare occasions, I worked in Java shops, it was, “Great. We're going to go—here's a WAR file. Go ahead and deploy this with Tomcat,” or whatever else people are going to use. But basically, “Don't worry your pretty little head about that.”At most, I have to worry about how to configure a heap or whatnot. But it's from the outside looking in, not having to deal with that entire ecosystem as a whole. And what I've seen from that particular perspective is that every time I start as a technologist, or even as a consumer trying to install some random software package in the depths of the internet, and I have to start thinking about Java, it always feels like I'm about to wind up in a confusing world. There are a number of software packages that I installed back in, I want to say the early-2010s or whatnot. “Oh, you need to have a Java runtime installed on your Mac,” for example.And okay, going through Oracle site, do I need the JRE? Do I need the JDK? Oh, there's OpenJDK, which kind of works, kind of doesn't. Amazon got into the space with Corretto, which because that sounds nothing whatsoever, like Java, but strange names coming from Amazon is basically par for the course for those folks. What is the current state of the Java ecosystem, for those of us who have—basically the closest we've ever gotten is JavaScript, which is nothing alike except for the name.Scott: And you know, frankly, given the protection around the name Java—and you know, that is a trademark that's owned by Oracle—it's amazing to me that JavaScript has been allowed to continue to be called JavaScript because as you point out, JavaScript has nothing to do with Java per se.Corey: Well, one thing they do have in common I found out somewhat recently is that Oracle also owns the trademark for JavaScript.Scott: Ah, there you go. Maybe that's why it continues.Corey: They're basically a law firm—three law firms in a trench coat, masquerading as a tech company some days.Scott: Right. But anyway, it is a confusing thing because you know, I think, arguably, JavaScript, by the numbers, probably has more programmers than any other language in the world, just given its popularity as a web language. But to your question about Java specifically, it's had an evolving life, and I think the state where it is today, I think it's in the most exciting place it's ever been. And I'll walk you through kind of why I believe that to be the case.But Java has evolved over time from its inception back in the days when it was called, I think it was Oak when it was originally conceived, and Sun had eventually branded it as Java. And at the time, it truly was owned by Sun, meaning it was proprietary code; it had to be licensed. And even though Sun gave it away, in most cases, it still at the end of the day, it was a commercially licensed product, if you will, and platform. And if you think about today's world, it would not be conceivable to create something that became so popular with programmers that was a commercially licensed product today. It almost would be mandated that it would be open-source to be able to really gain the type of traction that Java has gained.And so, even though Java was really garnering interest, you know, not only within the developer community, but also amongst commercial entities, right, everyone—and the era now I'm talking about is around the 2000 era—all of the major software vendors, whether it was obviously Sun, but then you had Oracle, you had IBM, companies like BEA, were really starting to blossom at that point. It was a—you know, you could almost not find a commercial software entity that was not backing Java. But it was still all controlled by Sun. And all that success ultimately led to a strong outcry from the community saying this has to be open-source; this is too important to be beholden to a single vendor. And that decision was made by Sun prior to the Oracle acquisition, they actually open-sourced the Java runtime code and they created an open-source project called OpenJDK.And to Oracle's credit, when they bought Sun—which I think at the time when you really look back, Oracle really did not have a lot of track record, if you will, of being involved with an open-source community—and I think when Oracle acquired Sun, there was a lot of skepticism as to what's going to happen to Java. Is Oracle going to make this thing, you know, back to the old days, proprietary Oracle, et cetera? And really—Corey: I was too busy being heartbroken over Solaris at that point to pay much attention to the Java stuff, but it felt like it was this—sort of the same pattern, repeated across multiple ecosystems.Scott: Absolutely. And even though Sun had also open-sourced Solaris, with the OpenSolaris project, that was one of the kinds of things that it was still developed very much in a closed environment, and then they would kind of throw some code out into the open world. And no one really ran OpenSolaris because it wasn't fully compatible with Solaris. And so, that was a faint attempt, if you will.But Java was quite different. It was truly all open-sourced, and the big difference that—and again, I give Oracle a lot of credit for this because this was a very important time in the evolution of Java—that Oracle, maintained Sun's commitment to not only continue to open-source Java but most importantly, develop it in the open community. And so, you know, again, back and this is the 2008, ‘09, ‘10 timeframe, the evolution of Java, the decisions, the standards, you know, what goes in the platform, what doesn't, decisions about updates and those types of things, that truly became a community-led world and all done in the open-source. And credit to Oracle for continuing to do that. And that really began the transition away from proprietary implementations of Java to one that, very similar to Linux, has really thrived because of the true open-source nature of what Java is today.And that's enabled more and more companies to get involved with the evolution of Java. If you go to the OpenJDK page, you'll see all of the not only, you know, incredibly talented individuals that are involved with the evolution of Java, but again, a who's who in pretty much every major commercial entities in the enterprise software world is also somehow involved in the OpenJDK community. And so, it really is a very vibrant, evolving standard. And some of the tactical things that have happened along the way in terms of changing how versions of Java are released still also very much in the context of maintaining compatibility and finding that careful balance of evolving the platform, but at the same time, recognizing that there is a lot of Java applications out there, so you can't just take a right-hand turn and forget about the compatibility side of things. But we as a community overall, I think, have addressed that very effectively, and the result has been now I think Java is more popular than ever and continues to—we liken it kind of to the mortar and the brick walls of the enterprise. It's a given that it's going to be used, certainly by most of the enterprises worldwide today.Corey: There's a certain subset of folk who are convinced the Java, “Oh, it's this a legacy programming language, and nothing modern or forward-looking is going to be built in it.” Yeah, those people generally don't know what the internal language stack looks like at places like oh, I don't know, AWS, Google, and a few others, it is very much everywhere. But it also feels, on some level, like, it's a bit below the surface-level of awareness for the modern full-stack developer in some respects, right up until suddenly it's very much not. How is Java evolving in a cloud these days?Scott: Well, what we see happening—you know, this is true for—you know, I'm a techie, so I can talk about other techies. I mean as techies, we all like the new thing, right? I mean, it's not that exciting to talk about a language that's been around for 20-plus years. But that doesn't take away from the fact that we still all use keyboards. I mean, no one really talks about what keyboard they use anymore—unless you're really into keyboards—but at the end of the day, it's still a fundamental tool that you use every single day.And Java is kind of in the same situation. The reason that Java continues to be so fundamental is that it really comes back to kind of reinventing the wheel problem. Are there are other languages that are more efficient to code in? Absolutely. Are there other languages that, you know, have some capabilities that the Java doesn't have? Absolutely.But if you have the ability to reinvent everything from scratch, sure, go for it. And you also don't have to worry about well, can I find enough programmers in this, you know, new hot language, okay, good luck with that. You might be able to find dozens, but when you need to really scale a company into thousands or tens of thousands of developers, good luck finding, you know, everyone that knows, whatever your favorite hot language of the day is.Corey: It requires six years experience in a four-year-old language. Yeah, it's hard to find that, sometimes.Scott: Right. And you know, the reality is, is that really no application ever is developed from scratch, right? Even when an application is, quote, new, immediately, what you're using is frameworks and other things that have written long ago and proven to be very successful.Corey: And disturbing amounts of code copied and pasted from Stack Overflow.Scott: Absolutely.Corey: But that's one of those impolite things we don't say out loud very often.Scott: That's exactly right. So, nothing really is created from scratch anymore. And so, it's all about building blocks. And this is really where this snowball of Java is difficult to stop because there is so much third-party code out there—and by that, I mean, you know, open-source, commercial code, et cetera—that is just so leveraged and so useful to very quickly be able to take advantage of and, you know, allow developers to focus on truly new things, not reinventing the wheel for the hundredth time. And that's what's kind of hard about all these other languages is catching up to Java with all of the things that are immediately available for developers to use freely, right, because most of its open-source. That's a pretty fundamental Catch-22 about when you start talking about the evolution of new languages.Corey: I'm with you so far. The counterpoint though is that so much of what we're talking about in the world of Java is open-source; it is freely available. The OpenJDK, for example, says that right on the tin. You have built a company and you've been in business for 20 years. I have to imagine that this is not one of those stories where, “Oh, all the things we do, we give away for free. But that's okay. We make it up in volume.” Even the venture capitalist mindset tends to run out of patience on those kinds of timescales. What is it you actually do as a business that clearly, obviously delivers value for customers but also results in, you know, being able to meet payroll every week?Scott: Right? Absolutely. And I think what time has shown is that, with one very notable exception and very successful example being Red Hat, there are very, very few pure open-source companies whose business is only selling support services for free software. Most successful businesses that are based on open-source are in one-way shape or form adding value-added elements. And that's our strategy as well.The heart of everything we do is based on free code from OpenJDK, and we have a tremendous amount of business that we are following the Red Hat business model where we are selling support and long-term access and a huge variety of different operating system configurations, older Java versions. Still all free software, though, right, but we're selling support services for that. And that is, in essence, the classic Red Hat business model. And that business for us is incredibly high growth, very fast-moving, a lot of that business is because enterprises are tired of paying the very high price to Oracle for Java support and they're looking for an open-source alternative that is exactly the same thing, but comes in pure open-source form and with a vendor that is as reputable as Oracle. So, a lot of our businesses based on that.However, on top of that, we also have value-added elements. And so, our product that is called Azul Platform Prime is rooted in OpenJDK—it is OpenJDK—but then we've added value-added elements to that. And what those value-added elements create is, in essence, a better Java platform. And better in this context means faster, quicker to warm up, elimination of some of the inconsistencies of the Java runtime in terms of this nasty problem called garbage collection which causes applications to kind of bounce around in terms of performance limitations. And so, creating a better Java is another way that we have monetized our company is value-added elements that are built on top of OpenJDK. And I'd say that part of the business is very typical for the majority of enterprise software companies that are rooted in open-source. They're typically adding value-added components on top of the open-source technology, and that's our similar strategy as well.And then the third evolution for us, which again is very tried-and-true, is evolving the business also to add SaaS offerings. So today, the majority of our customers, even though they deploy in the cloud, they're stuck customer-managed and so they're responsible for where do I want to put my Java runtime on building out my stack and cetera, et cetera. And of course, that could be on-prem, but like I mentioned, the majority are in the cloud. We're evolving our product offerings also to have truly SaaS-based solutions so that customers don't even need to manage those types of stacks on their own anymore.Corey: On some level, it feels like we're talking about two different things when we talk about cloud and when we talk about programming languages, but increasingly, I'm starting to see across almost the entire ecosystem that different languages and different cloud providers are in many ways converging. How do you see Java changing as cloud-native becomes the default rather than the new thing?Scott: Great question. And I think the thing to recognize about, really, most popular programming languages today—I can think of very few exceptions—these languages were created, envisioned, implemented if you will, in a day when cloud was not top-of-mind, and in many cases, certainly in the case of Java, cloud didn't even exist when Java was originally conceived, nor was that the case when you know, other languages, such as Python, or JavaScript, or on and on. So, rethinking how these languages should evolve in very much the context of a cloud-native mentality is a really important initiative that we certainly are doing and I think the Java community is doing overall. And how you architect not only the application, but even the Java runtime itself can be fundamentally different if you know that the application is going to be deployed in the cloud.And I'll give you an example. Specifically, in the world of any type of runtime-based language—and JavaScript is an example of that; Python is an example of that; Java is an example of that—in all of those runtime-based environments, what that basically means is that when the application is run, there's a piece of software that's called the runtime that actually is running that application code. And so, you can think about it as a middleware piece of software that sits between the operating system and the application itself. And so, that runtime layer is common across those languages and those platforms that I mentioned. That runtime layer is evolving, and it's evolving in a way that is becoming more and more cloud-native in it's thinking.The process itself of actually taking the application, compiling it into whatever underlying architecture it may be running on—it could be an x86 instance running on Amazon; it could be, you know, for example, an ARM64, which Amazon has compute instances now that are based on an ARM64 processor that they call Graviton, which is really also kind of altering the price-performance of the compute instances on the AWS platform—that runtime layer magically takes an application that doesn't have to be aware of the underlying hardware and transforms that into a way that can be run. And that's a very expensive process; it's called just-in-time compiling, and that just-in-time compilation, in today's world—which wasn't really based on cloud thinking—every instance, every compute instance that you deploy, that same JIT compilation process is happening over and over again. And even if you deploy 100 instances for scalability, every one of those 100 instances is doing that same work. And so, it's very inefficient and very redundant. Contrast that to a cloud-native thinking: that compilation process should be a service; that service should be done once.The application—you know, one instance of the application is actually run and there are the other ninety-nine should just reuse that compilation process. And that shared compiler service should be scalable and should be able to scale up when applications are launched and you need more compilation resources, and then scaled right back down when you're through the compilation process and the application is more moving into the—you know, to the runtime phase of the application lifecycle. And so, these types of things are areas that we and others are working on in terms of evolving the Java runtime specifically to be more cloud-native.Corey: This episode is sponsored in part by our friends at Sysdig. Sysdig secures your cloud from source to run. They believe, as do I, that DevOps and security are inextricably linked. If you wanna learn more about how they view this, check out their blog, it's definitely worth the read. To learn more about how they are absolutely getting it right from where I sit, visit Sysdig.com and tell them that I sent you. That's S Y S D I G.com. And my thanks to them for their continued support of this ridiculous nonsense.Corey: This feels like it gets even more critical when we're talking about things like serverless functions across basically all the cloud providers these days, where there's the whole setup, everything in the stack, get it running, get it listening, ready to go, to receive a single request and then shut itself down. It feels like there are a lot of operational efficiencies possible once you start optimizing from a starting point of yeah, this is what that environment looks like, rather than us big metal servers sitting in a rack 15 years ago.Scott: Yeah. I think the evolution of serverless appears to be headed more towards serverless containers as opposed to serverless functions. Serverless functions have a bunch of limitations in terms of when you think about it in the context of a complex, you know, microservices-based deployment framework. It's just not very efficient, to spin up and spin down instances of a function if that actually is being—it is any sort of performance or latency-sensitive type of applications. If you're doing something very rarely, sure, it's fine; it's efficient, it's elegant, et cetera.But any sort of thing that has real girth to it—and girth probably means that's what's driving your application infrastructure costs, that's what's driving your Amazon bill every month—those types of things typically are not going to be great for starting and stopping functional instances. And so, serverless is evolving more towards thinking about the container itself not having to worry about the underlying operating system or the instance on Amazon that it's running on. And that's where, you know, we see more and more of the evolution of serverless is thinking about it at a container-level as opposed to a functional level. And that appears to be a really healthy steady state, so it gets the benefits of not having to worry about all the underlying stuff, but at the same time, doesn't have the downside of trying to start and stop functional influences at a given point in time.Corey: It seems to me that there are really two ways of thinking about cloud. The first is what I think a lot of companies do their first outing when they're going into something like AWS. “Okay, we're going to get a bunch of virtual machines that they call instances in AWS, we're going to run things just like it's our data center except now data transfer to the internet is terrifyingly expensive.” The more quote-unquote, “Cloud-native” way of thinking about this is what you're alluding to where there's, “Here's some code that I wrote. I want to throw it to my cloud provider and just don't tell me about any of the infrastructure parts. Execute this code when these conditions are met and leave me alone.”Containers these days seem to be one of our best ways of getting there with a minimum of fuss and friction. What are you seeing in the enterprise space as far as adoption of those patterns go? Or are we seeing cloud repatriation showing up as a real thing and I'm just not in the right place to see it?Scott: Well, I think as a cloud journey evolves, there's no question that—and in fact it's even silly to say that cloud is here to stay because I think that became a reality many, many years ago. So really, the question is, what are the challenges now with cloud deployments? Cloud is absolutely a given. And I think you stated earlier, it's rare that, whether it's a new company or a new application, at least in most businesses that don't have specific regulatory requirements, that application is highly, highly likely to be envisioned to be initially and only deployed in the cloud. That's a great thing because you have so many advantages of not having to purchase infrastructure in advance, being able to tap into all of the various services that are available through the cloud providers. No one builds databases anymore; you're just tapping into the service that's provided by Azure or AWS, or what have you.And, you know, just that specific example is a huge amount of savings in terms of just overhead, and license costs, and those types of stuff, and there's countless examples of that. And so, the services that are available in the cloud are unquestioned. So, there's countless advantages of why you want to be in the cloud. The downside, however, the cloud that is, if at the end of the day, AWS, Microsoft with Azure, Google with GCP, they are making 30% margin on that cloud infrastructure. And in the days of hardware, when companies would actually buy their servers from Dell, or HP, et cetera, those businesses are 5% margin.And so, where's that 25% going? Well, the 25% is being paid for by the users of cloud, and as a result of that, when you look at it purely from an operational cost perspective, it is more expensive to run in the cloud than it is back in the legacy days, right? And that's not to say that the industry has made the wrong choice because there's so many advantages of being in cloud, there's no doubt about it. And there should be—you know, and the cloud providers deserve to take some amount of margin to provide the services that they provide; there's no doubt about that. The question is, how do you do the best of all worlds?And you know, there is a great blog by a couple of the partners in Andreessen Horowitz, they called this the Cloud Paradox. And the Cloud Paradox really talks about the challenges. It's really a Catch-22; how do you get all the benefits of cloud but do that in a way that is not overly taxing from a cost perspective? And a lot of it comes down to good practices and making sure that you have the right monitoring and culture within an enterprise to make sure that cloud cost is a primary thing that is discussed and metric, but then there's also technologies that can help so that you don't have to even think about what you really don't ever want to do: repatriating, which is about the concept of actually moving off the cloud back to the old way of doing things. So certainly, I don't believe repatriation is a practical solution for ongoing and increasing cloud costs. I believe technology is a solution to that.And there are technologies such as our product, Azul Platform Prime, that in essence, allows you to do more with less, right, get all the benefits of cloud, deploy in your Amazon environment, deploy in your Azure environment, et cetera, but imagine if instead of needing a hundred instances to handle your given workload, you could do that with 50 or 60. Tomorrow, that means that you can start savings and being able to do that simply by changing your JVM from a standard OpenJDK or Oracle JVM to something like Platform Prime, you can immediately start to start seeing the benefits from that. And so, a lot of our business now and our growth is coming from companies that are screaming under the ongoing cloud costs and trying to keep them in line, and using technology like Azul Platform Prime to help mitigate those costs.Corey: I think that there is a somewhat foolish approach that I'm seeing taken by a lot of folks where there are some companies that are existentially anti-cloud, if for no other reason than because if the cloud wins, then they don't really have a business anymore. The problem I see with that is that it seems that their solution across the board is to turn back the clock where if I'm going to build a startup, it's time for me to go buy some servers and a rack somewhere and start negotiating with bandwidth providers. I don't see that that is necessarily viable for almost anyone. We aren't living in 1995 anymore, despite how much some people like to pretend we are. It seems like if there are workloads—for which I agree, cloud is not necessarily an economic fit, first, I feel like the market will fix that in the fullness of time, but secondly, on an individual workload belonging in a certain place is radically different than, “Oh, none of our stuff should live on cloud. Everything belongs in a data center.” And I just think that companies lose all credibility when they start pretending that it's any other way.Scott: Right. I'd love to see the reaction of the venture capitalists' face when an entrepreneur walks in and talks about how their strategy for deploying their SaaS service is going to be buying hardware and renting some space in the local data center.Corey: Well, there is a good cost control method, if you think about it. I mean very few engineers are going to accidentally spin up an $8 million cluster in a data center a second time, just because there's no space left for it.Scott: And you're right; it does happen in the cloud as well. It's just, I agree with you completely that as part of the evolution of cloud, in general, is an ever-improving aspect of cost and awareness of cost and building in technologies that help mitigate that cost. So, I think that will continue to evolve. I think, you know, if you really think about the cloud journey, cost, I would say, is still in early phases of really technologies and practices and processes of allowing enterprises to really get their head around cost. I'd still say it's a fairly immature industry that is evolving quickly, just given the importance of it.And so, I think in the coming years, you're going to see a radical improvement in terms of cost awareness and technologies to help with costs, that again allows you to the best of all worlds. Because, you know, if you go back to the Dark Ages and you start thinking about buying servers and infrastructure, then you are really getting back to a mentality of, “I've got to deploy everything. I've got to buy software for my database. I've got to deploy it. What am I going to do about my authentication service? So, I got to buy this vendor's, you know, solution, et cetera.” And so, all that stuff just goes away in the world of cloud, so it's just not practical, in this day and age I think, to think about really building a business that's not cloud-native from the beginning.Corey: I really want to thank you for spending so much time talking to me about how you view the industry, the evolution we've seen in the Java ecosystem, and what you've been up to. If people want to learn more, where's the best place for them to find you?Scott: Well, there's a thing called a website that you may not have heard of, it's really cool.Corey: Can I build it in Java?Scott: W-W-dot—[laugh]. Yeah. Azul website obviously has an awful lot of information about that, Azul is spelled A-Z-U-L, and we sometimes get the question, “How in the world did you name a company—why did you name it Azul?”And it's kind of a funny story because back in the days of Azul when we thought about, hey, we want to be big and successful, and at the time, IBM was the gold standard in terms of success in the enterprise world. And you know, they were Big Blue, so we said, “Hey, we're going to be a little blue. Let's be Azul.” So, that's where we began. So obviously, go check out our site.We're very present, also, in the Java community. We're, you know, many developer conferences and talks. We sponsor and run many of what's called the Java User Groups, which are very popular 10-, 20-person meetups that happen around the globe on a regular basis. And so, you know, come check us out. And I appreciate everyone's time in listening to the podcast today.Corey: No, thank you very much for spending as much time with me as you have. It's appreciated.Scott: Thanks, Corey.Corey: Scott Sellers, CEO and co-founder of Azul. I'm Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice along with an entire copy of the terms and conditions from Oracle's version of the JDK.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.Announcer: This has been a HumblePod production. Stay humble.

Andy Champion: Hello everyone. My name is Andy Champion. I’m the vice president and general manager of Highspot here in EMEA. Delighted to welcome you to this latest installment of the Win Win podcast. Joining me today, I’m delighted to speak to Scott Edinger. He’s somebody that I've spoken to before. He is a deep expert in his field, and he advises many companies globally on how to drive consistent growth. He has over 40 articles published in the Harvard Business Review and has contributed to over 50 articles in Forbes. Scott, welcome to the podcast. Scott Edinger: Thanks for having me, Andy. I’m excited to be here and talk with you again. ANDY: Always good to get back together. So Scott, there’s a few topics that I want to touch on today. And the first one I want to start with is this concept of the great resignation. It’s something that I think that, you know, is a topic of conversation with business leaders that I talk to, and it’s been causing quite a stir. Now, I think it’s fair to say there’s been a talent shortage for quite some time now. It’s nothing new. We as sales and revenue leaders have always sought to get the best possible talent. But I think what has changed is the pandemic has caused, I think, a pause in that natural talent lifecycle. It’s caused people to pause and to delay decisions, but as we come out of the pandemic, I think what I’m starting to see is that people are taking this moment to reevaluate their positions, to reevaluate the companies that they work for. But more importantly, I think they’re really taking a long, hard look at the people that they work with and specifically their managers. So I wanted to start there and just get your take on, are people starting to leave companies, or is it really that old adage of “People don’t leave companies—they leave managers”? SCOTT: Yeah, I very much think it’s the latter. I believe it was the people at Gallup, famous for their organizational surveys, who coined that phrase many years ago. I think it might be like 20 years ago. People don’t leave organizations, they leave their managers. And as much as we have this great resignation upon us, as it were, you know 10 years ago, we were calling this the war for talent. And I was reading some statistics about this great resignation and we certainly have much lower unemployment than we have had, but even the total number of people leaving the workforce, while statistically significant, isn’t dramatic, at least in the U.S. statistics I was looking at. So, it’s not like people who need to work are all of a sudden dropping out of the workforce. I mean, there are people who perhaps don’t need to work who are reevaluating. You know, like you said, the pandemic gives us this great pause to say what’s important in my life. And there is, without a doubt, people who are saying, “Look, I’m not going to work” or “I’m not going to work like I was.” And definitely there’s an Exodus from the workforce from that. But people who are either sales professionals or engineers or in technology, whatever their roles are, it’s not like they’ve decided all of a sudden, well, I’m just resigning. They’re going someplace else for something better. And they’re looking for something more from the organizations and I think most importantly from their leaders. So I think it’s very much that latter idea, “What more am I getting from my leader?” ANDY: And I know that that’s a sort of a starting off point for us on a few topics here. And you know, maybe we explore that briefly. When you look to leaders and great leaders, what are some of the core components? What are some of the core behaviors that you see come up time and time again that differentiate the good from the great? SCOTT: Well, it’s been a dozen years since I wrote my first book. I just realized, I was going to say 10, and now I realize it’s actually closer to a dozen. And that book was called The Inspiring Leader. And I wrote that book along with Joe Folkman and Jack Zenger. And one of the analyses that we had done was to identify which leadership characteristics were most powerful—in particular, which leadership characteristics were most powerful in driving engagement and commitment. One would think that this is the key to retention, right? So amidst all of these leadership competencies, one really stood out as strongly important. The book title gives it away: the inspiring leader. It’s the ability to inspire and motivate high performance. Now on the surface that may not seem revelatory, right? It’s like, okay, so someone who’s inspiring—this drives commitment, engagement. I can totally see, you know, we all want to be inspired. We all want to have that kind of leader in the workplace. But when you start to break that apart and say, so what is it that makes a leader inspiring? Then you start to get to some really valuable ideas, especially as it relates to this great resignation, war on talent, whatever the next iteration of it’s going to be. Because again, people don’t leave companies, they tend to leave their managers. So some of the things we found were most valuable was this idea of developing talent. Coaching and developing talent. People were loath to find another opportunity when they worked for someone who invested strongly in their development, who coached them, who helped them to advance in their career. When you find that, even if there’s better companies, you may find yourself in a really wonderful opportunity with that kind of growth—particularly, I’ll say this, if you’re between the ages of—call it 25 and 45. Which, by the way, is where we see most of the resignation happening, some in the 45 to 55 range. But the more concerning part of the great resignation is in the 25 to 45 year-old group. ANDY: And maybe we can unpack that a little bit. You know, I’m fascinated around this concept of the culture of coaching. It really resonates as I reflect on my career and it certainly resonates with many of the individual contributors and salespeople that I talk with. And I think it also aligns with how at Highspot we think a lot about consistent execution at scale: How do we help everybody succeed? How do we help everybody make their best contribution? So I wonder if you can sort of unpack that a little bit for us and talk exactly about what does good coaching look like, and why does it matter so much? SCOTT: Well, when you consider good coaching, you know, it’s usually not in the form of just telling people what to do. Really good coaching is about investing in someone’s development, helping them to get the right kind of training, the right kind of, call it formal education. But then when they’re back on the job, helping them to actually get better at those skills, whether they be selling skills, coding skills, management skills, leadership, even other coaching skills. So if you consider this idea of investing in the initial growth for people, send them to proper training, But then when they’re back from that, how do you engage with them regularly to help them to improve? Are you able to observe them in action? Are you able to give them proper guidance? Are you able to invest your time in helping them to get better at their job? I’ll give you an interesting hypothetical here. So if you are interviewing for a job and the manager that you are talking with shares with you all of the really wonderful elements and all the great parts of the company and their benefits. And, you know, maybe we have a sushi chef here once a month, whatever, the foosball table, whatever these things are. They spend their time on this and how great the company is. That’s interview number one. The second interview includes all of that. But that manager says, “A vital part of my success is investing in your development. So I’m going to spend a lot of time and coaching on you. I’m going to spend a lot of time helping you to get better at your job. That way you can drive greater success.” Which of those sounds more enticing? Both companies may be good, but I think it’s pretty obvious to me, which one I’d want to go with. ANDY: Yeah, for sure. And one of the things that I wish I’d learned earlier in my career was just how big a determinant of my success my leader and their line manager was. I only came to realize that fairly late on, and I think it was a big mess on my part. SCOTT: Well, I got lucky on that one. I’ll share a quick story here. When I was 25 years old, I had the second interview. I had a manager who said to me, “You know, I'm going to really invest in your development, in your growth.” Now, the funny sidebar there is that months after I was on the job—and this person rode me pretty hard on a number of things. His name is John Robens, great manager. Great, great coach. But when we talked about that, he said, “By the way, none of that is altruistic.” He’s like, “I’m not doing that just for the sake of doing it.” He was like, “I want you to grow. I want you to develop. I want you to be successful. But I know if you do that, you’re going to do a better job for me. We’re going to have more success. We’re going to hit our numbers.” There was a lot of things involved with that. So I think if you are a job seeker thinking about this, or if you’re in a job someplace thinking about your manager, or if you are managing others and looking to hire, this is a really wonderful lens to put over the hiring process. And even more importantly, how you do your job, how you go to work every day, really focusing on developing others and helping them to grow. And that really is the key to coaching. ANDY: I mean, there’s no downside for this, as you say, whether you are the manager looking to attract talent or whether you are the job seeker looking for your next role. But you know, there’s another aspect to this, right? And that’s this: What about the people that are staying? What about the people that are remaining in their jobs? This should be applying to them as well. And this could be a conversation that they can have with their manager. SCOTT: If you’re evaluating, leaving someplace, if you are a part of the great resignation, you want something better, it costs you nothing to try to ask for that at your current location. And one of those things can be, “What kind of development is available for me? What kind of coaching? How am I going to get better? Improve my ability to bring value to a job?” You know, you have to believe that ultimately your ability to bring more value equals greater compensation, greater degrees of freedom, all the things that are important to people in this pandemic resignation—whatever moniker we’re going to give it next. ANDY: Yeah, it makes a lot of sense. One other aspect of this conversation that I’d be really interested in your take on is the dynamic between the manager and the individual, whether you're seeking a job or whether you’re in a current job. I agree with you asking for that development is really important, but where does the balance lie between me as the individual owning my career development and owning my growth and the manager inputting into that or providing the guidance. Where does the responsibility sit? Is it with me to drive my own career? Is it with my manager? How does that work? SCOTT: Well, I think self-determination notwithstanding, we all have a responsibility for our career and where we’re headed in our career. You know, where you don’t necessarily have the responsibility, if you are an employee, is perhaps to kick in the financial resources—though, bookmark that maybe if you want to. If there’s something special you want to do for your growth and development and maybe a company offset there, or maybe you expect the company to fund it. But I think each of us has to be able to say, “Here’s where I need to grow. Here’s where I want to improve my abilities, my skill sets. These are the competencies or areas of focus I want to get better at or to acquire.” I think we each have to do that, but it can’t be done in a vacuum because you don’t work alone. So being able to go to your manager, to your leader, the vice president, the CEO, whoever that may be and say, “Where do you need more from me?” And how do we come together on a vision for what my improvement looks like, getting to that proverbial next level in terms of skill development, in terms of knowledge, in terms of capacity. And what does that look like? And being able to drive that together. In a good company, managers are doing that in collaboration with individuals who are taking responsibility for their own. That’s ideal. You can imagine there’s plenty of non-ideal scenarios where people are driving all of their own development or the company’s trying to get blood from a turnip and trying to get, you know, lots of growth out of people who either don’t have the potential or don’t want to. We see that plenty too. ANDY: So, Scott, one of the things I remember reading some time ago was a quote by Richard Branson and it went something along the lines of, “Hey, you know, train people well enough so that they can leave. But treat them well enough so that they don’t want to.” I'm really interested in exploring that through the lens of the people that are staying and how we should think about balancing all of this investment in them so that they might actually be able to go and get a better job. SCOTT: Yeah. That Richard Branson character has a good idea now and then, doesn’t he? This is, I think, such an important point, because of all the talk about everybody leaving, the great resignation and the drama of it, it's really easy to forget about everybody who’s staying. They're the backbone of your business. So when I wrote that book, The Inspiring Leader, this notion that inspiring and motivating was one of the top factors in people not leaving their company. And for those who are most inspiring and most motivating in terms of getting the most out of other people, the ability to develop talent was a key factor. The Richard Branson story reminded me of another story of a vice president of customer service, talking with a CFO about significant investment in training and development. And the CFO responds to the VP of customer service and says, “Well, what if we spend all this money on them and they leave?” And the VP of customer service sort of says, “Oh, that’s a good point.” And responds with, “What if we don’t invest much in their development…and they stay?” Really sort of puts a point on the idea. You’ve got a lot of people that are staying. In fact in just about every business you have many more that are staying than are leaving. The people who are staying are the real issue for you. And how are you going to invest in their development, make them better at executing your strategy, make them better at interacting with and providing value for customers? This is ultimately the heartbeat of your strategy: the experience that you provide, not just what you provide, but how you provide that. So making sure that you’re investing in people and their growth is one of the things that I have seen that make people really reluctant to leave a situation, even when there are better jobs available. When they’ve got really great management, they’re growing, they’re developing, they’re stretching themselves, at least as long as the job opportunities are comparable here. The people are reluctant to leave when they’re in that situation. It also has the added benefit of helping you to compete better in the marketplace. So you have this really wonderful synergy of factors here of both making people more committed, more engaged in their work and getting better results. Like the manager, John Roben, who I mentioned to, you said to me, you know, “It’s not just altruistic.” Here is a definite gain for the business here that they're after. And that’s laudable. In commercial enterprise you’re allowed to do that. ANDY: And I really love that because I think there’s some gold dust in there that I want to be very specific about. You know, when typically when we look across a population in a given company, perhaps in a specific role, you see a bell curve of performance, right? You have far more mid-performers than you do low performers and high performers. And I think, you know, the temptation can often be as a manager just to focus on, “Hey, if I can get my high performers to perform another 10% better, that’s where my big output is,” but I think what I’ve seen, and one of the things that we focus on, is actually taking some of that time and shifting your mid-performers up by 5% can actually pay off way, way, way more, because you’ve got so much more of them. The concept that I often talk about is the frozen middle. It's just interesting to me. Does that align with your experience? SCOTT: Yeah, I’d say there’s a couple of frozen parts. You know, typically when people talk about—this is such an important point—when people talk about coaching and performance management improvement, they almost always gravitate to improving poor performance. And that is not what you and I have been talking about here at all. We’re not talking about trying to remediate poor performers and get them to be okay. We’re trying to take, you know, the entire bell curve, like you said that frozen middle, and shift it to the right to improve everybody’s performance. And I’ll say here that the people most likely to benefit from your coaching, who are most likely to contribute that much more to your business results—it’s certainly true in sales and in technical fields where I’ve seen it—are the high performers. And managers tend to say, “I’m just going to get out of their way and let them do their job.” But there’s a ton of value in saying, “No, I’m going to double down here. I’m going to invest a lot of time, effort, energy, maybe money, in helping them to get that much better, because they’re in complex jobs where the value that they can contribute is even greater.” So in everything we’ve been talking about coaching, in my mind, I’ve not been thinking about poor performers at all. I’ve been thinking about average and really strong performers and getting them better because they’re the ones that contribute value. Usually the poor performers we spend a lot of time coaching and investing in performance management with them. If I had a nickel for every time someone got on a performance improvement plan that got off of it and became a top performer, I’d have about 75 cents. It doesn’t happen very often. A lot of effort goes there that isn’t as valuable. ANDY: So as we wrap up, I want, I just want to come back to where we started, and that’s the great resignation. And we’ve discussed the importance of coaching in every situation, how there is no downside for the individual, the manager, or the company. Everybody benefits here. Just as we wrap up, I just want to touch on briefly, what does good coaching look like? And how does that manifest itself in, for example, the sales job? SCOTT: Yeah. Well, I think that, you know, I've drawn from a few different bodies of work for this, but one in particular, Dr. Anders Ericsson, professor of psychology at Florida State University wrote a book called Peak. As in peak performance, P-E-A-K. And most of you listening would not know Dr. Ericsson, but you’ve probably heard of the 10,000-hour rule popularized by Malcolm Gladwell. And that was an extrapolation of the research that Dr. Ericsson had done. I’m going to give you the short version here on what really makes the difference. The short version is, 10,000 hours isn’t the key. It might be less than 10,000 hours. It might be more than 10,000 hours. There’s certainly a significant amount of practice involved in developing expert performance, but there’s no magic in 10,000 hours. According to Dr. Ericsson, who I had a chance to sit down with a few years ago, the real magic is something we’d call deliberate practice. And that has a few conditions that we as leaders and that we as leaders and coaches can apply to our work every day. The first of which is that you’ve got to have a model for success. What does good look like? I’ll share them and then I’ll do a quick brief on each of these. You've got to have a model of what good looks like. And then second, you have to have a chance to practice against that model. You have to try to do it like the model. Third, while being observed by an expert who really understands number one, what great looks like, and then, four: again. So if you think about any instrument or sport—you know, my daughter’s a violinist. She doesn’t listen to a piece of music once to get what good looks like or great looks like. She listens to it a lot. And she watches how the teacher moves their fingers along the frets and uses the bow and everything. And she watches that very carefully and then she mimics it while being observed. And then she gets feedback: what worked, what didn’t work. So she gets that observed feedback on what worked and what didn’t work. Then she goes back and does it all again. And she doesn’t do that once. She does it dozens and dozens of times, I’m going to say hundreds of times, given how much I’ve listened to some practice (delightful in our house). But still, you know, nonetheless, you’ve got to do it a lot, whether it is learning to play a sport or an instrument, or be an effective seller. And you asked me specifically about that. So I’ll go take a quick dive on that. So number one, in sales, you’ve got to have a good model of what success looks like. What do you want your people to do differently? It’s not just generate revenue. That’s the outcome. What are the specific behaviors? From asking questions to positioning your solutions, helping clients to see issues that they hadn’t considered, helping them to understand problems in a different way so that they can develop some kind of insight. These are the things we tend to want salespeople to do. That’s the backbone of every consultative or solution sales course out there. You got to give them that model. I think sending them to a few days of training and expecting them to absorb it and integrate at one time is probably as unrealistic as listening to a piece of music one time and then expecting someone to play it perfectly. So then they’ve got to have the chance to go practice that while being observed by a manager or another expert. And when I say practice that, I’m going to suggest that you don’t want people to practice on your best customers, your top prospects. You want safe environments where they can get it right and make a few mistakes. That’s not great when you’re negotiating million-dollar deals. So you want to have that chance to practice these skills while being observed by someone who afterward can say, “Here’s what good looks like. Here’s what you did. Here’s what I saw. I liked that. Keep doing that. Change this. You remember when that happened with the customer, how you said that and they responded kind of negatively? I think you didn’t ask the right thing there.” Whatever these things start to look like. And then to say, okay, when that happens once, then you’ve got one iteration. And if Malcolm Gladwell said the average was around 10,000 hours, how many sales calls do you need to develop not expert, but at least strong performance? So that gives you a bit of a model. It’s like, have the model of what great looks like, have a chance to practice against that. Be observed with it, get feedback on what worked, what didn’t, and start all over again. You can apply that to any sport, skill, competencies… ANDY: You know, the beauty here that I think as leaders, as managers, our key currency is behavioral change. Long-term behavioral change to help our people achieve their personal objectives, their career goals. And that’s, I think, as we’ve talked about all throughout this, very, very closely aligned to the company goals and the aspirations that we have. Scott, thank you so much for your time today. SCOTT: My pleasure. ANDY: I think what I take away from this is that one of our best defenses as leaders in and around this great resignation is to continue to invest in our people to create that culture of coaching, using tools like deliberate practice to be a core part of that. This is about going deep on the individual and the skills and behaviors that they need. But also as individuals, when we are looking at our careers, when we’re assessing, do we make a move? Do we stay? Let’s look at the environment in which we’re in, put that alongside the companies that we look at, and make some decisions around where are we going to get that investment and that development? Thank you again for your time. I really enjoyed the conversation. I look forward to the next installment. SCOTT: Yeah, me too. Great to talk with you again, Andy.

About ScottScott is a web developer who has been blogging at https://hanselman.com for over a decade. He works in Open Source on ASP.NET and the Azure Cloud for Microsoft out of his home office in Portland, Oregon. Scott has three podcasts, http://hanselminutes.com for tech talk, http://thisdeveloperslife.com on developers' lives and loves, and http://ratchetandthegeek.com for pop culture and tech media. He's written a number of books and spoken in person to almost a half million developers worldwide.Links: Hanselminutes Podcast: https://www.hanselminutes.com/ Personal website: https://hanselman.com TranscriptAnnouncer: Hello, and welcome to Screaming in the Cloud with your host, Chief Cloud Economist at The Duckbill Group, Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.Corey: This episode is sponsored in part by Thinkst. This is going to take a minute to explain, so bear with me. I linked against an early version of their tool, canarytokens.org in the very early days of my newsletter, and what it does is relatively simple and straightforward. It winds up embedding credentials, files, that sort of thing in various parts of your environment, wherever you want to; it gives you fake AWS API credentials, for example. And the only thing that these things do is alert you whenever someone attempts to use those things. It's an awesome approach. I've used something similar for years. Check them out. But wait, there's more. They also have an enterprise option that you should be very much aware of canary.tools. You can take a look at this, but what it does is it provides an enterprise approach to drive these things throughout your entire environment. You can get a physical device that hangs out on your network and impersonates whatever you want to. When it gets Nmap scanned, or someone attempts to log into it, or access files on it, you get instant alerts. It's awesome. If you don't do something like this, you're likely to find out that you've gotten breached, the hard way. Take a look at this. It's one of those few things that I look at and say, “Wow, that is an amazing idea. I love it.” That's canarytokens.org and canary.tools. The first one is free. The second one is enterprise-y. Take a look. I'm a big fan of this. More from them in the coming weeks.Corey: This episode is sponsored in part by our friends at Lumigo. If you've built anything from serverless, you know that if there's one thing that can be said universally about these applications, it's that it turns every outage into a murder mystery. Lumigo helps make sense of all of the various functions that wind up tying together to build applications. It offers one-click distributed tracing so you can effortlessly find and fix issues in your serverless and microservices environment. You've created more problems for yourself; make one of them go away. To learn more, visit lumigo.io.Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. I'm joined this week by Scott Hanselman of Microsoft. He calls himself a partner program manager—or is called a partner program manager. But that feels like it's barely scraping the surface of who and what he is. Scott, thank you for joining me.Scott: [laugh]. Thank you for the introduction. I think my boss calls me that. It's just one of those HR titles; it doesn't really mean—you know, ‘program manager,' what does it even mean?Corey: I figure it means you do an awful lot of programming. One of the hardest questions is, you start doing different things—and Lord knows you do a lot of them—is that awful question that you wind up getting at cocktail parties of, “So, what is it you do exactly?” How do you answer that?Scott: Yeah, it's almost like, if you spent any time on Clubhouse recently, there was a wonderful comedian named Spunky Brewster on Instagram who had a whole thing where she talked about the introductions at the beginning of a Clubhouse thing, where it's like, you're a multi-hyphenate sandwich artist slash skydiver slash programmers slash whatever. One doesn't want to get too full of one's selves. I would say that I have for the last 30 years been a teacher and a professional enthusiast around computing and getting people excited about computing. And everything that I do, whether it be writing software, shipping software, or building community, hangs off of the fact that I'm an enthusiastic teacher.Corey: You really are. And you're also very hard to pin down. I mean, it's pretty clear to basically the worst half of the internet, that you're clearly a shill. The problem is defining exactly what you're a shill for. You're obviously paid by Microsoft, so clearly you push them well beyond the point when it would make sense to.You have a podcast that has been on for over 800 episodes—which puts this one to shame—called Hanselminutes, and that is, of course, something where you're shilling for your own podcast. You've recently started on TikTok, which I can only assume is what the kids are into these days. You're involved in so many different things and taking so many different positions, that it's very hard to pin down what is the stuff you're passionate about.Scott: I'm going to gently push back and say—Corey: Please do.Scott: That if one were to care to look at it holistically, I am selling enthusiasm around free and open-source software on primarily the Windows platform that I'm excited about, and I am selling empowerment for the next generation of people who want to do computing. Before I went to Microsoft, my blog and my podcast existed, and I was consistent in my, “Hey, have you heard the news?” Message to anyone who would listen. And I taught at both Portland Community College and Oregon Institute of Technology, teaching web services and history of the web and C# and all that kind of stuff. So, I'm one of those people where if you touch on a topic that I'm interested in, I'll be like, “Oh, my goodness, let's”—and I'll just like, you know, knock everything off the desk and I'm going to be like, “Okay, let's build a model, a working model of the solar system here, now. The orange is the sun.”And it's like, suddenly now we're talking about science, like Hank Green or whatever. My family will ask me, “Why isn't the remote control working?” And then I've taken it apart and I'm explaining to them how the infrared LED inside works. And, you know, how can you not be excited about all these things? And that's my whole thing about computing and the power that being able to program computers represents to me.Corey: I would agree with that. I'd say that one thing that is universal about everything you're involved in is the expression I heard that I love and am going to recapture has been, “Sending the elevator back down.”Scott: Oh, yeah. Throwing ladders, ropes, elevators. I am very blessed to have made it out of my neighborhood, and I am very hopeful that anyone who is in a situation that they do not want to be in could potentially use coding, programming, IT, computing as the great equalizer and that I can I could somehow lend my privilege to them to get the things done and solve the problems that they want to solve with computers.Corey: I'm sure that you've been asked ad nauseum about—you work in free and open-source software. You've been an advocate for this, effectively, for your entire career; did no one tell you you work at Microsoft? But that's old Microsoft in many respects. That's something that we've covered with a bunch of different guests previously from Microsoft, and it's honestly a little—it's becoming a bit of a tired trope. It was a really interesting conversation a few years back that, oh, it's clearly all just for show.Well, that is less and less obvious, and more tired and frankly bad take as time progresses. So, I want to go back a bit further into my own personal journey because it turns out that the number one reason to reach out to you for anything is tech support on various things. I don't talk about this often, but I started my career moonlighting as a Windows admin, back in the Windows 2003 server days; and it was an experience, and licensing was a colossal pain, and I finally had enough of it one day, in 2006, switched over to Unix administration on BSD, and got a Mac laptop, and that was really the last time that I used Windows in anger. Now, it's been 15 years since that happened, and I haven't really been tracking the Windows ecosystem. What have I missed?Scott: [laugh]. There's a lot there that you just said. So first, different people have their religions and they're excited about them, and I encourage everyone to be excited about the religion that they're excited about. It's great to be excited about your thing, but it's also really not cool to be a zealot about your thing. So hey, be excited about Windows, be excited about Linux, be excited about Mac.Just don't tell me that I'm going to heck because I didn't share your enthusiasm. Let's just be excited together and we can be friends together. I've worked on Linux at Nike, I've worked on Mac, I've worked on Windows, you know, I've been there before these things existed and I'll be there afterwards.Corey: Exactly. At some point being a zealot for a technology just sort of means you haven't been around the block enough to understand how it's going to break, how it's going to fail, how it's going to evolve, and it doesn't lead to a positive outcome for anyone. It fundamentally becomes a form of gatekeeping more than anything else, and I just don't have the stomach for it.Scott: Yeah. And ultimately, we're just looking for—you know, we got these smart rocks that we taught how to think with lightning, and they're running for loops for us. And maybe they're running them in the cloud, maybe they're running locally. So, I'm not really too worried about it. Windows is my thing of choice, but just, you know, one person's Honda is another person's Toyota; you get excited about the brand that you start out with.So, that's that. Currently, though, Windows has gone, at least in the last maybe 20 years, from one of those things where there's generational pain, and, like, “Microsoft killed my Pappy, and I'll never forgive you.” And it's like, yeah, there was some dumb stuff in the '90s with Internet Explorer, but as a somewhat highly placed middle manager at Microsoft, I've never been in an active mustache-twirling situation where I was behind closed doors and anyone thought anything nefarious. There's only a true, “What's the right thing for the customer? What is the right thing for the people?”My whole thing is to make it so developers can develop more easily on Windows, so I'm very fortunate to be helping some folks in a partnership between the Windows division and the developer division that I work in to make Windows kick butt when it comes to dev. Historically, the Windows terminal, or what's called cmd.exe which is run by a thing called the console host has sucked; it has lagged behind. So, if you drop out to the command line, you've got the, you know, the old, kind of, quote-unquote, “DOS shell” with a cmd processor—it's not really DOS—running in an old console host. And it's been there for gosh, probably early '90s. That sucks.But then you got PowerShell. And again, I want to juxtapose the difference between a console—or a terminal—and a shell. They're different things. There's lots of great third-party terminals in the ecosystem. There's lots of shells to choose from, whether it be PowerShell, PowerShell Core—now PowerShell 7.0—or the cmd, as well as bash, and Cygwin, and zsh, and fish.But the actual thing that paints the text on Windows has historically not been awesome. So, the new open-source Windows terminal has been the big thing. If you're a Machead and you use iTerm2, or Hyper, or things like that, you'll find it very comfortable. It's a tabbed terminal, split-screen, ripping fast, written in, you know, DirectX, C++ et cetera, et cetera, all open-source, and then it lets you do transparency, and background colors, and ligature fonts, and all the things that a great modern terminal would want to do. That is kind of the linchpin of making Windows awesome for developers, then gets even awesomer when you add in the ability that we're now shipping an actual Linux kernel, and I can run N number of Linuxes side-by-side, in multiple panes, all within the terminal.This getting to the point about juxtaposing the difference between a terminal and a console and a shell. So, I've got, on the machine, I'm talking to you on right now, on my third monitor, I've got Windows terminal open with PowerShell on Windows on the left, Ubuntu 18.04 LTS on the right, with the fish shell. And then I've got another Ubuntu 20.04 with bash, a standard bash shell.And I'm going and testing stuff in Docker, and running .NET in Docker, and getting ready to deploy my own podcast website up into Azure. And I'm doing it in a totally organic way. It's not like, “Oh, I'm just running a virtual machine.” No, it's integrated. That's what I think you'd be impressed with.Corey: That right there is the reason that I generally tended to shy away from getting back into the Windows ecosystem for the longest time—and this is not a slam on Windows, by any stretch of the—Scott: No of course. Sure, sure, sure.Corey: —imagination—my belief has always been that you operate within the environment as it's intended to be operated within, and it felt at the time, “Oh, install Cygwin, and get all this other stuff going, and run a VM to do it.” It felt like I was fighting upstream in some respects.Scott: Oh, yeah, that's a great point. Let's talk about that for a second. So—Corey: Let's do it.Scott: So, Cygwin is the GNU utilities that are written in a very nice portable C, but they are written against the Windows kernel. So, the example I like to use is ls, you type ls, you list out your directory, right? So, ls and dir are the same thing for this conversation. Which means that someone has to then call a system call—syscall in Linux, Windows kernel call in Windows—and say, “Hey, would you please enumerate these files, and then give me information about them, and check the metadata?” And that has to call the file system and then it's turtles all the way down.Cygwin isn't Linux. It's the bash and GNU utilities recompiled and compiled against the Windows stuff. So, it's basically putting a bash skin on Windows, but it's not Linux; it's bash. Okay? But WSL is actually Linux, and rather than firing up a big 30 gig Hyper-V, or VirtualBox, or Parallels virtual machine, which is, like, a moment—“I'm firing up the VM; call me in an hour when it comes back up.”—and when the VM comes up, it's, like, a square on your screen and now you're dealing with another thing to manage.The WSL stuff is actually a utility virtual machine built on a lower subsystem, the virtualization platform, and it starts in less than a second. You can start it faster than you can say, one one-thousand. And it goes instantly up, it automatically allocates and deallocates memory so that it's smart about memory, and it's running the actual Linux kernel, so it's not pretending to be Linux. So, if your goal is a Linux environment and you're a Linux developer, the time of Linux on the desktop is happening, in this case, on the Windows desktop. Where you get interesting stuff, and where I think your brain might explode is, imagine you're in the terminal, you're at the Linux file system at the bash prompt, and you type ‘notepad.exe.' What would you expect to happen? You'd expect it to try to find it in a Linux path and fail.Corey: Right. And then you're trying to figure out, am I in this environm—because you generally tend to run these things in the same-looking terminal, but then all the syntax changes as soon as you go back into the Windows native environment, you're having to deal with line-ending issues on a constant basis, and you just—Scott: Oh, yeah. All that stuff, where.Corey: And as soon as you ask for help because back in those days, I was looking primarily into using freenode as my primary source of support because I network staff on the network for the better part of a decade, and the answer is, “I'm having some trouble with Linux,” and the response is, “Oh, you're doing this within a Windows environment? Get a real computer, kid.” Because it's still IRC, and being condescending and rude to anyone who makes different choices than you do is apparently the way that was done back then.Scott: Well, today in 2020 because we don't want to just have light integration with Windows—and by light integration, like, I don't know if you remember firing up a virtual machine on Windows and then, like, copy-pasting a file, and we were all going like, “Oh, my God, that's amazing.” I drug the file in and then it did a little bit of magic and then moved the file from Windows into Linux. What we want is to blur the lines between the two so you can move comfortably. When you type explorer.exe or notepad.txt in Linux on Windows, Linux says no, and then Windows gets the chance, fires it up, and can access the Linux file system.And since Notepad now understands line endings, just happily, you can open up your .profile, your bash_profile, your csh file in Notepad, or—here's where it gets interesting—Visual Studio Code, and comfortably run your Windows apps, talking to your Linux file system, or in the—coming soon, and we've blogged about this and announced it at Build last year, run Linux GUI apps seamlessly so that I could have two browsers up, two Chromes, one Windows and one Linux, side-by-side, which is going to make web testing even that much easier. And I'm moving seamlessly between the two. Even cooler, I can type explorer.exe and then pass in dot, which represents the current folder, and if the current folder is the Linux file system, we seamlessly have a Plan 9 server—basically a file server that lets you access your Linux file system—from—Corey: Is it actually running Plan 9?Scott: It is a Plan 9 server.Corey: That is amazing. I'm sorry, that is a blast from the past.Scott: I'm glad. And we can run N number of Linuxes; this isn't just one Linux. I've got Kali Linux, two different Ubuntus, and I could tar up the user mode files on mine, zip them up, give them to you, and you could go and type ‘wsl–import,' and then have my Linux file system. Which means that we could make a custom Screaming in the Cloud distro, put it in the Windows Store, put it up on GitHub, build our own, and then the company could standardize on our Linux distro and run it on Windows.Corey: That is almost as terrible an idea as using a DNS service as a database.Scott: [laugh].Corey: I love it. I'm totally there for it.Scott: It's really nice because it's extremely—the point is, it has to have no friction, right? So, if you think about it this way, I just moved—I blogged about this; if people want to go and learn about it—I just moved my blog of 20 years off of a Windows Server 2008 server running under someone's desk at a host, into Azure. This is a multi-month-long migration. My blog, my main site, kind of the whole Hanselman ecosystem moved up in Azure. So, I had a couple things to deal with.Am I going to go from Windows to Linux? Am I going to go from a physical machine to a virtual machine? Am I going to go from a physical machine to a virtual machine to a Platform as a Service? And when I do that, well, how is that going to change the way that I write software? I was opening it in Visual Studio, pressing F5, and running it in IIS—the Internet Information Server for Windows—for the last 15, 20 years.How do I change that experience? Well, I like Visual Studio; I like pressing F5; I like interactive debugging sessions. But I also like saving money running Linux in the cloud, so how can I have the best of all those worlds? Because I wrote the thing in .NET, I moved into .NET 5, which runs everywhere, put together a Docker file, got full support for that in Visual Studio, moved it over into WSL so I can test it on both Windows and Linux.I can go into my folder on my WSL, my Windows subsystem for Linux, type code dot, open up Visual Studio Code. Visual Studio Code splits in half. The Windows client of Visual Studio Code runs on Windows; the server, the Visual Studio Code server, runs in WSL providing the bridge between the two worlds, and I can press F5 and have interactive debugging and now I'm a Linux developer even though I've never left Windows. Then I can right-click publish in Visual Studio to GitHub Actions, which will then throw it into the cloud, and I moved everything over into Azure, saved 30%, and everything's awesome. I'm still a Windows developer using Visual Studio. So, it's pretty much I don't know, non-denominational; kind of mixing the streams here.Corey: It is. And let me take it a step further. When I'm on the road, the only computer I bring with me these days—well, in the before times, let's be very realistic. Now, when ‘I'm on the road,' that means going to the kitchen for a snack—the only computer I bring with me is my iPad Pro, which means that everything I do has a distinct application. For when I want to get into my development environment, historically it was, use some terminal app—I'm a fan of Blink, but everyone has their own; don't email me.And everything else I tended to use looked an awful lot like a web app. If there wasn't a dedicated iOS app, it was certainly available via a web browser. Which leads me to the suspicion that we're almost approaching a post-operating-system world where the future development operating system begins to look an awful lot—and people are going to yell at me for this—Visual Studio Code.Scott: Mmm.Corey: It supports a bunch of remote activities now that GitHub Codespaces is available—at least to my account; I don't know if it's generally available yet—but I've been using it; I love it; everything it winds up doing is hosted remotely in Azure; I don't have to think about managing the infrastructure; it's just another tab within GitHub, and it works. My big problem is that I'm trying to shake, effectively, 20 years of muscle memory of wrestling with Vim, and it takes a little bit of a leap in order to become comfortable with something that's a more visually-oriented IDE.Scott: Why don't you use the VsVim, Jared Parsons Vim plugin for Visual Studio?Corey: I've never yet found a plugin that I like for something else to make it behave like Vim. Vimperator is a browser extension, all of it just tends to be unfortunate and annoying in different ways. For whatever reason, the way that I'm configured or built, it doesn't work for me in the same way. And it goes back to our previous conversation about using the native offering as it comes, rather than trying to make it look like something else.Scott: Okay. I would just offer to you and for other Vim people who might be listening, that VS Code Vim does have 2.5 million installs, over 2 million people happily using that. And they are—Corey: Come to find it only has 200,000 actual users; there was an installation bug and one person just kept trying over and over and over. I kid, I kid.Scott: No, seriously though, these are actual Vim-heads and Jared Parsons is a developer at Microsoft who is like, out of his cold dead hands you'll pull his Vim. So, there's solutions; whether you're Vim or Emacs, you know, we welcome all comers. But to your point, the Visual Studio, once it got split in half, where the language services, those services that provide context to Python, Ruby, C# C++ et cetera, once those extensions can be remoted, they can run on Windows, they can run on Linux, they can run on the cloud. So, VS Code being split in half as a client-server application has really made it shine. And for me, that means that I don't notice a difference, whether I'm running VS Code on Windows or running VS Code to a remote Linux install, or even using SSH and coding on Windows remotely to a Raspberry Pi.Corey: I love the idea. I've seen people do this, in some respects, back in the days of Code Server being a project on GitHub, and it took a fair bit of wrangling to get that to work in a way that wasn't scarily insecure and reliable. But once it was up and running, you could effectively plug a Raspberry Pi in underneath your iPad and effectively have a portable computer on the go that did local development. I'm looking at this and realizing the future doesn't look at all like what I thought it was going to, and it's really still kind of neat.Scott: Mm-hm.Corey: There's a lot of value in being able to make things like this more accessible, and the reason I'm excited about a lot of this, too, is that aligned with a generous free tier opportunity, which I don't know final pricing for things like GitHub Codespaces, suddenly the only real requirement is something that can render a browser and connect to the internet for an awful lot of folks to get started. It doesn't require a fancy local overpowered development machine the way a lot of things used to. And yes, I know; there are certain kinds of development that are changing in that respect, but it still feels to me like it has never been easier to get started with all of this technology than ever before, with a counterargument that there's so many different directions to go in. “Oh, I want to get started using Visual Studio Code or learning to write JavaScript. Great. How do I do this? Let me find a tutorial.” And you find 20 million tutorials, and then you're frozen with indecision. How do you get past that?Scott: Yeah, there is and always will be, unfortunately, a certain amount of analysis paralysis that occurs. I started a TikTok recently to try to help people to get involved in coding, and the number one question I get—and I mean, thousands and thousands of them—are like, “Where do I start?” Because everyone seems to think that if they pick the wrong language, that will be a huge mistake. And I can't think of a wrong language, you know? Like, what human language should I learn?You know, English, Chinese, Arabic, Japanese. Pick one and then learn another one if you can. Learn a couple. But I don't think there's a wrong language to learn because the basics of computer science are the basics of computer science. I think what we need to do is remind people that computers are computers no matter whether they're an Android phone or a Windows laptop, and that any forward motion at all is a good thing. I think a lot of people have analysis paralysis, and they're just afraid to pick stuff.Corey: I agree with what you're saying, but I'm also going to push back gently on what you're saying, as well. If someone who is new to the field was asking me what language to learn, I would be hard-pressed to recommend a language that was not JavaScript. I want to be clear, I do not understand or know JavaScript at all, but it's clear from what I'm seeing, that is, in many ways, the language of the future. It is how frontend is being interacted with; there are projects from every cloud provider that wind up managing infrastructure via JavaScript primitives. There are so many on-ramps for this, and the user experience for new folks is phenomenal compared to any language that I've worked with in my career. Would you agree with that or disagree with that assessment?Scott: So, I've written blog posts on this topic, and my answer is a little more ‘it depends.' I say that people should always learn JavaScript and one other language, preferably a systems language, which also may be JavaScript. But rather than thinking about things language-first, we think about things solutions-first. If someone says, “I want to do a lot of data science,” you don't learn JavaScript. If someone says, “I want to go and write an Android app,” yeah, you could do that in JavaScript, but JavaScript is not the answer to all questions.Just as the English language, while it may be the lingua franca, no pun intended, it is not the only language one should pick. I usually say, “Well, what do you want to do?” “Well, I want to write a video game for the Xbox.” Okay, well, you're probably not going to do that in JavaScript. “Oh, I want to do data science. I want to write an iPhone app.” JavaScript is the language you should learn if you're going to be doing things on the web, yes, but if you're going to be writing the backend for WhatsApp, then you're not going to do that JavaScript.Corey: This episode is sponsored by ExtraHop. ExtraHop provides threat detection and response for the Enterprise (not the starship). On-prem security doesn't translate well to cloud or multi-cloud environments, and that's not even counting IoT. ExtraHop automatically discovers everything inside the perimeter, including your cloud workloads and IoT devices, detects these threats up to 35 percent faster, and helps you act immediately. Ask for a free trial of detection and response for AWS today at extrahop.com/trial.Corey: Yeah, I think you're right. It comes down to what is the problem you're trying to solve for? Taking the analogy back to human languages, well, what is your goal? Is it just to say that you've learned a language and to understand, get a glimpse at another culture through its language? Yeah, there is no wrong answer. If it's that you want to go live in France one day and participate in French business discussions, I have a recommendation for you, and it's probably not Sanskrit.At some point, you have to align with what people want to do and the direction they're going in with the language selection. What I like about JavaScript is, frankly, it's incredible versatility as far as problems to which it can be applied. And without it, I think you're going to struggle as you enter the space. My first language was crappy Perl—slash bash because everyone does bash when you're a systems administrator—and then it has later evolved now to crappy Python as my language of choice. But I'm not going to be able to effectively do any frontend work in Python, nor would I attempt to do so.My way of handling frontend work now is to have the good sense to pay a professional. But if you're getting started today and you're not sure what you want to do in your career, my opinion has always been that if you think you know what you want to do in your career, there's a great chance you're going to be wrong, but pursuing the thing that you think you want to do will open other opportunities and doors, and present things to you that will catch your interest in a way you might not be able to anticipate. So, especially early on in careers, I like biasing for things that give increased options, that boost my optionality as far as what I'm going to be able to do.Scott: Okay. I think that's fair. I think that no one ever got fired for picking IBM; [laugh] no one ever jeopardized their career by choosing JavaScript. I do think it's a little more nuanced, as I mentioned.Corey: It absolutely is. I am absolutely willing to have a disagreement with you on that front. I think the thing that we're aligned on is that whatever you pick, make sure it's something you're interested in. Don't do it just for—like, “Well, I'm told I can make a lot of money doing X.” That feels like it's the worst reason to do things, in isolation.Scott: That's a tough one. I used to think that, too, but I am thinking that it's important to note and recognize that it is a valid reason to get into tech, not for the passion because for no other reason that I want to make a lot of money.Corey: Absolutely. I could not agree with you more, and that is… something I've gotten wrong in the past.Scott: Yeah. And I have been a fan of saying, you know, “Be passionate and work on these things on the side,” and all that kind of stuff. But all of those things involve a lot of assumptions and a lot of privileges that, you know, people have: that you have spare time and that you have a place to work on these things. I work on stuff on the side because it feeds my spirit. If you work on woodworking, or drones, or gardening on the side, you know, not everything you work on the side has to be steeped in hustle culture and having a startup, or something that you're doing on the side.Corey: Absolutely. If you're looking at a position of wanting to get into technology because it leads to a better financial outcome for you and that is what motivates you, you're not wrong.Scott: Exactly.Corey: The idea that, “Oh, you have to love it or you'll never succeed.” I think that some of the worst advice we ever wind up giving folks early in their career—particularly young people—is, ‘follow your passion.' That can be incredibly destructive advice in some contexts, depending upon what it is you want to do and what you want your life to look like.Scott: Yeah, exactly.Corey: One of the things that I've always been appreciative of from afar with Microsoft has been there's an entire developer ecosystem, and historically, it's focused on languages I can barely understand: ASP.NET, the C# is deep in that space, F#, I think, is now a thing as well. There's an entire ecosystem around this with Visual Studio the original, not Visual Studio Code—turns out naming is one of those things that no tech companies seems to get right—but it feels almost like there's an entire ecosystem there for those of us who spent significant time—and I'm speaking for myself here, not you—in the open-source community talking about things like Perl and whatnot, I never got much exposure to stuff like that. I would also classify Enterprise Java as being in that direction as well. Is there a bifurcation there that I'm not seeing, or was I just never talking to the right people? All the above? Maybe I was just—maybe I had blinders on; didn't realize it.Scott: There was a time when the Microsoft developer ecosystem meant write things for Windows, do things on Windows, use languages that Microsoft made and created. And now, with the rise of the cloud and with the rise of Software as a Service, Microsoft is a much simpler company, which is a funny thing to say for such a complicated company. Microsoft would love to run your for loop in the cloud for money. We don't care what language you use; we want you to use the language that makes you happy. Somewhere around five to seven years ago, in the developer division, we started optimizing for developer happiness.And that's why you can write Ruby, and Perl, and Python, and C, and C++ and C# and all those different things. Even C# now, and .NET, is owned by the .NET Foundation and not by Microsoft. Microsoft, of course, is one of the primary users, but we've got a lot of—Samsung is a huge contributor, Google is a huge contributor, Amazon Web Services is a big contributor to .NET.So, Microsoft's own zealotry towards—and bias towards our own languages has, kind of, gone away because Office is on iPhone, right? Like, anywhere that you are, we'll go there. So, we're really going where the customer is rather than trying to funnel the customer into where we want them to be, which is a really an inverted way of doing things over the way it was done 20, 30 years ago. In my opinion.Corey: This gets back to the idea of the Microsoft cultural transformation. It hasn't just been an internal transform; it's been something that is involved with how it's engaging with its customers, how it's engaging with the community, how it's becoming available in different ways to different folks. It's hard to tell where a lot of these things start and where a lot of these things stop. I don't pretend to be a Microsoft “fanboy,” quote-unquote, but I believe it is impossible to look at what has happened, especially in the world of cloud, and not at the very least respect what Microsoft has been able to achieve.Scott: Well, I came here to open source stuff. I'm surely not responsible for the transformation, I'm just a cog in the machine, but I can speak for the things that I own, like .NET and Visual Studio Community, and I think one of the things that we have gotten right is we are trying to create zero-distance products. You could be using Visual Studio Code, find a bug, suggest a feature, have a conversation in public with the PMs and devs that own the thing, get an insider's build a few days later, and see that promoted to production within a week or two. There is zero distance between you the consumer and the creator of the thing.And if you wanted to even fix the bug yourself, submit a pull request, and see that go into production, you could do that as well. You know, some of our best C# compiler folks are not working for Microsoft and they are giving improvements, they are making the product better. So, zero-distance in many ways, if you look at the other products at Microsoft, like PowerToys is a great thing, which is [unintelligible 00:32:06] an incubator for Windows features. We're adding stuff to the PowerToys open-source project like launchers, and a thing called FancyZones that is a window tiling manager, you know, features that prosumers and enthusiasts always wished Windows could have, they can now participate in, thereby creating a zero-distance product in Windows itself.Corey: And I want to point out as well that you are still Microsoft. You, the collective you. I suppose you personally; that is where your email address ends. But you're still Microsoft. This is still languages, and tools, and SDKs, and frameworks used by the largest companies in the world. This zero-distance approach is being done on things that service banks, who are famously not the earliest adopters of some code that I wrote last night; it's probably fine.Scott: Do you know what my job was before I came here?Corey: Tell me.Scott: I was the chief architect at a finance company that created software for banks. I was responsible for a quarter of the retail online banking systems in North America, built on .NET and open-source software. [laugh].Corey: So, you've lived that world. You've been that customer.Scott: Trying to convince a bank that open-source was a good idea in the early 2000s was non-trivial. You know, sitting around in 2003, 2004, talking about Agile, and you know, continuous integration, and build servers, and then going and saying, “Hey, you should use the software,” trying to deal with lawyers and explain to them the difference between the MIT, Apache, and GPL licenses and what it means to their bank was definitely a challenge. And working through those issues, it has been challenging. But open-source software now pervades. Just go and look at the license.txt in the Visual Studio Program Files folder to see all of the open-source software that is consumed by Visual Studio.Corey: One last topic that I want to get to before we call it a show is that you've spent a significant portion of your career, at least recently, focusing on, more or less, where the next generation of engineers, developers, et cetera, come from. And to that end, you've also started recently with TikTok, the social media platform. Are those two things related, first off, or am I making a giant pile of unwarranted assumption?Scott: [laugh]. I think that is a fair assumption. So, what's going on is I want to make sure that as I fade away and I leave the software industry in the next, you know, N number of years, that I'm setting up as many people as possible for success. That's where my career started when I was a professor, and that's hopefully where my career will end when I am a professor again. Hopefully, my retirement gig will have me teaching at some university somewhere.And in doing that, I want to find the next million developers, right? Where are they, the next 10 million developers? They're probably not on Twitter. They might be a lot of different places: they might be on Discord, they might be on Reddit, they might be on forums that I haven't found yet. But I have found, on TikTok, a very creative and for the most part kind and inclusive community.And both myself and also recently, the Visual Studio Code team have been hanging out there, and sharing our creativity, and having really interesting conversations about how you the listener can if not be a programmer, be a person that knows better the tools that are available to you to solve problems.Corey: So, I absolutely appreciate and enjoy the direction that you're going in, but again, people invite you to things and then spring technical support questions on you. Can you explain what TikTok is? I'm still trying to wrap my head around it because I turned around and discovered I was middle-aged one day.Scott: Sure. Well, I mean, I am an old man on TikTok, to be clear. TikTok, like Twitter, revels in its constraints. If you recall, there was a big controversy when Twitter went from 140 characters to 280 because people thought it was just letting the constraint that we were so excited about—which was artificial because it was the length of a standard message service text—Corey: I'm one of those people who bitterly protested it. I was completely wrong.Scott: Right? But the idea that something is constrained, that TikTok is either 15 seconds, or less than 60, it's similar to Vine in that it is a tiny video; what can I do in one minute? Additionally, before they allowed uploading of videos, everything was constrained within the TikTok editor, so people would do amazing and intricate 30 and 40 shot transitions within a 60 second period of time. But one of the things I find most unique about TikTok is you can reply to a text comment with a video. So, I make a video—maybe I do 60 seconds on how to be a software engineer—somebody replies in text, I can then reply to that text with a video, and then a TikTok creator can do what's called a stitch and reply to my video with a video.So, I could take 15 seconds of yours, a comment that you made, and say, “Oh, this is a great comment. Here's my thoughts on that comment.” Or we could even do a duet where you record a video and then I record one, side-by-side. And we either simulate that we're actually having a conversation, or I react to your video as well. Once you start teaching TikTok about yourself by liking things, you curate a very positive place for yourself.You might get on TikTok, not logged in, and it's dancing, and you might find some inappropriate things that you don't necessarily want to see, or you're not interested in, but one of the things that I've noticed as I talk about my home network and coding is people will say, “Oh, I finally found adjective TikTok; I finally found coding TikTok I finally found IT TikTok. Oh, I'm going to comment on your post because I want to stay on networking TikTok.” And then your feed isn't just a feed of the people that you follow, but it's a feed of all the things that TikTok thinks you're excited about. So, I am on this wonderful TikTok of linguistics and languages, and I'm learning about cultures, and I'm on indigenous TikTok, and I'm on networking TikTok. And the mix of creativity and the constraint of just 60 seconds has been, really, a joy. And I've only been there for about a month and I've blessed to have 80,000 people hanging out with me there.Corey: It sounds like you're quite the fan of the platform, which alone in isolation, is enough to get me to look at it in more depth.Scott: I am a fan of creativity. I would also say though, it's very addictive once you find your people. I've had to put screen time limits on my own phone to keep me from burning time there.Corey: That is all of tempting, provocative, and disturbing. I—Scott: You should hang out with me on YouTube, then. I just got my 100,000 YouTube Silver Play Button in the mail. That's where I spend my time doing my long-form. I just did, actually, 17 minutes on WSL and how to use Linux. That might be a good starter for you.Corey: It very well might. So, if people want to learn more about what you're up to, and how you think about the wide variety of things you're interested in, where can they find you?Scott: They should start at my last name dot com: Hanselman.com. They used to be able to Google for Scott, and I was in an epic battle with Scott brand toilet paper tissue, and then they trademarked the name Scott and now I'm somewhere in the distant second or third page. It was a tragedy. But as an early comer—Corey: Oh, my condolences.Scott: Yeah, oh my God. As an early comer to the internet, it was me and Scott Fly Rods on the first page, for many, many years. And then—Corey: If it helps, you and Scott Fly Rods are both on page two.Scott: Oh. Well, the tyranny of the Scott toilet paper conspiracy against me has been problematic.Corey: Exactly.Scott: [laugh].Corey: Thank you so much for taking the time to speak with me today. I really do appreciate it.Scott: It's my pleasure.Corey: Scott Hanselman, partner program manager at Microsoft and so much more. I'm Cloud Economist Corey Quinn. This is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on your podcast platform of choice, whereas if you've hated this podcast, please leave a five-star review on your podcast platform of choice, along with a crappy comment that starts with a comment that gatekeeps a programming language so we know to ignore it.Corey: If your AWS bill keeps rising and your blood pressure is doing the same, then you need The Duckbill Group. We help companies fix their AWS bill by making it smaller and less horrifying. The Duckbill Group works for you, not AWS. We tailor recommendations to your business and we get to the point. Visit duckbillgroup.com to get started.Announcer: This has been a HumblePod production. Stay humble.

In this episode of Totality Living Well, Scott and Michelle introduce themselves and how they came to be health coaches in Knoxville, Tennessee.  Scott and Michelle began their health journeys early in life.  Scott remembers meeting Arnold Schwarzenegger and admiring his bodybuilding as much as his ballet training.  Michelle questioned everything as a kid. She wanted to figure out why her family members suffered from diabetes and heart conditions. She even questioned what lunch ladies were serving her in school, which led to some awkward conversations. Having lived in both Colorado and Tennessee, Scott and Michelle acknowledge the health gaps between Western and Southern America. The couple discuss how their love story intertwined with their health and business goals. Ebbs and flows are a part of everyone's lifestyle. When your healthy habits are right on track, Michelle says that's when real life will set you off balance. As an adult, parent, and businesswoman, she's been there and survived.  TranscriptMichelle: Welcome to the Totality Living Well podcast where we probe into the nitty-gritty aspects of health: the good, the offbeat, and even the controversial things that aren't always discussed. Whether you've had a long-standing curiosity or simply want to know more about a topic, we're here to explore the solutions and answers to empower you in body, mindset, and spirit.Scott: Hey guys, Scott and Michelle Williams here. Healthy living consultants, certified in nutrition fitness and neuromuscular massage.Michelle: We're parents, business owners, and understand the challenges that life can bring with keeping the elements of your own health on track while ensuring that the kids, parents, pets, and loved ones in your life are also taken care of with the resources they need for health and longevity.Scott: We're so glad you joined us.Michelle: Welcome listeners to the introductory Totality Living Well podcast. My name is Michelle Williams, and I am joined today by my husband Scott Williams. We are co-owners of Totality Living Well, a health and wellness company based out of Knoxville, Tennessee. And we are stepping into the podcast world to share our life experiences and expertise in health and wellness, and we are so honored that you have chosen to listen to our first episode.Scott: Thank you for joining us today. We're excited to talk a little bit about who we are and how we came about. Michelle and I met here in Knoxville about seven years ago, and we both were looking at, just, the community and basically what we felt was missing here. And basically just the concepts of health and wellness, and how people actually looked at this community and health and wellness, both coming from a different geographical area of the country. And we both looked here and said, “Wow, we could really do some great things here.”Michelle: Yeah, one of the things that we noticed, too, that the idea of health and wellness for a lot of people entailed getting a prescription filled, and then going to grab their salad at a fast-food restaurant, and maybe just doing a little bit of something here and there—mowing the yard for a little exercise. And we wanted to introduce people to a way of living that we had grown accustomed to, especially out in the West. We each came from Colorado, where it's pretty much a health mecca, but I guess we've always lived a life of health and wellness. So, Scott, why don't you just share with everybody how you got started?Scott: Yeah, when I was a young kid—I actually grew up in the Midwest, I mean Indiana, and up there was meat and potato country. They did three vegetables and boiled them to death and that was about it. But once I moved out to Colorado, I saw just a little bit more about how to treat your body, really. And then I got an opportunity. My father took me to an early contest of Arnold Schwarzenegger in Columbus, Ohio. So, I got to meet Arnold initially and was very inspired by him. But then also for people that are of our age range, I also got to meet a gentleman named Jack LaLanne. And Jack LaLanne was an icon of health wellness in the early 1900s, and he was just very inspiring. And the guy was probably in his 80s at that point in time, was strong as a house. And he just gave me advice, and he said, basically when it came to nutrition, he said he made it and he said if it came in packages, he didn't buy it. It was fruits and vegetables, if he wanted pasta, he made his own pasta, if he wanted bread, he made his own bread. He said, “You've got to stay away from the additives that are out there.” And he says that's the way for him on how he was able to keep himself in such a great condition of health and wellness. Which, you know, it went back for me as a young teenager, and I was so inspired by that. I was like, okay, right away, I went home, and it's like, I'm going to have better eating habits, I'm going to hit the gym, I'm going to exercise, I'm going to take care of myself, and just continue that the way that was, basically. And I just really got inspired by that. And I decided I wanted to help others as well.Michelle: So, Jack LaLanne asked you a question when he first met you, that actually was a life-changing question. And I ask that, a lot, of my first-time clients, too, and that question was, “How frequently do you poop, son?” [laughs].Scott: [laughs]. Exactly. And it's all about the fact is when Jack, his motto was when you ate, you should go to the bathroom. You should poop within 15 to 20 minutes after every time you eat. And, basically, if you're not doing that, then your system is not working properly.Michelle: Yeah and I think so many people, just when it comes to digestion like that, that's something that they don't really even address or think about the frequency. So, the way you eat and the way you move, all of that not only affects your digestion for the better but it also, it helps with cellular turnover and all of that. And that's just—it all fits together, and I think you saw that at an early age.Scott: Yeah, definitely. It changed my life in the way I was doing things, was before I was eating fast food, I was going out, I was doing stuff like that, and probably I didn't have very good bowel movements at that point in time. But once I got on a health train, but more vegetables in my life, and more fruits, and more things that—it made me feel so much better energetically. And it also made me just perform better as a kid. I could think better in school, I could perform better in sports. It just all around made me a better person in that way.Michelle: And then you got to meet Arnold again after you started walking that healthy lifestyle. So, tell us a little bit about that.Scott: Yeah, I mean, I got to meet Arnold a second time there. And Arnold was just such an inspiration because even though he was a bodybuilder, and everybody knew him for his muscle mass, he still was iconic because he was doing things that people didn't even think about. Arnold did ballet. And if you can believe the fact that a gentleman that size actually did ballet because, at that point in time, they didn't have any formal yoga, they didn't have a lot of formal stretching ideas. But he did ballet, which opened his body up, to be able to keep him injury free, to keep him flexible, and to be able to train harder and still care for his body in that way.Michelle: It's almost like a lot of those principles and that line of thinking is starting to come around and be more widely received, and even taught now, which is kind of cool because both of those guys were just so iconic and before their time. They just set the tone in the bar for health and wellness.Michelle: It's really cool that that all led to your next steps. And that's how you got started with your education.Scott: Yeah, so I guess basically, from that point on, I just knew that I wanted to help people. I dabbled in a couple different types of jobs, and things just weren't right for me. So, I basically knew that through personal training, through nutritional consulting, and then also 10 years, 15 years later, I went on and did neuromuscular massage work and trained in that because I started seeing the benefits of helping people that had injuries, helping people stay away from injuries, and helping people get through pain that they didn't even know they had, and how they could take that and get that out of their lives so that they actually could physically move because people would say, “I just can't exercise because my back hurts too bad.” “I can't exercise because I've got this bad neck.” But if you found a way to actually help people change that, that didn't take any effort, necessarily, for them, except for to lay on the table and actually get work done on them, and then to find out what the possibilities were. And then that always opened the door for me, too. People will say, “Well, how should I eat?” Or, “How many days a week, do you think I need to exercise?” So, basically, we could get them healthy on the table, we could change the mindset that they had. And then they start inching into interest in other realms of taking care of themselves.Michelle: And then at one point, you started helping people move, and you had this cool idea. Tell us a little bit about what you did.Scott: Yeah, so actually, um, when I was a young teenager, I decided that I was tired of the large gym scenes and all the hype about it—because all they wanted to do in the gyms were sell memberships, sell memberships, and then hope people didn't show up. Because if people didn't show up, they could keep selling memberships. If everybody showed up, they would be over-occupancy. So, I thought about it and I was talking to one of my clients at the time, and I said, “I got this great idea.” And she was a really sweet lady. She was an attorney, I think, in her probably late 50s. I had helped her—when she came to me she had a hard time lifting things. Her and her husband—I mean, her husband was like a big marathoner and she was having a hard time keeping up with him. And basically, I got her to the point where she was curling 25-pound dumbbells, and she was able to go on hikes with her husband at the end of the day and keep up with him. And so she was so excited that she wanted to help me in any way possible. So, I said, “Okay, this is my idea.” So, she said, “You know what? Come see my banker.” So, what I did in the early 90s, basically, was I started a mobile gym. So, I took a 35-foot school bus, renovated it, put equipment into it, stereo system, lights, everything you could do, and then I rolled around to businesses and homes, and I trained people in the Denver Metro area.Michelle: I love that story and I think just—I love your heart too. Of course, I'm married to you, but you've got a great heart. And then after you did that little journey with the bus, I like what you did with the bus.Scott: Well, so at that point time, when I decided to park the bus—the hard thing about the bus was the metro area was getting too busy, it was hard to get around, and truly, I needed a crew of buses. I needed five to be around different places at different locations for when people needed to be trained. So, I decided to park that situation and I got out of it, and actually got myself outdoors a little bit more. So, while I was sitting on this bus, I didn't know what to do, I thought I bought—I tried to sell it, nobody was really that interested in it. And then someone had called me up and they said, “Hey, we're really interested in your bus. We saw it.” That thing. And so basically, they came over to look at it and ended up being a family. And they were basically, like, living out of a tent. And they wanted to purchase the bus so they could actually live out of it.Michelle: I love it. And I love how your heart speaks through all of that. And I think that's part of the reason that we started working together, too. We met in Knoxville, Tennessee, after coming out here from Colorado, and you were trying to get your business up and running, and my professional background for so many years had been in marketing. And after we had become friends, I said, “Hey, let me just try pitching you to a couple of these TV stations and see what happens.” I said, “But the first thing that we need to do is, I want you to start with one word that we're going to base your whole media campaign on, your publicity.” And I said, “Take a few days, that's all you got to do.” And because this is an important word, and we need to really think carefully about that. And you said, “I don't have to think. I know my word.” I said, “What is that word?” You said, “Integrity.” I think I fell in love with you that day. [laughs]. I was like this guy really not only walks this walk, but he's got heart behind it. So, it was pretty easy to fall in love with you after that, and to start a business, and sharing our stories together and how they paralleled.Scott: You know, and I think that it was a great experience that we fell in love at that point in time. And by talking to you, I want you to tell them a little bit about your story and what drew you into health and wellness.Michelle: Okay, so I am 52. And so back in the '70s, we did not have internet, we did not have all of this immediate access to information. We had to go to the library and look things up or read the encyclopedias, and what you got from those encyclopedias, that was what you're going to get. And I was always interested in healthy eating just from a young age and noticed that a lot of my relatives kept coming down with the same types of illnesses, diabetes, gallbladder problems, heart disease, high cholesterol. Just, you name it and it was just kind of the norm. And I started thinking, “Why? Why does everybody get that when they get older?” And it was my maternal grandmother who came down with gallbladder disease. And I thought, “Well, how does that happen? What does the gallbladder do?” So, I was seven and started researching what the gallbladder did. And I learned that it metabolizes fats. And then I started looking at what we had in our foods in the way of fats, and then how we kind of started eating a lot of fats with just everything we did, a lot of processed foods. And by the time I was in fourth grade, I thought, “Well, what's it going to be like if I take 30 days, and go without sugar?” Just 30 days, no sugar at all. And then at the end of that 30 days, just binge on sugar, and go to McDonald's, and have a Sprite, and have a Big Mac, and an apple pie, or an ice cream, or anything like that. And my mom thought it was kind of funny. And so I started reading the labels. And that became not so funny to her because I was questioning everything. And then at school—I was in fourth grade—started asking the lunch ladies about what kind of sugar was in their food and nobody could tell me so I started boycotting school food. And it really wasn't funny when the principal called to meet with my mom because nobody else wanted to eat school lunch. And so that was that weird time period where everybody was like, “I want to be a movie star. I want to be a nurse, I want to be a teacher. I want to be—” anything but a nutritionist and I wanted to be a nutritionist. So, it was a fun thing for me and my grandfather. After he retired from the military, he had a huge garden in Tennessee—or in  Mississippi, rather. So, I would help him with that big garden and I learned a lot about organic gardening, which is still a big passion today with our garden, that you get to till for me every year.Scott: Of course I do.Michelle: You love me. [laughs].Scott: I do love you. That's the reason I do it.Michelle: But we do grow some superfoods. And so anyway, that was the beginning of that. And then fast forward to when I could go to college. And I did get a scholarship to a great school that had a great nutrition program. I was 17, and I chose communication of all things. But it was always a passion of mine and came back to it full circle. I now have all of the certifications in that. And I was really interested in youth nutrition when the boys were first born, and wanted to get them off to a good start. So, that was the first big interest and the first certification that I had to help them. And you and I started talking, and we realized that all generations needed good nutrition. And then I also had just my passion, hobby of running and exercising, and then I just fell in love with weight training after I met you. So, there's our story.Scott: And that's great. It's one of those things that you just evolve through life, and you really and truly grow, and you add more tools to the toolbox as you go along. And that's the nice thing about it, being a little bit more of a seasoned professional in this business is, the more people you touch and the more clients that you have, the more challenges you've seen, and the more things that you can teach them on how to apply those challenges. And all of us have challenges in life. Even today, we have our own challenges. But you have to find and look at what types of things will actually help you. And there's a lot of professionals out there, and they'll say, “You just follow my checklist. You do this, this, and this. You do it this way and you're going to have the perfect body, you're going to have the perfect life, you're going to have the perfect kids, you're going to have the perfect job.” But realistically, that doesn't work that way. Nobody out there has that perfection, and that might have worked for one individual, but that doesn't work for other people, and so you just cannot follow a standard out there. And so those are some of the things that we want to help dive into.Michelle: Yeah. And we really do take a comprehensive approach to health and wellness. And it's more than just your body which, that's a lot of what brought us into our health journey was just the interest in how movement, and nutrition, and flexibility, and all of that adds together. But then there's so much more to health. And the component of your mindset, and what you tell yourself, and the way you think, and then also your spirit. And that's what differentiates us from animals, and I think a lot of times that's overlooked with people looking at a comprehensive health and wellness program. So, when we started Totality, we said that it's going to be Totality Living Well, in body, mindset, and spirit. So, in this podcast that we are about to pursue, we're excited to just delve into all kinds of topics that maybe aren't always first and foremost in the media, or social media, or in the articles. And we're going to look at some things that can be practical in helping people move along. And I know that as a certified youth nutrition specialist, there have been many, many days with our now grown—almost grown sons who are 18 and 16, where I was like, “Do I have to really feed them today? [laughs]. It's kind of a pain. I'm getting tired of this.” And so, as parents and as business owners, we understand the challenges, and we understand real life, and we're not going to try to act like we know it all because we don't, and we are looking forward to talking with experts in different areas of health and learning from them, but then also sharing what we have learned with our listeners, and with the goal of just empowering all of you in your health journey, so you can live a quality life.Scott: And truly, that's what it's about. It's really at the end of the day, when people talk about what they want to do, so many people say, “I'm going to work hard for 30 years, 40 years, and then when I retire, everything's going to be great.” Well, you know, it really depends on what you do when you take care of yourself along the way because you can't wait until you're 55, 60 years old to start taking care of yourself. Because you'll realize the fact that, “Oh, wow, this isn't what I remember.”Michelle: Yeah. And that's one of the first things that I tell my clients. Strap in because you're about to go into a ride of your life. As soon as you commit to really taking the reins on your health, real life is going to happen like never before. And that's going to be anything from financial issues, to relationship issues, to illness. I mean, it can be anything. So, it's about walking mindfully through all of the hurdles and the challenges. And so I'm really excited about some of the things that we've got in store.Scott: I am too. And we're going to look at it from both angles because Michelle works a lot with females; I work a lot with males. And just getting a feel for what both people struggle with throughout life, and their tug of war, I would say, between taking care of themselves and taking care of their family.Michelle: Yeah. And one of the things that we want to do with our podcast, each time that we have one, is to leave our listeners with three tips. And so we started brainstorming, what could we do in this introductory podcast for three tips?And the first one is to practice mindfulness in your life with your health, but always remembering that your health is not just about your body alone. It is the body, mindset, and spirit. And I think when you do take that comprehensive view of your health, it really opens your eyes to what you can be doing for yourself.Scott: And our second step is really about self-care. It's vital. In order to take care of others, you got to take care of yourself first because if you put yourself on the back burner all the time, between your kids, your job, your husband, anything, you're going to wear yourself down. And when you wear yourself down, you're not good for anybody else.Michelle: Yeah. And then the third one, too, it's just, don't overcomplicate the journey. And I think that that comes when we do listen to so many plans that have been pre-mapped out for us. It's just like, “I've got to execute this perfectly, or it's a wash.” And it's about ebbing and flowing, and simplifying it, and just focusing on a couple of things. So, I'm very excited about some of the things that we're going to be introducing to our listeners.And we just want to thank you so much for taking the time to learn who we are and what we stand for. And we invite you to tune into our next podcast where we're going to be expanding upon the three tips that we just mentioned, and give you some valuable insights that we've discovered as health professionals in walking our lives of health.Michelle: Elements of living a healthy lifestyle come in various forms. Sometimes we don't have all the answers we need, and sometimes we don't even know that we have a need until we have important discussions.Scott: That's the inspiration behind why and what we do with Totality Living Well and helping others live a life of true balance in body, mindset, and spirit.Michelle: We love hearing your comments, questions, and feedback as you navigate your own health journey. We're grateful that you've taken this time to join us. You can keep up with the latest on the podcast through Apple, Google Podcasts, Spotify, or wherever you choose to listen to podcasts.Scott: You can also follow us on Facebook or Instagram by following Totality Living Well.Michelle: And check out our website totalitylivingwell.com for other tips and customized health programs available.Scott: We'll see you next time.Michelle: Remember, keep your health front and center. It's priceless. In great health, always.

17 years ago, today's guest received a call that his dad had cancer. Two years later, his mom got cancer, too. Yet, inspired by his parents' survival, he had a new determination to focus on what he could control in life. That's when he connected the dots that everything is a puzzle, available to solve; health, business, life. He's now on a mission to help others live their best life by giving each person permission to find what works best for them as an individual. Please welcome Scott Stanfield. Scott Stanfield, thanks for jumping and learning from others. How are you doing? Oh, I'm doing great. How are you? Good. Uh, you and I know each other out, so we, you know, a lot of these times I have these podcasts guests and when we chat, it's the first time, but you and I will get into how, um, you and I started chatting together, but not until I ask two questions. Question number one is what's your background and why should our listeners be caring about what you have to say today? Well, my background is almost 33 years restaurant management and, uh, the right place at the wrong time or the wrong place at the right time. And yeah. Went from dishwasher with no experience to manager in a summer. So 90 days, yeah, it was pretty, pretty wild ride, you know, to go from dishwasher to prep, cook to, um, mind cooked expediter to, Hey, we've got a position for you as a manager and, uh, so bye. And, you know, I've worked as a restaurant manager more than I've done any other part of the restaurant. I know how to do all of those things that I have worked as a server and a bartender, but you know what my background really is, is working in one of the most stressful environments that you can imagine, and really trying to, um, deliver excellence five star reviews with, um, You know, not everybody speaks the same language and you know, not everybody has experience and not everybody's trained. So a lot of entry level people that are just passing through and, and so, um, and then how to manage myself and really live the healthiest life is really what I, what I talk about now. And, um, you know, because I did a lot of things wrong. I had to, I had high blood pressure at 1331. Um, I, I was overweight twice, had to lose 40 pounds twice. So that's really what, what my background is. And I'm sitting here taking notes. I've got a lot of stuff. Uh, I want to touch on, but not until question number two, which is okay. So you told us all these cool things about, ya know, let's learn more about what you suck at. What do you suck at Scott? Well, I think the reason that I figured out how to, you know, live a really healthy life in a stressful environment, because I really sucked at it in the beginning. I didn't know how to do that really. And you know, all things being equal when I was a PE major and athletic training major at university of South Carolina, it was 157 pounds, you know, five foot 10. I was, you know, you know, ripped and, and everything was great. You put me in a restaurant, am I. I gate, I go to 185 pounds, right. And not sleeping and drinking too much. And those types of things and what I sucked at was, was balance. And I think this is what I'm really delivering, is what I've learned through the process of getting balanced in my life. I was going to ask you how you went from, you know, the PE to you saying you've been overweight twice, but that makes sense that you already hit that. So why don't we just kind of start there? So you and I met because we had a, we have a mutual friend, Sean Boucher is actually been on the show and I messaged Shawn and said, Hey, I'm looking for somebody that knows this and this about, uh, certain types of diets. Sean is a chef as well. And he said, uh, I'd be happy to help you, but I think. My friend Scott would be better suited. So that's how you and I got, uh, got connected and we've talked a lot. And what I admire about you is a lot of what you touched on is, um, you know, some of the listeners will know that I, I acquired an auto immune condition a while back, and as I've tried to explore that and figure out how to make the most of, of life with that condition. Now I've talked a lot of doctors and it's just kinda like, well, Here. Here's what you got and here's the options, the end. And there aren't really options. And so when I talk to you about it, I was, I was really appreciative of what you touched on, where you set up. I've had problems with health, and I just figured it out. I just delve into it, trial and error, AB testing. And that really resonated with me because that's what I've been doing. Cause I felt like talking to doctors was just like, Very black and white and you know, all, all, all conditions are the same. All solutions are the same. And if it doesn't work, it doesn't work the end. And so I was really drawn to you and I connecting for that reason. So why don't we kind of start there and is that, that, is that the way that you've kind of always been, or because you started realize you're gaining weight and being unhealthy, he said, shit, I need to do something. And you're just kind of forced to figure it out. Well, it's, it's an operating system that really came from my childhood and that being okay. Race go-karts, uh, really wanted to be a NASCAR driver. I wanted to be Dale Earnhardt and, um, And so what happens is, um, you know, when you're a racer and I would, I did, you know, really well. And my parents really, you know, backed me in, in the best I possibly could. And I was fully sponsored by kart shop that made their own chassies and had engines. And so I had a full ride. I didn't cost me anything to race for like the last six years of my career, one, you know, national championships and state championships, and other awards in there as well. And. Eraser does AB testing all the time Right. And you're also are willing to scrap what was working last week because you got beat this week or adjust it and tweak it and do those types of things. I think that's one reason why I was successful in the restaurant business. So early is because I came in with this operating system that allowed me to see. The whole system as a systemically and you make this one adjustment that affects this thing because you change a left rear tire, even when you're racing ovals, and it could change your track time by two tenths of a second, if it's two solved or you had to run too much air in it or too little air in it, those types of things. And so everything's a puzzle for me. And so I lay these systems over everything that I do, and it happened to be, I did the same thing with my health and. You know, when you, okay. So you're working at a time when you're like, okay, I don't have time to sleep now. I mean, you know, or I don't have, I'm really busy. What do I give up? And a lot of people give up sleep, and that's the worst thing you can give up. And we can talk more about that later, but, um, You know, so I had to like figure out how to make all these pieces work and, and what were the elements in this? Just like, what's the element and being a great entrepreneur and a business, you got to have a good product and a service and solve a problem. And you got to have a marketing plan, got to have good SEO. If you have a website, you know, those types of things. So people can find you, it's the same thing with your health as well. Why? So I already stated, I admire that in you and I find myself to kind of fall under that umbrella of putting everything in life as an algorithm and the puzzle and figuring it out. Why are other people not like that? I don't expect you to have an answer, but I'm going to see if you do well. I started talking about Bruce Lipton and epigenetics and, you know, basically what we are as copies of the first six years of our lives. Right. Because our brains are in theta. Excuse me, our brains and data. When we first are born to the first six or seven years of our life, and we're seeing what other people are doing. It's why there's multiple generations of Irish people in New York that are in the fire department or the police department. And there's, you know, multiple generations that are doctors or attorneys or truck drivers or those types of things. And it's because we see what we see other people and how they solve a problem. And so these, these way we handle problems are handed down to us. Um, generation after generation of generation, just in this first six years. And, you know, I think the only thing that's going to change the way we think is repetition or desire to be really good at something or an impact, right. Uh, you know, there's things like death and divorce. It really changed our personality. You know, that can happen that way, but repetition is a big piece of that. And when you're driven, you know, to succeed at something, and for me, that was racing, I raced for eight years and I never won a race. I raced for 15 years total and won multiple national championships, eight state championships, and with sportsman of the year for the national series. So, um, I was put into an element to where. You know, there were no radios in the, in the helmets racing go-carts it was against the rules and way dads couldn't coach you to block or do this type of thing. So I had to figure those things out at age seven and age 15, I was going a hundred miles an hour, 80 miles an hour, depending on the track size and, you know, age 17, I'm going 110 miles an hour with a, you know, A 20 horsepower, you know, on, you know, sitting beside me, I'm racing on a fifth mile, uh, and going around it. And I'm like 11.7 seconds, right? Turn in 10,000 RPMs. And I'm 17, 18 years old. So you think differently when you're put in that situation, on the high level, not racing as people ended up making in the NASCAR. So it wasn't like, it was just like this. Go-kart that you think of, you know, just at a fun park, right? Or, you know, K speed on an electric car, there's a similar, but it was open tracks and, and, and rules and, and I mean, it was just an intense culture to be part of. So I think it is, has to do with striving to be excellent and trying to, I was trying to solve these complex problems at a very young age and it just carried over into my being an adult. Hmm. So, so you had about a 15 year career span, but the first eight of it, no success. And then it was the latter, the latter half where you started to get some wins. Yeah, exactly. I mean, I. You know, it was all about learning how to do it. Right. And you could only do it. And there was no internet. There was no video games other than pole position in the arcade. No, it was like, it wasn't like I was gaming it, you know, on the weekend or during the week. And they go into the weekend and doing it. It was all like old school visualization. Right. You know, and I mean, I was sitting in my go-kart in the backyard, you know, I get my mom to help me pull it out when my dad was at worst, I could sit in it and do that. And so you're. You know, and so it was like you had to learn it and you can only do it when you went to a race. And so the scene of that is, uh, a couple of them, as I've learned that, you know, life is really more about slow and steady wins the race, right. You know, where you have to really put the time in to learn a skill. And I had to learn the skill cause I wasn't as talented as other people and to learn other aspects of it. I had to make the go-kart. You know, be faster than other people because I wasn't a better driver than everybody else. Another thing is, is my dad understood that how, what he called seat time was so important that we would go to an asphalt race on Saturday morning. And then at night we would drive over and go to the dirt track. And with the same cart, we would race at two different races in the same day to get as much seat time as possible. And also every condition, if it rained, I was out there drying the track off the, what, the track on the dirt track. I was out there doing that. So I learned how to drive in all these different conditions. And, you know, I live in the mountains of park city, Utah, and she'll drive in the snow is fun for me. It reminds me of driving on those slick dirt tracks. And when I was a kid. You know, but, but yeah, it takes time to learn a skill and it took me time to learn how to win. So it was a gradual progression where you would, okay. I finished last right then I would finish next to last and then I would move up and I'd okay. I finished 15 out of 20 and then I, then I go to a national race and I wouldn't even make the main event. And then next thing I'm going to, you know, a couple years later I'm going to a national event and I finished in the top 10 and you'll get trophies back. Then you'd give trophies to everybody. Right. You know, you would, you would go and I would finish six and a national race and I would finish six, six. So I kinda got to that spot now. And then, and the next thing, you know, I'm qualifying first at a national event. And then we go to like a world championship in Daytona and I qualify, you know, third and finished second in the race and, you know, and then next thing you know, it's like, um, you know, winning points, championships, and, and those types of things. And so it just put, progressed up and. And the life lesson in that for me was you have to love something long enough, uh, to, to go through the tough parts to get good at it. So you gotta love it enough to go through the tough parts. Yeah. Do you remember that first win? I remember the first state race win or one of the very first ones. Um, I'm being chilled thinking about it. Yeah. Um, Oh gosh. Um, You know, I was a junior, I was an older, so it was probably 14. 15 years old. Um, when I won this race, it wasn't my home track. And the track conditions of dirt, dirt tracks changed, especially when you had the, it depends on how many people came and the weather and how much they wet it. And if you put calcium in the water and all these types of things. And so yeah, knew the track really well, but it never really got this hard and fast. And so when tracks dirt tracks got hard and fast, a lot of my asphalt road core skills would kick in. And most people specialize. They either race, dirt, or they race asphalt, they re did, did both. Right. And, um, luckily for me, you know, the team that I drove for, uh, Charlie Sox is the owner Sox racing. They made shadow carts for years. He, um, He was one of the very, he was the very first person to ever win a national championship in both surfaces and, and configurations. That example was set in our shop. That is like, this is just what we do. And we can, we can move back and forth between those things. And so versatility was a big part of what we did and what we do. And, uh, the guy that I raced with Dan, he still races some and he's building engines and. You know, he's got his sons involved in doing a lot of stuff there now. And so it's really, and I worked there 30 years ago when I was in high school when Jen just out of high school before college. All right. So I want to jump ahead a little bit. You had mentioned that after racing days, you started in a restaurant, um, or was, was day one in a restaurant still when you were younger and doing a little bit of racing. I kind of blended them together a little bit, but I, I had retired from racing. Really. I had decided that I w you know, cause you back then you couldn't make any money, a go cart racing. It was like, it was just a, a hobby that you did. You know, I got a full ride, but I didn't make money at it. I worked at the go-cart shop making $6 at 50 cents an hour. That's when I started there, I was making a minimum wage at $3 and 5 cents an hour. So it wasn't like breaking the bank in any way, putting in 40 hours working on go-carts and then race working on my personal carts after work and on the racing on the weekends and those things, it wasn't like I was waiting tables or any of those type of stuff. So I broke clean of that. And probably about six months just kind of worked at a land surveying company. They really convinced me that I needed to go to school. I had already gone to technical school to be a machinist. I think that's another piece of me understanding how these pieces fit together, put together. And, uh, just with a couple of classes left and I decided I didn't want to be yeah. A machinist. And so I started going to university of South Carolina and I'm like, what are my interests? My interests are business and athletics. Uh, so that's how I ended up. I flipped a coin when admissions called me, you can't do both. I flipped the coin and decided to be a PE teacher. And they talked me into double major. And when I went to orientation, so I was athletic training major and PE, which serves me, serves me well. And so. There was a break. There was a small break in there. And so then what happened is my love has always been racing. That was my first love. My first passion. And that brought in, you know, working out and exercise and go into the gym because the stronger you were cause there no seatbelts it to hold yourself in the, in the cart. Right. You just pitchers. One side of my neck was bigger than the other holding the helmet. Right. I was like all set, you know, it was like really kind of, I had a mullet too, which I'll never show you this. Right. Uh, but, um, it was, it was. Really nice mullet. And I'm telling you this, is there such a thing back in the eighties? Uh, there was, yeah, I was early blonde hair and, you know, hang it. You had to get your mullet long enough to where it hung out the helmet long enough where the girls liked it. Right. So it was kind of, I'm laughing because I have a brother in law and his girlfriend is just absolutely in love with mullets. She's posting all the time. Anytime she sees like a mullet meme. That's her jam, but, uh, so there was a break for me and then I started going to school and then I had, you know, it was a really cool thing. Um, one of the, the kids that I help, one of the juniors I helped with racing go carts. His dad owned an apartment building was an old mill. That was, um, Down across the street from the engineering building right off the campus of university of South Carolina. And, um, uh, it was mr. Huffman and I helped them at one race and gave them my setup that I had done. And that was one of the biggest races I ever won. It was really quick that that day. And, um, and I gave them my set up because. The people who were helping them were really good friends of mine. We used to be on the same team together and those things. And so mr. Huffman, let me live in this apartment building for free for my first year of school. And then he sold a building and I had to start paying rent and all those things. And I'm like, I need to get a job. And I'd always told me, I told myself that if I didn't make it into a NASCAR, that I wanted to own a restaurant and I don't know why it was just a draw to it. I don't have the energy or any of those things. And. Uh, of it, but we ate in a lot of restaurants that we traveled. So that was something that drew me to it. And I applied it probably 15 different restaurants didn't get hired. And finally, I got a referral from a guy that I was a bartender at this restaurant opening out on Lake Murray and he was friends with the people opening it, and we were in the same training classes together. And he made a referral and I got a job as a dishwasher there. And, uh, haven't looked back, you know, that's crazy. I was going to ask you, um, you know, if you had an interest in, in the restaurant world beforehand, so that's interesting. Now you had made a comment when we first started talking that the restaurant industry is the most stressful environment you can imagine. Why is that, you know what goes on behind the scenes? You touched on a couple about, um, differences in language entry level position, people come in and go on, but us as everyday customers, what do we not see? You? Don't see. People's lack of commitment to the job. You don't see. And so therefore there's probably in bigger restaurants, multiple call outs every day. So you write a schedule that with all things being equal, there's very little padding in it for taking into consideration of somebody calls out because your trial. Uh, most of my calls out sick, right. Or, you know, here in park city call out because was a powder day or, or at the beach, because the surf's really good. Uh, you know, cause I worked in Santa Monica, I've worked in here in park city, Utah, you know, Hilton head Island, uh, you know, all these different places. And so you're, you're hiring people who are, you know, they're in town for different reason. And so. You know, people may just like try to take advantage of it or another term that we use, they call up because they're hung over or have whiskey flu as we would say. Right. Right. And so what you don't see is that, you know, when you see a manager, that's actually standing at the host stand. It may not be because that's where they need to beat us because they have to be because somebody called out of work. Right. And so that's what you really don't see there. And you obviously don't see it for, if it's a closed kitchen, you'll see what's going on behind the kitchen. You know, someone like me as a general manager may be hosting, you know, and helping we call it, follow the bubble. People come in and you have all these people coming in and you're helping seed everybody. Then you're going in your back and you're helping make waters to get every, all the waters out. And then, um, and then about that time, what's happening is your pantry station is they're making cold appetizers. They're making salads and they're also making desserts. They're getting, they're making three courses and they're overwhelmed because it could've been somebody called out. It's just like your staffing is for one person and you're busier than you expected. So the general managers back there in a suit, a lot of times bailing out the kitchen and making desserts Brulay in your dessert and running the food out, doing all those things and, and that type of stuff. So there's a lot of things that go on and it's a very, this business is condensed in a very short period of time. And. Here's another really crucial aspect of this. There are micro deadlines for every single table or guest in the, in the building. You know, you can make a reservation for seven 30 and if I seat you at seven 35 you're okay. But if I push it to seven 47, you're upset because you have, why did I make a reservation? There's a deadline and you get sat down. And then it's like how long we were judging this. On a micro level, this experience, how long does it take to get you my water or greeted? Get my water, get my drink from the bar, get my appetizer, get my entree was my entree cooked the right way. How long? All the way down to, like how long does it take to get the check? Right. All those things where the customer is judging this there's probably. You know, sometimes, you know, 10, depending off as a fast casual walk in, or tend to 40 different micro deadlines that are, that are being happening at all with the same time at different places, even in one server section who has a four or five table section and having to hit all those deadlines. Yeah. You know, and that person could not get sleep that day could have been working. This is their second job. Um, I got a call from their boyfriend, girlfriend, or husband, or wife or kid texts, and they're been in dry storage and they got that and they're emotionally hijacked. It could be hung over. Right. It could be that too. Right? So there's all these things that are going on and people don't really take the job seriously a lot of times, cause it's not a profession for them. And you're trying to deliver five star experiences with all of those things going on with hundreds of people at one time, it's a pretty intense environment. And um, I guess that's why the saying is if you can't handle the, he get out of the kitchen, right. It's a pretty, pretty intense place. I imagine it sounds like the demographic that makes up a kitchen is, you know, part. Of the people like you that are super passionate about it. And then the other side is just people there temporarily. And there's, I imagine there's not a lot of in between the people that are semi committed, um, may want to pursue this as a career, but aren't, they got one foot in the door and one foot out is, is that. A fair assumption. It is you have, you have people who are, you know, you, you may have someone, a chef, the super passionate about food, and they may have gone to CIA, the culinary Institute of America. And, you know, you know, but their job is really more about placing orders and hitting food calls and hitting their numbers and doing those types of things and coaching and training and those things, they may spend some time on the line cooking, but you know, when you get to that level, You know, their, their commitment is not actually making great food. They may make, they may be in a position to make up specials and those things, it depends on how they structure their job. There are some chefs that they really are in the kitchen a lot more, and they have, uh, their sous chef, which is their under chef assistant to them, do a lot of the paperwork and do those things. So just, they structure different ways based off their desires and their, um, and their skill sets and those types of things. Um, but yeah, there, there are, when you think about it, you know, it's like it, you know, it's interesting level, a lot of positions are, and you work your way up and we're training people and, you know, they may be commuting from, you know, uh, have a longer commute and they'll change jobs, jobs for 50 cents more an hour. Right. That may be closer to them or maybe yeah, not. And so it's, you know, build team building is a very tough piece of the puzzle and hiring people that have the right characteristics is really a tough thing. And that's one of the things I really dialed in on. Okay. As I was, um, you know, as I was leading restaurants is how to hire people that. Um, really have the right characteristics, uh, and asking the right questions and understanding of what the answer to the question we're in the, to get the best possible outcomes for that. And so, yeah, having the right people in the cultivating the right ecosystem are the really two top things. Yeah. What is one of the most unique slash amazing slash bizarre slash standout memories that you have from the restaurant career? Uh, I think it's probably, um, uh, one of them comes to mind is, uh, Um, you know, getting, well, gosh, there's so many of them, what comes to mind is like getting chewed out by guests and really turning those things around. Right. One of them came to mind actually was this lady was her birthday. She's 95 years old and really going over and talking to her and her nieces, you know, telling me it's like, yeah, she's. The difference about her. She has a goal. She wants to live to be 105, and really, and really connecting with this lady. Who's 95 years old and saying that she wants to live to be 105, you know, you know, things go wrong. Right. You know, you think I just explained this whole system, these micro deadlines, you know, that are going on. I spent a lot of time working in a prime grade steakhouses like classic American Alcart steakhouses, uh, that are expensive and people really, if they're going to lay down that a level of money for their steak, they want to be cooked the way they want it to be cooked in. And as our job to cook this steak, And it's 1800 degree broiler to the temperature that they desire. And I remember this one particular one, this lady steak was overcooked and. Uh, it is really, really a funny situation. I had just finished reading the book by Chris boss, uh, his FBI hostage negotiation techniques, which is called never split the difference, negotiate like your life depends on it. And on top of that, I was the trainer for our hotel and restaurant on how to turn upset guests around. And there's really a psychological sequencing in this process. And the first thing is to hear. What they have to say, just listen intently. And it was really interesting. This lady, this takes over cooked is a bonus filet is a $65 steak and is overcooked. And the reason it was overcoats is cause the server mistakenly, um, you know, had, had, had done mistake. And so it was overcooked. And so I went out to her. I said, you know what? You know, ma'am, uh, I, I came out to talk to her. She was really upset. And, uh, I did everything I could to do it, but she wouldn't let, let me take the stake and she didn't want me the cook or another steak. Right. So she chewed me out. Tableside I've ruined. We ruined her, her husband's best friends, you know? Um, birthday because her stake was messed up. Right. It was really what she believed. Right. It was really odd thing. So we ended up, we did the best we could with it. And she was so emotional hijack. She went to the restroom and in hotels, restaurants, uh, the restroom is in the lobby of the hotel was not actually in the restaurant. Like it would be in a stand alone. So I'm standing at the host stand checking in with the hostess. She walks back in and she's. Tune me out again. He goes, I got you out twice for the same mistake that she wouldn't let me fix, or she wouldn't let me cook another steak, which when I say she wouldn't let me, it would have made things worse. If I would have delivered her another right. She was bad upset. And uh, so. You know, she threatened to she's in social media marketing, she's threatened to, you know, like, you know, slander us on social media and all these other things, but it was just the frustrating, most memorable thing with that is that I, you know, no matter what I did, she was unhappy. And so then I started using some FBI hostage negotiation techniques quarter to really, and it frustrated her and I was able to turn it around at that point. And so a mirroring technique, and then also a labeling technique, which I don't know if you've heard of that stuff and heard of Chris Voss, but it's super impactful and super, super useful, especially for a leader because you now have these tools when people are really upset and you can help connect them back to reality when they're they're hijacked. I like that. So does she end up chilling out a little bit? She calmed down a little bit. Uh, but I, you know, we obviously comp the entire steak, right? Because she didn't need it. She didn't like it, you know, and those types of things, but the unfortunate piece is, is that someone like me who really cares about their job and the service and the product that we're delivering is I want to get them what they want. I want to give it and the way they want it. And when somebody get that emotional, they won't let you do it as hard to, um, feel good about because you feel like you didn't do something right. Because, and not everything's gonna be perfect, but, um, you didn't, you weren't able to deliver what they wanted. And it did, you know, because of her, the reaction to it or emotional reaction to it. It did mess up the dining experience for that entire, our family and their friends. Yeah. Yeah. So you've taken a lot of what you've learned and kind of doing your own thing. Now, doing a little bit of health consulting and growing that. Um, how, how did you evolve into wanting to pursue that more of a one-on-one environment? Well, Well, I got furloughed from the job I had in Santa Monica back in March. And you know, this is something that has been on the back burner, uh, for me for a long time. I I'm, I'm really spending all this time doing all this research on how to. Nope, optimize my performance day in and day out in a very stressful environment. I was also inspired by the fact that my, both of my parents are cancer survivors with my parents got cancer in their mid fifties. My dad got prostate cancer, my mom, uterine cancer, and had to have chemo and surgery and go through the whole nine yards. And dad's 72. Now mom turned 70 in April. And so, um, they're, they're still kicking up a ruckus and back in South Carolina and, um, And so I was furloughed. I was like, okay, what am I, what am I going to do? I'd been doing a brand around being the restaurant GM coach and. Um, my, my life coach, a really good friend of mine said, Scott, modern longevity. Tara is such a strong brand and it's so needed right now. You know, you should consider it. And it took me like 47 seconds to really say, you know, you're what you're right. And. Because we took me out of the restaurant unless I'm asked specific questions. Like you asked me, I really don't think about it that much. I don't think about leadership that much. You don't think about those things. I'm not trying to solve those problems, but I'll wake up in the morning. I'm like, okay, what's my morning routine. Like I was waiting for you to come on. I did one round of Wim, Hof breathing exercises before that. I, um, you know, I've meditated this morning. Right. And I do transcendental meditation. Right. And so I think about. These elements of, of how I can, um, a optimize my performance today. I'll extend my health span tomorrow. Like my is obviously my genetic, uh, capability or expression of my genetics in a certain way to get cancer in my mid fifties. Cause both my parents got it. My, my dad's dad passed away cancer 62. So he probably had cancer in his mid fifties as well, or at least his late fifties. And then. Um, how can I move that out to 85, 95, 105. Right. So what I think about, so that has expended extending lifespan. So my, my, my dad's dad, um, pass away 62, my dad's 72, I'm shooting for 102. Right. So really moving it that way. So how did I get there? A really good conversation with someone who really knew me from the inside out and what I believed in and who I really am. And I listened to her. Do you think if that person didn't do that, you might not be pursuing this? I think so. I think I would have taken the easier route and continued with the restaurant GM coach and not taking the time to do this. COVID pivot. Like most everybody, a lot of people are doing. I probably would have still would have been like, I would have gone deeper on that. And it would, it goes, it would have been easier for me instead of saying and looking inwardly and going okay. Yeah, you bring up a good point that a lot of people are probably going through, as you said, a COBIT pivot to some people because they have an opportunity to like yourself to pursue something that's that they've had an interest in before other people not really having a choice and. You still hear me? Yeah, I guess you repeat that last one. I didn't hear it. Uh, now you're going to hair hall. Let me make a note to have Kevin cut this out. Okay. You bring up an interesting point about COVID pivot and some people are kind of forced into that circumstance. Other people have been fortunate enough, like yourself to have a little bit of a passion. Already in mind, on the back burner to jump in, as you started this journey, a lot of other people are a step or two behind you. Um, do you think that you've found enough momentum to carry or your way through to success? You know, what have you learned so far? Anything that helps people that are that one or two steps behind you catch up to maintaining that momentum? Well, I, I think that I've built some momentum for sure. And, you know, there's, I think that there's a chance that. I may have to step back into doing something on a smaller scale insight as a job to support my family, because unemployment is going to run out. At some point, I don't expect, you know, governments from the check checks from the government to keep showing up. And those types of things, which we only got one right back, you know, four or five months ago. Um, so I it's, you know, when you're starting something, you know, uh, it does take time sometimes to really. They're really gained attraction and the, and get the momentum. You think that, you know, the name of my brand is a word that hasn't really been use for 150 years. Longevity, Marion people don't really know what that means. They know what vegetarian means, you know, they know, um, you know, that someone's Quito or those types of things, but they don't really. Uh, and so I'm putting a word back into the English language that's very rarely used. So that makes it, that's one of the good things about the brand, but it's also one of the bad things about the brand. So I, you know, I know in the back of my mind that because I have a mortgage and two kids, a wife and eight chickens and, you know, two dogs, uh, two lovebirds and a cat. Um, that I got a lot of, a lot of miles to, depending on me to feed them. Right. And so, um, I may have to, you know, someone is single, right? And I've been, you know, working in a restaurant, you know, for, for five or six years. And they have a passion about, you know, about this and they have a low expenses. They could, you know, during this time they could have gotten, you know, personal training type of thing, and then go work in a gym as a personal trainer and transfer some skills that way. And that may be something that I do, but. I know that there's, there's going to probably need to be a bridge for me to make it to where I go full time and continue to do for this full time. But I'm putting up a hundred percent into whatever. Yeah. Why don't you define longevity Marion for us? Well, as long as you have a tear longevity plus Tarion right. And you know, for me, it really means it means extending your health span or the prime years of your lives out as far as possible. And. You know what it really means actually, when I searched it eight and a half years ago, when I thought of this word, I found it in a book on Google books and it was in this living green volume, one 24, and it was referring to people over a hundred years old. And we use that a word now centered in an area and where it's, you know, these blue zones where people live to be over a hundred years old and in the highest per capita percentages. And so this, it really is just about taking your health and giving it a long view versus like, what am I hacking today to feel good today, but making decisions that are good for the long run, like. Yeah, I've been keto for four and a half years. And you know, this, we've talked about this a lot. You've been on the keto diet too. When we start looking at blue zones, start looking at longevity diet by Victor Longo, dr. Victor Longo, um, they're 90% plant based and being Quito and being plant-based is difficult. I know that, um, you have to we'll call wrote a book called keto Tarion that has a lot of plant based recipes in there. And we even talked about that as well in it, you know? And so I'm migrating, you know, more, you know, more about being plant-based and now, because I'm really focused on the longevity piece of it versus just, you know, optimizing myself to, to live the best life and being able to skip multiple meals by managing restaurants and those things. I mean, I don't know. You obviously got food in the refrigerator, and I know you work from home, but imagine working in a restaurant where you have everything from bacon to cheesecakes and everything in between prepped, and you can eat it for free all day long and you're working 10, 12 hour days, right? It's you there's no garden is amazing. Yeah, it is. That's why I gained 30 pounds in a summer. And that's why I had to lose 40 pounds twice. Right. I was definitely spoiled. Right. When I wanted to have a salad, I was walked over to the salad bar, wash my hands, put on a pair of gloves. Here's the salad makes them want. And here's all these toppings right. Already prepped and cut. And I could just do this and I had six salad dressings freshly made. I could just put on there what I wanted. Oh, and can you cook me a piece of salmon to go on here? It was just like, it was. Like easy. And then I come home, it's like, I gotta make a style. This is going to take some time. Right. It's a different things. And there's just the other day at Costco, I bought these pre made beats. Organic beets are pre, pre cooked. It's been like, it's been like, it's like awesome. Cause I just gotta pull them out of the fridge and cut it up, put it on top of whatever. Yeah. It's convenient. So I'm never been really like, um, A meal prepper or those things, because I could just eat where I go to work.   And so I'm having to transition that way there. Well, as we get closer to wrapping up, I want, so you talk about extending life span, going past a hundred, correct me if I'm wrong, but was your inspiration. To be a 95 year old crappy man that complains about stakes. Is that when this all came to peak? Oh no, no, no.   Um, initially my first goal was just, you know, don't be fat. Right. And then it was like, don't get cancer. Right. That was the first really two things. And I knew I could control I'm going to put in and all my body. So, you know, I'm married. Super smart. Beautiful. I know you talk about your wife being hot, but my wife saw it too.   Right. So we're fine. Yeah.   And you didn't say your wife's hot or you just said she's hot, so we're good. Yeah. Yeah. I haven't seen the pictures yet. I don't know. I can't. I think, I think for me, my wife's hotter for me. Right. And so, yeah, but my wife had been a pescatarian, vegetarian and pescatarian for a number of years when my parents started got cancer and those things were happening.   So I switched my diet and. And then, you know, I was doing a lot of things wrong. You know, I was a fat vegetarian. I mean, when I turned 40, when I turned 40, I'm like, Oh, I'm doing everything right. And what I did is my diet, really, it made some markers better. My blood pressure went down because I had high blood pressure 10 years before that.   And so my blood pressure went from one 20 over 80 to like 100 over 70 by changing my diet as I got older, but I was 40 pounds overweight. And then, you know, then I started like, okay, what, what, what do I need to do? And then as like, I'm working at a hospital, um, salt Lake, regional medical center, you probably heard of it, the old Holy cross hospital and the director of food and beverage there.   And they do bariatric surgeries there. And one of the doctors said, you know, that. Weight loss is, you know, 70% diet. And I'm like, well, gosh, I'm just, all I did was started doing P90X. I didn't really change my diet really. Cause I thought my diet was on point cause I'm a vegetarian. Well, then I read this book called the warrior diet on intermittent fasting.   Okay. And nobody was intermittent fasting eight years ago, other than the guy who wrote the book. Right. It was like me and him that were doing right. You know, but now it's like some people who are like, you know, 20 years old are intermittent fasting and it's like, it's something new. And, and so as I progressed and I started putting all these blocks together of all these different things and doing, using Bruce Lee's.   Philosophy of absorb everything, keep what is useful discard, what is not, and make it uniquely your own. Because what I need for me is different than what you need. There's some similarities because to lose weight, your insulin's gotta be low, right? You gotta be at a calorie deficit at some point, and you can do that with keto.   Or you can do that by, you know, just doing calorie restriction. There's different ways to skin the cat, so to speak. And then as, as I, it became health span. And, uh, you know, in extending to prime years. And then when you a brand on longevity, your whole goal set, your mindset changes around that, you know?   And so this is something I plan on doing for another 45, 46 years until my mid nineties and being still being as close to a hundred percent as I possibly can be at that particular age, that's really the game. How can I be the best, a hundred year old? Yeah. Yeah. I like it. All right, Scott, you and I could go on forever cause you and I have a relationship outside of this podcast and we geek out on health stuff.   I'm going to, I'm going to call it a wrap right there and thank you for jumping on learning from others and give you the last few moments to tell our listeners how they can find out more about you. Well, you can try to figure out how to spell modern longevity, marion.com. Right. And do that search my name, Scott Stanfield.   And you'll, you'll see some, some things there. Um, and I hope that you put some links in the show notes. Um, on Instagram, my handle is @straightcabbage. Yeah. Yeah.   Uh, so as a good way to find me, um, there on LinkedIn at Scott R Stanfield and, uh, I, I put out a mix of things on LinkedIn, some leadership stuff, and, and also things about. You know, longevity and sleep and those types of things, um, you know, and health span and diet and, and, uh, you know, and Instagram's more about sometimes like what workout I'm doing, what food I'm eating, you know, those things I'm making.   And we have a private face group, group PI. We have a private Facebook. Book group as well, guys. Why can't I talk right now? Um, it's just called, um, it's modern longevity, Marion as well. So, um, if you want to join that, I asked him questions like Monday, I put, you know, it's Monday and you have 20% more likely to have a heart attack today.   So what are you doing to mitigate stress today? Right. And, and then Tuesday I put, you know, uh, Californians are less likely to barbecue on Tuesday and you know, day a week. And I went, duh, it's taco Tuesday. Right.   Uh, yeah. And really trying to put some cool articles about people who are really living the long Jared Jebbit turn lifestyle. I've also a podcast, modern longevity, Marion. Yeah. And, um, I'm, I'm really excited about that because I'm really starting to do some longevity, Marion spotlights, where I'm interviewing people that are really living it.   And so really dear friend of mine, that was a mentor of mine for about five years. He's 78, he's Quito. He fast for 36 hours once or twice a week. And, uh, we did, we did six mile hikes together and, uh, just really a cool, cool thing to really spotlight people are doing it right at that age. So I'm really excited about school.   Yeah. Yeah. Very cool. Stop. Scott Stanfield, everybody modern longevity. Marion. We'll put the links in the show notes. Thanks so much, Scott. Thank you. It's my pleasure.  

On‌ ‌today's‌ ‌episode,‌ ‌we‌ bring back ‌Scott‌ ‌Scharf‌ to talk about‌ ‌how‌ ‌to‌ ‌build‌ ‌out‌ ‌an‌ ‌accounting‌ ‌system‌ ‌using‌ ‌automation.‌ ‌ Scott is the Co-Founder of Catching Clouds, an outsourced cloud accounting service for e-commerce businesses. Topics: Why accounting is a daily, weekly, and monthly endeavor. The best accounting software. Setting clients up for accrual. Understanding the technological ecosystem. Switching from cash-basis accounting. Refining the process of cash flow projections. Why cash is king. One thing to increase optimization.  Transcription: Joe: Mark, I said many times that I actually fell asleep in accounting class in college. And unfortunately, it was Northeastern University and there were probably 200 people in the room. I was sitting near the door. So 199 people marched out with me there, my head on my desk, drooling, and then the next class came in yet somehow I'm in the position over the last eight years of really revealing a bare minimum of 5,000 profit and loss statements. And I get on my soapbox and preach about this; how important good clean financials are, not only for an entrepreneur's ability to analyze his own business and make sure they're driving towards their goals properly, but to be able to even just get in the room with highly qualified buyers. Once you get in the room, there's a ton of other things, but the P&Ls will get you in the room. And I understand you just had another conversation with our good friend Scott Scharff from Catching Clouds about building automation into accounting so you don't have to actually do this yourself day in and day out, week in and week out by building some automation into the process, either through QuickBooks or Xero. I understand Scott has preferences for both and good things and bad things to say about both. Mark: Yeah, so you're not the only one that fell asleep in accounting class. I did as well. If you looked at my grades, you'd wonder why I'd talk about accounting so much. But you know this Joe I've been working my way through some biographies of various titans of American business. I went through John D. Rockefeller. I'm now in the middle of a biography on Andrew Carnegie. And you know what one thing they both have in common? They were religious about their books. In fact, that was one of the big advantages that Carnegie brought into his business, was detailed books that they could optimize. I just find it fascinating that we can see that this is the case all the way through history what the people have been super successful. Their books are up to date. They're clean. They use them to optimize their businesses. And Scott and I talked a lot about how to do that with an Amazon business. I'm not going to lie, it was overwhelming, partly because Scott is crazy intelligent when it comes to this stuff and he has his systems all set up and he starts throwing around this system, that system, you just hook this up and you do that and then the other thing happens. And in my head, I'm thinking, how can anyone even start this? And at the end of this episode, you'll hear me kind of say that to him. I'm like Scott, this is overwhelming. How do you even get started? But the idea is simple and it is you just get started. He said something in this episode, which I didn't call out in the middle of the episode, but I think is really, really key. He said that of all the financial records that he sees people put together, he will see sometimes accountants that don't know the Amazon world trying to do books, and then he'll see some owners doing their own books. He said both are typically a mess but the ones done by the owners are less a mess than those being done by the bookkeepers because the bookkeepers don't know anything about Amazon. Joe: That is CPAs you mean, right? Not the bookkeepers. Mark: Yes. Joe: Yeah, I'll agree with them a million percent because CPAs do taxes, bookkeepers manage books, and owners try to manage books as well but never quite as good. So I think he's spot on. Guys, listen, and by guys, that's a unisex term. Pay attention to this. I know I preach on it sometimes and I'm so sorry, but it's because I'm here to help you. I'm here to protect you. We are entrepreneurs, we're advisers, we're brokers, we're mentors, and we're your friends, and we're sharing this information for you to help you build a better business and have a better exit someday. Even if that someday is 20 years from now, if you've got automation in your books like Scott is talking about here with Mark, it's going to make your life easier and help you make more money. So with that, let's move to it. But before we do, I want you all to send an email to Mark to discuss whether Carnegie is pronounced Carnegie or Carnegie. Mark: That's a really good question. I go both ways by the way. The author of this; it's an audiobook, he's saying Carnegie so I'm saying Carnegie now. Joe: Okay, Carnegie Hall is where I've been before, but I don't know either. I actually said we have a client that is a one, two, three, fourth remove descendant of Teddy Roosevelt and I pronounced it Roosevelt because I Googled that. Mark: That's wrong. Joe: I know. It was dead wrong. Mark: Carnegie, Carnegie Accounting, let's do accounting. Joe: There we go. All right. Here we go. Mark: Scott, thank you so much for coming back on the podcast. I know you are on the podcast a while ago. I think we talked about the ultimate seller's checklist about the things that you have to do, both leading up to a sale and then after the sale, closing on the business but I'm excited about today's conversation. We're going to talk a little bit about bookkeeping and the reason I'm excited about this and I know people in the cars or wherever you're listening at would be like I need to stay awake, I want to talk bookkeeping. I hop on this all the time. Bookkeeping is so important and there's so much data in your books if you keep them right. I had a conversation with somebody just the other day who is ready to sell. He's got a great business that's growing like crazy and he's going to have to put things on hold to flip over to accrual because that's what we require now. And so I want to talk to you about this because it's what you guys do over at Catching Clouds. Why don't you just kind of give a quick introduction for those that are listening to you for the first time? Scott: Okay, cool. Thank you. That was a while ago and that was a good conversation. So Catching Clouds, we provide outsourced cloud accounting services to e-commerce businesses. So our whole focus is only working with businesses that are selling a physical widget on Amazon, eBay, Shopify, Bigcommerce, TrueCommerce, House, Wayfair, Wish, Amazon Canada, CO, UK. Really most of our clients are those more complex multi-channel sellers and we're working with the larger established businesses and the one to fifty million dollar range. But the main value we offer is we provide the bookkeeping, accounting, and controller level review of their financials and we do all the work. The clients get read-only access to the financials. They threw everything over the wall to us and we leverage technology to pull everything together and then we turn that into accurate financials. And we just consider ourselves part of our client's businesses. Were just part of their team. Mark: Why? I mean, let me just start off with kind of an obvious question and one that I think if somebody is not at the million-dollar revenue or fifty million dollar revenue level, why are companies at that level hiring and spending money on a company like yours? Why is it that their financials are important enough to have that controller level service like yours? Scott: Yeah, so the main thing is that they feel out of control. And we have talked all about management accounting, not just year-end for taxes; we're like a clock, strike twice a day. And otherwise, you only know; and if anything it is extended, you only know if you're profitable in September for the whole prior year. And our whole focus is accountings at daily, weekly, monthly piece and that the owners at a minimum have to stop, take a step back and look at their financials and adjust their gut feeling so they can make great decisions on a daily, weekly, monthly basis, which are all those decisions you have to make so that your business runs better. It's more efficient, it's more profitable, and better to sell because it's managed well. But if you don't get that feedback where we have people; sellers that will go, wow, that was my best month ever and we're like, yeah, you lost a bunch of money. And they're like, wait, what? Well, you spend all the money on this and you didn't pay attention to your marketing spend and you spent through all your profit on the marketing spend. And if you don't see that, it doesn't do any good to notice that six months from now. So it's those kind of things. Or when they're looking at any of the many real-time tools, there's a big difference between real-time tools to do re-pricing and high-level reporting and you can use to make real-time decisions on re-pricing product or what to buy and all that stuff, and then double-entry accounting that accounts for everything. And then we help them adjust they're gut. Hey, this tool always shows you your sales numbers 10% too high, and then they can adjust to it and make those real-time tweaks. But the real value is they're serious about being entrepreneurs. They understand and they hate doing accounting. Most of these businesses didn't go into business to pay sales tax or do accounting and they want somebody else to do it, but they want somebody else who can talk the talk, who understands where the FBA is and FBA reimbursements and inventory and accrual and landed costs. And they don't want to have to train the accountants on just the terminology, let alone what are all the crazy things Amazon does, what's the settlement statement, and all that crazy. So that somebody that they can trust is taking care of those financials and then it's our goal to educate them on how to read the financials themselves and provide insight. Mark: Yeah, I think you talked a lot about kind of those boots on the ground sort of decisions, those granular decisions. I think financials and getting comfortable with reading your financial statements there's two levels. I'm a big picture type of guy and I actually just recently did this with Quiet Light and with another company I own where I took a look at my financials over the course of the last year and I just simply broke down the expenses as a ratio of revenue in the big categories and where are we? And with Quiet Light one thing I want to do is up our data game. We've got a lot of data that we built on over the years, but it's not organized as well as it could be. It's not point and click we could pull this data up. It requires some work. And you know what? It shows in my P&L because we historically had a large tech department that's changing. With my other company, we should be more marketing focused and it was this kind of bigger directional sort of CEO sort of thing and saying, hey, you know what, we really need to double down on the marketing. So I think the financials have that kind of dual-level play of you get the big picture, but the granular boots on the ground sort of decisions too is important if you know how to read them and understand them. You guys help with that. You help laicized some of it. Scott: We do. And one of the key values we do is each of our controllers who are CPAs we don't do federal and state income taxes, but they understand accrual accounting, gap accounting, and everything else. But each one is supporting at least 10 sellers and we never share confidential information, SKUs, or whatever but we can look across all of our clients and say, hey, wow, you're spending three times as much on your Google ad spend as we've seen with our other clients and we're not seeing that show up in your income. And they're like, oh, I just launched a new product, in four weeks I'm going to cut that back. And then our controller as from an accountability puts it on the calendar, calls the seller and say cut it back so you can start making profit. It's okay to ramp up your marketing spend and burn through your profit for whatever number of weeks to launch a product but sometime you've got to back it down. And if you forget all your profit is flowing out. And so it's that comparison and we can do that common comparison, kind of small data, big data across our client base because they're all consistent because we have no restaurants or which would be bad or nonprofits or other things. So it's that insight of being able to see multiples and your business too, you have the same benefits of the fact that I've looked at over a thousand seller's books. You guys have looked probably at least that many if you get that when you're in this niche and you focus on these areas, you really understand the nuances and you see the different scenarios and then you can provide that feedback. Mark: Absolutely, specialization especially for what you guys do. It makes a huge difference. Let's start with talking about different types of software, because Joe Valley, the co-owner of Quiet Light he often, says Excel is not accounting software. Unfortunately, we see a lot fewer Excel books these days than we used to, although they still come up every once in a while. The two dominant ones seem to be QuickBooks and Xero. I have seen other systems thrown in there from time to time. I know you've dealt with NetSuite to an extent. What's your favorite, why, or are they equally good? Scott: So Pepsi, Coke, they're great. It's so great that they… Mark: I'm a pop guy. Scott: Okay, yeah. Mark: Oh no, I'm joking. I'm not, I don't drink pop or soda. Scott: Yeah, I know. So in general it's great that they're both out there, they're both heavy competitors, Xero does much better internationally. Intuit has a much bigger footprint here; a much, much bigger footprint here in the US. But because Xero came along and has been in the cloud and about six years ago, got 200 million in VC funds Intuit went uh-oh we better fix our cloud solution. So that helped anybody that was on QuickBooks. So today they're both feature consistent. Okay, so if you pick either platform one or the other, you're going to be okay. We prefer Xero. We think Xero is a better cloud platform. It's better with multi-currency. If you're doing multi-currency, it is by far significantly better. And then our view is that Xero is a better company. Intuit is a shareholder driven marketing company and that's all they care about. They don't care about accountants. They don't care about small business. I mean their marketing says they do. They are a big, big business. And Xero even though it's much bigger, is still only a few thousand people. It started in New Zealand and is very much about supporting businesses and being engaged in everything else. And they're just really upping the feedback always. Mark: Yeah, I've got a soft spot in my heart for Xero. I put my other company on it for a while. I actually had to take it off because I didn't like their PayPal integration at the time and that other company had a good amount of PayPal sales, but I just like how they set up the system philosophically. It just felt tighter. It felt like QuickBooks you could have all these loose ends kind of floating out there and Xero, like their name kind of alludes to, wants everything zeroed out and they wanted all the balance out. And philosophically, it felt better. What about NetSuite or other third-party systems? Are there other systems that you think are good to work with? Scott: Not really. Really it's in that small; even if you're a startup, you should start on Xero and QuickBooks and you should be doing accounting from day one even if you have no idea what you're doing. And every business owner, entrepreneur, you have to wear every hat in the business so you understand it enough so when you delegate it, you can oversee it. So you can start at that level and the only reason we would expect anybody that would outgrow Xero or QuickBooks online or us at that 50 million or whatever stage is when their supply chain gets more complicated. So we can talk about cloud inventory tools but the idea is need and I'm a big believer in best of breed; so Xero for cloud accounting, Gusto for payroll, A2X for Amazon and Shopify income, Hubdoc for document management, Bill.com and others and Veem for international wire. So we've got these set of tools but then the cloud inventory tool really has to be specific to the client. Almost all of them suck in different ways but there are some that are getting to be pretty good that you can use. But if you outgrow those or you can't find a tool that you need that will meet your supply chain and the number of 3PLs you have and your manufacturing process, then you might have to grow up to NetSuite. And if you're a larger business and you want to be able to; you're buying a lot of international stuff and you have customs invoices that show up six months after you've done a sale and you want to back-calculate all of your COGS into the past, the only way to do that is on NetSuite. Because we do monthly snapshot accounting so if there's an adjustment six months later we posted in that month, we don't go unravel everything and put it all back. So if you need that sophistication or you need a more advanced one but you're going to pay for it price wise and you're actually going to pay a penalty that in my opinion, not great integrations to pull data from these sites and it makes it difficult to impossible to at least reconcile Amazon working with the different NetSuite integrations. Mark: Well, let's talk a little bit about that because I want to talk about some of the automation of this because I think the biggest challenge with a lot of the software is figuring out how to pull in the data in an efficient manner and we especially run into this problem with accrual accounting. This is why so many bookkeepers mistakenly or misguidedly tell their clients you should just do cash basis, because for them it's a lot easier, right? You see the purchase order, you enter it in, and going through to an accrual, you need to check your beginning inventory levels at the beginning of the month and ending inventory levels to figure that out. And it's just more work than they want to do, frankly. How do you set your clients up? I want to talk two questions, one would be how do you set your clients up for forward-looking moving forward we're going to be on accrual and keeping that automation in place. And then secondly, what are easy ways if there is an easy way to go back and get those historical COGS on a monthly basis for an Amazon business? Scott: Yeah, the two sides income. I mean, the first piece would be the automation we look at is first making sure you're posting your income properly. If you sell a hundred widgets that you get paid for 100 widgets and so we use a tool called A2X accounting to post the Amazon income. We've been using it for six-plus years. If posted a penny, it breaks up a hundred plus Amazon fees and follows the accrual method by posting a summary invoice. Because the main thing we recommend for everybody, unless you're doing B2B or direct manual sales on turns, every other sale can be summarized on a daily or weekly or monthly invoice and A2X will post Amazon and Shopify income. For Shopify, it will post Shopify payments every day that matches the payout every day. So the first thing you want to do is be able to get all the income into the system properly and then A2X breaks out based on our design. We're their close partners. We're using it for a year and a half but we were in Alpha for about six months, but they'll post and our standard is to post all the income by payment processor. So on Shopify, if you're using Shopify Payments and Amazon Pay and PayPal and Globally and Sasol and Afterpay or whoever else. It'll break out each of those posted invoice for each of those merchant providers and then you can reconcile it. So that's how you get your income and it's going to post it in the right period as to when the sale happened, not when you got paid. The difference between accrual, you track everything. And in our opinion and accrual, not only do you need it for valuation, not only do you need accrual to make sure you have a balance sheet so you can see your inventory and your assets versus liabilities but it's also easier to look at that if you have these huge expenses that you pay for or you're buying a ton of inventory and you pay $100,000 this month in shipping charges you want to spread that out and as you sell the product, pull that out not pull it together. Now for COGS and inventory, if you're looking for your values, the best tool is just you can't do it on spreadsheets. Just like you can't run accounting on spreadsheets, you really need a cloud inventory tool. You need the automation so you have a structured process to purchase products through a purchase order so you know what you're paying for. I mean you're constantly updating your costs, you're receiving that inventory. So whether it's fraud or they forgot to put a case; you bought 20 cases and they only put 19 in and they were just going super fast, which is usually the problem not so much someone's trying to rip you off. And if you can't catch that in controller control, you just have money that's just leaking because inventory is just cash in a different form that you're trying to turn into more cash. And so you really need those tools that are pulling in every order because all of that detailed data doesn't have to live in the accounting and it shouldn't. Xero and Quickbooks online are not set up to pull in every Shopify transaction, every Amazon transaction. They're not. The idea is you want that summary information and then you want to make sure that your cost of goods sold aligns with the income. So you have to have a consistent process. For Amazon, we upload costs into A2X and it'll post cost of goods sold so the same orders that were in your income even if the settlement statement splits over the end of the month all get posted in the appropriate month, and then you can do the same thing for Shopify. And then for our clients that are on cloud inventory, you can run as long as the tools provide in our focus, which would be cost of goods sold per channel so you can see your profitability per channel on the financials is really the piece you want to make sure that you can get that number, be able to validate it, and everyone's like, oh, that's this big accounting thing. I'm like no your whole world is operations; its purchasing product and shipping product out. Everybody will know we did 422 orders last month and they'll go, okay, and there's all the data for it and that needs to get applied to the accounting and then you need somebody who can do that properly. Mark: You said something just a little bit ago here which I find; it tends to be a mindset shift among a lot of sellers and that is your inventory is just cash in a different form that you hope to turn into more cash. And this is where the switch from cash to accrual changes and people that are on cash basis tend not to see this, right? They see their business bleeding cash and they see a cash in, cash out and when they spend all the money on inventory, they see that as losing value but it's not. You're just transitioning one asset cash into another asset inventory. And I think this is, again, why this topic of discussing books excites me because it causes you to think of your business in a different way; in completely different ways, as a blend of assets. Most of what you said, I already know our listeners are going to listen to this and be like that is way too complex for me to go through and do. Can I connect these things directly? Can I just plug and go or do I need to hire somebody to do this? Can I train somebody to do this? I mean, how do you actually go about implementing this? Scott: So there isn't one tool that will connect all the different pieces. Now Xero and QuickBooks online and A2X for an Amazon-only business gets you a long way along the method because if you're all FBA A2X will get you most of the way there. But for anything else, there's no secret process. So someone's like, oh, I'll just use what Logility and use their reports, they connect everything. I just did a deep dive review of them again and we couldn't figure out how they were posting the data and then we couldn't rec because we were evaluating we were trying to implement it. So you have to have a consistent set of processes to know you're doing your accounting on a daily, weekly, monthly basis. We do cost of goods sold monthly. So it's an hour or two per client per month because we have a standardized process that we follow through that shakes out vendor deposits and the other details. So the first process is what are you doing, what are you trying to accomplish, and just break that down, whether you're doing it yourself. Look at resources. We have some online courses. We have a bunch of YouTube videos to make sure we educate people. But then we still have a manual process for Walmart and eBay and Etsy and House and Wayfair and all these other channels where we download the data monthly, pivot it to post the income, and reconcile it. But we use the exact same data to apply a cost to post COGS. So it's a matter of that. Now, there are consultants out there that will help you set up the cloud inventory tool which we don't do, or you can work with the vendors to implement it and then you either have to manage it yourself or hire someone like Catching Clouds or another e-commerce accountant that understands the technology, the e-commerce space, and accounting. Mark: I think this is why it's so tough for so many people. Because as an entrepreneur, I have an idea, I've invented a product or I've identified a niche I want to go after and I'm good at that but now you're asking me to understand my financial reports. And then on top of that, you're asking me not to just understand my financial reports, but to understand the technological ecosystem around these financial reports to make them all work without hiring somebody who's going to cost me $10,000, $20,000, $30,000 a month just to be able to do this and suck up any profits that I do if I do have. That's why it is so difficult for people. The whole ecosystem is complex and difficult to understand. But I do know once you do get it set up, it is just a few hours a month. So you put in the effort of what am I selling, what are my processes, and then how can I get this into the system the right way? Once you get that setup, then maintaining it isn't as difficult as the initial setup. Is that fair? Scott: That is correct. Once you get those processes in place and you've got a defined process, you're just not assuming you can set automation and set and forget it, you're there. And then I would put the same due diligence that everybody puts into outsourcing; I mean, e-commerce sellers, the big things they outsource, except for the few that decide to buy a warehouse and want to invest in property and that's important to them being an entrepreneur and that's part of the journey. But that's, in my opinion, a very small percentage of the sellers, everybody else is working with 3PL warehouses or FDA or Walmart fulfillment service, Shopify fulfillment network. The same due diligence that anybody puts into that and understanding their supply chain or their vendors or who they're purchasing from, you just need to decide the financials are a priority for that order and then go through the same due diligence where you know nothing as an entrepreneur about whatever and then you start. But it is absolutely possible to put these systems in place or outsource the work like most sellers outsource and one thing I recommend every seller do is outsource sales tax. Don't try to use a tool like TaxJar or Taxify or Avalara. Just hire assault consultant or have someone like Catching Clouds, which we do it only with our accounting services because it's so complex. We're filing over 5,000 returns a year and even if you do everything right, the states generate notices and you have to deal with all of that. And the same thing applies to outsourcing your 3PL and your fulfillment. And then I would recommend outsourcing your accounting and finance because unless you're 30, 40, 50 million, it's really expensive to hire a bunch of accountants and manage them and train them and make sure they stay on top of the technology and all that other stuff. Mark: You know this is the sort of field that if you fall behind, is that much more work to get caught up. And I know we've referred some business over to you in the past that need some cleanup. We refer them to other partners as well that need clean up. What does that process look like? I'm saying, okay, I've fallen behind, I've been doing cash basis accounting for the past forever and now I want to go back three years to do this right and get moving forward. What sort of workload are you typically looking at to be able to get that caught up? Scott: Yeah. So in general, unless they were using A2X and it's very, very rare or they were doing things right or in a lot of cases it's interesting if the owners are involved, they don't know all the things in accounting and what they do they're very particular about so they do less wrong. Invariably when we see other accountants that don't work with any other e-commerce businesses, they're just making it up as they go and they make it worse and worse. 80%, 90% of the time we have to start over with a brand new Xero file even if somebody is on Xero because there's just tens of thousands of bad records in there and you can't get to it. So we set up a new Xero file. You import all the bank and credit card transactions for that time period. You categorize them and you reconcile all those accounts. Then you post all the income and then you go through accounts payable through all that time. And of course, once you just identify the data and even if they have another system, we can rip all that out, put it back in, but then make sure that no, no, this invoice was paid this month, but it was from the prior month to make sure that the bills are in the right period to get all that going. And you just do those accrual things and then we can post the income per month historically and then do the cost of goods sold per month. And so if it's 12 months or; and so we have to go back to either 1120 or 1119 to the prior tax return or back to the beginning of the business and run that and that's what it's going to take. We have looked at; we are Xero expert experts. My co-founder, partner, and wife Patti teach Xero experts how to do cool expert things in Xero and we have all these tricks to clean up the accounting. And I've got a whole list of things that I want Xero to do to allow us to make it so we can just take what's already in Xero and clean it up because the bank feeds and the fundamentals for Xero are great it's just when you connect all these apps and push in data, you end up with whatever. So it's really a process for us. It's about four to six weeks for one to maybe a little bit longer but it takes time. It takes time to set up the systems. It takes time to pull in the data. It takes time to get through it all and redo it and then validate things with the client go away. Hey, I bought a forklift. That was in inventory. I don't sell forklifts. You go, oh okay that doesn't go in inventory. We'll move it over to a fixed asset and off you go to the races. But it just takes a fair amount of work to understand to pull in all the data and do it. But for the most part, you just start with a new accounting file, get all your data; bank, credit card, bills, income, and COGS, and repost it following the accrual method. Mark: Yeah, I get that. I've been there. I've had to do that before. And you're right, going back when you have thousands of transactions can be a nightmare. I want to know where's the balance between good enough and probably not good enough and too much. And here's what I want to bring up to you, there's a well-known accounting company, which I will not name names, that has a cloud-based service that I know does cash basis and then at the end of the year does an inventory adjustment so basically giving you a full yearly accrual basis. And I've seen these financials before where all of a sudden December looks like the worst month ever because they're doing this massive adjustment at the end of the year. So that's one extreme and for a lot of owners, they'll say, well, it's good enough, I'm getting some high-level understanding of my sales and maybe my some cost, but not COGS. That's one and I would say that's not good enough but that is the attitude. On the other end, you and I have talked before about entering sales down to the individual sale, and being that's ridiculous you don't need to go to that level of detail. What is the balancing point from a controller standpoint being able to look at financials and be able to understand these books and be able to get both those kind of big picture decisions made, but also those granular decisions of look you're over overspending here. This is not a profitable product line or you need to stop ramping up your expenses in this area. What's that balancing point for you guys? Scott: So, yeah, there are a lot of people that really look at their financials and that other method is good enough for a tax return. It's not good enough to make those decisions to understand what's in your business. And it's just making sure that you're doing all of the accounting, not everything, right which means every bank. And the most common things we see when we review books is that they're not reconciling every bank account and credit card every month. Because if you think your system; you downloaded whatever data and you think you have $50,000 in the bank and the bank thinks you have 10, they win unless you've caught the error and fixed it. And it's typically just a data error so if you're not looking at the end of the month settlement for every bank account, credit card, and merchant account to say, hey, this is where we have clients were like, you had $30,000 disappear. Oh, it's a reserve. PayPal's got a reserve or Strike has a reserve which has been happening a lot recently. So we want to have those triggers but you want to make sure you're doing those reconciliations so that you know about all of those expenses and all the things flowing through your credit cards. The other thing is make sure every account's on there. If you're using a personal credit card from the owner because you don't have an Amex, Plum, or whatever in your business, and as long as it's dedicated to that business, it should be on the books. You should be tracking those expenses and then it's just do; and then you pay it off and it's just payments to the owner and it all works out from an accounting perspective. And then, like we said, you just want to make sure you're posting the income in a summary fashion and you could just decide to do it all monthly and know that I'm going to take four hours a month, I'm going to post the income and figure out COGS and get that done and it's good enough and if there's any adjustments. And then the last thing is you have to make sure that the balance sheet balances, which means all the numbers and the liabilities and assets. If the balance sheet doesn't balance you can't trust the P&L. You can't trust your statement of cash flows. And so it's kind of a do those core things and then go make sure you have somebody; an external party that's reviewing what you're doing at least monthly or quarterly to say, yeah, this is right or no, you have this write off or hey, you have this big hundred thousand dollar adjustment leach let's go see if we can figure out what's going on in there. Mark: It sounds like there's two steps here, right? There's the validation of your financials, but there's also an understanding or review of those financials. And maybe they're kind of linked together in the same thing where when things don't add up right that's a sign that you need to be digging deeper into something. Maybe you have an inventory leakage or you're leaking money because not all the inventory has been shipped or accounted for. And you would recommend that on a monthly basis then? Scott: Yeah, at a minimum, it's hard to do. We try to do as much of the accounting daily as possible. We believe that to stay on top of a dynamic e-commerce business, you have to be pulling in the bank feeds from yesterday today. You need to be looking at accounts payable and bills you know oh, I did a $30,000 prepayment on a $100,000 purchase order and I owe $70,000 in six weeks when it ships. Like if you're not paying attention to those things on a daily basis, then the owners are constantly pulling money out when they have to pay bills out of the business; their personal bills, and then the next week loaning the same amount of money or more back into the business and you just go do this swing if you're not staying on top of it. But if you're smaller and you're ramping up and everything else, at least do it monthly and then start doing a little bit more weekly. There is more automation that's coming over time around bank feeds and AI and other stuff, but it's going to take a while to get here. Mark: You know, one of the things that I think can really help once they start getting the stuff together is the ability to forecast. And I'm not talking about even on the sales side, that's kind of the second level of forecasting. But on the expense side, because you just brought it up right now, right? You have a bill of $70,000 that's going to come due. Have you planned for that or is that something that's gotten lost with all the craziness of the rest of your business? Or you want to launch a new product line what do your expenses look like over the next three, four, or five months? You can't do that if you aren't living to some extent in your financials on a fairly regular basis where you understand what's coming up. Do you guys get into much of forecasting even on the expense side? Scott: Not long term forecasting, but cash is king and cash flow projections. So we're just refining our process. So we have some clients that we'll do it for a daily for a short time when they've got lots going on at a specific time frame. And then we'll just provide kind of a weekly cash flow that's always that four to six-week view; here's where payroll comes out, here's your expected income, here's what the Amazon payments come in if you're not using Payability or something that lets you cash out every day so you can manage cash flow but it's really all about that. And we just haven't chosen to extend it for a longer period of time because our focus is daily, weekly, monthly but the idea is that the owner should take a step back and look and say, oh, because what we're trying to always get to is to say, here's how much free cash flow you have to buy inventory, pay for marketing, invest in the business, new products, new design, new people, whatever and then hopefully there's something left over for the owner as well. Unless you're in that I'm continually investing that's great but you need to know how much that is so you're not constantly doing. And that cash flow and that availability can include you have a $100,000 Amex plan card. That's just capital to you because most e-commerce sellers love racking up points and that's not debt. That's not a long term loan. They're going to pay that Amex bill probably every two or three times a week to keep the balance down so they can keep buying product to keep up with demand. But you need to know where those numbers are, where are those thresholds? When you're starting to push out against them if you're growing and your sales are growing, which is what's been happening for a ton of sellers in this big new world that we're in where everyone's home and everyone's buying online and that's all ramped up you need to know when you're hitting those limits and that you either need to invest more money as the owner because you're going to turn that cash into more profit; into more cash. Or you're looking at different lines of credit whether it's with a bank, which is usually the most painful way. But there are other alternative ways that aren't quite online loan shark and you find the balance between those to post that in. But it's really cash is king. If you're not looking at it; there's so many businesses that are profitable on paper, profitable on their P&L that go out of business because they didn't manage their cash. Mark: They didn't manage their cash or the cost. And you said costs are king what do you mean by that? Scott: Cash is king. Mark: Cash is king. Scott: Well, actually, costs are pretty important. If you don't have a good handle on your costs, you're going to run into the situation where you don't know what the value of your inventory is. And the most important thing is you don't know how to price your product. So if you have a product that you buy in the US and you buy in huge volumes and that your suppliers don't charge you shipping, you can use your buy cost. It's pretty straightforward. But if you're buying a product, either whether it's being manufactured or shipped internationally and it costs you a dollar per unit, but it costs you nine dollars to get it live in Amazon FDA or your warehouse, you need to know your cost is $10 is your landed cost after shipping and customs and insurance and even inbound into Amazon. So you know your all up cost to know what that is. And if you don't have a good handle on one of the first things we do with just about every client is revalidate their costs, identify the ones that are wrong, and then look at what they're selling it for. And they think they're averaging some margin and it's usually a lot less because they're not aware of their full cost for their product. And that's understanding that landed cost and landed cost is a key accrual process where you pay for everything and then you take that shipping and it gets added to inventory and then as you sell, it comes out and it's value. And that can make a huge difference on client's business. We have clients that are close and they're using landed cost, but they're not doing that last accounting bit monthly to do a journal entry to take hey, I spent as much on cost, customs, tariffs, whatever, and moving that all into the inventory account. And then you go, oh, I really have spent two million dollars on inventory and shipping and everything else, and I'm pulling out 200,000 a month in cost of goods sold. I have not just the number of quantity of units, but you can see the money flowing in and out of your business. Mark: Why don't we have you on monthly to the podcast? I don't know I feel like we just scratched like the first quarter of what you put together as far as the list of things we can talk about. But we are up against the half an hour, so I am going to cut it here and ask the best way to reach you; obviously CatchingClouds.net. You guys have courses available. Is that on Catching Clouds? Scott: Yeah. So if you go to our site, we have a contact form if you want to talk to me, especially if you're a larger business, I'm happy to talk or email and interact with anybody. I just enjoy interacting with sellers. Then we have our YouTube channel, which we have over a hundred YouTube videos, and we'll start adding more next month on basic topics. Now it's all my wife mostly who can explain things better and doesn't talk as fast as I do, but we're really there. And we have so much more that we want to push out onto those YouTube videos because we're happy to share the basics; how to read financials, and all these different things. We just want to help those sellers that are smaller than a million and or do it yourself. And then we also have a Facebook group that supports that for sellers and accountants for providing answers and questions for people that take our courses and just have general questions and then we have our outsourced service. So if you go to our contact form, reach out and I'm happy to interact and have a conversation. And most of my focus is really where your biggest challenge is and if I can help them figure out the top two or three cloud inventory tools that would be there or a developer that would do automation and build zappy integration to improve their efficiency or point them in the right direction, I'm happy to do that. And then our big services, we'll just take it all over, clean it all up, and then run it. Mark: Yeah, I think for those that are listening here, especially those that may not be in that one to fifty million dollar revenue range, the one thing I can say just from my experience is the companies that get there have books in order for the most part, much more so than smaller companies. And part of the reason that they've gotten there is because they have taken the time to put together good books. And it does give you insights into the business that you can't get otherwise. That doesn't mean that we haven't seen companies in the one to 50 million dollar range that don't have their books together. But all the more reason for those companies to make sure you're are doing this because if you aren't, I can almost guarantee you're bleeding cash somewhere and you're lacking optimization somewhere. I think the biggest thing; let's end with this cut, people are overwhelmed by this, they may be not sure how to start. What's one thing that they can do today? If they think that they're under optimized with their books right now, what's one thing that you would suggest that they do today? Scott: I mean, it really usually just comes down to education. So whether it's our YouTube videos or books like Financial Intelligence for Entrepreneurs is a good book. It's looking at that and then our big thing is process. So if you're not documenting your process for receiving inventory and dealing with returns, just take a whiteboard and put it on your wall and start building those things. So it's called the combination of education and then it's just organization so you can keep track of your to-do list and you know, oh, I've got to block out this much time every day or week or month for accounting. It's more about that discipline and then just get an accountability coach. There are other things you can do, like profit first for a different way to look at profit. Or you can hire someone for EOS entrepreneurial operating system and the traction books. So there are actual structured processes that you can join in where it's not just you have to determine it ahead of time, but it's kind of education. Have coach as partners, whether that's Quiet Light who gives out I know great advice. Even when they're talking to people two or three years from when they're selling and they may never sell to say, no, these are the smart things to do because everything they're telling you to do smart to sell your business is the same guidance to run your business profitably. And then get those external resources, find your peers out there and talk to them and share best practices, and just continue to evolve as an entrepreneur. Mark: Scott, it's really good to see you again. Thanks so much for coming on. Scott: You're welcome. Thank you. Resources:  Catching Clouds Catching Clouds Contact Form Catching Clouds YouTube Channel Catching Clouds Facebook Page Quiet Light Podcast@quietlightbrokerage.com

James:  Hi audience and listeners, this is James Kandasamy from Achieve Wealth True Value and Real Estate Investing Podcast. I'm excited to let you guys know that last week we had Mark Kenny from King Multifamily and we discussed a lot of interesting stuff about some of the different markets that he's been buying. They have been buying like in five different markets. Tennessee, Alabama, Georgia, Texas, and Florida. And it's very interesting to see, apart from Texas and Florida, which are, you know, more popular markets and how do they underwrite deals in Alabama and how they underwrite deals in Tennessee, you know. So it's a very interesting episode, I would encourage you guys to listen to that as well.    This week we have Scott Hendricks from Current Investment LLC. Scott is a wealth manager and we're going to be covering different topics such as a DST or Delaware Statutory Trust, which is another alternative for 1031 exchange. You're going to be talking some things about 1031 exchange. And we're also going to be talking about qualified opportunity zones investments and some of the broker-dealer licensing such as series seven licensing, which is really important for people who want to raise money using broker-dealer license. Hey Scott, welcome to the show.   Scott: Hi James. Thank you very much.   James: Awesome. Awesome. So did I miss out anything? Do you want to fill in the introduction with anything else that I missed out about yourself?   Scott: No, I, I appreciate that. I have been an Austin based wealth manager, financial advisor for about eight years now. I have a series seven, which is the general securities license and I have a series 66, which is called a combined uniform state license. I also am licensed with my clients in California and Arizona and Wyoming in addition to Texas. And I am affiliated with a broker-dealer firm known as Kelton and Associates. They're based in Tampa, Florida. But my business current investments are based right here in Austin.   James: Awesome. Awesome. Awesome. I really want to quickly get into the series seven being a broker-dealer because there's a lot of capital out there. There are very, very few deals nowadays. And what's happening is a lot of people trying to raise money, you know trying to be a money raiser, but there's a lot of advice that's coming from the SEC attorneys that, you know, you have to do it the right way. And there's a lot of discussion about why not I become a broker-dealer? So can you define what is a broker-dealer, which is basically a licensed person who's allowed to legally raise money? What is a broker-dealer?   Scott: Sure. So a broker-dealer in my case is basically the...I think of it as kind of my back office. The back office that supports registered representatives like me with performing my transactions for my clients, maintaining regulatory oversight and supervision of my activities, ensuring that I receive ongoing training. They handle the registrations with the government entities that oversee all securities business in this country. And you're correct, there are a wide range of licenses that govern various aspects of all of this activity. They are now regulated by an organization known by its acronym, FINRA, which is simply the financial industry, regulatory authority and finra.org is the website where anyone who would be interested in learning about these licenses or possibly even obtaining one of these licenses could go and look at the menu of the different licenses that FINRA overseas. Some of which are for broker-dealers, some of which are for general securities representatives like myself, some of which govern the transacting in your liquid securities and private placements, which are often the kinds of opportunities that I believe you're describing where it is necessary to raise funds.    I don't remember the specific numbers of all of those licenses. There are about two dozen types of licenses that FINRA supervises. And I would encourage your audience if they were interested to learn more about that to go to FINRA, finra.org.   James: Got it. So how difficult is it to get a series seven license? I mean how long does it take? How difficult is the exam? What do you need to be good at kind of thing? Can you explain?   Scott: Well, you know, interestingly I got my license eight years ago. I know some things have changed as far as the cost. The costs have gone up a little bit. They're still reasonable. Most of these licenses can be obtained for a few hundred dollars, a filing fee, purchasing the study materials, scheduling the exam. I would say the process takes anywhere from three to six months. There are no prerequisites so you do not have to have a finance degree from college, you don't have to work in the financial industry. You can simply if you purchase the application for the license, study the material, take the test and pass the test, you'll obtain one of these licenses.   James: So do you need to know a lot of financial terms? Is there a lot of math? Is that calculus involved?   Scott: I wouldn't have passed if there was very much calculus. No, there's no need to know a lot of math. It certainly helps to be familiar with, I would say intermediate financial concepts. Certainly, basic concepts like, you know, interest compounding, time of the value of money cost basis, rates of return; fundamental financial concepts that anyone who wishes to invest or is already an investor should be familiar with. But there's no set list of previous academic or experience requirements that one must have before taking one of these FINRA exams.   James: Got it. So basically the cost is less than a thousand dollars. You say $300 eight years ago.   Scott: Again, I'm a little out of date, but I would say yes, you can still apply for any of these federal licenses for less than I would even say, you know, three to $500.   James: Got it. Got it. And so you say three to six months you go to the exam, it's not that difficult, you need to know basic financial concepts, which I think is important. You're going to be advising people about their money and what's the rate of return.   Scott: It's a designed course of study to maintain the credibility of the industry, the level of professionalism and the basic knowledge base that the regulatory bodies in this country want professionals to maintain for the benefit of their clients.   James: So when you are taking a series seven and becoming a broker-dealer, why would one person want to be a broker-dealer?   Scott: If you want to oversee agents, if you want to essentially work with a group of agents, representatives, who will assist you in putting together investment opportunities and seeking investors, seeking clients, raising funds a broker deal or license, which I'm going to go out on a limb and say a broker-dealer license is probably more difficult to obtain, a little bit higher barrier because of that nature. That a broker-dealer is more of an office in charge of a number of representatives who then go into the field and work directly with clients.   James: So are you saying broker-dealer has someone under them who works with the clients?   Scott: They could. There's no reason why a broker-dealer could also not be an individual as well. But it is a different level of licensing required to have broker-dealer credentials than it is to have securities representative or securities agent credentials as I do.   James: Oh, got it. Got it. So series seven will get you into the securities agent level and there's another level where you're to become a broker-dealer, I guess.   Scott: That's reasonably accurate. Yes. So series seven, again, a series seven is called general securities license that enables me, authorizes me to transact in marketable securities for individual clients or businesses. So I am authorized to recommend and Franz deck that is initiate the buying and selling of stocks, bonds, mutual funds, exchange-traded funds, registered private placements and in that last case to accredited investors. So it opens up a range of investment transactions that I am authorized to both recommend to clients and then assist them in transacting in those assets. A broker-dealer could essentially be in a position to put together deals, to put together or review outside deals that then they would approve an authorized to their representatives to go out and seek investors, recommend them to investors   James: Got it. Great. I think the structure is similar to like in real estate agent versus broker, either the broker has somebody working for them.   Scott: I wish I thought of that. That's a great analogy. I think that's very comparable. Yes.   James: Got it. Got it. Very interesting. So I didn't even know that; I thought broker-dealer is a person, I mean, can be a person, but it's usually like a company where a lot of agents work for them and these agents get the series seven licensing. Okay. Got it. Got it. So I presume if you want to do fundraising for your lifetime, then you want to get a series seven licensing and be part of a broker-dealer.    Scott: You know, I would advise anyone interested in being licensed in the securities industry to get a series seven. The series seven is almost the gateway licensed to a range of other licenses. Some of these other licenses do require that the individual have a series seven as a prerequisite. And as I mentioned earlier, there are licenses that are specific to illiquid private placement types of investments. So if I was interested only in raising money for let's say for startups or for venture funds or for passive real estate portfolios or deals, I would encourage that person to go get the series seven but then also look for one of the more specific licenses that delve more deeply into the specialized knowledge required for those kinds of specialized  investments tailored to the accredited investor.    James: Oh, got it. So series seven is just basic and then there's a lot more specific to the niche, I guess.   Scott: Yes. Now, the series seven enables me to do both, but the accredited investor deals that I am able to recommend to clients must first be approved by my broker-dealer.    James: Okay, got it. Got it.    Scott: If I had one of these more specialized licenses, I might be able to go out and self approve or do my own independent due diligence and then recommend a particular investment to an accredited investor.    James: Got it.    Scott: As such, right now I need to go to my broker-dealer and say, Hey, here's a good deal. It looks like it would be right for one or several of my clients. And then asked my broker-dealer to scrub it, do their due diligence and then if they approve it, I would be authorized to go raise funds for it.    James: Got it. Got it. So if one of our audience who wants to raise money for commercial real estate, you know, as syndication or multifamily, so they can get a series seven license and go and work for a broker-dealer.  And in that while they work, they can propose to raise money on specific multifamily or any other commercials syndication, I guess to the broker-dealer and the broker-dealer needs to approve that, then he can go and raise money for that part of their syndication. Okay. Got it.    And I mean, if it's not confidential, do we know how do these agents get compensated in terms of percentage? What is that range if it's not confidential?    Scott: No, it's not really confidential. In my case, it's not confidential. In fact, it all has to be completely transparent and disclosed to the investor. So, for example, on a non traded REIT,  if I was to recommend a real estate investment trust to a client that had previously been approved by my broker-dealer, I would earn a commission. In most cases where the investment is illiquid, I'm not gonna put that into a fee-based account. It's a standalone transaction that might complement that particular investor's portfolio. If they agree, I would disclose my commission and my commission generally runs between about four to 6% on the deal. Again, it's very comparable to what a real estate agent might earn on the sale of a property. But I'll disclose my commission, if the investor wishes to proceed, then I'll help them invest and I'll earn a commission on that transaction.   James: So four to 6% of the money being invested, is that right?   Scott: Correct.   James: Got it. Got it.   Scott: You know, four to 6% of the investor's contribution I would earn as a commission, a percentage of that, I would share with my broker-dealer, my back office. The way we think about it with these securitized real estate deals is if you invest $100, you know, $94 of your investment goes into the ground.   James: Got it. Yeah, I understand.   Scott: You know, approximately a 6% sort of transactional cost. Speaker: Got it. And do you get paid in the beginning or do you get at the end or during the transaction or how does that..?   Scott: It really varies depending on how the deal is structured. It really varies. In many cases, my commission will be earned upfront, but there are certain deals where, where my commission may be considerably less upfront but I'll get an annual payout over the life of the time that the investor holds that deal. It really just depends from a deal to deal.   James: And it's a one time commission. Right? That's it. Right?      Scott: In most cases.    James: Yeah. So I think what some people are doing is basically they're getting a GP percentage, which can be a lifetime, I mean, of that investment. But this is slightly different. Did you get a commission flat fee of 4-6% in the beginning? I mean, not at the beginning, in most cases.    Scott: Right. Yeah. Most of my business James is fee-based portfolio management. So I may work with a client who has a portfolio of stocks and bonds and I'll earn a percentage of that account value over the time that I manage it on behalf of my client. It's in these cases of the one time a private placement transaction like a REIT or a Delaware statutory trust, where I'll simply earn a one-time commission. And then the investor will then own a passive property, a passive asset that will generate passive income for that client. But if they also have hired me so to speak or work with me to manage their other portfolio, that may be on more of a percentage-based or a fee-based relationship.   James: Got it. Got it. So is it public information on which agent or which broker-dealer is doing better than others like the stock market, in terms of performing for their clients or is it all private?   Scott: You know, that's one of those questions that can always only be answered with the words 'It depends.' It's really difficult when you come down to investing for individuals and let's say for business owner clients to compare performance. Because each and every investor has so many different goals and different risk tolerances and different timelines that it makes it very difficult. It really is apples and oranges to compare the performance of an entire book of business; either held by an advisor like me or overseen by a broker-dealer. It almost makes no sense to try to compare rates of return or performance simply because each and every investor has a unique objective.   James: Absolutely. Absolutely. I agree. I mean, that's a really good comment. I mean, returns are one thing, right? But risk profile off the investors and you know, how risky is the deal itself is another factor. And everybody has their own taste or flavor that they want to take on when they want to invest. So, awesome. Awesome. And why does an equity investor want to come to a broker-dealer versus going to a private syndication model and invest privately?   Scott: I think a lot of it has to do with the extra risk that you are mitigating by looking for investments that have already been registered with the securities and exchange commission and have been scrubbed; that is, have been researched thoroughly by a professional organization. And you know, there are certain things like just the credibility of the track record of successful deals that it has offered to clients that have exited; all the kinds of things you might look into with a private syndication deal. But for some investors that extra assurance of knowing that it has met the registration requirements of the securities and exchange commission and has been scrubbed and approved by a registered and licensed broker-dealer.   James: Got it. Got it.   Scott: That basically, that does that for a living. That does it, you know, hundreds of times a year looks at deal, memoranda and all of the documentation that goes into assuring investors that the deal is sound. And while you can never completely eliminate risk in any deal, I think that there's a certain risk premium that is reduced with registered and professionally researched opportunities.   James: Got it. Got it. Got it. Although I think I want to just clarify one thing. So usually the investor's equity is paid out of their equity, right? I mean the broker-dealer or the agent fees in this model are paid out of the equity. Whereas in the syndication model, a lot of times people who you know will become part of the GPS as one of the functions to raise money. They get the money from the GP, not from the passive investor. So that's one big distinction, right, because...   Scott: It is, that's correct. That's correct.   James: It makes a difference as well. So, in terms of the profile of customers who come and look for broker-dealers and agents who work with broker-dealers, I mean, is it like a lot of family offices, a lot of institutions, or is it a lot of private equity investors? How would you say in terms of percentage?   Scott: I think the answer is yes. And again, every wealth manager's business is different. In my case, I primarily work in the area of regulation D filed, liquid or a passive real estate and other types of deals. I generally am working with high net worth individuals.   James: Okay.   Scott: High net worth investors who are accredited and are simply looking to add or complement their existing portfolio with passive income through real estate, through business development companies. I also transact in oil and gas, master limited partnerships. So it's the investor in my case who is looking to diversify our portfolio and derive passive income at a rate that is more favorable than they would get in the bond market these days or certainly more favorable than they would get in something like a bank insurance CD or savings account. And perhaps doesn't have the inclination or the experienced to go in and evaluate real estate from private syndication that others might feel that they do have. So I'm able to offer for the less experienced real estate investor, the kinds of opportunities to derive passive income without the expertise that it might take to evaluate a syndication deal.     James: Yeah. Yeah. Okay. Makes sense. Yeah. The professionalism, of course, makes a lot of difference compared to someone you know, coming on from a weekend boot camp. So very interesting. So, yeah, I mean that's really good.   Scott: There are always different paths.    James: Yeah, absolutely. Absolutely. And so coming back to 1031 and DSTs - Delaware statutory trust. So 1031 is, you know, a lot of people know what 1031; where it's basically an exchange mechanism within real estate to a much larger real estate offer, same kind where someone has to identify like three deals within 45 days of closing of the current deal. And they can defer the capital gain and they can defer the depreciation recapture back to the new deal which they should close within six months. Am I right? Did I miss out some?   Scott: You know, that's pretty good. Everything you said is correct. I would simply add, and the way I like to describe it, a 1031 transaction is it's taking advantage of a section of the tax code and that's all 1031 is. It's simply a section of the internal revenue code that allows a real estate investor to sell a property or multiple properties and exchange the proceeds into other real estate, either a single property or multiple properties that can be either active or passively owned and differ all taxes that might be paid as a result of be the capital gains, depreciation recapture. There are a few other taxes that may come into play. For example, if you're in a state that has a state capital gains tax like California, that can also be deferred under the federal a tax code section 1031. But you're correct about the timelines there.   There are pretty strict timelines that must be met in a 1031. And I often tell groups of real estate agents and investors that 1031 is widely known. A lot of people know about it, but it still kind of has some stigma or some intimidation factor about it that prevents it from being widely used. And so part of what I try to do is help my clients and others understand the 1031 process. The primary thing they're going to gain is what they might have otherwise paid in taxes, they can keep inequity and reinvest into other real estates. You mentioned that in many cases an investor will trade up with the 1031, going into the larger holding in real estate. I also see a lot of clients who spread out their investment and diversify into other classes o rfeal estate or into other geographic areas that they may not have owned previously. So it really is a wonderful way, four real estate investors to both diversify, expand, and differ the tax liability in the process of building a portfolio of real estate.   James: Very interesting. But It's within the real estate asset class, right? Can they go from a real estate, you know, equity a 10 31 into something else other than real estate?   Scott: Not as of the end of 2017. And this is something that may be new to your audience. So with the last tax bill, I think it was called the tax cut and jobs act passed by the government in Washington back at the end of 2017, the rules of 1031 were limited. Whereas, previously investors were able to exchange property in maybe in a non-real estate asset. For example, if you owned a, I like to use the example, if you owned a classic car collection, you could sell your antique automobile and exchange the proceeds into real estate or into more cars or fine jewelry and still do it under section 1031. All of that went away at the end of 2017 and left only real estate tangible property is now the only asset class that can be exchanged under the tax deferral section of 1031.   James: Okay. So that's something new. I didn't even know that previously before 2017 you can exchange from other than real estate to other than real estate even though now you know, we all are real estate people so it's all within real estate, which is good.    Scott: And you also hear another common misconception about 1031. The 10 31 exchange is also sometimes commonly called the like-kind exchange. Like-kind is a phrase that is used in the actual language of the tax code. And a lot of investors, and frankly a lot of real estate agents confuse the phrase like-kind as meaning that if you sell multifamily, you must buy multifamily. Or if you sell a commercial property, you must buy a commercial property. That is not the case. Like-kind is very broadly defined by the IRS. Meaning, if you sell anything that has a physical address, a tangible property, you can buy any other category of tangible property. So if you sell a block of single-family homes that you've held as a rental property, you can go buy a warehouse or if you sell a self-storage property, you can go buy a ranch. So it's really any kind of property. It can be exchanged for any other kind of property,[31:24unclear] since 2017, as long as we're talking real estate.   James: Okay. So let me clarify that because we had some kind of sound issue there. So after 2017 we can go and exchange, even though it says like-kind, but you can go within a different asset class, like buying from single-family to a ranch or from multifamily to single-family. Okay. So if you still within real estate, you are good I guess. Right?    Scott: That's right.    James: Got it, got it. Got it. And I think one of the common strategies that a lot of you know, generational real estate investors use is basically to buy real estate and keep on exchanging until they die. And when they die, they gave it to their kids as a gift and where the cost basis starts all over again. And that's the generational wealth Passover, right? Is that true? I mean, did I say it correctly?   Scott: Yeah, it is. And really the 10 31 exchange is, I believe a terrific way to build a real estate legacy. If the investor has heirs or hopes one day to pass a legacy of real estate on to their heirs, 10 31 exchange is an excellent way to do that. Because as long as you continue to sell and then buy real estate under the rules of section 10 31, there's no limit to the number of times you can do it. And as long as you continue to do it, you have deferred your tax liability each time. If at any time you chose to cash out and simply sell your holdings and take the cash and walk away, you're going to owe the tax and in fact, you're going to owe the cumulative tax that you have been deferring. So there actually is with 10 31 a fairly strong incentive once you've begun the process to just keep doing it.   And if you keep doing it until your time is up and you have heirs waiting in the wings, you will upon the date of death of the original owner, that owner will leave to their heirs a legacy of real estate that upon the date of death is stepped up in cost-basis. That's the term that the auditors use such that the cost-basis will then become equal immediately to the market value as of that point in time. And as I like to say, the heirs, if they don't wish to hold on to the real estate, they conceivably could turn around the day after the funeral and go sell everything and pay virtually nothing in capital gains or depreciation taxes.   James: Got it. So that is an awesome tip there. You can use real estate to not pay tax and make tons of money and, of course, your kids are your heirs, they inherited that and they will make the money. But it's a big way to give your wealth that you have created to your heirs, right. And without paying any taxes   Scott: Right. And, again, it, it would then be up to that next generation whether they want to continue to own that real estate and continue to enjoy the benefits of passive income and all the other benefits of owning real estate in a portfolio. Or as I said earlier, if they chose to get out at that time because of the step-up in cost basis, it would potentially eliminate or virtually eliminate all of the capital gain tax liability.   James: Got it. And also the depreciation recapture, right?   Scott: The appreciation recapture as well. Now of course, if there's an estate tax, depending on the size of the portfolio that is inherited, an estate tax may still come into play. But that's an entirely different situation.   James: Estate tax. Okay. Got it. Got it. Got it. So let's come to DST - Delaware statutory trust. And I know some people say this is similar to 10 31. Can you explain what this and why we should use this compared to the normal 10 31?    Scott: Absolutely. So a Delaware statutory trust is not widely known. I've been familiar with these opportunities for about 4-5 years now and I've spoken to many real estate groups, investor groups, agents, attorneys, CPAs. The Delaware statutory trust, in short, is the only form of passive real estate that is eligible as replacement property in a 10 31 exchange. So let me expand on that. A Delaware trust is often compared to a REIT. It's very different from a REIT in many important ways, but it is a legal form of ownership set up around a property, around a physical property, and then offered to investors who may invest in a fractional percentage of the underlying property via the trust.  Because a Delaware trust must own physical property, the IRS recognizes it as another way an investor could engage in a 10 31 exchange. In other words, the 10 31 is just the process of selling and then swopping or buying other real estates. You could either as an investor buy an active property or properties, you're going to be the landlord and hold the deed and be responsible for the rents and the tenants and the repairs. Or you could own a fractional interest in a Delaware statutory trust. You would be a passive investor. The sponsor of the trust would have all management and landlord responsibilities, but as a fractional investor, you would derive your proportionate share of the income. And because there is underline real property in a Delaware trust, the IRS allows these types of trust as an eligible investment via section 10 31.   And so here's really how it works and this is kind of the main core, I think, of the benefits of the Delaware statutory trust, In section 10 31 exchanges, the investor sells a property that begins, as you alluded to earlier, that begins a 45 day calendar, a 45 day clock. That investor has 45 days to identify, in most cases, up to three properties that they intend to reinvest in. Now, they don't have to invest in all three. They could identify one primary property and two backups or two properties and one backup. But they've got to have those properties identified in the first 45 days.    A Delaware statutory trust makes an excellent backup property because it's passive, for one thing. It's open to investment. It's not going to fall out of escrow during the first 45 days as sometimes real properties do. In other words, it's not going to go off the market. If that were to happen with the investor's primary or secondary property and the deals weren't going to close there, if they have named a Delaware trust as a third or as any of their backup properties, their money could then roll back into that trust as an investment and that would effectively secure their 10 31 transactions from start to finish. So Delaware statutory trust makes great backup properties in that first 45 day identification period.   Secondly, in cases where an investor is selling a property and buying a property for less, or actually buying a less expensive property, maybe a value-add property that they want to improve and they're going to have some leftover cash from the deal that they sold, a Delaware statutory trust makes a great way to capture or invest that leftover cash and still secure 100% of the transaction, the 10 31 transaction, from tax. So as a simple example, if you're selling a million-dollar property and the property you want to buy is 850,000, you've got 150,000 leftover. It might be hard to find another real property for 150,000 in some markets. So a Delaware trust comes along as a great way to park or invest that residual leftover cash securing 100% of the 10 31 proceeds from taxation, at least deferring 100% of the tax liability and giving the investor now two different properties.   One is the primary property for 850 that they wanted to buy and fix up or be the landlord over. The other is the 150,000 fractional interest in a passive investment that they will have no work responsibilities to maintain, but they'll be receiving a passive income from that trust. And then the final way that I think Delaware trusts are powerful is if the investor is simply wishing to continue to own real estate but really wants to get out the landlord business entirely. And that would be someone who maybe has been an active landlord for a better part of their investment career, wishes to continue to hold real estate because it's a great asset. Why not? But doesn't want to be a landlord anymore. So they may sell all of their active real estate properties, declare their intent to do a 10 31 exchange and then pick two or three Delaware statutory trust to put 100% of the proceeds into. They now have switched from being an active to a 100% passive investor.    Someone else does the work of the landlord that is the sponsor of the trust. They began to receive the mailbox money or the passive income, still own real estate as part of their portfolio and they've effectively deferred all of what would have been their tax liability from selling their active holdings. And another wonderful thing about two more points about a Delaware trust. You can do a 10 31 exchange out of a Delaware trust. So when the underlying property in the trust sells, which signals the liquidation of the trust, the investor will be notified with plenty of time. They can then declare another 10 31 and take their proceeds out of the Delaware trust, which may have appreciated over that time and they can take those proceeds and swap them into some other property. They can either go into another trust or they can go back into the active real estate market if they choose to. Or of course they have the option to simply cash out, take the cash, and at that time they would incur the tax liability.    And then the other benefit of a Delaware trust is you do not have to do a 10 31 exchange to invest in a Delaware trust. Delaware statutory trusts are open to cash investors. So it's a good way for an accredited investor, which you must be. In order to invest in a Delaware trust, you must be an accredited investor, but you do not have to be bringing money into the trust via 10 31, you could be a cash investor. But once you're in a Delaware trust as fractional owner with either your cash investment or your 10 31 proceeds, you can then when the trust liquidates do a 10 31 exchange. So a Delaware trust provides a good way for a real estate investor who wishes to be passive, doesn't have a property to sell but wants to in the future be able to do a 10 31 exchange. As long as they've got cash and they are accredited, they can invest in a Delaware trust.    And then you know, three to five to sometimes seven years down the road when the trust liquidates, they'll be eligible to do a 10 31 exchange and defer any potential tax that they might have otherwise paid.   James: Wow. I didn't know so many things about DSTs. This is very eye-opening for me. It's like a syndication but it's a tax-protected syndication, right?   Scott: It's a way to take 10 31 money; money coming out of a 10 31 deal and put it into an investment open to up to 500 individual investors typically, which is far more than something like a tenant in common where you're limited to only 35 investors. Delaware trust, yes, you're a fractional owner of a real estate portfolio that is managed by a sponsor who acts as a trustee and you basically, your only job is to go to the mailbox and receive your checks.   James: Got it. Got it. Yeah, I was trying to bring that up. Tenants in commons is another way I thought Delaware strategize is similar to tenants in common. Because in tenants in common is where everybody puts their 10 31, everybody has their own LLCs, all different entities, but they work as one. But you brought up a good point. There's a limit on 35 tenants in common that can be done but DST is 500 people.   Scott: And an important distinction to make there is that with a much higher cap on the number of investors, you're able to fractionally own much larger institutional scale types of real estate. So you may be able to be a fractional investor in a downtown Dallas office tower that's in a Delaware trust, whereas 35 investors, it would be difficult to pull together the 35 investors who could afford to purchase a multimillion-dollar property. But with a Delaware trust, you often are a fractional investor in a property portfolio that could potentially be worth tens or even hundreds of millions of dollars. So access to a larger scale institutional type of property is one of the benefits of what the DST has versus a tenant in common.    And then the other one, now some will see this as a negative, some may see it as a positive. With a tenant in common, each one of the up to 35 investors has a vote. They have some control over the upkeep and the sale or the management of that property. And as you know, when the property is going to be sold, you've got to get the unanimous vote of all 45 investors. With the Delaware trust, the investor is 100% passive. They do not have any say, any control over the management of the property. That's entirely the responsibility [48:05unclear] of the sponsor. They also do not have any control or voice over when the property is going to be sold. So if that appeals to an investor, in other words, if they say, I don't want I have to vote or to have to go get the other 34 people to vote, I just want to be passive, a Delaware trust is a good option compared to [48:31unclear]    James: But what is the average return of Delaware statutory trust?   Scott: So again, that varies. It varies from you know, market conditions and from the difference of Delaware trusts that are available. Typically what I have been seeing lately are rates of return between about five and seven and a half to 8% and that's cash on cash. So cash on cash or nominal right of return is let's just say six to six and a half percent in the midpoint. So while that is not typically a strong rate of return compared to private syndication or even compared to a lot of tenant in common deals, you have to look at the other benefits.    One, again, access to larger institutional scale properties. The fact that the Delaware trust is going to be a registered program, sponsored and regulated by oversight bodies. And then three, although this is also the case with the other types of real estate investment, the sponsor of the Delaware trust in rules similar to REITs. If they are taking depreciation on the underlying property, that tax credit has to be distributed to their investors. So while the nominal rate of return might be 6%, that is the cash on cash return, in many cases, the investor is going to see some portion of that cash dividend be already after tax. In other words, it's going to receive the benefit of that depreciation tax credit that the sponsor is taking. So depending on the investor's tax bracket, their effective rate of return is going to be higher than their nominal rate of return, given that some portion of that distribution is after tax money.   James: Got it, got it, got it. But let's say for example 6% cash in cash, is it including the sale of the property or is there such thing called the sale because they are physical assets under this DST, right?    Scott: Yeah, no, you're right and I thank you. I should be clear. That is the cash flow. Let's say that, again, rates of return I'm typically seeing now average, I would just say average around 6% for this example. That is the cash flow. So that's the annualized cash flow that the investor is going to receive in monthly checks. Obviously one 12th of that amount in monthly check is the underlying property where they have their principal. If that underlying property appreciates over the life of the trust and is sold at a value greater than it was acquired for, the investor is also going to receive their prorated share of that appreciation. So the aggregate return is, I like to call it, or the total return is if the property appreciates is definitely going to be higher than the cash flow rate of return.   James: Okay. So do you have that kind of sample numbers on roughly what's a performer?   Scott: I can refer generically to some of the deals that I've seen. So let's say if an investor puts $100,000 as, let's say in this scenario where I described leftover cash; if they've sold a million-dollar property and they want to do a 10 31 and buy a $900,000 property and put that residual 100,000 into a Delaware trust, I'm just gonna use a number typically four to five, six or seven years. And again, during this time, the investment is illiquid. The investor cannot get their money back on their own schedule. They have to wait until the sponsor finds a buyer and sells the underlying property. But most real estate investors understand the concept of illiquidity.    So if they've put 100,000 into a Delaware trust and five years down the road, the sponsor finds a buyer for that property and sells it at 25% gain, 25% in an appreciation, the investor is going to get their 100,000 back, they're going to get 25,000 for their proportionate share of the 25% gain. And during the five years they've held it, they've collected, I'll use the 6% rate of return as an example, they've collected $6,000 a year in monthly distributions at a 6% rate of return. So they've in effect received in a very simple example, their $100,000 back. They've gotten $30,000 of cashflow over five years and they've received a $25,000 gain or appreciation on their original investment.   James: Got it. Got it. Got it. Interesting. So, yeah, I mean, it depends on the structure of syndication, right? Usually, you know, like for me, we allow people to buy and sell their shares. You know, within the investment period, but it looks like DST doesn't give that flexibility.   Scott: A DST and you know, again, it's important for me to also say that with DSTs, there are still risks involved. You can lose money as you can with any type of investment. The illiquidity of the investment is something that the investor has to be informed of and understand that if they are an investor in a DST, they're at the mercy of the sponsor for the holding period. Now, while the disclosures require that I tell investors it's a five to seven year hold time with no option to exit. Typically with the market right now being what it is, I have seen DSTs liquidate sooner then five to seven years. It's simply varies from yield to deal.   James: And what is the fee that the sponsor takes in DST?   Scott: That again, it varies from deal to deal. Typically there's a 1% a dealer or sponsor fee, at closing. And again, as I mentioned earlier, I do earn a commission on investment that goes into a DST, it can range from anywhere from four to 6%. And, again, it's in the same ballpark as if you were working with a real estate agent and buying the physical property or working with yield syndicator and buying into syndication.   James: Very interesting. I mean, I didn't know this vehicle exists and this is very powerful in terms of 10 31 money specifically. Why? Because you know, and I was thinking that you always have to go in 10 to 200 to go to larger properties, but it looks like you can buy smaller properties and take the remaining and put into DSTs I guess. Right?   Scott: Yeah. It's really a part of my message that using a DST is a great way for an investor to diversify if it is in their interest. First of all, the primary reason anyone would undertake a 10 31 is to defer the tax. But a DST allows that investor to diversify into different types of property, both in terms of asset class or asset and active and passive real estate. So they can begin to sort of put more chest pieces onto the chest board, I guess and look at passive investment, active investment, lodging, self-storage, multifamily, single-family industrial, commercial; build a real estate portfolio that is truly diverse in terms of geography, asset category and the active and passive of ownership status.   James: Got it. So let's quickly talk about qualified opportunities zone. I mean, there's so much of details into opportunity zone. I don't think we have time to go into a lot of details there. But at a high level, what is qualified opportunity zones investment, how is that different from a normal 10 31 and DST and you know, investing into opportunity zones?   Scott: So qualified opportunities zones were also part of this same tax act that passed at the end of 2017. They are a fairly new concept or fairly new opportunity for investors. And the case can be made that opportunity zones were written into law because investments that were not real estate were excluded from section 1031 eligibility. So an opportunity zone is a geographic region of the country and there are a thousand or more opportunities zones all over the country where the local authorities have designated a desire to have investment flow into those zones from investors. They may be, you know, below market regions of cities or communities where the thought being that if investment dollars float into these areas, we would have more healthy economic development.    Qualified opportunity zone investors may use gains from a sale of an investment other than real estate, whereas with 10 31, all you can exchange is real property. So, for example, if an investor has a stock portfolio and it's gone up in value, they want to sell their stock portfolio, but they'd rather not pay the capital gains tax that that's going to incur, they could invest the gain from that sale into a qualified opportunity zone, differ the tax liability, invest in a a property or real estate or real estate fund that's building projects in that zone and then they would enjoy a certain tax benefits due to the deferral of their original gain. If they maintain that investment in the opportunity zone for 10 years, they could then cash out and take their money and pay no tax. So one of the important differences between a 10 31 exchange and an investment in an opportunity zone is to put it simply, you don't have to die in order to cash out tax-free.   James: But do you get 100% tax being erased?   Scott: Not in the first case. You're correct. It really is complicated and we could probably have a whole separate episode on all of that opportunity zones. There are really two appreciation events that are subject to favorable tax treatment when it comes to talking about opportunity zone investments. The first one is the gain that the investor realized on the sale of their asset, whatever it may be that they want to put into an opportunity zone. So if they sold real estate that had gone up in value or sold stock, or I'll go back to my classic car example, and had an investment sale that would have been subject to capital gains tax, they can defer that tax up to seven years by putting that investment into an opportunity zone. Now, it is only a seven-year deferral. So after seven years, the investor will owe a portion of the tax they would have owed on the original sale of their investment.    It will only be, in the case of a seven-year deferral, it'll only be 85% of the tax they would have owed. So it is truly just a deferral. You do have to come up with tax payment, at least 85% of the tax you might have owed seven years ago. In year seven, that tax bill does come due to the IRS. But understand now we're talking about two different investments. The investment that was sold to make the original opportunity zone investment, the tax four, which is deferred seven years. So it might be a benefit to an investor's cash flow and then the investment within the opportunity zone itself. And if that investment turns out to have been a good one, and the real estate or the property or the project in the opportunity zone appreciates over 10 years -hold time- and the investor then cashes out of that opportunity zone investment that will be exempt from capital gains tax.    So it's that second investment in the opportunity zone that if it is a winner, if it appreciates over 10 years, the investor has the potential to cash out with their gain and owe zero capital gains tax.    James: Got it. Got it. Very interesting. So let me summarize. 10 31 DST and qualified opportunity zone. So 10 31 let's say I have a million-dollars, where I want to defer my tax and my depreciation recapture, I just buy another asset, right? A larger asset or multiple assets, but it should be a larger value than all of it get deferred. And to the next asset, if I don't want to pay tax, I have to, you know, keep on doing 1031 until I die and pass it to my heirs. That's the 10 31.  So DST is basically you asked it's the same as 10 31, but it's more of passive investment.    Scott: Let me, let me jump in there and clarify it. A 10 31 is just a transaction. It's a way to sell and then buy real estate and defer the tax, not pay tax during that transaction. A DST is an asset. It's a kind of an investment. It is a passive real estate investment that can be a part of the equation of the 10 31 transaction.   James: Got it. Okay. Yeah, that makes sense. And qualified opportunity zone is basically, it's the same as 10 31, but you're deferring your tax for seven years and on the seventh year, your bill is due to the IRS, but you get 15% forgiveness.    Scott: You basically get a discount based on discount on the tax that you would have owed in year one. You'll owe 85% of it by the time year seven comes around. And so again, that was the tax you would have owed on whatever it was you sold to make the opportunities zone investment.    James: Got it. Got it. So the original tax difference, you only pay 85% after year seven, right? So you get 15% forgiveness. But I think the bigger thing in an opportunity zone is whatever deal that you're investing in an opportunity zone that's completely free in terms of capital gain after 10 years.   Scott: Yeah. Right, right. If the investment you have made in the opportunities zone does well and it goes up in value and 10 years down the road you have the opportunity to exit, you'll owe no tax.   James: Okay. That's very interesting because that's another investment where you don't pay tax at all. And if you're doing most of the time you definitely make money, right. If you go through the construction phase and you're past that I guess. Right.   Scott: Well, I will say that opportunity zones are new. There are a lot of risks involved. We don't have time probably to go into them here, but yes, there are a lot more considerations to making a potentially successful opportunity zone investment, but in the basics, I think you've got it correct.   James: Yeah, yeah, yeah. I've heard about so much of details on opportunity zone that you're to be really careful whether it's a qualifies opportunity zone and, you know, there's so many things, right. So awesome.    Scott: And you know, James, this is a good opportunity for me just to mention as kind of a way of a disclaimer. I am not an attorney and I'm not a CPA. And one of the most important pieces of advice I give to my clients is if you're doing any of these complicated real estate transactions, check with your lawyer, check with your CPA to make sure that you've gotten all your questions answered before you write the check.   James: Yeah. I think the purpose of this podcast and talking about so many things of this is just educational and just letting people know there are options out there. Which is very important because I was not aware of DSTS and you know, there are so much of details of the, you know, opportunity zone. So it was very eyeopening for me, so thank you very much. I appreciate it. Why not you tell our audience how to get hold of you if they want to get hold of you?   Scott: You bet. Sure. again, I'm Scott Hendricks. My company is called Current Investments. My website is currentinvestments.net. That's all one word, current, like the flow of water and then investments plural.net. You'd be welcome to send me an email or give me a call. My email is Scott@currentinvestments.net. My phone number...Do you typically, do your guests share their phone number?   James: That's up to you.   Scott: Okay, well that's fine. I don't mind at all. My phone number in Austin is  512 563 2134    James: Awesome. All right, Scott, thanks for coming in. I learned a lot of things. I'm sure my audience and listeners learned a lot of things and that's it. Thank you.    Scott: It was fun. James. Thanks very much.

Scott Meyers is a real estate investor based in Indianapolis. It all began in 2005 and since then he has grown in the self-storage industry as a developer, owner, syndicator, and operator. He has several multi-million dollar businesses under his belt but his favorite is self-storage and today he is in control of over 7,500 units. Scott started ‘The Self-Storage Mastermind’ to teach others about the self-storage business.  In today’s episode, he discusses how he entered the real estate industry, why he’s chosen to grow with self-storage, and what one should keep in mind before investing in a facility. He gives us insight on one of his memorable deals over the years- what happened, what he learned and what’s going on with it today.  Some Of The Episode Highlights: His Self-Storage Business His ‘Why’ in Self-Storage The ‘Boomerang Property’ Special Gift for Our Listeners    Connect with Scott: Website: selfstorageinvesting.com   - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  TRANSCRIPTION Intro: Hey guys, this is Don, your host. In today's episode, I will interview Scott Myers. Scott is an amazing investor and he specializes in one of the most interesting asset classes, self-storage facilities. Today, me and Scott will discuss the nature of this market. Also, as previously mentioned, I want to remind you that you have an opportunity to get a free 30-minute phone call with me and Eden if you review our podcast on iTunes. Simply rate the podcast and write a review of how you feel about the content and the show. To redeem, email us the content of the review to Hello@donandeden.com. You will then be contacted and scheduled for a 30-minute phone call with me and Eden, where you could ask questions or network about any subject or project that you would like. So, let's get started and I hope you guys will enjoy the interview. Lady: Welcome to the commercial real estate investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to off-market strategies. Don: Scott, welcome to the show. How are you doing today? Scott: Hey, Don, I am fantastic. How about yourself? Don: I'm great. How's the weather up in Indiana? Scott: Well, that depends. We had our first snowfall of the year last night. It had about three inches, which is a little bit more than we normally get this time of year. So, I think I'd rather be down next to you conducting this interview right now. Don: Yeah, I mean, we just got the best weather right now in Florida. It's been very muggy for November, 75 degrees all throughout. I used to live in the Midwest, and I know it kind of gets cold in that period of time of the year, right? Scott: Sure can. Yep. Don: Yes. You've been living in Indiana, all of your life, born and raised? Scott: Born and raised in Michigan. I went to the University of Michigan and after I graduated, I moved down to Indianapolis where I took a job. I was working in the telecommunications industry before I got involved in real estate. Don: Wow. Okay, so that's a pretty sharp transition. What made you move into real estate? Scott: When I began looking in investment books on ways to I guess diversify my retirement rather than relying on our 401k stocks and bonds and mutual funds ran across several books, one of which was Robert Kiyosaki's book terms in real estate and the more I looked at more I realized that I didn't want to put my money into the stock market as the poor dad did in Robert Kiyosaki's book 'Rich Dad, Poor Dad.' And so, I began investing in single-family homes and then it took off after that. Don: Yeah, let's talk about your initial investments in the single-family space. What did you do, fix and flip? Scott: Began to buy single-family homes, and then fix them up, refinance them and rent them out. And I did that for a number of years until holding. It's kind of a tough gig holding on as a landlord unless you're flipping some as well. So once the economy began to turn in 1999 and 2000 during that downturn, shortly after the government came out with the Community Reinvestment Act, and made it easy, a little too easy for anybody to own a home and so we began then turning around our houses to sell them. So, we became retailers in addition to landlords. Don: Nice. I know right now you're focusing primarily on self-storage. Tell us about the first time you got to learn about this asset class and this market in general. Scott: Began looking into self-storage because of, well, that wasn't the cash flow that I wanted to have in single-family homes and apartments on like I had intended. And then when I went back and looked at the business model, I realized that most of my expenses were a result of a related to tenants and toilets and trash. And so, we all love real estate and we love running real estate if it weren't for that. So, I began looking into what are the other asset classes in real estate that has the benefits of real estate, but without all the hassles of the three T's. And it's either parking lots or self-storage. And so, the more I begin to look into self-storage in the business model, yeah, I really liked what I saw. And began attending some industry trade shows, then dip my toe in the water by getting into a partnership with someone in a self-storage facility. And the rest they say is history. Don: Yeah. So, there is a question that I want to ask you. I know now that you're very big on the self-storage space and you own or you're in control of over 7500 units, I’m guessing in self-storage just since 2005. So, you've been a longtime player in that space, but I want to ask you more about the beginning because I remember I just recently did a transition from residential wholesale real estate into commercial real estate. And even then, being an experienced investor and owning a lot of properties and having capital, it's not easy. So, you said something about going to shows and learning about... So, tell us a little bit about that period of time where you did not make your first deal in self-storage yet, but very attracted to that asset class and what you did in that time period, how much time did it take for you to get your first deal? Scott: There weren't any resources. You found me, Don because we have an education company as well. We teach people how to go about and do this business and we've been doing that since 2008. But prior to that, that company was really born as a result of that. There wasn't a resource, there wasn't a Scott Meyers out there to learn from it. So, I attended the industry trade shows and those shows are primarily for the folks that are already in the business.  So, I begin talking to the attendees and just asking them, "What do you like best about self-storage and what don't you like about self-storage?" just to get an understanding from several folks that before me and how to get into it. There still wasn't any way to learn the nuts and bolts, the A to Z or how to get into it. When I came home as I began to do more research on my own, I reached out to a consultant in the industry and I spent a day with him and drove around and taking notes and asking about it.  He owned a management company as well. And he managed several facilities for other folks. I asked him as many questions as I possibly could to fill in the gaps and I filled up three notebooks full of paper, just answering the questions that I had about the business and I, like you, been in multifamily and apartments and I understood commercial real estate. But all the nuances and all the intricacies of self-storage to bridge that gap and fill in the gaps took me all day and a bunch of notes and even then there was no way to get it all but that's how I started. And then just sort of trial by the fire going out and talking to other owners and brokers and begin exploring and looking at several facilities to buy. Don: Okay, tell us a little bit about the market itself. So, what are the biggest players, what is considered a big property? I know so when you're looking at multifamily anything over 200 units is considered very big. Mobile home parks, anything over 150 is considered institutional. So, what would you say is a big deal when you talk about self-storages? Scott: Yeah, we're in that 400 to 450 unit range and which equates to roughly greater than 60,000 square feet. Those facilities that are larger than those are the ones that are going to be typically institutional, so those are the ones are going to be held by Public Storage or Extra Space or Bridge or CubeSmart number of the big players or reads in the marketplace. Now not all the time we own several facilities that are that size as well with the goal and the intention of eventually off to the reeds and that's what we're developing and building now. That's really what's considered the big boys. And so the reeds are the institutional properties and facilities that size you know, that only accounts for about nine to 10% of all the units and all the square footage of self-storage are below that and are owned by some regional players that own you know, 1, 2, 5, 7 properties. Some national players that aren't considered and then a lot of the mom and pops that we buy our facilities from that can go all the way down to as low as 15 between units per facility. Don: Okay. So, mom and pop are always good because you can get a pretty good deal. Somebody that owned the property for quite a while, they have a lot of equity typically and there is a lot of value-added. So, I would assume that the value adds basically comes to play when talking about raising up the rents, right? So, they're just not fulfilling their potential. Scott: Yeah, that's absolutely one of the ways that we look at. We're always looking at turnarounds and value adds and the first of which is usually what you just mentioned is usually poor management. They haven't raised rents in a while because they like to stay full, they have fallen behind on technology and we do utilize software and kiosks to manage these facilities or at least help to manage these facilities, which reduces our payroll, which is our second highest expense, line-item expense next to property taxes. In many cases, not all the cases many of the mom and pops didn't understand how to market their facility, therefore they suffer from a lower occupancy than if they were running very well and had a better website and then a means for people to rent a unit or reserve units online. Don: Yeah, what would you say are the biggest minds or the things you should be careful when you're buying a self-storage, especially when underwriting a deal? Scott: Well, the normal due diligence that we go through first the physical side, we hire an inspector, we do our site visits and we hire an inspector to look at all the physical aspects with the underwriting. As you know Don, that some in commercial real estate, you make a $10,000 mistake and underwriting and just at a 10 cap is $100,000 valuation mistake that you've made. But in today's seven or six cap environment, we're talking about $120,000 - $130,000 mistake. So, it's making sure that if we're buying it from a seller and individual seller, or if we're buying from a broker, we need to get the seller's numbers, and all of the expenses. So, it has an art and a science to it. But the science part is just knowing exactly what to ask for. And in self-storage versus apartments versus mobile home parks, there are expenses that are associated with each one of those asset classes.  So it's important to know what are the expenses of running a self-storage facility and making sure that your account for that. And as I'm sure you're used to and telling your folks as well but just because the seller and the broker don’t include it has zero alongside an expense sentiment doesn't mean it's going to be zero for you. So, management of lawn care and landscaping and snow removal, if that manager does that, or their employer does that, well, they're not going to do it for you so you need to add those expenses in. So, I think that's one of the places where people get tripped. Another is the change in property taxes.  If you run it for a million dollars, and the last time it was assessed was at $500,000 and in this county, they assess based upon a sale, you can expect your property taxes to double roughly and so you need to account for that and underwriting that you're different set of expenses when you buy it versus what is given to you by the seller. So you know, we can go through each and every one of those but just making sure that you pull all the bills and you all of the information in terms of all the income coming into the facility, as well as all the expenses of that underwriting based upon that to give your valuation and your offer. But then we always have two sets of numbers that we use afterward, which is how we're going to run it today meaning 30 days after we bought and then what does it look like in the next one to five years down the road once we have stabilized it and added more value. Don: Okay, and what does it look like as far as the demand and the supply for self-storage facilities across the United States when we're talking about late 2019? I know that people are buying and we're consuming a lot more than what we used to, especially those you can buy everything online right now. And I know people have a lot of things that they want to store. What is your take on this industry and the direction in which it's going in the future for 5 or 10 years? Scott: What we're seeing right now is a demand for self-storage. We always look at supply; supply and demand for a particular market. And the good news is that we draw a ring around a particular site if we have developed for an existing facility of about three miles, five miles as if it's rural or one mile if you’re in downtown Miami. But then we're looking at the amount of self-storage square footage already in that market in a three-mile radius, compared to the population in our industry is considered somewhere between six and a half to seven and a half square person. And it depends upon the market and there are some areas that are quite a bit different than that. But that's kind of a round number. And so, that alone gives us an idea of what the demand is. So, then we visit those facilities and determine if that truly is the case, if they have waiting lists, the rental rates in the market will also be an indicator of what the demand is, obviously. And so, then we base it upon that, but there's only four square foot of storage per person in this market, and the rates are considerably higher than we see around the rest of the country and all the facilities are full and have waiting lists, then there's probably a need for some storage there. In the case of development, we're also going to get a feasibility study on just like you do Don when your billing departments often saying, "Yeah, we think it's going to work, we have to get a feasibility study before the bank will give us money and private equity partners as well." But that's how we look at it in today, in real-time for looking at a facility to develop or even to turn around.  Now in terms of moving forward or looking forward, we don't see a whole lot of changes being the demand for self-storage. And we don't have a crystal ball that is perfect, but we keep an eye on trends and we've seen in the past, we've seen that the baby boomers have created a huge demand for self-storage as they've been downsizing and moving into assisted living and then passing on. Their kids store their items in storage for the future.  But then the concerned about the millennials that perhaps they wouldn't have the same demand and self overseeing just the opposite. Yeah, they're minimalists, they have smaller homes or apartments because they want to give them up and go travel instead of having a house or they want to live in a smaller home. But they like adventures and experiences and adventures and experiences require skis and gear and mountain bikes and camping gear and kayaks and all those other things. And they don't fit in in their tiny houses or apartments or condos. And so we've seen an even greater surge in demand for self-storage, and we see that happening in the foreseeable future. Don: So, you wouldn't think there are any major disruptors coming in the form of let's say, multi families that are being built with storage facilities inside them. Would you say that this is a disrupter? Scott: I don't think so. Because sometimes they are done either on the grounds and in the basement in some of those areas. For they're doing that to a degree but we haven't seen that effect because if you're going to build apartment and you already have construction crew on-site, you're going to maximize the living space because you're going to generate a heck of a lot more revenue per square foot in living space, and you are for storage. So it's an amenity that they can put in place, but not to the degree that it meets the demand for the entire area or the market. So, we may lose a few of those clients in a three-mile radius, but it certainly doesn't speak to the entire market that we're marketing to if that makes sense. Don: Yeah, it makes sense. So where are you focusing on buying these self-storage facilities? Are you buying across the country or you're looking at particular markets and then when you're looking into a market? I know when I'm looking for mobile home parks or multi-families, that I'm looking for job growth and population growth and understanding the environment of the market. Are you doing anything different when you're looking into a self-storage facility, are there different stats that you got to understand before moving in? Scott: When I was also in homes and apartments and we're always looking for the emerging markets that were always a buzzword and some of the guru's had created. And you always want to see where there's growth in those markets. And that's always like that as well. Because if you see, you see self-storage facilities going up. Typically, they're going out not too far from apartments in a growing market, we're not too far away, they go hand in hand or in step with one another. But the good news about self-storage, unlike apartments and single-family rentals is that in a downturn in the economy, or even in a market that is experiencing a little bit of a decline in population or maybe some job loss in self-storage, we're in the trauma and transition business.  If there's trauma, people losing their jobs are having to move they need storage, and they're downsizing and moving back with their parents are moving in with somebody else. And so that creates a need for storage. We've seen during the last recession and everyone prior to that self-storage does extremely well because businesses are downsizing. So, as we head into a changing economy, we feel that we're in good shape. When we're in a growing market or growing economy, people buy more stuff or there are more people to store things therefore there's a need for storage. But even if there's a downturn in a particular market that is losing jobs, there's a need for storage and self-storage does extremely well.  Now doesn't mean that we do great in every single market in every single economy. The one caveat or the one market in which we wouldn't do well, and as those in which there's just a new extreme blight or a flight. So, if there are several manufacturers are leaving, and there are thousands of jobs that are leaving a market. That there are some instances that we've seen that or even New Orleans when Katrina came through and wipe them out, there's lots of areas within a three-mile radius that the population is so low that self-storage facilities are struggling, same in Detroit and Flint, Michigan, exited as the auto industry has left, the same thing. So, we do have to be careful that there is an extreme blight in those markets but we like just about every market and every economy for storage. Don: Yeah, but I would think that whenever there's an extreme blight in the market, then it's not going to be just self-storage is not going to be affected. It's going to be all types of real estate... Scott: Exactly. And you're right. Don: It doesn't really matter. So, I want to ask you about a specific deal. One that you remember, one for the ages is what we call it. So that you can intrigue everybody that's listening to this episode about self-storages and is considering to get into space, something that you bought, made good money and it was interesting and intriguing. So, tell us about one of those. Scott: Yeah. So, this is a property, it was a larger property that I bought back in 2007, so just prior to the Great Recession. I bought the property for $1.5 million with no money down, I used seller financing and a bank and bank debt on it. And it was an industrial building that had offices in it and warehousing, but we converted a large portion of it to outdoor parking for storage is the indoor self-storage. So, we put about $400,000 with a bank loan into the project and we had $1.9 into it. Then in 2007, at the end of it, so about two and a half years later, we sold it prior to the recession of 2008 and we sold about a $2 million profit on that one.  Then came the recession and the buyer went bankrupt because he was a developer out of California and had lost his portfolio, retain the rights to market some of those properties, this being one of them. So, he offered it to me several times over the next several years, and the price kept coming down, down and down and then finally I was able to buy it back for $545,000. And so that's when we get good at syndicating as we mentioned Don when you run out of cash. We've leased it back up again and we've rehabbed them and renovated several areas, leased up the storage, added more storage to it. And it's under contract to sell right now for just a little shy of $3 million. Don: So, you made $2 million the first time and then a little bit over $2 million the second time. It is coming back to you giving you $2 million whenever you work with it. Scott: We affectionately call it 'The Boomerang Property,' so yeah. Don: That is just great, that's phenomenal. Okay, that's beautiful. You bought the property, that was luck also buying it right on time and selling it just before the recession, won't you say? Scott: We had that thing leased up so that we really couldn't create much more value in it. It was at the top, it would have just been through some minor rate increases. And so, we didn't foresee the recession coming and certainly not the magnitude that it was. So, I absolutely will not pretend that I knew what was happening. So yes, we were fortunate enough to be able to sell it at that time when financing was plentiful, and he was able to buy it and that was really good timing. And boy, we learned a lot of lessons through that recession. Fortunately, we weren't holding that one during that time. Don: Okay. What market was it? Scott: That was here in Indianapolis. Don: Nice. Great. That's very interesting. And I'm sure everybody that's listening could see that you could make $2 million on a self-storage facility, one that you bought for $2 million or was in for $2 million. That's amazing! That's a 100% return on your investment. That's great. What book would you recommend for somebody to read in case they already read 'Think And Grow Rich' and 'Rich Dad Poor Dad?' Scott: Wow, let me see here. Don: Difficult question, huh? Scott: It is. I'm just looking at my bookshelf of the many things we’re utilizing our company right now as we scale and grow just depending upon where folks are at is 'Traction'. So, it's more than just a book. It's where Gino Whitman talks about the entrepreneur operating system and really how we as entrepreneurs need to handle and run our business and treat it as a business no matter what the size is. So, I would strongly recommend 'Traction' by Gino Wickman. That is the one that's probably had the biggest impact on us recently. This is for yourself as well as any staff that you may be bringing on are the Four Disciplines of Execution or 4DX all about just getting things done. Bestseller on our wall street journal number one, and again loads of information on how to, well, just how to get things done and how to not make excuses or procrastinate and move the ball forward in your business. Don: Yeah, it seems that procrastinating is always one of the keys to failure. Everybody's saying to never procrastinate, always take action and get things done. Amazing. Yeah. So Scott, what's the best way to connect with you in case anybody wants to learn more about self-storage is or invest with you or anything of that nature? Scott: Sure. Well, selfstorageinvesting.com is our website with all things self-storage, and lots of freebies to download and some videos. But I got a little something that I want to give to your folks done specifically for being on this podcast. If you want the beginning a roadmap or what we call the blueprint into self-storage, you'll go to that same site http://selfstorageinvesting.com/blueprint1/ the numeral one behind it. It’ll show you the steps that you need to follow to get involved in this incredible business that we call self-storage. Don: Well Scott, thank you very much for sharing that with our audience and I hope that you're going to have a great day and thank you for being on the show today. Scott: My pleasure. Thank you, Don. Don: Yes, you're welcome. You have a great rest of your day Scott: You too. Lady: Thanks for listening to the real estate investing podcast with Don and Ethan. Stay tuned for more episodes. Till next time.

Scott Voelker, the amazing seller himself, is back on the podcast today with a new book that will guide entrepreneurs on a path to financial freedom. Scott has transformed from someone who dabbled in e-commerce into a seven figure business owner, author, and host of one of the most popular e-commerce podcasts out there. Now he is sharing his tips with other entrepreneurs, offering sets of specific steps to follow to create a business that will allow freedom and flexibility. From the construction career he left at an early age to starting and building a successful photography business, Scott has built on his entrepreneurial nature for over two decades. In 2008 he started selling photography products online and soon realized it could become a full time income. Fast forward a few more years and he started to hear more about Amazon FBA model and how some people were making good money using the platform. He started researching and listening to any valuable information he could garner then used all the know-how he'd gathered and applied it to his product listings. Episode Highlights: How Scott and his wife got their start building a business from the ground up. Scott discusses the path he took and how the book delves into his future plans. Whether he finds the pathway to the end goal more difficult than five to ten years ago. How Scott is evolving from being “The Amazon Guy.” Helping others with the book and the action steps he outlines. Scott addresses the question of finding time to start a side hustle. Learning how to schedule downtime once success allows for less work time. Tips for finding that future-proof opportunity. Taking the affiliate marketing path as an opportunity to learn your market. Using channel diversification as a building block. Transcription: Mark: Joe recently I sent you a book through Amazon that I was hoping you would read and I'm assuming that's the next book on your reading list, right? Joe: No. Sorry. Mark: I'm not going to buy you any more gifts. Joe: No. Now you sent it to me via Amazon and I think I have to download it onto my Kindle app. Mark: You haven't even downloaded it? Joe: I haven't even downloaded it. Mark: Oh my goodness. Joe: You're just trying me. See the reason I haven't is because it's a productivity book and you're trying to get me to be more productive but I haven't read it yet so I'm not as productive as I could be. Do you see an excuse thing going on here? Mark: Productivity is one of those things that I'm sure everybody's like Joe is terrible at getting stuff done. Joe: This book I'm holding out for those that are on the YouTube channel. Thank you for being on the YouTube channel, by the way, you're awesome. This is the book I'm currently reading it's called the Take Action effect By Scott Voelker; a friend of ours and we just had him on the podcast. And that's what the book is all about. It's a combination of, and this is why I'm not reading the book you sent me. And I have one more in front of that by the way but this one is amazing it's really telling Scott's story. Scott as lot of people know has a podcast called The Amazing Seller podcast. With the audience he has every month he could fill up the Bank of America Stadium here in Charlotte and I think that's like 25, 30,000 people. He started out just telling his story building an Amazon business and everything he was going through. He just laid it all out on the line. He's really transferred himself or transformed himself into someone that is first and foremost helping people take action in their lives and he talks about this in the book and how he did certain things in his life and what an impact it had and what it led to next and next and next and now where he's at running a 7 figure business with the lifestyle that he wants. It's still one of the most important things about Scott and the book and the action steps that he shows people how to take is to run a business, set your own goals, how to set goals properly with vision boards and different things but with a lifestyle that you want. This is not a get rich quick scheme it's a book to build the life that you want; how to take certain steps and actions and if you want to run a 10, 20, 30, 40, 50 million dollar business great. These will help and there are some examples of that; of people that are doing that. But if you want to just earn an extra couple of thousand dollars on the side and build the business slowly there are absolutely some steps in there for those folks as well; people that are listening now that still have full time jobs that don't dare buy a business this allows them to take certain steps and actions to do that and build a safe business that's going to be relatively passive that they could do part-time as they build that up and eventually quit your day job work and sell it through Quiet Light. Mark: One of the things I like about this is the idea of having a purpose to what you're doing. And I think there is this tendency to chase success, chase success, chase success, and we put in our minds that success is a certain business goal while we ignore the other aspects of our life. And I know over the past 13 years running Quiet Light Brokerage I've run across so many successful entrepreneurs who have built amazing businesses but frankly are somewhat miserable because they've built prisons for themselves. And we talk about why are people selling. Sometimes it's just because they've built that prison of a business and they need to get out. And they realize that they need to readjust their life priorities. I love when we meet people like Scott, like Ezra Firestone, and some of these other guys that have reached certain levels of success and now what they're doing is they're really trying to just be helpful and really contribute to that entrepreneurial community with some of the lessons they've learned. And I love the focus of this book. I love that it's a system out there to help you identify what's really important and have everything else flow into that, set the real goals out there and build that system including the business that fits those goals. Joe: And it's just that Scott is a real guy giving real-life examples of things that he's done and the path that he's taken and he's giving real advice here that is action-oriented. And it's a mindset. It's inspiration. And they're steps to take as well. It's one of the best books I've read in 2019. I highly recommend everybody take a listen to the podcast and at the end and in the show notes here you can go to take action effect and download or buy the book. It's available. He went further than our very own Walker Deibel, he made it available in the audio version as well. Mark: Walker needs to step his game up and start a recording. No. Fantastic. Let's get to this episode here. I love introducing our audience to people that we find to be good friends of Quiet Light because they share some of our mission and purpose. So I'm excited to share this episode with everybody. Joe: Let's get to it. Joe: Hey folks Joe Valley here from the Quiet Light Podcast and today I have a guest that is back on. But this time he is a published author on his way I'm sure to being a best-selling author. Scott Volker, welcome to the Quiet Light Podcast. Scott: What's going on Joe? Thanks so much for having me. Joe: Welcome back I should say. I just saw you a couple of weeks ago at Brand Accelerator Live; a fantastic event where you launched the book, a big hit and my goodness I'm looking at some of the reviews and they're fantastic. And I'm reading it myself of course. And let's get into that but first for those folks that don't actually know who you are why don't you tell us all about Scott Voelker? Scott: Yeah. Well to kind of sum it up I've been at this basically creating businesses that allow me to have the flexibility, the freedom, that's always my first and foremost. Back when I was like 21 years old I was working for my father's construction company and from there I thought I was going to own that company one day and then that partnership and son in law that was stealing and some craziness I soon saw that that wasn't the path that I was going to take. But I wanted to still be able to work for myself and my wife and I started a photography business, learned the ropes through good old trial and error, and built that into a business that allowed us to take our kids to school and home from school and all of that stuff. And it's really important me to watch my kids grow up and I've got 3 kids ages now 11, 21, and 24. But I've been at this for over 18 years and really building businesses hasn't really changed just the platforms have changed. And so when I wrote this book I wanted to go through and tell the story of myself. Someone that didn't have a college degree and felt a long time ago that I kind of felt to myself like I wasn't smart because I didn't go to college. But then after kind of building some businesses and watching other people go to their 60 plus hour a week job and then seeing myself not have to do that I was like well wait a minute I'm going to give myself a little bit more credit. I've done okay. And so it in a nutshell that's what I do. I just love building businesses. But I like more about just building a business it's more about the freedom and the flexibility, stability and all that stuff. Joe: And that is what you talk about in the book. Let me just; I don't think I said what the name of the book is. It's called The Take Action Effect. Scott: Yeah. Joe: Proven Steps To Build a Future Proof Business And Create Your Ultimate Freedom. I'll hold it up here for those folks that are on the podcast; I'm sorry on the YouTube channel. Scott: Yeah. Joe: One of the things that you talk about in the book really hit home with me and that is that your wife had that first idea for you to go off and on your own. Scott: Yeah. Joe: And it's and it's continued in your relationship. You guys work through all of your business opportunities and ideas together, right? Scott: Yeah, 100%. I mean she was my take action moment as I talk about in the book a lot. I think we all have these moments in our life that something happens; like a decision happens that we make either because we're forced to and then we see the result from it or we choose to, we take that leap. And I was frustrated with my job and I thought I was going to own this company and then found out that it wasn't going to probably happen and we needed to figure out another way. And then that's when my wife had said maybe we should start a photography business which at the time we didn't have digital it was all film based not YouTube videos to go out there and educate yourself. So Scott that wasn't a good student in school had to figure out how to go through and teach myself Photoshop and just how to run a studio and we did that. But yes she was the one with the idea and still to this day she's always the one kind of nudging me a little bit and saying like you should probably listen to this. Even the podcast The Amazing Seller Podcast that was because she said that you should; I had the idea but she was likey should probably lean into that a little bit and here we are. Joe: That's funny you know my wife usually has the idea and then I have to go out and do it. It's a running joke in 20 plus years of marriage. I was going to I think our wives are very similar. Our marriages are very similar but it sounds like there's one distinct difference is that my wife comes up with the idea and I have to execute. So you're taking a lot of past so it's interesting from a construction worker to entrepreneur in the photography space before really the online world existed and then discovering it through eBay and then Amazon and then The Amazing Seller podcast. Scott: Yeah. Joe: Can you just talk about that path a little bit and talk about what the Part 2 of this business about this book talks about? Scott: Yeah. So like I said the photography business being brick and mortar I learned a lot about how to get clients in the door. And a lot of people say like Scott when you start a business should it be your passion. And if it could be then yes that would be amazing because then you would love to work on it every day. But I wasn't passionate about photography. I was passionate about getting out of my job. So my wife was passionate about photography but then I started to develop these passions and that was marketing and that was Photoshop and video editing. And the way that it kind of led me to really the online space and e-commerce really was my wife was looking for props on eBay. So in our business, we always were unique in the way that we had props. We had certain sets and we had like a lot of backgrounds that cost us 2 or $3,000 and people would pay just to come in because we had this hand-painted backdrop. So my wife was looking for this cedar bridge that she had seen somewhere else and she found one on eBay. It was like 130 bucks it was a little 4-foot little wooden cedar bridge. And so then as she was looking at one of the other stores that she shops at she's seen the same bridge for 30 bucks and she's like it's selling for 130. I bought one for 130 maybe we should try to sell this thing. I said okay. So then that's where we got the idea and we started selling those. Actually, we took the minivan over to the store and we loaded it up and we packed that thing and that money actually paid for our kids tuition for a private school. And so that opened my eyes to eBay and like what else could I sell, right? And even though I had a business I'm still thinking to myself as an entrepreneur like well that wasn't that hard. Maybe I should try to find more things to sell. So then we actually started a video business on the side of our photography business; they kind of work too, you know one of the same. And then I started building these projectors to transfer old 8-millimeter film. So the old 8-millimeter film that we use to have grown up as kids it was a lot of times silent film but there was some sound when it got; I think it was Super 8 and then I found a machine that was modified to transfer the film. And so when I got that I kind of looked at it and being in the construction world I'm like this is just a modified projector. Let me go ahead and reverse engineer what they did here and I did that and I started selling them on eBay for about 800 bucks. I was selling one or two of them a week. Joe: Wow. Scott: Yeah, so I made about 100,000 on just old projectors that I modified for film transfer and that's kind of what got my wheels spinning about this online stuff. Joe: And it never would have happened if you didn't; I'm going say this so many times, taken some action, right? Entrepreneurs are special people. They come up with an idea and they don't think about it and think about it and think about it and think about it. They've got to do some planning, of course, the more complex world we live in you've got to do some planning especially when you're going to spend some dollars. But I think maybe Scott back then when you and I didn't have any gray hair we were able to take action a little simpler and a little quicker, right? I would just with that whole ready aim fire or ready fire aim what is it? Scott: Yeah. Joe: Those things, right? And I just take my path and hustle and work hard and get it done and figure out the road to that end goal which I knew what the end goal was. I just didn't know the road or the path. Scott: Yeah. Joe: Are you finding now given that you've; I mean you've done all this for 20 years an entrepreneur in many, many different past and you've coached thousands of people through The Amazing Seller podcast and many of them 6, 7, 8, 10 figure exit eventually. Scott: Yeah. Joe: Are you finding that the pathway to that end goal whether it's an eventual exit of a business or just a one of a lifestyle where you can drive your kids to work every day and spend more time with your spouse and you take family vacations, is it more difficult than it used to be in your opinion? Scott: I think it depends on what your final outcome is. I think for a lot of people it's not about building an 8 figure business just to say you built an 8 figure business; to some people it is. It's like bragging rights but for a lot of people; and I know you told me a story about a guy he was a stay at home dad I think and he built his company in 2 years without pulling a dime out of it so they could cash it out and then live off of that and live the life that they wanted. So I think for a lot of people it is that. So for me personally I think it is I don't want to say easy; it's simple. Nothing is easy. Like everything that I've ever done, there's always been struggles and issues that you have to overcome; whatever like that's business. You just have to learn how to adapt, how to move, and adjust. But I think it is actually easier nowadays to build a business that you can potentially exit. And actually getting to know you more, getting to know the team over at Quiet Light has actually got my wheels spinning once again at looking at this as an opportunity for me to build something maybe from scratch, get it to a certain level, and then sell it, and then you just repeat that process. Like I could build a team to just help me do that. So again my wheels are always spinning. And the more I talk to you and I start hearing these stories I'm like that seems like a pretty straightway to go. But the principles and the concepts are pretty much the same. They haven't really changed. And that's what is in the book is really these pillars; these core things that make up a market, make up products, make up traffic; like all of that stuff hasn't really changed. The platforms change but the principles never change. Joe: You addressed some of the approaches in Part 2 of the book about building your future proof business. Scott: Yeah. Joe: You started out as an Amazon guy, right? You were selling on Amazon telling your story in the podcast but you've evolved quite a bit. Can you address that and then we'll talk about how the book addresses it as well? Scott: Well yeah but the book itself actually is my pivot. So we talk about pivoting all the time. So when I started the podcast you're right I was getting into the Amazon game just like everyone else was. It's just I was kind of doing it and other people were just kind of consuming information and saying like I'll wait until we have all the pieces that are working or all of the answers, right? Joe: You were telling your story whether it was a success or a failure and everybody was listening. Scott: Exactly. And so as I started to do that I also started to see how the market was shifting. So when the podcast was started it was Scott the Amazon guy. And then after I started to kind of see that the market was changing, more competition was coming, and it was getting a little bit riskier I'm like I don't want to go down that road. Now that doesn't mean it can't work. I just don't want the headaches of constantly just worrying that my accounts are going to get shut down or whatever. So I'm like I'm going to go back to basics build a business from skill sets that I've built and I talk a lot about that in the book like everything we've done we've built skill sets that we can then leverage in the future. So for me to really go down that road of like okay where was I van and where am I now, it's all about evolving; all about growing. I mean I think we're all doing that as we learn more things like even like when I first started I didn't think about having a brand that I could exit. And now I'm thinking; a lot of times I'm thinking to myself could this brand be sold, what would it take to sell this business? So a lot of times I'm thinking more along those lines now. But like I said people are always kind of like thinking of me as the Amazon guy and I don't want to be known; I don't want to 20 years from now be Scott the Amazon guy. I want to be the guy that helped people build a business that allowed them the life that they want and that they deserve. Joe: That's what I'm seeing with the people that I've met that have listened to your podcast and then to your events and are connected with you in any way. Whether it's Brand Accelerator Live, your inner circle Mastermind group, or The Amazing Seller podcast; they're not just building Amazon businesses, they're building businesses that will allow them to live the life that they choose to first and foremost. Scott: Right. Joe: Some of them that's all about building value and exiting and others it's all about taking care of others. Rachel; I had a conversation with one of your followers, listeners, attendees, whatever you want to call them, Rachel we don't use the last name but an amazing story. She's building a business so that she can help others. Scott: Yes. Joe: She's going to make money off the business but that's not the focus. The goal is to be able to use that money to help others foster children charities and things of that nature; really good people. You're building good humans which I think is terrific. You're surrounding yourself with them as well. Scott: It's pretty awesome. It's funny Joe I was just listening to the Ask Scott session that we recorded there live at Brand Accelerator and it just happened that the one lady came up and was telling us about her problem and her problem was is that she was wondering how she was going to keep up with the amount of scale. And I said that's a real bad problem to have. And I knew you were in there; I thought you were in there and I called you out and I go I think this is a question for Joe later kind of let him help you on that. But it's really; it's pretty rewarding to sit there and think to yourself I had something to do just because I showed up, pressed record, and started helping people. That right there that will; to me that surpasses any amount of money that I can make from a podcast is hearing other people's stories and how they're set up now to really live the life or maybe donate to their charity. That's like again the effect of the take action is the effects of that we're able to do the ripple effect on other people but also on your life and your business. So it's really about the ripple effect all the way through. Joe: Yeah, not necessarily about just building that business and exiting it. It's everybody involved along the way. Scott: 100%. Joe: That lady was Karen by the way and she did have some good problems, right? People wish to have her problems. Scott: Growth every year, year after year, and I don't know… Joe: Yeah. How do I keep up with buying more inventory? One of the things that you talked about which I think is really, really important both in the book and on stage and I'm going to just summarize for anybody listening. This book really encapsulates everything Scott's done in his life and what you've done in your life, Scott. But then it also gives a pathway to taking action and seeing what the impact and effect of that action is. But someone said look I'm busy I've got a full-time job. I'm trying to do this. How did you find the time for that? How do you find the time for this if you; you're an advocate of don't quit your day job if you have one do a little side hustle and build this over time until it's safe to exit. How would you address that question but Scott I just don't have time? Scott: Yeah and I actually I address this on stage when I came to that point because I shared my story that I was working 60 plus hours a week for my father's company running I think was like 13, 14 guys at one time that were underneath me making sure that those jobs got done. So I was always the first one there and the last one to leave like always. On the side, I was building a house from scratch. I was like 25 years old. Joe: That took a little time. Scott: It took me 11 months. And I remember Joe my mother in law lived up on the Hill. She lived probably I don't know maybe 500 or 1,000 feet. She was up on a hill though and she could look down and see the property. We had two acres. And I remember one night I wanted to get this one spot on the house done outside. It was up in the peak. I had a 30-foot ladder up against the house and I had floodlights out there at 2 o'clock in the morning because I wanted to finish. She couldn't sleep because she was worried about me going to fall and I'm up there nailing up my siding because I wanted to get that peak done because I didn't want to come back to it the next day and do it. And then I got up at 6x o'clock and I went to work. So when people say I don't have time I don't have sympathy for that because you probably have time you just are not really wanting it bad enough in my eyes. You know what you're watching your TV show or maybe you're taking an extended lunch break or maybe you're just oh I need my 8 hours of sleep you know like get 6 for a month, right? I mean it's not going to kill you but if you really want it bad enough you will find the time. And I've done it. My photography business when I was learning that when I was getting ready to leave my job I was up till 2 o'clock in the morning figuring out Photoshop. I was figuring out how we were going to do billing for our customers. Like I was figuring out all that stuff late at night and then I'd get up and I'd go to my job because I wanted it so bad. And I was so interested in it because I wanted it so bad. Joe: Yeah you are preaching to the choir if I'm the choir right now because yeah look the thing that I see consistently I mean I've done this in my life you and I have been self-employed for about the same amount of time and it's always started with a side hustle and then work like crazy. As you are building that business you're not really making a whole lot of money. You're not taking anything out and oddly enough when you're making the most money is actually when you're not working as hard in my experience. Scott: Right. Joe: You get it up to that level and it starts to just; it's a scalable business. And with that scale, it's starting to generate enough revenue to kick off and then you can quit your day job and then you can live that lifestyle that you want. It's hard though when you're a hard worker and a hustler like yourself and like so many people that are listening. How do you shift from that I'm used to working, I love working, I'm going to work, I'm going to work, I'm going to work to I'm going to sit down and I'm going to have coffee and breakfast with my wife every day by the pool at 8 o'clock? Do you have the discipline to really reschedule your downtime? Scott: You definitely have to schedule it for sure. You have to schedule it and I'm getting better with that like I'm still not perfect Joe. I have to make sure that at 6 o'clock at night that's my cutoff. I'm not going to do anymore posting and I'm not going to do any more answering. It's hard because we can work as long as we want. And when you start to see momentum you want to work more because you want [inaudible 00:24:18.18]. But I've made it very, very clear in my life that I want to have that time. I literally wrote out a vision board and really I created a video years ago that I wanted to see come true. It wasn't like you know the woo-woo stuff but it was like what am I working towards. And one of them was having a coffee and breakfast with my wife. And so here we are many years later and literally, I just got in now. I mean I started my day today at 10 o'clock in the morning. I had a first interview at 10:00. I dropped my daughter off the school at about 7:45. My wife and I got back here. We went out to the pool. I had coffee. I was out there with the dogs. I had my laptop. I was answering a few emails; doing stuff. I'm out there chillin' with my wife hanging out. And that's what I want my life to be. Now could I be doing other things to try to make the Amazing Seller bigger or my e-commerce businesses bigger? Yes, I could but I choose to; like that's kind of like my time. You know what I mean? Joe: Right? Scott: And I do think it's hard. You have to be disciplined. A lot of people say Scott I could never do it. I would never get any work done. Then maybe you do need a job. Joe: I've heard that often. I couldn't work from home I could never get any work and that's just discipline. It's focus and discipline. Scott: 100%. Joe: We've gone from how do you find the time to do this extra side business and side hustle and grow it to how do you schedule your downtime so that you could work. You don't need to as much but scheduling your personal life to make sure that you're there for your family and things of that nature. My kids are older than you. Well, not actually mine are 16 and 18 right. You've got 21? Scott: 21, 14, and 11, yeah, Joe: So I've driven my kids to school from kindergarten right up until last year when my oldest got his license and it's an honor, right? It's a privilege and an honor to be able to do that. And when they look back someday that's what they're going to remember. They're not going to remember that Dad was making more money or something like that. So from finding time to scheduling time; your book specifically talks about all of that in your life and creating the mindset of action and everything you've done in your life. But can you address like a little bit of the how to's in terms of building that future proof business and the steps that you go through with the folks that are listening. Scott: Yeah. To me, it's very, very simple and even if you're looking at this because I know people listening here are probably looking to possibly buy a business or sell a business. Here's the deal. Like whenever you're looking at an opportunity you want to first see if there's a market already there. Like a lot of people say I want to invent a market. That's risky because we don't know; I mean if you ever listen to Shark Tank they always say has the market validated the product? No I don't have any sales it's in pre, or we're kind of building this thing out, it's in pre-production, or we're in like the pre-stage and they're like come back to us when you have sales that the market actually voted and said we actually want and need this. So the market is critical. You have to have a market. Now I'd like it to also be a submarket. So we could talk about like and I always talk about the bass fishing. So if we went like fishing we would niche it down into bass fishing. If we wanted to go one level deeper we could go kayak bass fishing. And then we can really own that category and then we can also build out of that category to serve a wider part of the market. But I always like to look at the market first. Then from there, I want to see what's the potential in the market? And that could be going to Amazon and seeing how the products are selling using a tool like Jungle Scout or whatever tool you want. We have these tools that let us know the market's buying these products. Now we can either sell those products ourselves as our own brand or we can affiliate market those products. We can do all kinds of things. So I want to validate that there are actually sales being made there. Joe: Let me just stop you for a second because some of the language you're using I don't know if everybody knows it. Talk about the affiliate marketing aspect of it because it's a brilliant path that you educate people on taking. Scott: And I'm going to be doing more of it Joe; I got to be honest with you. I was just thinking about this this morning I'm like man there's so many things that I could cover just for getting back from Brand Accelerator Live. People get stuck at the I've got to launch products or I've got to grow mine. If you bought a business; right now if you bought a business and you're thinking I don't want to launch a whole bunch of products because it's something a whole bunch of capital. Why not take the content side of things. Build out traffic and start putting out products that are related to your product as an affiliate bringing some revenue but also get them to vote that the products that you're putting out there from them they want to buy then you can private label them. So I think it's an easier way to get started. If you're just listening to this and you're getting started, the easiest ways to start looking at the market and how much traffic the market has. And then from there can you get in front of the market by getting attention by posting content, building an email list, like getting attention with influencer, whatever. Then you can start to say okay all these products I'm not going to private label all these it's going to cost me a small fortune. I'm going to start putting products out there like a kayak bass fishing boat. Like I might do that but I'm not going to sell it as my own but I might do an affiliate offer for it. So basically on Amazon, we can use their whole catalog. We can become an associate for them. And it's not going to be a ton of money it's 4%, 8%, depending on where your bracket is; the category but it's a nice easy way anyone can get started. It's not going to cost you hardly anything to set up a website and to start posting content. You can write it yourself or have someone else write it and then just start building that over time. Joe: It's a great way to go back to discovering your market as well because as you niche it down people are going to buy certain things and you can say okay well that one's much more popular than the other. Scott: 100%. Joe: The tools like Jungle Scout do that very, very well. But this is an action you've got proof in your own bank account which ones they like more. What about the multiple channels. You and I have talked about this before. We talked about channel diversification. That's something you talk about quite a bit here as well. Scott: Yeah. Well, I think again there's a lot of businesses that are very successful and you sell these businesses just Amazon FBA. We got someone in my inner circle that bought I think 3 businesses from you guys already. Joe: 3. Scott: Big businesses too; crazy amounts. I mean one of them is doing like 6,000 units a day like insane. Joe: Yeah. Scott: And you know what I mean? So it's massive. So the potential there is huge but also I look at like there's a little bit of risk there because if that channel decides to go away or they shut your account down there is a potential. So I want to build a back end support there in some kind. So I want to start building content. I want to start getting my own traffic so that way there I could lead people over to my Shopify store or I could leave people over to my channel if something shall happen. Now if it doesn't; great, keep using that. And I don't; I never tell anyone not to use the channel. Use the channel. Leverage the heck out of it. Drive traffic to Amazon. Build up your rankings. Do all of that stuff. But I do think that having your own email list is a must. I think having your own content, your own home base I call it; your own blog, your web site so this way you control that asset. And to be honest with you Joe like I'm really interested lately and I think I talked to you about it, content sites to me are never going anywhere. We're always going to have content sites. We're always going to have information that people are going to be searching for. So for me what I'm looking at doing is starting something and building it over the course of 12 to 18 months. Now listen to what I just said there over 12 to 18 months not 3 days or 30 days. It's going to take time for the search engines to kind of pick it up and get it indexed and all that stuff. And if I can build that piece of property like I used to do in the construction days; I find a piece of property, I build a house on it, I get some revenue coming in by renting it out, and then I might want to sell it. That's kind of what I'm thinking about. And there's ways you can do that without even having to launch a physical product until you get to the 12, 18th month. Then you can decide what you want to do. But you can start getting revenue coming in from affiliate offers, from AdThrive, Mediavine, any of these other networks just from the content coming in. So for people that say I can't get started because I don't have the capital, I don't have the know-how, I don't have the time, do something like even if it's just building out a content site over the next 12 months do that. Just do that. Joe: Yeah I think again taking action, right? Scott: Yeah. Joe: We just got to say that whole lot here; the take action effect. This book as I've read it and as I've talked to you, you are an interesting mix of inspiration and how-to; and you are the book. That's what emanates. You call it a pivot I call it it is what you are, you're inspiring people to go beyond their current capabilities or to get started and take some action but you're also teaching them how to do it. So it's a nice blend of both and was that the main objective of the book itself? Scott: It was actually a little bit difficult and to be honest with you Joe because I didn't want to just be let me show you how to start a business. I wanted it to be for someone also that has a 7 figure business right now that are 100% dependent on Amazon they read the book and they go oh I can do all of these other things and then probably bring in more revenue, bring in more traffic, get a better multiple when I go to Joe Valley and Quiet Light. So I was looking at two different paths. So as you're reading the book you're going to hear me talk about if you're feeling stuck at your corporate job right now and you feel like you can't get out of it here's what you could do but if you already have a business you should do this too. So it's kind of like you're serving two camps. And it was kind of hard when I was going down that path because I wanted to really talk to both people not just the person starting. Joe: Yeah and I think it's an important message for both. For those that have bought a business that want to diversify beyond Amazon and those that are listening to their spouse and that spouse is saying honey we've got a great gig here you've got health insurance and a retirement plan are you crazy you're going to buy an Amazon business and [inaudible 00:34:05.8]. No, you teach them how to do something on the side as a side hustle and let it grow and take less risk but still have that that additional income down the road or a decent exit as well which boosts the retirement plan. Right, Scott? The book itself again folks it's called The Take Action Effect; Mr. Scott Voelker from The Amazing Seller and beyond. The beyond card is you just do so many other things. How do people find the book; where can they go, what do they need to do to get this in their hands and learn everything you've talked about? Scott: Yeah, just go to TakeActionEffect.com and there's just a simple page there. It'll tell you a little bit more about the book and it'll lead you over to most likely Amazon you get paperback hardcover or the Kindle; pretty affordable to be able to take this information. I don't think people are taking the value in a book is much as they should. It is a way for you to really understand me and my story but also who I've helped and who I want to help. And it allows us to start that relationship because I'm all about relationships. And I want to be able to build a relationship with you way before you would ever hire me or come to one of my workshops or inner circle or whatever. And this book is a way to do it. It's a really, really small investment to be able to really get you thinking differently because the way I look at it Joe is we're installing the Take Action mindset. We're taking this to where you think you know what I don't think I can do this and by the time you get done with even the first; probably quarter of the book you're going to feel like you're going to conquer the world. And that's what it's really all about. Now, Joe, before I do end this I'm going to ask you a question. Joe: Yes? Scott: I want to know one of your take action moments. Joe: Okay. Scott: What's something that you can recall that you're like if that never happened my life would be totally different. Joe: Let's see. Well going back to your vision board I did something very similar once upon a time and it was a Tony Robbins program writing down my goals and envisioning what they are. And I literally; and this is I described my life; I put it all down from the lifestyle that I wanted to live and the type of woman I wanted to marry. Lo, and behold within 6 months I met her. Scott: Wow. Joe: I showed her the list maybe 18 months later and it described her to a T. So that is a Take Action moment for me in terms of writing that list down. Now it changed over the years in terms of my goals. At one point I wanted to have the boat in the harbor in Portland Maine. Well, I live in North Carolina right now that's not really going to happen. And I didn't want it once I had kids. I couldn't really spend much time with them on a boat in that situation. The other one Scott when I'm at Brand Accelerator Live is; I mentioned it before we started recording, is that I have taken action on moving forward with my book as well. We're not going to talk too much about it. I'm going to drop a little hint in here and then I'll be quiet for 12 months. But it's something that I've talked about for many years and I've tried and I've tried and I just haven't gotten it done. And you've inspired me to get it done. And some of your tips in the book itself have allowed me to sort of bullet point what I need to do to take more action and get it done; so two impacts right there and I think is going to make a huge difference for me. But again it's not always; like Rachel says it's not always about me or her. It's about how you can help others as well. And I think you're doing that. You're helping others first and it's benefiting you. And I think it's the best way to go about it. So thank you, Scott, for being my friend, for being my colleague, for being on the Quiet Light podcast. I hope to see you on it again. Scott: Thank you so much, Joe. I appreciate it, man.   Links and Resources: The Take Action Effect Scott's Website Scott's Podcast Scott's YouTube Channel

Scott: One of Kyle's big interests is birds. So what we did was created a birding weekend, and invited a bunch of guests who were connected with the Audubon Society, Cincinnati chapter, Cincinnati Bird Club. People along that line those who share the same interest in birding as Kyle does.Katie: Yeah and this interest in birding is more than just - I like to be outside and in the woods, right? Tell me about that interest that Kyle has and what that looks like.Tammi: When Kyle was born we had two acres in the woods and my husband is the biggest Audubon-nut known to man. And we had every bird in our yard. So Scott had all these CDs from Audubon and from Cornell University of bird calls.Tammi: What we didn't realize is Kyle's gift is audio memory and at age 2, age 3 he was putting those CDs in our old stereo and memorizing, we didn't realize, he was memorizing all those bird calls by track. We're thinking three hundred, four hundred, or five hundred bird calls he has memorized, and he still knows them to age 20. Katie: That is incredible, I didn't realize that it was something that started that young. So when you chose what to do, you were thinking around Kyle's interests. Why were you looking at Kyle's interest in particular?Scott: Well we want to get him integrated, involved in the community - trying to link him up with like-minded people. People with the same interests, shared interests.Katie: So let's unpack how you came up with the idea to eventually have a retreat, what was your initial concept around what you would do?Tammi: My initial thought was a running event, Kyle ran cross country in eight grade and he wants to run again. But Scott and I don't run long distance. So I thought I thought we would set some kind of annual running event. And that was mom, all on my own, in my own head, I get caught in my head.Katie: What do you mean by that? Why was it like being caught?Tammi: When we came to Starfire and started learning different strategies. Taking people to lunch, taking other runners, birders, artists, taking even neighbors, just taking people to lunch and pick their brains, I just call it getting out of my own head.Scott: Yeah the cool thing about some of this was when we first started thinking about this we thought well we can do this, we can do this with no input from anybody else you know we'll come up with the idea and then we can help execute. And then talking to a particular person at Starfire we were told to just talk to people, see what they think and let them kind of run with the program. Don't plan everything for yourself, this is not about you, this is about Kyle integrating into the community. Don't even make the event about him, just make an event of which he is an equal part of and let people volunteer and get the buy in from that.Katie: How important do you think those coffees were and those plannings were over time?Tammi: They were critical.Scott: Critical that's the word I was thinking too.Tammi: It was fun and it was critical to get everyone's feedback and to brainstorm with others. The synergy of getting all our ideas together.Scott: Yeah, simple conversations and getting buy-in, otherwise you're going in cold asking people to do something when they don't even know who you are. It just, you have to.Tammi: And we took a few birders to lunch and they said, well why don't we rent a cabin out in rural Adams County and go birding? And that had never crossed our minds. Scott: And then all the pieces, well what would we need to do for this and this and and it just kind of fell in place in some ways. It still look a lot of planning.Katie: And did it fall in place because the people who helped come up with the idea were helping with some of the logistics and thinking through what to do?Scott: Yeah.Katie: Some shared ownership there, and that's kind of what you were saying that you might get caught in your head, that the original idea didn't have anyone else owning it and so that's the shift where some other people being part of this and feeling just as passionately is what drives the whole ship.Tammi: Absolutely.Katie: And then so everybody who participated in the planning of it how did you work with their schedules to make sure they were involved?Scott: Our event was more of a regional draw, it's not people who live on our street. So our meetings were one on one, they were through email, phone calls things like that. It wasn't like a collective group of people meeting all the time. Turned out there was a bigger interest than we really kind of expected so we had to kind of pull back on it because the place we were getting for the weekend wasn't large enough to hold everybody. So their enthusiasm made things so much easier. The worse thing you can do is throw a party and nobody shows up.Katie: That's really neat. And what was Kyle's role in the project planning itself?Tammi: Excellent question.Scott: I won't say Kyle initiated any of the plans himself, what we would do is we would always ask Kyle if he wanted to do this, get his sign-off essentially.Tammi: Is it ok to have a sleepover with ten people in a cabin? And he would give us a thumbs up or thumbs down. He would come on all the lunches with us or the coffees we would have with people.Katie: Once you came up with this idea together and you landed on your theme, you came up with what you were going to do, you probably set a date, picked a location, were there any other things logistically that you really had to work through that were big parts of this?Tammi: We had to watch the weather, and it rained, which actually turned out to be a good thing because the birds like the rain.Scott: Yeah, it was migration season for the warblers, it was in May, so a nice spring rain kept them calm and singing.Tammi: Picking trails that were accessible and worthy of seeing lots of birds. Picking a trail that was near a lunch picnic shelter, because we provided lunch.Katie: Did anything come up during the process where you felt like, oh no this is never going to work?Tammi: Oh big time.Scott: YesKatie: Can you name a couple of those?Scott: Well, we had a spot all picked out, it was an hour and a half east of the city of Cincinnati, and was it a week or two before? They said, there's — I'll just call it an environmental issue. They had some wild animals on the premises, and we cannot have you come to this. Katie: What type of wild animals?Scott: Feral hogs.Katie: Oh of courseScott: Feral hogs were loose on the property and we need to trap them and we can't have humans at the facility because it'll spook the feral hogs. So we had to scramble, Tammi actually did, scrambled and found a place that we then rented for the weekend.Katie: That must have been just.. How did that feel, gut wrenching?Scott: (Laughter)Tammi: Gut-wrenching except that the rental I think turned out to be a better option for us.Katie: So it was a good thing, hogs feral hogs who would've thought can actually be the best part of your project?Scott: Yeah and then we walked into the place we rented and the first thing we see is the mounted head of a hog on the wall, and I was like, this is perfect, it was meant to be.Katie: So take me to the day of the birding event. It sounds like a lot of the planning happened with you all and you were the connection but maybe having everyone in the room at once was kind of an exciting thing. Where everybody's like, now we're all here. Tell me about the day, how did it feel?Tammi: It was May and it was rainy and we all met at a trail head and that's how we got our day started with a hike.Scott: And we turned the hike procedures and all that over to one of the birders, who was familiar with the trail. So they led the hike and we just participated like everybody else.Tammi: It was exciting, everyone showed up.Scott: Everyone showed up.Tammi: We had 17 on the hike and I think 14 came back to the cabin for dinner. That was exciting to finally get inside and out of the rain. We had a lot of fun stories to tell. And then ten people, that's the limit on the cabin for spending the night, so we had ten conversations to midnight.And what Scott and I noticed too, Kyle being such a (I don't want to say expert) but the audio memory, he can hold his own in that group of experts.Katie: Were they impressed by the level of knowledge that he has?Tammi: Absolutely.Katie: After all this your goal to help Kyle get more integrated into the community, and also as a family to connect more socially with people who share the birding interest, what has happened since? What is a result of this project that you want to share?Scott: During that weekend one of the activities we did was we had a little contest where we would play a bird call and the avid birders had to identify what the bird was. We had fifteen birds and Kyle ended up winning the competition. It was pretty cool in and of itself. Then a few months later there was a bird outing, and the person that was leading the birding walk - we had never met. And when we introduced ourselves to him he said,“Oh Kyle I've heard about you, you're the one who knows all the bird calls.” So we decided to take him to lunch just to make the connection with him. Over lunch he said he would like to do that, he heard about the birding weekend, he actually knew of the place we went and said that was one of his favorite places to go birding ever. And he would like to do that same weekend if we'd be interested in doing it with he and his buddies. So great yeah, we'll do that. And then at lunch he decided I have about an hour, I'm going to go birding, Kyle would you like to join me? So we all went birding and it was kind of interesting because Josh kind of took Kyle. And they went birding and Tammi and I were kind of behind them watching it was pretty cool because it all came out of the birding weekend. It was that connection, he knew about the weekend, he knew about Kyle's skills, he knew of where we went birding, it was just this perfect puzzle that was put together.Katie: And you didn't even have to put that out there?Scott: He did it all. It was his idea, and it's his guest list, so we're connecting Kyle to a whole other group of people he didn't know before.Katie: That's incredible, thank you guys anything else you want to say?Tammi: Well, I was going to say, I felt as the non-birder, you know the big let down after the big weekend… Birders all go away for the summer and I thought, oh my gosh we did all of this and there's no connection. And then a month later they go on that hike and then — there's Josh.Katie: Pretty awesome.Tammi: It was awesome.

This is a special episode courtesy of the Dorks Delivered Youtube channel where Josh interviews Scott Aurisch about his life in business and what motivates him. Josh Lewis and Scott from NRG Boost Fitness talk about taking the plunge in business in the fitness industry. Watch this interview: https://www.youtube.com/watch?v=wX1YaTk2bl0&t=22s Josh: I've got Scott here from NRG Boost Fitness and today we're going to be talking about taking the plunge in business. My understanding is you've been in business for a while and about 12 months ago, you decided to go for some brick and mortar. Scott: Yeah, exactly right. I've been in the fitness industry now for over 20 years but in business for myself for coming up to 8 years, and very close to 12 months in my own premises. Josh: Right. Are you loving it? Scott: Absolutely loving it. It's probably been one of the most tiring years of my life but certainly the most fulfilling, from a professional standpoint. Josh: I think it's a big discipline thing. You get your own business and you take a plunge and you do something that you're thinking, should I or shouldn't I, and if you take the risk, sometimes against all odds, and it's not that you fail, you don't fail, you make sure you don't fail. Scott: Exactly right. You sort of get rid of that safety net and you're just forced to step up and it's an enormous growth experience and I'm really pleased that I did. Josh: That's cool. And has there been any milestone moments over the last 12 months that really stood out as a, ‘I've made it’? Scott: Yeah! Probably no one moment, just lots of little moments along the way, where, when you do take a moment to reflect back on where things were... Pretty much 12 months ago was when I was in the planning phase for opening here, which all came together super quickly. Once I've made the decision to make this happen, things just seemed to fall into place, which is something we might talk about a little bit later on, but as the year has unfolded, just sometimes when I'm training somebody that I've built a good relationship with, in some cases over the years, but in some cases, people I've just met this year, it's in those moments that I realise what I've achieved, when you make those connections with people. So that's what I mean by what some people would regard as little things, rather than big milestones, but they're the most rewarding moments for me. Josh: That's cool. Prior to running out of brick and mortar, how was your business beforehand? Scott: I was working out of a local gym and I'd been there for several years, and it wasn't that I got to a point where I was unhappy, but I did feel like I wasn't growing professionally anymore, and I just needed a new challenge that would present that opportunity for growth and freedom as well. Josh: Cool, cool. I guess you haven't looked back. You're 12 months in. What sort of aspirations do you have for the next 12 months? Scott: Yeah, I guess I haven't looked too far ahead, which is probably something I need to get a little bit better at, but certainly, consolidating what I've achieved in the first 12 months, and I think one of the keys to that is building good relationships with my client base but also other industry associates that I have contact with. So I'll definitely be looking to build on that over the next 12 months in a way that is sustainable in terms of my energy and my own health and wellbeing because, as you would know, when you work for yourself, you can get a little bit focused on the business and some of your personal life can tend to suffer. Josh: Absolutely, it can go by the wayside. Scott: Yeah. Josh: It becomes a very addictive, very addictive thing, having your own business. Scott: It certainly can, and in my situation, where I'm preaching to people about achieving balance in your life. It's really important that I practise what I preach and set the example of having a balanced lifestyle where I'm looking after myself and looking after my personal relationships outside of work as well because your business might be firing on all cylinders but if some of those other areas of your life begin to suffer, that's going to impact on you as an individual at some point, and then ultimately affect your business. Josh: Yeah, completely agree. It's all about having balance. Otherwise, the whole system breaks. Scott: Yeah, that's right. Josh: If you were to go back to the moment while you were working for someone else and you didn't have your own business, can you remember what made you take the step and take the leap towards doing everything, wearing all the hats, and doing the payroll, doing your taxes, doing everything underneath your own banner? What was the catalyst towards the move? Scott: Yeah, probably just a couple of little moments. Again, it was nothing major. There was no massive falling out with anyone at my previous workplace, but just piecing a few things together and just some little frustrations and I thought it was time to take control of things myself and when you run your own business, you get to do things your way and you are absolutely responsible for everything that occurs. So, yeah, it was nothing major and just a couple of little things and I do distinctly remember in those moments thinking, yeah, I've got to do this because there was a lot of thought that went into it beforehand but when I eventually made that decision, like I said earlier, it all just fell into place. Josh: That's cool, that's cool. You do a lot of stuff for communities, and I understand you've gone back to the school that you went to and you've helped them out. Tell me more about what happened there. Scott: Well, I was fortunate enough to be contacted by the Logan PCYC who run a lot of great programmes and one of them is called the Deep Blue Line programme, which is in association with Queensland Police, where they visit local high schools and present an 8 to 10 week programme to a group of students of various ages. I was invited to come along and speak for one particular week about the importance of exercise and nutrition and, yeah, it was pretty cool. But one of the schools I got to visit was my own old high school that I had not stepped foot inside for 25 years and it was my Back to the Future! Josh: That would have been weird. Scott: It really was. It was a really cool experience, though. The place had not changed. It had been really well maintained over that time but it was just like going back to how I remember it. And then to go back as an adult, as a professional, and feel like you're adding some sort of value to a place that played a role in your own development. It was very fulfilling for me, and I've been back a couple of times since as well. Josh: Was there any old teachers that you saw and you were like, ‘Oh, no… Sir, what are you doing?’ Scott: No, no. Very much a turnover of staff but while I was at the school office, I did look at the boards with all the photos and the honour boards with the kids' names and that sort of thing. And just to tie that into NRG Boost Fitness here, I've actually got three old schoolmates as current clients. Josh: That's cool. Scott: Yeah. So that's also something that I find very rewarding as well and makes me feel really good. Obviously, we all run businesses to earn money. Josh: Ideally, yeah. Scott: Yeah. You've got to earn a living. You've got to support yourself and your family, but for me, I think one of the keys to my success is that I don't focus on just the dollars. It's about a lot more than that. It's about personal fulfilment and things that make me happy and the fact that I've got three guys that I'd probably fallen out of contact with a little bit over the years but have reconnected with in recent years. They're now current clients, and I'm helping them improve their lifestyles. Josh: That's cool. So you've been in business for a long time, you've got your bricks and mortar now, have a rough idea of where you're wanting to go. If you were to do it all again, would you change the order of events or what would you do differently? Scott: I honestly don't think I would change a great deal. One of the things I think I got right from the outset was as professionals, as entrepreneurs, you would have to read a lot about the importance of beginning with the end in mind, having a clear picture of what you want your business to look like, and it was the clearest example in my life where I was able to come up with a very clear picture of how I wanted this place to look, how I wanted this place to operate, and doing that, and putting effort into getting those details right from the start, allowed me to almost follow that to the letter and it was amazing watching that unfold. To have ideas go from just words on paper through to, a little over two months later, from when I first decided to undertake this venture and then to actually open my doors, it was literally two months, but the reason it was able to happen so quickly is because I was clear on what I wanted and things literally just fell into place. There was no forcing or pushing. Things just sort of fell my way. Josh: That's very, very serendipitous, or lucky, I guess, or fortunate that that worked out that way. Scott: Yeah. So just to answer your question in fewer words, basically, beginning with the end in mind was the most important thing that I did and I would recommend that for anybody else looking to do anything similar. Josh: Cool. A lot of people get into business and they think, ‘Oh, in two years' time I'm going to retire. I'm going to make a million dollars,’ and have these huge thoughts of grandeur and they don't necessarily make the appropriate planning before jumping in and understanding the depth of the water and realising how deep it goes and how much is actually involved in running your own business, especially when you're starting up and you need to be the person wearing all of the different hats. You need to be the technical person, you need to be the administration, you need to be the marketer, the salesperson, you do all of the different things all at once, and as you said, you want to have a balance in your business, you want to have a balance in your life. Was there any steps that you went, ‘Oh, shit, I need to learn more about this,’ or, ‘I need to learn more about that,’ or things that you went, ‘Oh, wasn't expecting that to be a hurdle?’ Scott: Yeah. Not really. That's probably another thing I think I got right—the scale of the venture that I took on, I think, was appropriate for that first leap. But the point you make about a lot of business people taking the plunge but not realising the depth of the water they're diving into, in my industry it might be somebody that says, ‘Oh, I can run a gym,’ and they take on this big operation and then it's not until they're in it and they realise what an undertaking it is. So I was pretty happy to start with a personal training studio that's literally a couple of hundred metres around the corner from home, so it suited my lifestyle and I've been really comfortable with the size of the jump, so to speak. There have certainly been things that I've had to learn as I went along but that was the whole point to begin with—to learn new things and challenge myself. Josh: I think it's very sensible the way that you've gone about the business because, as you said, a lot of people might just go in and they jump straight into a lease but they don't have any clientele and they have no idea about marketing. They just think they get some business cards and then they will come, build it and they will come, and that's not how it really works. I think it's great that you're in the IT world, they call it agile development, where you try and make the smallest profitable item first and then you build upon that. A good example would be Uber. So you don't start with an autonomous vehicle that's driving everyone, tens of thousands of autonomous vehicles driving everyone around countries. Instead, you start with an app that allows for people to take in that step until they've saved up enough money to then be able to move onto the next ventures, and Elon Musk does the same things. Josh: And you've done the same thing in where you've built up your clientele, you've created a rapport and the message is strong and your social content in strong, and the community that you've created around your business is very strong. Different events that I've been to with Scott have been 60, 70 people upwards. Your opening day here, I don't know how many people you would have had here, it was stacks, so it shows the belief and the message that you've instilled in all the people that you have come here is very strong and the allegiance of people. Scott: Well, I think, getting back to one of your earlier questions about community, I've done things outside of here for the broader community, but I placed great emphasis on the importance of building a community within your business, in much the same way that a café might do the same thing. There are hundreds of cafes, Brisbane wide, and what makes you choose one over another? It’s generally the one where you feel most welcome and almost like it's a second home, and so that's what I try to do here, again, not in a forced kind of way but just in an organic way, and it's been another very satisfying thing for me to observe, friendships being formed and I know that some of my group members socialise outside of here, that didn't know each other previously but they met through NRG Boost Fitness and that's sometimes more rewarding than dollars. Josh: I think just, straight on the friendship situation, it's something, it's a place... I come here myself and it's a place that I feel very comfortable in, and I've brought multiple friends here because I find it's a good time to be able to catch up and see people while having a workout, as opposed to catching up and having a beer and a pizza, which is lovely as well, but it's not as great for your waistline and your health, and I can definitely say you...we, two and a half years ago, met for the first time and I told you my goals and you said, ‘That's not achievable’, in nicer words, in the timeline that I wanted to achieve it in. You said, ‘Look, see how you go’, I think, and I tried really hard, twisted my ankle, stopped trying as hard for a while, but I continued to persevere and 12 months later I achieved the goal that I wanted to, the weight that I wanted to, the percentage of body weight that I wanted to, and I'm very impressed with the results I was able to get from you. But it was not just the journey of the weight. It was also the friendship that was made along the way, and a great example would be Scott coming over and surprising me of a lunchtime and taking me over to see the jolly old Saint Nick. Scott: That's right, yeah. Coming up to a year ago. Josh: Yeah, that's right. We were able to sit on Santa's lap together which was… Scott: For the first time in probably 30 years! Well, for me, anyway! Josh: For you, yeah! And I thought it was great that you definitely went above and beyond and I don't think there would be many business owners, or especially PTs, that would do that level of commitment towards the friendships and the bonds that were created within the community, so it's a testament to the way you create your business. Scott: Thanks, Josh. Josh: I'd like to cut across to a quick video that discusses more about taking the plunge and we'll talk more about that afterwards. It's big, it's wet, it's wild. That's right. It's Niagara Falls, and if you've ever been here or any other large waterfall, you might have wondered, what would it be like to just jump in? So, there was this time when Sam Patch, who was the first daredevil to take the plunge over Niagara, all the way back in 1829. He shot to fame and his slogan became part of a popular slang. The slang was, ‘Some things can be done as well as others.’ It's a great line. You could take it to mean that our achievements are equal, or you could also take it like we are trying to do our own thing as best we can, or maybe he was telling us that we can do those things that others think are impossible. So what about you? What's your Niagara Falls? What's that big challenge that you are scared to take on? Well, let me tell you, it's often much easier than you think once you just commit to it. For Sam Patch, he was actually pretty disappointed with the crowd that turned up for his first successful attempt. There was bad weather and he'd been delayed, so he announced that he would do it again a few days later. This time, 10,000 people turned up and he cemented his place in history. So, if old Sam can jump off Niagara Falls twice, there's nothing to stop you taking the plunge. Whoa! Josh: Good to be back. I thought that was pretty good. So we went through that you can sort of see sometimes it's not the first time, the first step, but just taking the plunge and just being the person that commits to that can really make a big difference in your business. So it's cool that you've gone through and you've done that and you've experienced that firsthand and you didn't, in a sink or swim situation, you were able to swim and, if anything, swim very, very well. Scott: Yeah. Well, just one point I'd like to add to that, Josh. As any person should do when making a decision to go into business or not, you're going to come up with your list of pros and cons, and you'll have your moments of bravery and you'll have your moments of fear and ultimately, for me, it came down to a fear of financial risk and when I really thought about it, I then fast-forwarded to when I'm 80 years of age and I look back, and if I hadn't done this, what would have been the reason that I didn't and would I be comfortable with that decision? And if it was just a money thing that held me back, I think I would look back and regret it and be disappointed that I wasn't bolder at the time. So, yeah, I think it's a useful exercise sometimes, to fast-forward to when you're in your final years, will you wish that you had have taken more risks? Josh: Definitely, I agree completely. I've always looked at it like, who would you like to see standing there at your funeral and... as dark as that is, who would you like to see standing there, at your funeral, and what was the reason you were remembered? And hopefully, there's a legacy that you've left behind, whether that be children or even just a nice smile in helping someone out and that's there some memory that you've left there. So it's work your way back from there. Scott: Yeah. And it might seem a little bit dark to some people but it's an extremely powerful exercise to take yourself through as well. Josh: Mm-hmm (affirmative). Definitely. So what would you say would be the life tip or quote that you live by? Scott: Well, there are probably a few but one that I have been thinking about recently is not being a victim in life and basically taking absolute personal responsibility for your life circumstances. I just believe that as soon as you blame somebody else or other people for your situation, is when you give away your power. Sure, bad things are going to happen in your life and some will be other people's fault, but it's how you respond to that really makes the difference. So I really try to remember that all the time and take the appropriate action. So there might be people out there who are unhappy with their job and it's as simple as changing jobs. I understand that it's scary in that moment but if you're truly unhappy, you have the power to find a better job. Josh: Absolutely. Scott: And if you're overweight, you can continue blaming this, blaming genetics, whatever the case might be, but ultimately, if you eat better and exercise, you're going to improve that situation. Josh: Absolutely. And it's all about baby steps and getting the understanding, sometimes understanding your weak points and turning them into your strengths or at least having recognition towards them so you know how to work and come out of your comfort circle, to grow into a better person, whether that be through weight loss or a change of job, or a change of marriage, or whatever the situation is, it can all make you a happier you. Scott: Yeah, exactly right, Josh. Josh: Cool. And we're going to do something here. So we're going to do a shout out. You've done really, really well. Public speaking and especially in a global audience, like YouTube, can be scary. It's all imprinted in stone forever. It's going to live on longer than us. This could be our legacy. If nothing else, this is it. Scott: Don't stuff it up. Don't stuff it up! Josh: So you've done really, really well and I really appreciate your time that you've given me today, and I'd like to see if there's maybe another business coach, leader or business that you think would benefit from having a review and that the public would benefit from hearing from. Scott: Yeah, well, certainly one of the best things I've done in recent years in terms of developing my own business expertise, for want of a better term, is I undertook an internship with a business called Create PT Wealth. I attended a free workshop. It was probably over three years ago now, and that, in itself, was a half day, full day workshop that was highly valuable and I took a lot out of that and I realised the position my business, and I'll use the term business fairly loosely because at that time it was a fairly poorly structured business, and it made me realise what work I needed to do to make a real business. Scott: So I then undertook an 18-month personal training business internship and it covered all sorts of things: business systems, marketing, the whole gamut of things. At the time, I could not afford it, well, I told myself that, ‘You can't afford this,’ but something in me knew that I needed to do it and it wasn't an expense, it was an investment in the future of my business. So that was another time where I took the plunge and found a way to afford it and what I learnt in 18 months has been a massive reason behind where I'm at today, in terms of having my own premises and being very happy with my professional life. Scott: So Create PT Wealth is the name of the business and I would strongly recommend that anybody else in the fitness industry or a personal trainer seek them out and see what they can offer your business. Josh: Cool. Is there anybody particular at PT Wealth that stuck out for you? Scott: Yeah, well, certainly both Brad and Jason were both extremely helpful, right from that initial workshop and I also had a business coach, Leanne, through that time as well, that I would check in with, every fortnight, and just have a phone conversation, and it was a good way to be kept accountable. She would set me certain business-related tasks that I would need to report back to her on in the next fortnight and that's a really important thing, is accountability, because sometimes it's easy to make excuses to yourself but when there's somebody else that you've got to report back to, I found that that really kept me on track. Josh: Definitely. Scott: Thank you to Create PT Wealth. Josh: Cool. Well, I think we should all take a deep breath and give yourselves a clap. That's awesome. Thank you very much. Scott: No worries, Josh. Thank you. Josh: Awesome. Read about the interview: https://dorksdelivered.com.au/business-tips/interview-with-scott-aurisch-of-nrg-boost-fitness?highlight=WyJzY290dCJd I hope you enjoyed the episode. Every little bit helps and a small thing that you could do, as a token of appreciation, would be to jump onto iTunes and rate and review to make sure that other people can listen and get the same helpful help that you guys had. Thank you, and keep good.

How do you determine rents for properties you’re thinking about buying? As an investor, are you going to get a return on your investment? If you don’t, then you could get behind every month. Clint Coons of Anderson Business Advisors talks to Scott Abbey of RentFax, who will tell you how to determine rents for your properties. So, when you make investment decisions, you’ll have a range to use to budget wisely. Highlights/Topics: Scott pulls data on properties from the Census Bureau to track indicators of positive vs. negative experiences and determine if he could sustain an income stream Scott makes sure to understand the risks involved when taking on a property to establish a reasonable expectation from a client’s perspective Quality of the location has a direct outcome regarding your income stream and understanding what rents need to be Scott looks at a certain area to determine the rent range; 77,000 census tracts are available to identify the neighborhood’s risk and rent range If your subject and comps are in the same demographic area, it’s likely that those comps will be more powerful, desirable, and accurate than those outside the demographic area Process involves including the square footage and number of bathrooms of subject and comparing them to comps; RentFax adjusts rents to compensate for differences Start at the high end of the predictable range, and then market through it over a few weeks by lowering rent, until you get worthwhile applications Condition of Subject: Some investors barely make changes/fixes, but others modernize and make it nice; take your subject to a higher level to charge more rent Season of Subject: Some seasons generate less traffic; market rent prices based on number of clients looking for a place to rent and the season Use RISC Index to identify the risk of your property; rent affordability becomes a major indicator or cause of failure to sustain a cash flow stream RentFax is helpful for you to buy outside your market and to find comfortable risk tolerances; it quickly offers critical data, appreciation rates, and demographic information Most people who self-manage tend to be below market; but if they fall far behind the market, then they’re not capturing the full benefits from their investment Past three years has seen a large growth in rents - a 20% gain; recently, rents have started to slow down Buying properties in high-risk areas with low-risk tolerances is an investment disaster; RentFax matches area risk, subject location, and client’s expectations/tolerances Resources RentFax (Use COONS15 code to get 15% off) Census Bureau RISC Index RETS Clint Coons Anderson Advisors Tax and Asset Protection Event Full Episode Transcript: Clint: Hi everyone, it’s Clint Coons here at Anderson Business Advisors and in this episode, we’re going to be discussing how you determine your rents for those properties you’re considering buying. As an avid real estate investor, I have over 100 properties across United States and many of these are single family homes. One of the issues we all face as investors is are we going to get that return on our investment? We’re taking capital, we’re tying it up in a property, and we’re anticipating then that property is going to put X amount of dollars back in my pocket. But if it doesn’t do that, then we could be in a situation where possibly we’re behind every month. There’s more month left at the end of the money when it comes to covering all of our expenses and we never want to be in that situation. It’s something that I’ve seen in the past with my own investing and I’ve seen a lot with our clients who have made purchases in markets that they thought they could get a certain return on, that their cap rate is going to be X and it turns out it was Y, and they realize they’ve made a mistake. What I wanted to do in this episode is bring on an expert who can show you how to determine what those market rents will be for your properties so then when you’re making your investment decisions, you know going into it what that range is going to be so you can budget accordingly. With that, I want to bring on Scott Abbey from RentFax. Scott, thanks for being on. Scott: Thank you, Clint. Clint: Tell us a little bit about yourself. Scott: I’m a property manager of 26 years. We managed properties at 450 single family homes in the Kansas City area and by night I am a daily geek. Clint: What does that mean, a daily geek? You just sit up all night long? I mean, what comes to mind here, you’re maybe sitting in your boxer shorts and a tank top, and you look at the computer, you’re drinking a beer. Scott: Not quite, but I raised that story because years ago as my business was just getting started, in fact, the year 2000, I was able to bring down free data information from the Census Bureau, and I started studying the differences between properties that I was having positive and negative results in, that were in close proximity to each other. Using the same manager and the same scoring techniques, same screening techniques, same collection techniques, I found that house A and house B didn’t necessarily perform the same consistently even if the management was the same. So, I pulled down data and data from the Census Bureau. That’s when the night time work came because I had to sort the data out by zip code and then find I had to build statistical models from my property inventory, and I started tracking things that would be indicators for when I had positive experience versus negative experience. That experience as I referred to is, was I able to sustain an income stream? How long was the sustainability of the income stream versus other properties in similar type neighborhoods? It was a very crude Excel spreadsheet that then went to a database, was able to create a scoring model between 0 and 100, and then compared it to all of the neighborhoods with the zip codes in the Kansas City area, and developed a comparative tool that said, “Neighborhood A will perform better than neighborhood B based on these demographic nuances.” Clint: And I assume it started working out for you. Did you see that your rental income started going up when you based all your investments on that? Scott: It took over 10 years of changing the sauce and finding the right algorithms, but I brought in a partner, Shane Sauer, who is an engineer by trade and who also managed properties at the time. We were able to put the tool on steroids and we tested it in seven or eight different markets. That was really the foundation of RentFax. What I, more than anything else selfishly, I wanted to make sure that when a new client came to me, I understood what the risks were of taking that property on so that I could establish a reasonable expectation from a client’s perspective. In real estate acquisition, location, location, location really is there for a reason. It is a critical part of the decision-making. When you try to quantify location with a realtor, it’s always vague and ambiguous. The quality of the location has a direct outcome in terms of what your income stream is and it also helps drive understanding what the rents need to be. Clint: Wow. There is a lot that went into putting this together when you started RentFax. How long have you been in business then? Scott: 26 years. Clint: 26 years. How many clients do you have right now would you say that are using it? Scott: Oh, wow. Well, RentFax hasn’t been in business for 26 years. My client base of my property management company—I have 450 doors—I don’t actually know how many clients are using RentFax right until it’s expanding all the time. Clint: Got it. What you’re doing then is that you’re looking at a certain area and you’re determining the rent range. I’ve got two questions. Number one, is this all across the United States, no matter where I’m investing you have data on those areas? Scott: Yes. There are 77,000 census tracts. We used to use zip codes, now we use census tracts. It’s a smaller area so it’s even more accurate. We have data for all census tracts for the risk of the neighborhood and the rent range. Now, I will tell you that when you’re in low density markets when you have a small number of rental properties, it’s hard to build a statistical model big enough to get accurate data. So, in those rare instances, if the data’s not there, we can’t provide an outcome. But those are very small in number. Clint: When you’re looking at a particular area to come up with these ranges, how do you determine that? You’re looking at what their current rental rates are for homes if people are listing them for rent? You don’t have to give me your whole secret sauce here but, kind of what’s in the details? What’s in the mix? Scott: We go out and we pull the most recent listings from the web and then they’re de-duped so that we’re not duplicating listings because listings get populated to a lot of different places. And then we look for the like type which is single family home or multi family. Our product is designed for residential that means four and less, and it’s either single family or it’s a multi family. Then it looks for the number of bedrooms. Then it brings in the closest group of comps that it can for the proximity of your subject. Then it give you those rents that are being charged. We take it a step further because there’s a lot of products out there that offer rent information but typically the range of rents that are offered are very wide. So, it’s not as helpful as it would be if we could bring the range down to a more manageable number. What we’ve learned is, is that if your subject and your comps are in the same demographic area, the likelihood of those comps being more powerful and more desirable, more accurate are higher than those that are outside your demographic area. The further you go away from your subject, the less accurate the comp is, so we look at distance and we weight the comps accordingly. We also do something that many don’t. We look at the square footage of your subject and compare it to the comps, and we look at the number of bathrooms, and then we adjust the rents up or down to compensate for differences in square footage and number of bathrooms, much the same as an appraiser would do. Clint: Wow. There’s a lot of information. Scott: And then we drive it into a 70% probability curve, and that brings your desired rent range into a fairly manageable number. What I’ve learned as managing properties for all these years is that no one can tell you exactly what rents are because it’s a function of how many competitors do you have at the moment, and how many customers there are at the moment. So, to pick a single number is generally flawed. What we suggest is you start at the high end of the predictable range and then market through that over a number of weeks by lowering your rent over time until you start getting good applications. Clint: You advise then if I was going to going into a certain market, say Kansas City, I should probably base my rent on the property I’m buying and what maybe the lower end, and then like you said, market it from the top end, and make sure my numbers take into consideration that I may end up at that low-end number. Is that advisable? Scott: Well, one question one would ask is the condition of your subject. A lot of the investors will barely put a bandaid on a purchase and others will go in and modernize and make them nice. So, the data that you’re getting is of the average market. Kind of get it? It’s somewhat driven by the economics of the market. But if you take your subject to a higher level of the market, then you want to be sensing the fact that you can charge more rent. Whereas if you look ugly at the street, you’re probably going to need to drive down the rent numbers. Also, like in Kansas City, we have seasons. We’re in a season now where the traffic is much lower. So during this time of year, I tend to market closer to the lower end to accommodate for the smaller number of clients that are going to be looking for a place to rent. Clint: Okay. With that in mind, let’s assume that I’m looking for property now in Kansas City. When you use your modeling, does it then break it down by month? If you’re going to start renting it in, say December, then you ought to expect to charge high end this amount, low end this amount, versus if you’re doing the same thing in June. Is that how— Scott: It doesn’t do that. You have to be sensitive to the fact that when year-end climates that have cold and hot, generally speaking, as a general statement across the United States, your March to August time frame is where most of your moving actually takes place. It’s even more exacerbated where you have cold weather because people are less likely to get out. I know here in Kansas City, January-February are just miserable periods of time. The number of people that want to move in January-February are pretty slow. Now I’ve had warm Januaries where we had good activity. As an investor, you have to be sensitive to those kinds of tactical things you want to consider. The other thing that I want to emphasize is that, when you’re looking at rents, it’s helpful to know the risk of your property because the RISC Index will tell you, “Is this a good property on the neighborhood in the city? Or is this not so good?” As you go up in a risk, what we find is that rent affordability becomes one of the major indicators or one of the major causes of failure to sustain a good cash flow stream. As you are in the lower realm of your economics, you want to start being very sensitive to affordability. Our system looks at your median income and what happens is, usually in a neighborhood, tenants are attracted to similar neighborhoods and see you have to be sensitive to the median income of your applicant, being sensitive to the rent affordability. The thing I tell you is as your rents go down in value, generally you see that the tenants that are renting from those properties, sensitivity to job interruptions is greater and if they’re accustomed to getting five hours overtime a week and that’s cut off, that could have an impact on your ability to get paid. I can also tell you that, particularly in the lower economic areas, utilities become a huge part of the rent. In winter time, for example, if you’re renting a property for $800, it’s not unreasonable to see utility bills that represent 40% of that bay. When you’re looking at that total rent cost of utilities and rent and then you compare that to the gross income of your applicant, it provides a reason for you to consider driving your rents down more on the context of preserving your tenants over long periods of time versus the money that you hope to make from having a short-term tenancy. Clint: The program itself, when you start using it, does it gives you a profile of a typical tenant in that area? Scott: If gives you a profile of the demographics of that area. It provides a lot of information for investor-making decisions about where to buy. For example, if you’re an investor from out-of-area and you’re coming to Kansas City, for example, and you find 2-3 bedroom houses comparatively, and you’re looking at the rents in there reasonably comparable, but you look at the demographic score that we have and the risk score, I would tell you, you want to pick the house that has the better score because that house will, over time, perform better at providing a steady income stream. Clint: Okay, so then what I’ve seen, and correct me if I’m wrong here, if I have two addresses of two different properties I’m looking at, I would go to your site, log in, and then I put in the address of the property that I’m looking to acquire, and run the report on that, and then do the same thing on the other property or do you put in multiple and then compare them? Scott: If you want to load up multiples, you can. But generally, most people, they’re looking at two or three. You just enter one and you study it, and then yet another and study it, and yet another and study it. It is a fast way for you to have some really critical data because it shows appreciation rates, it will give you demographic information that’s helpful to learn. What I’ve learned with clients that have been using it for a while, they have an investment that works for them. They’ve got A-B-C house on such-and-such address and the thing just consistently works for them. Then they’ll run a RentFax on that property and understand what that RISC Index is. And they’ll look for like index numbers or above to buy property because an index of 33 in fill-in-the-blank, Philadelphia will have similar results of Atlanta, Georgia, if they fit the same index number. It’s a very helpful tool for you to buy outside of your market and to find the risk tolerances that you’re comfortable with. I have some clients have loved the high risk, which generally reflects a perceived high cash flow. I have other clients that are risk-inverse. They are at the end of their run and they want to preserve and protect. They want higher risk numbers because generally in the higher risk number, you have less yield but you have greater probability of appreciation. Clint: Got it. This is for people who are considering in purchasing property. They definitely want to run the property through the analysis. How about for somebody who already owns property you’re considering? All right, my tenant is going to be moving out the end of the month and I’m wondering now, should I move up my rents $500 a month? I can see someone wanting to run their own existing properties here. They’re to see where they should peg their new rental amount at. Scott: Right. What I’ve learned in managing property is that most people that self-manage tend to be below market. They usually are by design which, at a strategic level, I agree with being below market but if you fall far behind the market, then you’re really not capturing the full benefits you can from your investment. What we do on our renewals, is since we’re 90 days away from a renewal date, we’ll pull a report, we’ll send it to our client and we’ll make a recommendation of what we should do with rents. And then after he gives us a blessing on that, we send it to the tenant and we show the tenant that, “Look, your property is under market. Although we’re raising the rent, we’re not raising it as high as we could and if you go out and look for another house, here is the market.” Over the last three years, we’ve seen a large growth in rents. Now, I’m sensing recently that those rents are beginning to hit a slowdown point but there’s been 20% gain over the last 3-4 years in rent values and a lot of self-managed properties leave money on the table and not keeping those numbers up. You can see the report justified to the tenant. Clint: I’ve talked to a lot of investors and they see if the market slows down, that somehow that’s going to impact their rental income, personally, what I experienced when the market crashed in real estate back in 2008-2009, my rents went up considerably because people were displaced, they didn’t have houses, they couldn’t qualify for loans, and they had to become renters. That gave me an opportunity, of course, to make a little more money. Then once the properties have worked their way through and people started getting back into buying homes, I actually start reduction in my rental income because that pool of tenants started to shrink up some. Having, I think, that kind of data as well, especially now I think would really really important, given the fact that interest rates have gone up, and you’re starting to see a decline in purchasers now of homes. I was talking to a title company, an officer just the other day and she told me that they were getting 100 a day. And now, they dropped to 70 since the rates have gone up per home. Scott: I think there’s some surprise pressure, too. In my market, a house going to market and there being multiple bids and no mobile offers. It was a bidding war. Some of them would get to close and they wouldn’t approve this. I think that frenzy is behind us for now. My sense right now on RETS, in my market at least, is that I want to be careful to overstep the market in rents. We had our foot on the slow go during some of the economic troubles to keep the rents and to keep the rents affordable because I didn’t want to lose tenants. Then the rents went up and then we put the foot on the gas, but we’re now pulling our foot back off the raising of the rents because we’re seeing some pushback on rents and we’re seeing some affordability questions. Not everybody’s boat is rising at the same rate, and again, it depends on the economics of your property. You talk to someone that has a rent that rents for $2500 and you talk to others that rent for $750, that’s a whole different economic group. You have to be sensitive to both, though. Clint: I think what’s unique is you built this to sound like for yourself, initially, for your properties, and then you saw there’s an opportunity that other people can take advantage of it because it helped you with your business. Is that a fair statement? Scott: It is to an extent. I have to say selfishly when I first developed it, I didn’t want to have to drive to every house to look at the neighborhood before I accepted it. There are neighborhoods in Kansas City that, at the time, I wouldn’t accept to manage because the neighborhood was so difficult. But subsequently, as I started investing more and more of my passion into the product, over the years I’ve seen so many people come into my business, sit down, and said, “I want to hand you, I want you to manage this property for me,” and the first thing I’d do, I would, of course, pull a RISC Index. I found that a lot of people were buying properties in high-risk areas with low-risk tolerances. It turned into an investment disaster because the risk of the property area didn’t match the tolerances of the investor and the investor would burn out after two or three tenants. It was important to me to help match the risk of the area, the location of the subject property to the expectations and the tolerances of the client that was making the purchase. Clint: Yeah, because you don’t want to have pissed-off clients. Scott: I’ll share a story. A little lady and her son walks into my office and sat in my conference room. He had taken her retirement money and paid in cash for a house, or was about to pay cash for a house that was in a very high-risk area. I might work but the greater probability is it wasn’t going to work than it was going to work. He just kept telling her, “It’s going to be okay. It’s going to be okay,” and I ran the report and I gave it to both of them. When she saw the risk, when she saw the demographics, and she saw the crime factors and such, it had a big impact on her decision on whether she was going to give grandson the $75,000 he talked her into to buy this house. I can repeat story after story. A couple of retired teachers came in with three houses they have packaged up. They wanted zero risk but they were told that these were a good deal and they were low cost and how can I go wrong. They were in a war zone in our city. Clint: Yeah. They didn’t get out and visited the properties at all? Scott: They did but unless you have an experienced eye, you don’t recognize some of those things. Clint: Correct. Scott: And not everybody that goes into real estate investing has the training and has the knowledge they should. They make bad investments and oftentimes they’ll blame it on the realtor that sold it to them, or they blame it on the manager that manages it, but in fact, part of the problem was the due diligence they did on the front side of the acquisition and understanding where they are in terms of their investment protocol, like, “Do I have enough cash to sustain three months of vacancy if something terrible would happen? Do I have enough cash to sustain a new roof? Am I comfortable with what appears to be great cash flow but can often be nine months tenancies where there’s eviction every two years?” Those are things that can happen in the higher risk areas. And then, just making sure that there’s a good match there so the investor gets out of the experience what he had hoped for. Clint: And this is why when I first came across your company, I was so intrigued by it because we have a lot of clients that are on the coast that buy in the Midwest because it’s affordable. You can’t get the returns on the coast right now that you can in the Midwest. But the problem I see is that they hook up with these people who sell properties, that are buying them and then rehabbing them and then selling them as packaged deals to these investors, and the investors don’t even know what they’re buying. All they see is the numbers like, “Oh my gosh. That house is only $85,000. That same house out in California would be $500,000. Give me four.” Scott: That’s it. I’ve seen it for 20+ years. That’s one of the motivating factors that drawn all those late nights in developing a tool that not only can I use for my clients but can be used universally for investors to make a good match between the investment risk of the neighborhood because in real estate, it’s about location. Location has driven so many other factors that impact the asset as it ages and the tenant that it attracts. Clint: Got it. I know this that you agreed to give us special discount to Anderson clients that come to RentFax. We negotiated that so we can get 15% off if they go to our site, they go through the length that we’ll have up there for them and then they could take advantage of all the services you have to offer. I want to thank you for that. Scott: Yes. What’s important is that the folks use it and study it. The product I suggest the most is the Rent Package because it has a detailed risk report, it has a rent report, and also shows the historic vacancy report. When you look at those three factors, that really gives you most the tools you need for making decisions about what properties to buy and how to manage those properties. Clint: Great. Yes everyone, when you go to the link, you go to the site, make sure you put in the coupon code COONS15 in there and that’s going to get you the discount on those reports that you’re going to be running. Scott, I want to thank you for coming on today. This has been a great podcast. I know a lot of people are going to get great information out of this and they’re going to be coming to your site to start running those risk analysis because those are things that many people do not realize are so important in making an investment decision. Anything else you like to add? Scott: I wish everybody good luck with their investing. Thank you very much, Clint. Clint: All right, Scott. Take care. Thanks.

Similar to outsourcing fulfillment, today's podcast guest says for many entrepreneurs, it may be best to outsource the collection, management and disbursement of sales taxes with the new Economic Nexus ruling by the Supreme Court. In this podcast, first we cover what the decision means to online entrepreneurs, and how it will impact the average business. For some no action needs to be taken. For others a lot of action must be taken. And ignoring the details is not really an option. Sometimes the least interesting subjects and work as an entrepreneur bring the most value. Well-managed financials are one such thing. Held within the broad “financials” umbrella is now sales taxes. While the answer to the questions, “should I collect” used to be grey. Everything is fairly black and white now. And the subject is never going away. Episode Highlights: Don't geek out on Sales Taxes. Outsource it. See SALT experts below. If you have Nexus it means you have an obligation to potentially register and collect sales taxes or income taxes in a given state. Physical Nexus is where you are, where your business is, where you are storing inventory or where Amazon is storing it. Economic Nexus is the change with the Supreme Court decision. The states could define other ways to define Nexus. For instance either $100,000 in sales or 200 transaction in the last 12 months – and you could be required to collect sales taxes on those revenues that occured within their state…regardless of Physical Nexus. Economic Nexus takes effect immediately for the 24 states that already have them on the books. (Links below will lead to finding the 24 states) Notice and Reporting are other ways to determine Nexus. It's really confusing! You MUST register to collect sales taxes. If you collect and do not remit, it is CRIMINAL. Hire an expert to register to collect sales taxes. There are 45 states that require it. Only register where you have to if you are a small seller. But if you are doing 10-20 million in revenue, “suck it up” and register everywhere. SALT experts can handle almost everything for you. See notes and links below. SALT is an acronym for Sales and Local Tax Experts Use www.WhereStock.com to determine where Amazon is holding your inventory. Seel link below. Taxjar is a good option if you wish to take on managing this yourself. Scott & his outsourced accounting team at Catching Clouds use Taxify (but recommend both options) The Supreme Court Decision may not increase a buyer's liability in an asset sale. Transcription: Joe: So Mark Jason got an e-mail this week and he had a question and it was “What makes Quiet Light different?” And Jason gave it an interesting answer and I want your feedback on it. It says “Well the formal answer is that we're all entrepreneurs but that's not really it. The difference is that Mark … you Mark Daoust is one of the best human beings on earth and that permeates everything we do. As a result, he attracts good people that are always doing good work with the best interest of others even if it's painful for the broker we ignore our own incentive to do what's right.” Did you pay him to say that? Mark: Yeah … well, I'm not going to say exactly how much but he got paid for that. I think it's a little over the top. I mean really. Joe: But he didn't write that down. He said it to someone and someone wrote it down and shared it with me. And I … look I shared this to put you on the spot. You look by the way very much like an internet entrepreneur today. You've got a t-shirt with some ducks on it, a little duck, duck going on there. Mark: Duck, duck, gray duck. I'm from Minnesota and I [inaudible 00:01:53.2] I'm going to put this out there, it's a more sophisticated game. All you parents out there stop this duck, duck, goose crap. It's all duck, duck, gray duck; that's what we're doing here. Joe: Don't know if we have time to go into what the heck you're talking about with duck, duck, gray duck. Well just … I thought you were going into hockey or something like that. I wanted to touch on one more thing you know Jason talks about that and you and the environment that you've created here and the caliber of entrepreneurs and advisors that you brought on. I listened to a podcast last night with Chuck Mullets and for those that are the buyers in the audience today, if you have not listened to the 27 tools for due diligence I think it was, listen to it. Because some of the tools in there were just amazing and I've been doing this for a long time and I haven't heard of any of them. I have to take my hat off to Chuck and give him some compliments for the job that he did there. I was really really impressed. He's a … I'll say it, he's a lot smarter than I thought he was. Mark: Ah, you know the bar was pretty low, to begin with. Joe: But I want to just raise myself up a little bit and show you something. Mark: What's that? Joe: I have on- Mark: Oh you have on Chuck's shirt that he made for you. Joe: I have my Quiet Light logo shirt on. So there you go. Mark: While I'm wearing ducks. Joe: Oh I didn't shade you there. Okay, listen this podcast is about something that's really important. It's about the Supreme Court decision to change the way that sales taxes are to be collected. Let's not get into details, let me just tell you that we had Scott Scharf on again. We specifically talked about the problem and the solution. What does this mean to e-commerce entrepreneurs and how do you solve it? I can tell you right now when you get three quarters of the way through the solution is … if you are up for it just like you outsource your fulfillment to a 3PL you can outsource your sales tax collection and distribution and management. And if it were me that would be my recommendation but it's absolutely there and you don't have to deal with all that little detail and there's a lot of it. Mark: Yeah and I like to say a word to people that share a person holiday with me, and when I read and hear about some of these red tape sort of restrictions that are coming down, I have a tendency to plug my years and go la-la-la-la I don't want to hear it. Joe: Right. Mark: I like the days of the free open web when it was just easy to do things. But the fact of the matter remains this is the direction we're going. Joe: Right. Mark: Restrictions, regulations are going to come into play more and more frequently and these aren't necessarily bad things we just needed to understand how to navigate them. And so an episode like this is timely, I'm glad that you got Scott on the line to do this episode because this is the [inaudible 00:04:34.0] time the episode given that this decision just came down a few weeks ago. Joe: Yeah some of the things that we talk about here on the Quiet Light Podcast are painful as entrepreneurs. Particularly those that don't love this detail, they love the excitement of driving revenue and the marketing aspect of it. These painful things when you pay attention to them will make your business more valuable if and when you ever decide to sell. So again listen to the whole thing. Get through it, he talks about it in detail point by point. But I try to keep him on track so it's not … he doesn't geek out too much. Scott loves this stuff. Mark: Scott? Never. Joe: He calls it geeking out himself. So we try to get on track to … okay how do … how does a guy like me, how does a guy like Mark, like an entrepreneur listening, how do they overcome this giant massive ball of red tape? And really, I think the answer is, outsource it. And we're going to give all of the ability to do that down there in the show notes. Mark: Sounds great. Joe: Let's go to it. Joe: Hey folks it's Joe from Quiet Light Brokerage and today I've got Scott Scharf on the line with me from Catching Clouds. And we're going to talk about the Supreme Court decision that's come down regards to sales taxes, define what the problem is, and then give you a solution to it in the second half of the podcast. Scott welcome … welcome back actually right? Scott: Yeah it's great to be back. Joe: All right so you know we don't do fancy introductions. Tell these folks who you are and what you do at Catching Clouds so they understand what level of expert you are here. Scott: Yeah at Catching Clouds we're e-commerce accountants who are really experts in the accounting e-commerce businesses and of course sales tax management; which is why we can talk about this topic. We've been doing this for the last seven years and we love solving problems for e-commerce, sellers, anybody that we interact with it. And this Quill decision is definitely one of those things. Joe: Quill decision, that it that's the name of it? Q-U-I-L-L. Scott: Well, yeah so Quill was a decision from what 26 years ago that the Supreme Court overturned their own finding that really delimited what states could do to go collect sales tax from small businesses that are selling across state lines. Joe: Good. Okay, so they overturned it. So, folks, you heard Scott say that they're e-commerce accountants and I just want to reiterate … and you know my little soapbox here. E-commerce accounting, accounting, good financials, clean documentations, it's one of the four pillars to get maximum value for your business. So if you're using anything other than Xero or QuickBooks seriously consider talking to Scott if you want to get maximum value for your business. Because Excel spreadsheets for a 20 million dollar company or if you're doing a half a million in revenue doesn't matter, you're going to lose value in the sale of your business if and when some day you decide to sell. So there's my little pitch, definitely- Scott: [inaudible 00:07:24.7] Joe: these services. Okay so if I understand this correctly this is no longer physical nexus which I think everybody that's listening knows the definition of it; what it means. Is economic nexus, can you tell us what the heck that means for these folks? Scott: Yeah so actually physical nexus still applies so it's not that they got rid of physical nexus it's just not the only consideration deciding if you have [inaudible 00:07:52.0] of fancy. Joe: So let's say what physical nexus is anyway then, go ahead. Scott: Okay. Well, physical nexus … well, first nexus is if you cross a threshold and you have nexus based on some parameters means you have an obligation to potentially register and collect sales tax or income tax or other things in a given state. So if you don't have nexus you don't have to do these things. Okay, that's the first part. So there are different types of nexus, the first one is physical. It's been around for quite a while. It's where you are, your business is, your business is founded, you have employees, you have property. Okay for an e-commerce business, it's wherever you're storing your inventory. If it's at a 3PL on either coast you have a nexus where you're storing your inventory. If you're an Amazon FBA seller, when you send inventory to three or five warehouses they'll move it to up to 26 states that's your inventory and it creates nexus. There are a few other ones out there but from a physical perspective … I've been around for a while, there's like affiliates and other things. But the main thing it's where you are and your property is. Joe: Physical nexus, okay. And now we've got economic nexus, what is that? Scott: So economic nexus what states have determined and the brakes were taken off with the Supreme Court decision that they could define other ways to determine nexus to basically either require your business to do reporting and other function or register and collect sales tax in those states. So what they've done is said hey if you're doing over typically in the standard is based on the Supreme Court decision $100,000 in sales or actually more importantly 200 transactions either in the last calendar year or in the prior 12 months and that would mean that they're expecting you if you're a larger business to register and collect sales tax from there … of any consumers buying products you're shipping to into that state. Joe: How many transactions do you say? It was 200? Scott: 200. Joe: So if it's a $20 sale it's only what 1,000? Scott: $1,000. So $100,000 people see the $100,000 and think that oh God there's no way I didn't know you'd do $100,000 in any states last year, but it's totally based on your average. So if you take your average sale price and multiply it times 200, if you've done more than that revenue in any states that have these laws you're over that threshold. Joe: Okay so economic nexus passed by the Supreme Court, when does it take effect is it immediate or is there-? Scott: It's immediate for the roughly 23, 24 states that already had these laws on the books. And the only thing that was holding them back were these court cases that were just … was decided a week and a half ago. Joe: Okay so there's 24 states, not all 45 that collects sales taxes but that is 24 of them. And for folks listening, we will add a list of those 24 states but there'll be a lot of resources in the show notes that we'll give you that through their software as well. Scott: Well and it's not just economic nexus, you have to remember there's now notice in reporting states that aren't doing economic nexuses but have set thresholds for doing notice and reporting. They're basically two different new ways of determining nexus and they're both in effect now and there are other states that have them starting later this year and more. So it's multiple ways of nexus that might impact your business. Joe: Okay so I'm just going to say a few years ago I did a presentation at Rhodium Weekend all about e-commerce selling and part of it was sales tax collection accounting. So I wanted to say to Yana if you're listening I was right. She came after me after that now that's never going to happen. It's right. So really just don't even worry about the 24 states I think physical nexus, economic … basically get prepared to collect and remit sales taxes everywhere and use a special service that can allow you to do that. First though … and we'll get to that but first do you have to register to collect sales taxes? Scott: Yes. You have to if you are not registered you don't have a license and a number from the state, it's criminal to collect sales tax and not remit it and not have a license. It's also criminal to collect sales … have a license to collect sales tax and not give it to those state. Those two things have additional penalties and they'll come after the business owner's criminally. So you need to have a license before you start collecting sales tax and then once you start collecting sales tax you have to give it back to the state either monthly, quarterly or annually; whatever they say. Joe: Okay just to clarify, you used the word criminally three times. That's a little scary. Scott: Well it's … but unfortunately both Amazon and Shopify and these other sites, I mean literally there's a button in Shopify that you can click that says collect sales tax in all states. And it's easy to start collecting sales tax in the 45 states that have sales tax. So technically it's very easy to hit these buttons and not realize and you just want to be careful. And in difference between criminal is there's additional by jail. Everything else related to sales tax is expense and cost which is more likely to happen but maybe not as painful but can be pretty painful based on penalties and interest and other things. Joe: Right. Okay, so first and foremost let's just define and answer this simple basic question that some folks have been asking, does this mean … and I know the answer to this thus do you, does this mean quote unquote I have to start collecting sales taxes? The answer is yes. The answer is you should have been collecting them before, you had to before. Correctly? Scott: Well correct, if you have physical nexus that goes back in time. Okay, most of these economic nexus laws are new. And the way they're currently written is if you pass the threshold then the expectation is you register and start collecting sales tax going forward. So there's going to be nuances and changes but in general, if you exceed most of these thresholds for economic nexus or notice in reporting basically the expectation is you go out, you register now, and you start collecting forward. And there's no … depending on the state but for most states, there's no real risk of you owing money or have not done whatever in the past, you can go forward. But when you have physical nexus because of Amazon FBA or a 3PL then you need to consider if you register and collect going forward where you still have a risk of any previous outstanding liability which I know within a sale you're very aware of to make sure you know both the seller and the buyer are aware of any business liabilities or do you go back in time and pay anything that you didn't collect in the past; which isn't fun. Collecting sales tax or paying in sales tax you didn't collect from the consumer on each individual sale. Joe: Yeah because that's directly coming out of your profits now instead of collecting and just passing it through. Scott: Yup. Joe: Okay, so let's jump to making this easy for people that are listening. The bottom line is that they need to start collecting sales taxes and remitting them. Obviously, get registered to collect sales taxes. There're software out there that does this right? Because you're talking about you need to do this, you need to do that, and for me as a former physical products e-commerce seller, my eyes would roll into the back of my head, I would [inaudible 00:15:15.0] more and I'd never wake up again. Can't … Can I just pay somebody to do this for me and if yes what are the options and how much would it cost me annually or monthly? Scott: Well the first part, so you don't pull out your own hair, is there are multiple services out there that will help you with the registrations and register you in multiple states because it will drive you crazy. Every state is a little bit different. On average I'll pay about $100 per registration plus $20 to $50 in registration fee for some states, that's the first piece. So if you've decided to register in two, five, ten, whatever number of states you need to get registered first and I suggest … it'll just drive you crazy, is would be to get registered and there are a number of services out there that can do that for you. Joe: Okay and we'll put those in the show notes but why Scott only five or ten whatever you decide to get registered? And why wouldn't you register for every state that requires you to collect sales taxes? I guess maybe because you never sell any … somebody in the state of- Scott: So one it's just that overhead in the cost of doing business. So the first thing there are 45 states that have a sales tax and we are all heading sometime … I would have said three to five plus years that we're going to collect sales tax on every e-commerce sale, it's now probably two to four years or two to three years. It's going to happen a lot faster but there is a cost even on the low cost tool or outsourcing it … and I'll talk about some of those numbers in a minute, but you really only at this point want to register for sales tax where you have to. You shouldn't have to if … now if you're already a 20 or 30 million dollars e-commerce business just suck it up and go to all 45. Joe: Right. Scott: Anybody else below there, you're paying more money for compliance and tools and registrations. And in some of these states when you register for sales tax nexus you are in some ways volunteering to pay income tax. Potentially depending on the state and the situation; minimum franchise tax like in California which is $800 a year, and then additional fees, and not only the sales tax cost but paying a CPA to file and deal with franchise tax returns and income tax returns. So you want to as a small business or even a medium sized business minimize that overhead and only do this in the states you need to but you definitely want to start the big states where the population are. California, Florida, Texas, and those other bigger ones is the basics to get that going but you would want an easier way in. So figure it out for the first batch that you're doing and then do another batch and another batch. So you just can't stop your whole business to do sales tax and you just have to balance those things out. But at the same time, you don't want to show this huge [inaudible 00:17:52.3] selling and talking to Quiet Light. This huge compliance overhead and its overkill and it's going impact your own profitability and the money you're taking out of the business. So just want to find a balanced approach as you get there. Joe: How do you determine that? Is there a tool or process inside of Shopify or if you're an Amazon Seller that tells you that you know what sales you have by state? Scott: Yeah so there are two … for sales price there's a couple of ways to do it. So the first if you're an Amazon FBA seller there's a great tool called wherestock.com you pay him $30 and they'll log in … we'll get you the link, and they'll connect your Amazon site and they'll … it'll take them about a day and they'll give you a report showing you all the warehouses where you have inventory and when it started. How far back in time if you had inventory in the Michigan warehouse and if you go through that list and you don't see North Carolina or some states because of the type of your products it'll tell you, you might have had or five of these main states that you've never had inventory in and you don't have nexus there; which is great news. The next piece is really a matter of downloading all of your orders out of Shopify for the previous 12 months or the last year and then just pivoting the data or doing a total if you know how in Excel to show you your sales; both the number of sales in each state and the total dollar volume in each state. So you want to know your own numbers and any that you're over $100,000 in sales or unfortunately $10,000 in Washington State, Pennsylvania, and Oklahoma starting on Sunday I think. I think it just started Sunday. I think it was July first and it's happened right before it. Those are $10,000 in sales which is really low, everybody else is 100,000. So that'll … you'll go through those states and add up the ones that you have, look at the ones that you have the most amount of sales and income in and start with those. You want to know your own numbers and work through your own list. The other option is and I can provide a link to our tax calculator that we have in there … bunch of other people putting them out there that basically take your average sale amount enter it and it will total all those things up. But those are the two things; one, all of your income across all of your sales and then this Amazon wherestock report to let you know what's going on in FBA and that'll be in your information and then you just build a list and you work your way through your own priorities on how many you want to do; all at once or a few at a time. Joe: Okay so just to dumb it down a little bit. If you're doing 20, 30 million dollars just suck it up and do all 45 states. But if you're doing maybe just a million dollars in revenue, which is fantastic, do this report because you don't want to have to register in 23 states that instead of all 45 if you don't have to. Scott: Right. Joe: Someone else talked about it in this way. I mean that registration alone is going to cost you $100 to $150 so maybe $3,000 or so for 23 states that you don't have to register in. But if you're only doing $1,000, $2,000, $3,000 in revenue in the state of Montana it doesn't make any sense to register because a. you're not going to hit that threshold and b. realistically Scott is if someone in the state of Montana that works in- Scott: Montana is a bad example they're not on sales tax. Joe: Okay. Scott: So pick one of the few states that doesn't have one but Nevada or however else- Joe: How about Maine? Scott: So it's always a risk man, your question is so should you or not you … are you going to, can you fly under the radar- Joe: Yeah. Scott: Are they going to find you tomorrow and what's going on? So it's a risk management decision between the cost of compliance to your business versus the overhead and the cost of compliance and then the chance of being caught. There are four million Amazon sellers, there's between five and ten million businesses doing e-commerce these days. The states just had their handcuffs taken off and they're all going to go woohoo let's go get this money from out of state sellers. It's going to take them a while to ramp up and the chances of getting caught are very very low and they have been low and they're still very very low okay? But there isn't really no ambiguity now; there's no more well, maybe, or there's this court case, or whatever else. Joe: Right. Scott: So until now and whenever possibly the Congress does something or more lawsuits happen which take time this is the way things are today and you just have to make that decision of a risk management. So you never want to mess around with the IRS when it comes to payroll taxes or W-9s and contractors but for sales tax, you're going to have to balance those out. But the chance of being audited or being notified by the state is significantly higher than it's ever been in the past. Joe: Okay let's talk about the services that are out there; as in the software or services that you recommend for listeners just … you can do your download calculator that I'm going to provide in the show notes to determine the revenue by state and things of that nature to decide where they want to register. But what softwares or service programs do you recommend that folks check out that you have seen people use consistently that make this a whole lot easier? Scott: Yeah for people doing it themselves I would start with TaxJar it's by far the easiest to use most straightforward they … not only do they pull in all the data but they process the filing for sales tax and the payments in all 50 states. It's both the easiest and I, from what I've seen the lowest cost. They're a great tool. They have a great blog and a ton of information and support and it's the best way to do it yourself. The next one that's a little more powerful- Joe: Hold on a second. Scott: Yeah? Joe: In terms of a TaxJar thorough cost ballpark if someone's to put in all the states what would the overall cost be to … and do they do registration or just compliance? Scott: Okay so TaxJar does not do registrations. Joe: Okay. Scott: It's only the sales tax data aggregation to pull it all together from channels. Pull everything together. One note is if you have sales that are outside of Amazon, Shopify, or BigCommerce you have to import that data into TaxJar so that you have the complete thing. From all the sales so your filings are accurate. But in general, you're going to pay a monthly fee between I think 29 and up to 500 depending on the number of sales. Whether it's a thousand per month, 5,000 you know … in larger apps you're going to pay a base monthly fee no matter what; totally reasonable wherever your SaaS thing. And then you're going to pay a per-filing transaction. So if you're paying filing quarterly you're going to pay four times somewhere between $21 and $30 per filing. I don't have their pricing memorized. Joe: Sure. Scott: So if you're filing quarterly your costs are going to be lower. If you're filing annually it's going to be these monthly fees. So if you're a smaller seller the pricing can work out to be fairly affordable. They also have kind of an unlimited filing piece so if you get over a certain level … and I haven't done the math whether it's 20 states or 30 states but there's a certain point where you can pay it for kind of an unlimited plan and get to a max price. I think that's in the 4 to $6,000 for the year kind of total. But you can using that tool max that out and really lock that compliance cost in. Not counting your time making sure it's being done right. Importing data, dealing with notices, and just making … keeping an eye on it, it's not a set and forget process. Joe: So, on the high side it sounds like maybe $500 a month and your maxing out the services there, on the low side $29 a month so it all depends upon the size of the seller and how much you do. Okay, you are about to mention another- Scott: So the next one I would say is Taxify and that's what we use because we're doing hundreds and hundreds and hundreds of returns every month. It's a little more powerful in certain ways. They have integrations. It can handle a wider range of different businesses and there's … it's just they're really kind of head to head but for DIY most people go with TaxJar just because it's easier to use. TaxJar is more powerful if you have a more complex business. You might want to consider it or compare the two. Pricing is pretty similar between those two and- Joe: Those using TaxJar you said TaxJar, not Taxify. Scott: No we're using Taxify. We are using Taxify. Our accounting practice for us to file we use Taxify but I've known the TaxJar guys for six years now and they really do have a great solution. And any of our stuff we talk about those two is really the primary ones to consider third one is- Joe: Hold on I want to just interrupt again sorry. On this option, you're saying you already use it which means that with your accounting services for sellers of a certain size I assume, the collection, the management, and remittance of the sales taxes are part of your services as well. Scott: Correct. Joe: So I don't have to learn the software, I can hire you guys to do it. Scott: Correct. Joe: Okay. Scott: Well and I'll talk about some other … outsourcing is absolutely a viable, just like you outsource fulfillment to a 3PL or to Amazon FBA, sales tax is something you don't want to geek out on. I've done it for the last six years, it drives me crazy but I geek out on it. It just … it will distract you from listing products and buying products and designing new products and all the front end stuff to generate more income. That is absolutely something you want to … you might like that we look at here's how you do it yourself and you should understand anything you outsource but we do that. We offer the service but we also do notice management. The states send all kinds of notices. Even if you pay on time they'll send you a notice but if you don't respond to the notice they'll fine you for not responding to the notice. So there's more to it than just a set and forget tools. These tools are phenomenal as they deal with the complexity. Because every return is different, they have 50 different fields. They really aggregate the data and reduce the complexity of filing and paying which is awesome which is why we use automation. But then there's there is more to it. Joe: Okay, you're about to mention a third option for folks. Scott: Yeah third option is Avalara TrustFile. Now if you really are already a 20 or 30 … so Avalara has two products, they have a smaller and a lower end one which I don't think is as powerful as TaxJar or Taxify called TrustFile which you can use. They've cleaned up their pricing but it's still a little confusing but they're a viable tool. If you're already let's say five or really 10 million and you're doing more than just e-commerce you can consider Avalara AvaTax which is their higher end tool which will give you more control automated. If you have an accounting department it is definitely a tool you would consider. Quite a few CPA's and accountants use AvaTax as well to do more complex larger sales tax across multiple businesses. So those are really the key players, there are other smaller players out there but those are really the key players that are really focused and understand what's going on out there. Joe: Okay. I was listening to your better half Patti on your YouTube channel. She does a great job, by the way, great Q and A's there. I think she mentioned SALT experts and what they do and what not. Can you define what a SALT expert is and why someone listening might want to consult with one of them? Scott: Absolutely so a SALT; Sales And Local Tax expert, these are people that will do one, they can do a nexus study which tells you where you have nexus and it'll tell you whether your products are taxable or not, are they a food, are they a candy, do they have flour in them, are they clothing or … they can go look at all that. You can all interpret what the states say but these are people that do it all the time and will contact the state anonymously or you. The next thing they will do is what's called a voluntary disclosure agreement. If you owe a state tens of thousands of dollars of back tax and you want to come clean because you want to clear out your liability to sell your business and just make sure everything's done right, they'll go to the states anonymously and say I have this seller and they'll represent you. And in some cases get penalties, sometimes interests, and can potentially get a payment plan if you're cleaning up historical sales tax. And you want that person representing you a SALT expert, not your CPA. Unless they've done it multiple times in their own state you really want to talk to someone that's an expert. They're the people you want to call if you're audited to represent you and help you get through an audit. So those are the unique things we haven't talked about but the main thing is you can outsource your sales tax compliance to them. They will do the registrations and most in almost every case they will set things up. Most of them are very technical … in our case we at Catching Clouds we're really great at setting up Shopify to collect sales tax right and Amazon and eBay and in the more technical configurations. So we're very technical accountancy but they will help advise you on those things. They're all over it. They talk to me about the technical stuff, we're really good friends. It's a great community. I'll try to just solve this for sellers but then you can pay them a monthly fee or a per-state fee to take care of the data collection which you have to give them. The filing, the payments, notices, and kind of provide a complete service to outsource your sales tax. You can go to one person, pay them to take care all of your sales tax that's going on and advise you and then they're the ones that are keeping tabs on all the changes that happen every week; every month if that's the route you want to go. Which is a good way to go, in general, I'll give you a safe number, you really want to budget at least $50 per state per month. So you're looking at between $600 and $1,000 per year for this to not be an issue to worry about but you need to budget the right amount. Plus you want to have that same space because everyone's … Arizona's awful that they'll come back the second year and hit you with hundreds of dollars additional fees per county and everything else that you didn't count on and you can't get around and they'll deal with these random issues. Joe: Okay, great. I have a list of those from your website for those listening again in the show notes SALT experts will be available. Sounds like a one stop shopping place to go and just outsource all of this. Of course, some people that want to do the work themselves will have those calculators that you talked about there as well Scott and the links to the Taxify and TaxJar and Avalara. A couple of quick questions before we wrap this up, and maybe they're not quick questions but historically when someone sells their website … their physical e-commerce business in this case, the question of liability for past sales taxes that should have collected is really really gray, right? Scott: Yeah it is. Joe: And only once for those listening how do you solve that problem as a buyer? In most cases, most buyers don't worry about it. They really never have and these are people that are a lot smarter than you and I combined. They don't worry about it; pretty high level folks. In one case I had and think about this as a seller, I had someone that it was … the business sale total value was around $758,000 but they did the math and they said look in the 24 months that you've been around you should have collected X amount of sales taxes and let's call it $50,000 in that purchase price, in that $750,000 in the asset purchase agreement $50,000 was set aside in Escrow for potential sales tax liability purposes. And when the buyer went out to register to get their sales tax in the state of California, Texas, whatever if that state said yes, of course, we'll register you but we know that you owe us from this brand, you didn't own the company but from this brand you owe us $17,000 then that money would have come out of that 50,000. For the record, the buyer was able to register in all the states that he wanted to register and not a single state said okay great but you owe us money hence all 50,000 was released. How does this Supreme Court decision in economic nexus change that liability moving forward for the buyers of these businesses? Scott: I don't think it … I think it only increases the chance of the state contacting you and having to either answer the questions or go through an audit and all of these things are moot until you're actually audited. And you're at that point where you're dealing with an auditor and then then they ask for historical records and financials and everything else. Up until then, it's not really an issue. Unfortunately, though it's the decision of that state; are they going to hold the new business and whoever bought that Amazon seller account? They want to attach the liability to the Amazon account where it was being sold that you buy a continuing Amazon account which is what most people do or is it tied to the prior business and the business owner? The people selling you need to be concerned when you get that big chat to set some of this money aside if the states come after you historically because if you've spent it all, it really … in most cases tends to tie to the original business owner of the business. So I would say that there's … it's really if you're buying [inaudible 00:34:44.4] sale you have to be worried about it more than anything else. If it's an asset sale you're buying this asset, starting a new business, you've got to register fresh and move forward. There's a small risk but only after you've been audited. So it's just a couple of nuances there. Joe: So very very small risk and only after you're audited and the odds of being audited again, incredibly small. Scott: Correct. Joe: Okay. Let's talk about those out there that are wholesaling. They're buying products and wholesaling them, they don't have to collect these sales taxes is that correct? Scott: They don't but you have to follow the rules. The first is and what really does this finding really change is instead of collecting tax exemptions certificates; so for every B2B sale you have to get a tax exemption certificate and it's not just a picture of the sales tax license on the wall of someone's cell phone. You have to have something that has your business name on the top that other companies who you sold it to their tax licenses whether it's one state or multiple states. And it doesn't matter which states they are and an owner or a business manager an approved person of that company signing at the bottom saying they're responsible for the sales tax. Okay? Joe: Is it on a form? Is it an official form that they would fill out? Scott: There's a form per state and there's a great multi-state form. I can get you all of the links and if you want to have a process that you have them and keep in mind that they pretty … a lot of them expire every year. So you want to have all of these forms from your five or 10 or 50 or 500 B2B customers on file. And if you get audited by any given state then you need … then you have these to say hey I didn't have to collect sales tax but if you don't have the forms or they're expired or you're missing them that … then they can say all of that was taxable and you owe the sales tax. Even if the other company sold it and collected sales tax they can double dip and come after the information. What this decision really changed was two things related to B2B sellers. But first, as most people tend to collect tax exemption certificates for their own states where they're filing where they would expect their own business to get audited. Now that it's kind of every state can look at all this information, B2B sellers should start collecting tax exemption certificates on every sale. And if you have your top five or ten B2B customers, go back and get them from those ones and … to make sure you've got this filed. And then just set it aside in case you're audited. The second big impact of this for B2B sellers is now your B2B sales, number of transactions, and dollars volume count towards these economic nexus thresholds. It's all of your sales. It's your B2C sales and B2B. And even if you're 100% B2B and you have no tax you're still going to cross this threshold. And the states are still going to expect you to file a return. And it is going to cost you the same amount in compliance for you as it does. Even if you give them no money like every number is zero. Joe: That's really important for people that are doing both B2C and B2B. I was thinking just wholesale B2B but we have a lot of clients that they'll sell to let's say for instance chewy.com they're selling their own website but they wholesale to Chewy. They need to pay attention to this stuff as well. That's great information. Scott: It's all of their sales. It combines both and it's looking at all of your sales. Because what the really the states are doing and all these laws are meant to do is to get to the point where every transaction is taxed and they get a sales tax from every sale. That's what they're trying to do so pretty much most of the pain goes away if you register and collect in a state. You don't have to worry about different fines and fees or other unknowns, you can start defining your cost of compliance but that's really where we're going. Joe: Okay. Do you think this Supreme Court decision is good or bad? Overall for the individual states that are going to be applied this collect and collect is what I'm saying. Scott: I think it's bad for e-commerce sellers. I really do. The compliance costs just went from an unknown maybe I can avoid them to … and we're heading that way so I think it's bad for e-commerce sellers. Of course, it is great for the state bureaucracies that are going to go out and collect a bunch of money from other states until something else changes to back it down. I think it's going to increase the risk for smaller sellers and even mid-range sellers of having more unknown's that could impact your business. From us, as consumers, we're really getting to the point as a company … a country since we're so consumer based, it's all about products and services and things along those lines that we're really heading to the point where we're going to pay a sales tax on everything. It's just that the cost and the complexity and potential risks to all small businesses, not just e-commerce businesses, anybody that has a product and ships it out of state or does anything else now has to be concerned about that much more in running a business that you know e-commerce businesses are 24/7, running really fast, the rules are constantly changing, you just didn't need this additional in my opinion large overhead of cost of doing business to really impact them. Joe: Right at the end of the day hopefully it would be great for states and the roads and highways and schools in the state in which you live. But for now, it's a major complexity that you as an e-commerce owner have to deal with. Scott, as always you're fantastic. These details are great … for me personally they're overwhelming many times but that's the point of the show notes and simplifying it and really … perhaps hiring that SALT expert to do the vast majority of this work for those listening that choose to go that route. Scott before we depart any last thoughts or recommendations for people that are listening; both buyers and sellers? Scott: Yeah. Just take a deep breath plan out time once a month or a quarter to focus in on this. Add up your numbers, decide your risk tolerance, and then move on. And then don't worry about it for that month or quarter. And then when you decide to do it, think about what it is you're doing and make a decision and move on. You don't have to stop all your business or sales or everything else. Just take a practical approach. This is one more thing that has to be on your regular process; like checking your insurance or other things that you're validating. And just keep moving; keep selling and growing. Balance the risk and then just move on. Joe: That's great thanks, Scott. As always appreciate it look forward to seeing you at the next event and hopefully lots of folks will reach out to you here. And be at peace of mind here with what you've shared. Thanks so much, Scott. Scott: Well, thank you. Links: Catching Clouds eCommerce Accounting Patti's Q&A about Sales Taxes and the new SCOTUS Ruling Catching Clouds Academy Fox News Supreme Court sales tax ruling: The winners and losers MSNBC Supreme Court Rules States Can Require Shoppers To Pay Online Sales Tax Internet Sales Tax | What Online Retailers Need to Know Sales Tax Nexus Threshold Calculator Sales Tax Permitting with SalesPermitted.com Get your FBA stock locations summarized and delivered to your inbox. Sales and Local Tax (SALT) Experts – Outsource Everything Cathie Stanton and Lauren Stinson, Cherry Bekaert ► http://cherrybekaertsalestax.com/ Michael Fleming ► www.salestaxandmore.com ► https://www.salestaxandmore.com/chart… Diane Yetter ► www.salestaxinstitute.com ► https://www.salestaxinstitute.com/res… SaaS Sales Tax Apps: TaxJar ► https://www.taxjar.com/ Taxify ► https://taxify.co/ Avalara ► https://www.avalara.com/us/en/index.html

Kristen: Hello and welcome to Cerius Business Today. This is Kristen McAlister and I’m joined today with Interim HR Executive Scott Coolidge. Scott, thank you for joining us today. Scott: You bet, happy to be here. Kristen: Fantastic. Scott looking at from your perspective of what companies are most challenged with and the improvements that they can make, even if it’s just the little things, what are 3 pieces of advice you would give a CEO? Scott: Well you know I have to say this Kristen, I mean having them associated with, and this won’t be a surprise to any CEO, having been associated with the world of HR, big companies, small companies – it’s all around leadership. You know, who you select to put into leadership roles really at all levels of the organization. I don’t care if they’re supervisors, mid-level managers, directors, or executives. So often the default position is to take the person who’s your best technician, best technically who has grown up through the organization and, you know, selected them into these leadership roles. And often they’re simply not well-suited for management or leadership roles. That’s not to say they can’t be developed into that, but often times it’s a situation where they’re just not effective leaders and building out the selection process in order to identify and put people into leadership roles at all levels, I would say is the most critical thing that any CEO and management team could do. So that’s number 1, and I’ve seen that over and over and over again. Number 2 I would say that it’s around the, I’m going to call it the performance management framework right, and what I mean by that is really from two perspectives. What are you focused on in terms of overall business performance, what are the metrics? And how does that translate into the performance management process that you used for employees in order to get people to focus on the right things and have them working that optimal levels in order to achieve their personal objectives and those of the organization and building alignment between business objectives and people objectives. And to me that goes right back to the leadership issue because the most significant issue, I don’t care what kind of a performance management framework you have, if you don’t have managers who are capable of providing feedback on a regular basis. Look we all know business particularly in this environment changes almost every day and therefore the performance that you’re expecting from people at all levels is going to change constantly. You have to have people in place who are effective at providing feedback, both positive and negative, and getting people to change direction and encouraging them and having the right mechanisms in place to reward them. And that’s the third part of it. The third thing is taking a look at your reward and recognition programs. So many businesses, big and small, particularly small ones that are trying to grow to that next level. Taking a look at how you pay people: base compensation, bonus compensation, and equally important I would argue are recognition problems that you have in place because everyone knows that people want to be recognized and paid for doing a really solid job. And so having the programs and practices in place that allow your effective leaders to pay and recognize employees is absolutely critical. So those are probably the top 3. Although as you touched on just a minute ago, the other thing is communication and I can’t tell you how often I’ll walk into situations where I would just say employee communications are just not that effective. They aren’t clear, they aren’t consistent and they aren’t regular enough. So oftentimes I’ll find myself working with a CEO or a leadership team or a HR person to kind of clarify and effectively execute a solid communications stretch. Does that make sense? Kristen: Absolutely. I’m sure that anyone listening is nodding their head and saying yes I completely understand I’ve been through this. Well thank you so much Scott. I appreciate your time and sharing your time and expertise and experiences with us today, and joining us. For those listening, feel free to join us for our next episode at Cerius Business Today and have a great day.

Kristen: Hello and welcome to Cerius Business Today. This is Kristen McAlister and I’m joined today with Interim HR Executive Scott Coolidge. Scott, thank you for joining us today. Scott: You bet, happy to be here. Kristen: Fantastic. One of the questions we get most often from CEO’s and business owners is how is it that someone of this caliber is sitting around waiting to help me with my company. They don’t quite understand the makeup of interim executives and how they’re available and when they jump in and out of companies. If you don’t mind giving us a little bit of your background and how is it that you ended up becoming an interim executive and why? Scott: Oh great question Kristen. It’s pretty simple from my vantage point. I’ve had a 35-plus year career, almost exclusively in Human Resources. About half of that I was with large consulting firms, Towers Perrin and Hey Management Consultants, and the other half was in corporate roles in HR and various capacities. The latest of which was the head of Human Resources at Freddie Mac. And I got to a point in my career where I wanted to shift and change priorities in terms of life and career and so I left Freddie Mac and launched a career that basically allows me a lot more flexibility to manage my priorities, and what I look for and what I’ve found so exciting about interim opportunities is I look for interesting business situations, I look for client situations where they have significant human resources issues and where I can add some value, and so far I’ve found that these interim roles really fit that bill very nicely. Kristen: It’s a good thing that you shifted to that. I know you’ve helped a lot of companies. Looking at the type of companies that you step in and lend you years of experience to, human capital is often the most important part and most overwhelming part of the organization. What are some of the common situations that you get brought into, especially looking at a small to mid-size business? Scott: That’s another great question Kristen, and what I’ve seen so far is that typically even though my background has been with Fortune 500 types of companies, as I’ve stepped into these interim roles, it tends to be small to medium-sized businesses. Usually they’ll have a human resources person there, but that person tends to be more administrative than executional with respect to the programs that they already have in place. And typically what I have found is that the organization is in a situation where they’re trying to grow or have grown, and the number and complexity of human resources issues has grown dramatically. And what they’re looking for is somebody who’s been there and done that before, and then exposed to situations that their current staff just simply hasn’t been associated with. So they’re looking for an advisor to help them think about the situations they find themselves in, retention of staff, engagement of staff. They might have some pro-dramatic issues around leadership development or performance management or change management. And so they’re looking for somebody to tap who’s been there, done that and can give them some advice around what to do, when to do it, where to invest their time, and what the implications are of doing that to their business operations, and frankly to their bottom line. And that’s what’s been so interesting for me. Kristen: As a business owner, CEO it’s hard to know when you need to bring in that external help. Often you don’t do it until, not that it’s too late, but it’s past the point when you should have or when it would’ve been most helpful and productive. What are some of the symptoms I should be looking for as a business owner in my organization to raise my head and say “wait we really need some outside assistance here.” Scott: Well that is typically what I’ve found to be the situation. Quite honestly you’re exactly right. Hindsight being 20/20, I think a number of CEO’s that I’ve worked with or leadership team members wished they would have done it a bit earlier. And you asked about symptoms, typically it’s a spike in turnover; that it is certainly one element. The second element is that they’re just not getting the performance that they’re looking for. They’re not growing as fast, they recognize that part of the problem is leadership issue and they know that they need to upgrade their talent but they’re just not quite sure how to go about it and what to do in that regard. The other symptom that often presents itself is that they’re having trouble recruiting and retaining the talent that they need in order to get to the next level. Again, they’ll bring some people in, they think they’re moving in the right direction but then the new people that join turn over fairly quickly, and they’re trying to figure out why that’s the case and what they need to do to resolve that. The other thing that happens quite often is that they’re running into some financial difficulties. As a matter of fact, one recent situation that we were involved with simply was their revenue had become, had plateaued and their expenses were rising and they needed to figure out what to do. So in that particular situation we had to come in and take a look at their total award, expense, compensation, recognition programs, that kind of thing. Figure out what needed to be changed in order to help them control expense while at the same time of being able to retain and engage the people that they have on board. Kristen: Thank you so much Scott. I appreciate your time and sharing your expertise and experiences with us today and joining us. For those listening, feel free to join us in our next episode Cerius Business Today and have a great day.

Andrew: This is Safety on Tap. I’m your host, Andrew Barrett, and since you’re listening in, you must be a leader wanting to grow yourself and drastically improve health and safety along the way. Welcome to you. You’re in the right place. If this is your first time listening in, thanks for joining us, and well done for trying something different to improve. And welcome back, of course, all of you excellent regular listeners. We’re super pumped to be collaborating on this podcast series with Safeopedia. Safeopedia’s mission is to organize the world’s environmental health and safety information to make access free and easy for everyone. Now, the team over at Safeopedia wanted to get to know you better, and for you to get to know Safeopedia better. So, this podcast series brings you some intimate conversations with the founders of Safeopedia and members of the Content Advisory Board. Safeopedia set up their Content Advisory Board to share observations and ideas on which topics and trends in the environmental health and safety industry will have the greatest impact for their audience. Their commitment to quality and to giving you relevant content is just top-notch. Listen in to each episode in this series, as we get to know the individuals involved, what makes them tick, and get some great advice, insightful stories, and motivation to help you grow. Here we go. Scott Cuthbert, co-founder of Safeopedia.com, welcome to the Safety on Tap podcast. Scott: Thank you very much, Andrew. A pleasure to be here. Andrew: This is the beginning of a bit of an experiment for both of us, where Safety on tap, with its support for leaders who want to grow themselves and drastically improve health and safety, and Safeopedia, aiming to be the place to go globally for health and safety and environmental information, come together. I’m pretty excited, I should say, on here, for our listeners, to be collaborating with you guys. Thank you very much, to begin with. Scott: Oh, our pleasure. We’re equally excited to be working with you and just understand the importance of leadership in environmental health and safety. Andrew: You have the genesis story. You have the very beginning, because this hatched, I’m sure, in your head, sitting in the bathtub or trudging through the snow or—one day, I’m sure, it popped into your head. So tell us a little bit about you and your story and how Safeopedia came to life. Scott: Sure. My background really started in the construction industry. Not swinging a hammer, so much, out on the job site—I started in the finance departments with the international general contractor. Because I was the guy that knew how to reboot a printer or run the backups for the AS400 at the time, I ended up getting pulled more and more into the IT side of things, and ended up leaving the grind of working for a general contractor and providing some consulting services back to the industry through project controls consulting and also system selection and implementation, and then decided to branch out on my own with a software company that was specifically designed to deal with the field data capture on these large-scale industrial projects. I guess it was really through that experience that I got pulled more and more into the safety side of the business. They needed to pull data from our system to do safety statistics, hours of exposure by plant area, by trade, by demographics of the workforce. I just sat in more and more safety meetings and really took a personal interest in it and volunteered to sit on several committees and just sit around the table more as an observer and as a safety expert and to hear what the guys out on the field were talking about, what their biggest hurdles were, and understand where their strengths were, versus where they were falling down, implementing the best practices out in the field. Andrew: How do you bridge the gap, then, between that active interest that you had in those still project-based roles on the consulting and how Safeopedia came to be? Scott: Well, it is one of those “light bulb goes on” stories, because I had— Andrew: It wasn’t in the bathtub? Scott: It wasn’t in the bathtub, but I was going to say it was one of those bathtub moments, but it was actually in my car. I was driving back from a safety committee meeting, and I had sat around the table with half a dozen—a dozen folks that had just a tremendous amount of experience. They were trying to do the best job that they could possibly do. They were trying to share best practices and understand what was working on this job site, versus that job site, and they were really struggling to collaborate with each other effectively. They were sending huge Word documents back and forth, and really, it wasn’t my idea, as much as it was the group’s idea, saying, “If there was just one place we could go where we had these best practices, where we had these tips and tricks, where we could share ideas, it would save us so much time and energy.” And so, I was driving back from the meeting, and it’s quite a ways away from where our office was, and I had this just pop into my head: “Safeopedia.” And as soon as that idea popped into my head, I just couldn’t wait to get back to the office. I drove safely, minded the speed limits, of course, but I drove straight back to the office and looked up the domain name, and it was available, and I purchased it right there and then and began the incorporation process to set it up as a legitimate company. I guess the rest is history from there. Andrew: You really just started with what was a relatively tiny bit of market research, passion for the area, and a spur-of-the-moment domain purchase. And after that, you really just worked it out from there. Scott: Yes, that’s absolutely correct. After securing the domain and starting the trademark and incorporation process, I did spend another year or two vetting the idea with industry folks to the best of my ability, throwing out ideas of “What should it be? Should we try to replicate LinkedIn? Should we make it more social, like Facebook? Or should we just be producing educational content to start with?” It was over the next 12 to 24 months where, again, the industry that had helped give me the idea helped me vet my ideas and strategies on how we should get it off the ground and where we should start. It wasn’t an overnight idea that popped into existence. It did certainly take some time to cultivate it and find the right folks to work with and align ourselves so that we could be successful out of the gate. Andrew: I think that really speaks to me, in the paradox of—on the one hand, you had an idea, and you just jumped on it. You kick-started it by that drive in the car and then purchasing that domain name. That, in itself, was very insightful, in that sometimes we spend too much time stewing on things, and we just don’t get them started. But then, on the other hand, the paradox is that you did spend a fair bit of time and effort in order to validate the idea, to make sure it worked. I think sometimes, often, there’s a learning out of that for us, where we spend too much time analyzing and thinking and planning, and maybe not enough time just getting stuff started. We might find that it is a big job—and that’s OK—but we might find sometimes that the job’s not as big as we think, and we’ll actually solve problems and help people a whole lot quicker if we just get on with it. I think that’s a great story to tell and a lesson for us to learn from. Safeopedia has been growing and growing, in terms of the numbers of people that it serves, visiting the website, attending webinars, consuming the content, contributing new content. We have our collaboration, obviously, which is moving into a new space with podcasts and potentially pushing the boundaries a little bit more. You’ve come up with this concept, which we described in the introduction, of this Content Advisory Board. From your point of view, with you leading the charge, why have a Content Advisory Board? Scott: Great question And both Jamie and I are the faces of Safeopedia. We have a tremendous amount of background and experience within these industries. But we’re not going to sit here and pretend that we know everything, that we’re experts in all the different areas. It was really important for us to pull a group together that could certainly augment our strategy and our ideas and provide some really strong expertise to the direction that we wanted to go in. As listeners will learn, we have a very diverse group of professionals across primarily North America, one in UK, and certainly, with your involvement, Andrew, some Australian representation, as well. Andrew: From Down Under. Scott: From Down Under. And they’re helping us to understand what the hot topics or the key topics are within their industries and their geographies, and help us look ahead a little bit to what will be the most valuable information we can produce for our users in those areas. Andrew: Makes plenty of sense to me. In the time that you have been grinding and driving and working to slowly grow Safeopedia, what’s the biggest lesson that you’ve learned in that process? What’s been your light bulb moment or a big height? What’s been the biggest lesson? Scott: The light bulb moment? I think it’s understanding the new economy—the Google economy, if you will—and how people are looking for information. It’s great. I think there’s a lot of really passionate people out there that are publishing great content. But unless you know how to get found, unless you know how to connect with others and have a voice in this ocean of data that we now live in, it’s all in vain. I think the most important lesson we’ve learned is, again, how to get your data out there, how to get your information out there, but make sure that you get heard, as well. I think that’s key. Andrew: Great lesson. Do you have a superpower? Scott: I don’t know if I have a superpower. Certainly, I was an early adopter on LinkedIn, and was connecting with people and keeping in touch with people. I think that, if anything, that’s been my superpower over the years. I can’t remember who wrote the book— Andrew: The Six Degrees of Separation? Scott: No, the connectors and the influencers and the mavens and Malcolm Gladwell, I think, The Tipping Point. Definitely, I’m a connector, and I’ve always been a connector. I think that’s key in this new digital economy: having an online presence and having some knowledge of how that all works. Andrew: You know what? You reached all the way across the globe in order to tap me on the shoulder. That brings us here today, so that’s a real testament to that. When we first started talking about getting together and working out how we can make a bigger dent in the world together than we might do separately—we’ll be honest with the listeners—I said to you, “I’m not sure that we’re a match. The content on Safeopedia is really good to support people in a technical sense, but it does have a focus on compliance and some of the detailed stuff, and there’s a different leaning towards stuff like hazards and IT systems and checklists and things like that.” Now, all of those things are important. They’re the foundational things that help us drive our programs in health and safety in our work. But I think, sometimes, we tend to ignore the gray and the messy and the people part, effectively. That’s very gray and messy. Here at Safety on Tap, we fuel leaders to grow themselves and drastically improve health and safety along the way, which often means challenging the status quo and pushing boundaries out of what I call “the conventional.” What direction do you personally want to see Safeopedia take in 2017? Scott: I definitely want to echo your comments. You can’t dismiss the fact that a lot of the compliance components are what has helped us build our audience of over 100,000 members. But in the long run—and this was echoed, as well, by the Content Advisory Board—there is a bit of a leadership vacuum within environmental health and safety. It’s been, to date, a very technically-focused discipline, and we really need to broaden that, to teach people and attract visionaries and leaders to the industry, so that we can not just make sure that companies are compliant, but that companies are embracing culture, health and safety, and they’re being leaders, not just followers, in the industry. Long-winded way of answering your question, but I’d really like to see us provide more content and more connections for people who want to take a leadership role, perhaps who don’t know how to get started or want to connect with leaders who have done it before and can share their experiences and best practices. That’s definitely an area that we want to focus on for 2017. Andrew: That’s the very reason why we’re talking today, because we’re all about supporting leaders to grow. I’m sure the listeners will tell I’m pretty excited about collaborating with you guys. Is there anything that you want to ask the listeners for, in terms of how they can contribute to improving Safeopedia, putting in what you get out, so to speak? Scott: Yes, absolutely. One of our biggest compliments—if you want to call it that—from last year, was when one of our team members was on a conference in Puerto Rico, thousands of miles from here, and was talking about different businesses that he was involved in, and mentioned Safeopedia, and the fellow that he was speaking to—his eyes just lit up, and he said, “Hey, I use Safeopedia all the time. I can’t believe you’re one of the guys involved in Safeopedia! We go there regularly to look at articles and share content with our management team and our guys on the field.” That’s one of the greatest compliments we can get. We see, through Google Analytics, that over 50,000 people are coming to our site every month, but we really only get an opportunity to interact with a few of them, who maybe have some suggestions for us, who have some criticisms for us, who think that we need to focus on different areas or expand an article or a term that we have posted on the site. I really encourage people to—and we listen. I’m sure there are sites out there where people send emails and you never hear back, but we want to hear from everybody. We only know what we know. If you know something we don’t, by all means, share with us. Our terms and articles—our content is there as a starting point to help improve industry and help people out in the field, so any ideas or suggestions or criticisms that you guys have for us, please, by all means, share it. We’d love to hear it. Andrew: I’ll just add to that, it’s not just about you, then, getting more of what you want out of Safeopedia, or providing feedback to our podcast, as well. It’s equally the same, where the feedback you provide will help hundreds, if not thousands, of people. Scott: That’s right. Andrew: That, I think, is the fantastic thing about this global connected economy that we live in. Scott: Absolutely, if you have a question, or you have a problem with an article, then chances are hundreds, perhaps thousands, of others do as well. It was a little while ago now, but we had posted an article, and somebody replied, and the tone of it was a little bit angry. He had written a big dissertation about what was wrong with the article and the approach that we were taking. We reached out. We contacted him and said, “Hey, this is fantastic. This criticism is absolutely invaluable. Can we take this and turn it into an opposing article that talks about the same subject from a different perspective? Because if you’re having that problem—no matter how many people like or share or retweet that original article, if you’re having problems with it, then somebody else is, too.” He agreed, and we posted his follow-up article as a Part 2, and it was hugely successful and really, really well-received. We’re here to make the site better. We don’t take anything personally, so by all means, get involved and let’s make it the best site we can make it. Andrew: That’s a fantastic example. We might link to those two articles, I think, in the Safeopedia article for this podcast interview, and also on the Safety on Tap website show notes, as well, so the listeners can have a look at those and compare and contrast for themselves. Before you go, Scott, what’s your best piece of advice for people who want to have a more effective impact in their environment, health, and safety practice? Scott: I would say, "be tenacious." It’s a very, very important industry. It’s an important part of every organization. But it still continues to be minimized. Some companies are looking at it as a cost item, and some people think that it negatively impacts productivity, but we have to keep providing them with—keep educating them and keep moving them forward, slowly if necessary. But be tenacious. Don’t give up. It’s so important. It’s about our planet. It’s about our coworkers. It’s about ourselves and making sure everybody gets to go home safe to their families at the end of the day. Don’t lose hope. Be tenacious. If you need to, reach out, and we’ll provide whatever support we can. Andrew: Fantastic advice, and I’m looking forward to continuing to make a difference in the world with you and Jamie and the rest of the guys at Safeopedia. Scott Cuthbert, thanks for joining us on the Safety on Tap podcast for Safeopedia. Scott: Thanks, Andrew. My pleasure. Andrew: Thanks to Scott for today’s conversation. Next episode, we have Scott’s partner in crime—hang on, that didn’t come out right—anyway, Jamie Young from Safeopedia. Given the commitment to improvement that we have here at Safety on Tap and at Safeopedia, let us know what you think about this episode. Give us a comment. The best way is to head over to iTunes or Stitcher to leave us a review and to comment, and we’ll be eternally grateful. If you haven’t already, check out even more episodes and great content over at Safeopedia.com and SafetyonTap.com. Until next time, I think you take positive, effective, and rewarding action to grow yourself and drastically improve health and safety along the way. See you!

Episode 175: The Drama Classroom: There is a seat for everyone at the table Scott Giessler is a teacher and a playwright. He went into theatre teaching without any training and not only is he still doing it, he has a strong philosophy for how to do it. He's well aware that what you need as a teacher isn't necessarily what your students need. And for Scott, he's adamant that there is a seat for everyone at the table in the theatre classroom. Enjoy this conversation from the trenches of the drama classroom and the importance of what goes on there. Show Notes Theatrefolk.com Finishing Sentences Episode Transcript Welcome to the Drama Teacher Podcast brought to you by Theatrefolk – the Drama teacher resource company. I am Lindsay Price. Hello! I hope you're well. Thanks for listening! This is Episode 175 and you can find any links to this episode in the show notes which are at Theatrefolk.com/episode175. Okay. Today is a great conversation. It's about stepping into a Drama classroom, what the Drama classroom means, and what is the purpose of being a Drama teacher. Frankly, I think that's about as much introduction as this episode needs. It's lovely. I think it's just lovely. I'll give you something to listen for, though. Scott, our guest – who is also a teacher and a Theatrefolk playwright – does not believe in the phrase “the show must go on.” Why, you ask? Let's get started and find out. LINDSAY: All right, I am talking to Scott Giessler. Hello, Scott! SCOTT: Hi there! How are you? LINDSAY: Excellent! And how are you? SCOTT: I am doing terrific. Thank you for having me. LINDSAY: Yeah! So, tell everyone where in the world you are. SCOTT: Okay. Well, I am currently located in a lovely little hamlet here in New Hampshire called Tuftonboro which, most people, of course, will never have heard that but, if you know where Lake Winnipesaukee is in New Hampshire, that's where you'd fine me. LINDSAY: Well, of course, we all know where that is, Scott. We know where you are! SCOTT: Okay! LINDSAY: And so, Scott is not only a teacher – and, actually, it looks like you wear a ton of hats from teaching theatre tech to performance to filmmaking and playwriting. Scott has written a fantastic little piece – not a little piece – a piece, a great piece called “Finishing Sentences” which we have. We're going to talk about it but we're going to start with you, Scott. Tell everybody how long you have been a theatre teacher. SCOTT: Okay. I've been teaching for about sixteen years. Well, it's been exactly sixteen. I started my career and stayed in my career at Kingswood Regional High School and I teach a theatre class there as well as coach the afterschool theatre program there. It's been a great run. LINDSAY: What was it that connected you to teaching? Why teaching theatre? SCOTT: Well, oddly enough, if you kind of connect it up at the play, I worked as a camp counselor when I was younger and it was really – and this is even now strange to say – it was the only I had ever really connected with for the first – I don't know – 26 years of my life. But, you know, I was also an avid theatre student in high school, did a little bit more in college. I took a break from that because I was mostly paying attention to television and radio broadcast. But, when I got out of the working world, you know, I really felt like something was missing. And then, I sort of harkened back to the days of being a camp counselor. I went back, worked at that camp – that I actually still work at now – for a summer. And then, as fate would have it, the local high school in town was looking for a theatre teacher. You know, I let them know – I was an avid theatre person; I was an actor all through high school; I was a writer in college – that sort of thing. But I had not had the formal training, but they needed somebody and they brought me in. That first year – as I'm sure everybody will kn...

Why Comments Suck - Episode 26 Scott and Randy tear into the history and problems of comments on "news" sites, and identify the most overlooked problem. They then talk about current and future solutions (well, other than just giving up an shutting down.) Show Notes Links Popular Science -"Why We're Shutting Off Our Comments" -Sept 23, 2013 Shadow of the future: "The shadow of the future promotes cooperation in a repeated prisoner's dilemma for children" Original paper: Bargaining, Enforcement, and International Cooperation by James D. Fearon How others are addressing comment quality Shutting down onsite comments: a comprehensive list of all news organisations How the Huffington Post handles 70+ million comments a year We discussed the history of HuffPo comments with Justin Isaf in Jan 2015 Tablet Magazine: A Jewish magazine is testing an unusual solution for toxic internet comments After deciding to charge for comments, Tablet's conversation moves to Facebook Improvements along the roads! Civil Comments: Reforming the Trollosphere: Creating Conversation in the Comments Section The Coral Project: "We need to change how people are submitting their content and we need to make sure that we're giving them good reasons to behave well." The Coral Project unveils its first product to make comments better New York Times: Quora: How does the NYT determine which articles have comments? Model & Enforce the context New York Times: A Community Manager Walks Into A Bar:My AMA with Bassey Etim, Community Desk Editor at The New York Times The Engaging News Project: Journalist Involvement in Comment Sections Comments Are Terrible (But They Don't Have To Be) - SXSW PanelPicker submission for The Coral Project and the Engaging News Project. Additional links Hey reporters: An alternative to #DontReadtheComments: Jump in Case Study: Yahoo! Answers Community Content Moderation from Building Web Repuation Systems The Washington Post is using Slack to create a reader community focused on the gender pay gap Transcript Scott: Hi listeners, in this episode we ask why do comments on sites suck so much, and what can we do about it? Randy: They're sucking because they lack context, and we'll tell you what that means. Scott: Now, this isn't a new problem, and many are trying to address it. We'll share their approaches ... Randy: ... And give our recommendations based on our personal experiences. Welcome to the Social Media Clarity podcast, 15 minutes of concentrated analysis and advice about social media and platform and product design. Scott: I'm Scott Moore. Randy: I'm Randy Farmer. Scott: We're discussing the problem with comment sections. You may have heard that a number of news sites have been shutting down comment sections in the last couple of years, or generally complaining about the poor quality of comments they receive on their articles, and we think that there's a real simple problem here, and it's the model in that people are presented with just a blank text box with no context about what to say or how to behave. Randy: Part of that is because we don't know who the audience is. It's not clear from a plain text box who you have in mind when you're writing a comment, and what you're actually writing about. Are you writing to the publisher of the article? The reader? The commenter? The author? It's not at all clear, and I don't think the publishers were even sure. I think they assumed that the post, the content it self, would be a sufficient context for commenting, if they thought about context at all. One way I like to put it is, there's no "to:", expressed or implied, when a visitor creates their own context. Is it to the author? The publisher? The topic? Or a reply to another commenter? There is one context that I like to refer to all the time, which is when you post a public content, it's actually to God, Google and everyone. Scott: This creates an attractive nuisance. The vicious circle goes like this. Publishers are not creating a clear context to their commenters, and without that clear context, people don't have enough context to care about each other, so they don't really focus on developing relationships. They tend to focus on being an audience to the rest of the world, and they have their own axes to grind or they ignore the content of the article, and post anyway, and these low-quality comments tend to wind up drawing more bad comments than good comments, and the circle starts all over again. Randy: In contrast, there are communities with blank text boxes that have strong context and therefore have less difficulty with comment quality, because they're constructed around either topical content, or group goals, and they tend to be smaller and more intimate. Scott: These tighter contexts provide what's known as "the shadow of the future," and that is, that's the probability of future interaction. If you expect to interact with other people in the future, you treat them differently. If you don't expect to interact with somebody in the future, then your cooperation is going to be lesser than. It's like comparing a small town diner where you expect to see the same people over and over, you're going to be nice to them, verses a bus station where everyone's passing through, and bus stations aren't really known for their friendliness. Randy: Now it's time to discuss how others are trying to address poor quality comments on their sites. Scott: For too long, folks have been treating the symptoms. There's a long list of sites that have closed their comments absolutely, completely, but there's a cost to that. You lose your SEO from comments. You lose potential ad revenue from people participating on the page where you're selling ads. Some sites exert editorial control over which content can have comments enabled, and for how long. For example, the Philadelphia Enquirer, the Guardian, Fox News, all pick and choose which pieces of content are going to allow comments at all. This can increase your editorial costs and you can also suffer from a dip in your SEO and ad revenue from people commenting. Randy: Some, like Ars Technica and Boing Boing have put comments behind a click. This is an editorial speed bump. It's complex and it's all about context, and bad comments can cost you significant revenue. When I worked at Yahoo, Yahoo Health had comments related to articles about drugs and treatments, and when the drug companies were advertising, they were paying the highest ad rates on the internet, and they didn't like the detracting and often medically dangerous comments that were showing up on the same page as the article about their treatment or drug. They moved the comments off of that page in order to recover that revenue. The critical context turns out to be the advertisers for many of these applications, not the users. Scott: Then we can't forget the ever popular increasing your moderation. Whether moderation happens before or after publication, these systems wind up being expensive, mostly because they don't scale well, and definitely don't respond quickly. Randy: Some are pushing moderation tasks to Facebook comments, and for me, this is completely baffling, because now you have confused the context one more time, because now, instead of just the other people reading and the other people commenting, you now have brought in the entire user's social graph. Anyway, who gets notified when you post on a site using remote Facebook comments? Who are you talking to? Are you writing for your Facebook friends or are you writing for the author of an article? Scott: We've come across a really novel approach. Make your commenters pay before they can view or comment. Tablet magazine is a magazine for a non-profit organization, and they actually charge for commenting. They have a daily rate of 2 dollars, or a monthly rate of 18 dollars, or a yearly rate of 180 dollars, and you might think, "Who would pay to comment?" Randy: Nobody. Scott: Well the answer is no one. They killed the comments on their site. All of their commenting happens on their Facebook page where they repost the articles anyway. According to them, this is exactly what they wanted. They are very happy with it exactly happening this way. If somebody wants to comment from the wild web, then pay for it, and they'll be happy to moderate your comment. That works out well for them, but it might not work out well for you if you're relying on things like advertising revenue and SEO. Randy: This has been a problem for quite a while. It's well known. The grousing about it is everywhere, and we now join that group, but there have been several efforts to standardize and platformize. One of them is Civil Comments. Civil comments is a platform launched by Aja Bogdanoff who is involved with Ted Talks Communities, and Krista Morgan. Aja told Tech Crunch in October, "We need to change how people are submitting their content. We need to make sure that we're giving them good reasons to behave well," so when you write your comment, in order to post it, you actually have to review 2 other comments on the site for quality and civility. This gives you a chance to edit your comment before submitting. Then comments may go live or be held for review based on whoever is using the platform. This approach is a definite improvement, and it starts to set the context, but it's only after the user has invested in writing a potentially context-less comment. We think this approach might be able to be improved by changing the order, getting people to read comments from others before composing a new one. Scott: Another tool for publishers to facilitate curation in moderation comes out of the Coral Project. They have one tool called Trust. It's actually part of 3 planned modules, Trust, Ask and Talk. The Trust module is largely so that journalists can find new sources, reveal potential troublemakers and identify useful contributions within all the contributions that are going on. It's not out yet. Some people are experimenting with it, and it still doesn't address what we're talking about, which is the whole idea of context. There's nothing to provide context. It's really looking at things after all of these context-less comments come out. Randy: So far it looks like it's very early and there might be a little bit of reinventing the wheel, but we'll see how it turns out, and I'm certain they'll uncover some useful lessons I hope they share with us all. Scott: The New York Times has really changed how they're operating with comments. They started by following the popular but misguided, generic goal of "building community", but that lacks context, and that's the whole problem we're talking about. Since then, they have transformed into a better "letters to the editor." As Bassey Etim, the New York Times community editor, says, "Our goal is to have every New York Times comment thread offer tangible, added value to each article for our readership." Randy: That's a goal. Scott: That's a goal, and it limits the scope. With that goal clearly stated internally and externally, that allows them to select which stories have comments and how long the comments are going to be open on a particular story, and when those comments come in, they're human reviewed. They prioritize what comments are reviewed based on whether it's on the home page, whether it's getting a lot of attention, and when they review their comments, they hold off on publishing every comment just because it passes reviews. They actually hold on to a couple of comments until there is a spectrum of positions that support or add to the article. Randy: This does a great job of modeling. Scott: Exactly. It's done by your paid staff and it teaches regulars what's going to wind up getting published, and then also they curate and they highlight. They do this either by having picks of particular comments that really add to the context of the rest of the article, or they do modeling by highlighting the New York Times Picks community by doing profiles of folks. Randy: I really like that they preserve the context, as I was talking about earlier. They put the comments behind a click, which is the same kind of speed bump as I described before, but it's displayed as a pullout sidebar that allows the article and comments to scroll independently, so it keeps them connected, but it doesn't detract from either thing. It's great. Scott: You're right, but ultimately with all of this, there's still just an empty text box at the top of the comments, which makes it way too easy to skip a lot of this really great context modeling that they're doing, so good effort, but we're still calling them out on the one piece that we're saying is, we're missing context. Randy: My advice to them would be instead of just putting the FAQ link there, if you've never posted before, actually making you read the shorthand version of their FAQ, which is pretty short. After the break, our recommendations. Randy: There are plenty of problems to go around and lots of people are trying different things, but we're going to tell you what we think. We think the most important thing is to decide the context. Ask yourself the questions that are important. Why do you want comments at all? What do you want from the commenters? This is a behavioral question. What benefits do the commenters get? How do we want them to behave? Gather those questions clearly in your minds, and then talk about how you might be gathering this information. Once you know these things, you want to communicate them clearly. You want to be transparent about your answers to those questions. If it's about ads, is that why you want comments? What are you going to do to trade off to get that revenue? You want to communicate everything about that. Don't just present a white box. It has no context. Make it really, really obvious by putting context everywhere. Make knowing the context a speed bump. Some examples include making context a click through, as we talked about a couple different ways already. Put the text box after or to the side of other comments, and we added that to the side of after we saw the New York Times. That model is pretty cool. Reward and require reading other comments. I worked on a project called Discourse.org, which is a message board system, and before you could contribute, you actually had to read through threads. Scott: Part of communicating your context clearly is making sure that you've got the right technical bits for communicating the context. One of the challenges I found with working with traditional UX and UI approaches is that they tend to focus on what happens with one user behind the keyboard and not what's happening with hundreds of thousands of users in a social context, all taking that same action, and this plays out in terms of whether you want to have a community talking to each other or whether you want to have an audience talking to the publisher. If you want a community, set the context. Put the reply box on the bottom. Put the replies in chronological order. If you're looking at having the audience speak to the publisher, having the text box on top or having comments in reverse chronological order lends itself to talking to the article as opposed to other people. Labels can help. Consider changing the word "comment" to something else. Discuss, reply, contribute, and consider changing the label of your "like" buttons to "respect." There's something that backs this up. The Engaging News Project did a little research on simply changing "like" buttons to the word "respect," and they found that respondents who saw the respect button clicked on more comments in the comment section, and from an angle of participation, respondents seeing the "respect" button clicked on more comments from other political perspectives in comparison to either using "like" or even "recommend." Randy: That sounds great. Scott: Once you've set and communicated the context, it's important to shape it and reinforce it. Be willing to decide if comments are even needed on individual stories, much like the New York Times does, and this is a decision that can be based on your staffing capability, if the author is willing to or even able to respond in the comment section, if the topic is polarizing or if the top has recently had comments enabled. Also, set expectations for how you would like people to behave. Bassey Etim at the New York Times recommends you consistently tell your readers that they're part of a quality club, and this is the kind of quality that we're looking for, and this goes right back to our questions, "what benefit do the commenters get?" And, "how do we want them to behave?" Randy: You also want to model commenting behavior. Calling back to the New York Times policy of holding comment publication until a balance is available is a way to teach people what gets published. Make sure your content authors and staff are participating to your best standards. Scott: Don't forget, we're talking about people here, so directly engage with your commenters. Work with the folks who are writing the content, creating the content, to engage in the comments on their posts. This increases the quality of user contributions, and again, there's a little bit of experimentation from the Engaging News Project that found that when a reporter interacted in a comment section, the chances of an uncivil comment declined by 15 percent, and the commenters were 15 percent more likely to provide evidence over opinion when the reporters participated. Make sure your moderation staff is there supporting authors, so they can focus on meaningful engagement with the people commenting. Randy: It's really popular to talk about recognition, reward and celebration, and in appropriate measure, these are good practices. Just don't substitute recognition and reward for diligent moderation. Here are some recommendations that don't require special technology, just people. Dedicate a portion of your moderation strategy to finding good content. Reward the kind of comment quality you want. Reply to the person directly, and thank them or congratulate them for a particular quality. Of course, highlight and promote the best contributions, and do a retrospective of model commenters. Sometimes the technology you have just won't cut it, and you need to consider an alternative approach. One approach I've used with several clients, and has been implemented in the Telegent platform is the ability for users to be the frontline in identifying the worst content, and allowing them to flag it and then automatically hiding it, perhaps for later review, but I must warn you, we're calling this out as an alternative approach because if you do it wrong you can actually make things worse. If you do it right, the response time between a bad post it disappearing can drop to seconds, fundamentally improving the apparent quality of your content, and discouraging bad contributions from vandals. Scott: Sometimes you have to go back to your very first question, and ask yourself why you want comments, and realize that free text comments are not the right choice for your community or for feedback, and if you really want a community, consider a purpose-built community platform such as Discourse.org or even Slack. Now, the Washington Post is trying out an experiment where they have a small Slack community of Washington Post readers, mainly women, who are focusing initially on issues of pay gap, but it's turning into other discussions, which are becoming rich sources for the Washington Post to generate more stories or greater insight on this particular topic, or consider personal stories from your audience or your community that can give insight into a topic without a lot of back and forth that can be the source of conflict, and also consider that text is not your only tool. Submissions of images or videos, particularly if they are coming from members who are close to a particular topic or close to a particular location, where they can supplement or add flavor to the original topic are also ripe sources for content. That can give a sense of community without resorting to a blank text box. Randy: It was a challenge putting together this episode because it's difficult that there are so many different variants of text boxes for user feedback out there. There are so many techniques that people are using in an attempt to fashion quality out of that content. For example, we didn't talk much about moderation techniques here today. That's what people talk about a lot and we hope to have an episode about that in the very near future. If you have ideas for specific things we should discuss in this area, please give us feedback. You can reach us on Facebook at Social Media Clarity and on Twitter as @SMClarity. Scott: Thank you so much for listening. Randy: Yeah, see you next time. For links, transcripts and more episodes, go to SocialMediaClarity.net. Thanks for listening.

Quantifying Empathy - Episode 23 Twitter Hearts and Facebook Reactions TL;DR - You KNOW Marc, Randy, and Scott couldn't let Twitter messing with Favorites and Facebook Reactions go without some spirited discussion. Facebook is testing emoji reactions - this is the ‘dislike button' by Owen Williams @ TNW Hearts on Twitter on the Twitter Blog. RECLAIMING CONVERSATION : The Power of Talk in a Digital Age is Sherry Terkle's new book which influenced some of Randy's thinking. Kaliya Hamlin (@identitywoman) was mentioned during the episode. Transcript Intro: Welcome to the Social Media Clarity Podcast. Fifteen minutes of concentrated analysis and advice about social media in platform and product design. Randy: I'm Randy Farmer Scott: I'm Scott Moore. Marc: I'm Marc Smith. Randy: Really, Twitter, hearts? Scott: Really, Facebook? Reactions. Randy: Oh, my gosh, guys. We have a lot to talk about since the last time we've had a session. The big social guys have gone nuts for emoticons as a way to express yourself with a single click. Scott: We already had ways of expressing ourselves, they were just very generic. Now we're trying to be specific about it. Randy: Twitter changes from stars to hearts ... Scott: ... and Favorites to Likes. Randy: Yeah, and Favorites to Likes. [as if] they're exactly the same. If you think they're the same, people out there, just think what if they changed it back to a pile of crap. Is that the same as a heart, or a star? When I think of Twitter's problems, I don't think this is one of the ones that was very high on the list. Scott: No, but it's one of the ones that helps them get attention. It helps generate notifications. They practically said, 'we're not getting enough people using the Favorite, so now we're going to change it to something that more people will use.' That generates notifications, and that brings people back to the app. Randy: So, something that was meaningful, now means less. Marc: Is it the case that you are more likely to love something than like it? Randy: Well, that's not the test on the table in this case. It's Like versus Favorite. Marc: Yeah, but the like generates this heart, which suggests love, and it used to be a star. So, we're moving from star to heart. Admittedly, we're going from Favorite to Like, but is there really that much more like than favorite in the world? Scott: I think that the context was really different. From what I gauged from the reactions, other than people just hating change, was that Favorite de-noted a bookmark, and then expanded from there. A lot of people were using it as, "I'm saving this link for later", or, "I'm saving this Tweet for later". Some people were using it as, as you would for any signaling system, some people were using it as, "I like what you said". Now, they've actually tightened up the context while at the same time, loosen it, by saying, it's a like, which can mean anything. Anything that's positive. It's a positive mark on it. Randy: Right, and they retroactively marked every Favorite a Like. How many gillions of those they have, I don't know. At least one person I was talking to yesterday when I first saw this in practice, and was shocked by it, was Kaliya [Hamlin], otherwise known as Identity Woman, and she says, "Oh my God, now I've got to go fix all my Favorites on Twitter, because I don't love most of those things." Scott: Yeah. Some people were tweeting out "Liking your tweet is not consent." Randy: That's awesome. When we first thought of doing this episode, that hadn't even happened yet. That's just the freshest thing, that happened yesterday. Before that, Facebook was going to start testing the emoticon variants, or they call Reactions, as a response to the demand for dislikes. Marc: Right. So, we don't get Dislike, but we get Reactions. Randy: Well, and if you look at the reactions, the icons are ambiguous. I don't know if that's a feature or a bug. They do, in fact, include a dislike one, called Angry, it's angry face. It's like, what's this about? I think this is what we wanted to talk about, is we wanted to take some of these seemingly crazy, and capricious ideas, and talk about what it is maybe they're trying to do. We've been calling this, amongst the three of us - " Quantifying Empathy." So, we are going to have a conversation about that today. Marc: Right. It seems that what we're seeing is a feature that allows people to have a very light weight way to author some higher level of attention. I mean, after all, the system knows who "saw" each piece of content, and it even reports that for some pieces of content on some platforms. It'll say some number of people have been exposed to, or have seen the piece of content, but that's sort of the lowest level of content measurement. How many people might have seen it. Now with the Like, or the Love, or the Favorite, or the reaction, we're trying to get people to click, and just click, but to click from a field of choices to give us a higher resolution sense of, what did that click mean? The Like was too ambiguous. So, now we have angry, and happy, and sad. What are the other ones? Grumpy. Randy: You can make up as many as you want. Scott: Great. Randy: No, there's just a few. There's a Yay one supposedly. Scott: Yay. There's Wow, there's Sad, there's Angry ... Scott: ... and there's one other. Randy: So, when you use ambiguous faces, in the case of Facebook, it actually lacks all subtlety. Does it mean what the face expresses to you? Or, does it mean the words that are written underneath it? Scott: Yeah. Am I angry at you because of something you said? Or, am I angry about the same thing you're angry? Am I expressing actual empathy, or am I reacting against you? Marc: So, this is a great piece of ambiguity that the interface has yet to resolve. You pointed this out earlier, that people are splitting their reaction to what this story means _for the author_ of the story, and their reaction _to_ the story. So, there's this ambiguous reference that must be clarified, and these additional features do not clarify it. If anything they add more ambiguity. Randy: Interesting in Facebook, is you've always been able to use these exact same icons, you've always been able to add them to a message. You did it by posting a reply to post. You would then explain - so, you could put in a sad face, and say, "I feel sorry for you. If I can help you in any way, let me know." Right? So, you have this rich interaction that would be going on between humans. So, what do the humans actually want? What are good for humans? Probably saying more, not saying less. What really kind of drives it home for me, is when you *count* them. I say, when you click on an angry icon, there's object missing. There's a famous expression; "This sentence no verb". Right? Well, now with the reactions we have; "I'm angry with..." or "I'm mad at..." Marc: That's great. That's great. Randy: I'm sad at ... Right? In the same kind of construction, with that missing by pulling them out. Then you count them, and you say, "Lots of us are mad at..." We don't even know if those people are mixed and matched on what they're mad at. Scott: Right. A lot of people are mad, but we don't know if they're mad at, or mad with. Randy: Yeah, and I've got to tell you, that's going to drive people off. Just the mad icon alone is going to drive people away from posting, because they can't figure out, you know, if you have any social anxiety, any feedback, other than "we love you, it's okay" is going to be harmful. So, it surprised me that they said Dislike is too negative, we get that, and then put an angry face. In counting them they're already finding out in Spain and Ireland, where they're testing it, messages are coming back with a mixture of counted face types. Want to talk about no way to interpret data - What the heck does that mean? Facebook's excited, because they got a lot of clicks they probably wouldn't have got before. That they can use to route messages to your email box. Scott: Yeah, so the cynical side of me says - so one thing in developing, and choosing what they were going to choose as far as what icons to go for - they looked at all the one word, and sticker-only posts, and they just kind of aggregated all that together, and said, okay, these are the things that people most likely say in those replies, when they're posting an emoticon or sticker or something like that. So, they're just making it easier for them now to count and quantify that for other purposes. Either to send notifications, or more likely a lot of the brand pages, the blogs, and other folks out there who are into Facebook marketing, are saying this could be useful, because now you can get more detailed information about what your brand reaction is. So, it's just another thing that someone's going to measure in order to sub-divide targeted marketing. Randy: Yeah, but that ends up, it's true, and diluting. We all recall the experiments people have been doing just with Like and Share, if you think X: Like this thing. If you think Y: Share this thing. Right, because they're trying to manipulate these various counters. So, it occurred to me, they could have just put in a polling mechanism. So ... Scott: Twitter did put in a polling mechanism recently. Randy: Good. Scott: Yeah, Facebook used to have polls. A long, long time ago, Facebook used to have polls, and they took them out. Marc: So, this is an interesting point. If we're going to be critical of the reaction system, we ought to suggest an alternative: One alternative is to allow the poster to list the reactions that they are interested in having people choose from. So, a little bit of a hybrid between a poll, and these emotion icons. Maybe you could react to me with sympathy, empathy, or cash, or other. Scott: Well, you could even take the system that they have now, and say, which one of these would you like to focus on, or how many of these would you like people to, you know, is this a 'Wow - Yay' type of post? Do you want Wows and Yays, and you don't want Sads on your post, because that's not what you're talking about? They actually have something built in, this is really funny, in Facebook, they have the option for being able to say, "I'm feeling blessed." Or happy, or sad, or angry, and they have this list of about 25 of these things, and why can't I +1 somebody who is feeling a certain way already? Because now the context is, "I'm with you on this. " Marc: So, what's the ultimate goal here? We want users to click more, and ... Randy: ...let's be clear: Advertisers want users to click more. Marc: Right, right. I meant to say, what is the system designers ultimate goal here. They want users to click more. As system users though, as people who use these features, what is our goal? Randy: I got to say, I'm with Sherry Turkle on this, that anything that reduces human conversation, is probably truly reducing empathy. If people out there are interested, I'll put a link in the show notes to show Turkle's latest book and work. It talks specifically about the fact that we've been reducing ourselves to machine interactions with lighter and lighter interfaces to the point where we don't even know what empathy is anymore. We don't have to respond with any empathetic statement when all we have to do is click a sad icon. Scott: Yeah, and I really want to read Sherry's book, but I'm starting to think that there's a slight difference in that, and a little bit more optimistic in that, yes, using our smart phones, and what not, are pulling us away from face to face conversations, and I think we're having to figure out now that we're breaking that, what can we do, now that we're turning our faces towards devices, what can we do to actually build back in? What are the things that we're missing, and how do we rebuild that in our systems? How do we get folks to build up more empathy with people, and can we do that with systems? I think it's something that is important. These systems are light weight, and they're somewhat useful, but they lack deeper meaning, which is exactly what you're saying. Randy: Well, don't take the simple path. Don't just count clicks on dots, right? Design interfaces that help people solve problems. Scott: Right. Randy: People do this. Marc: What problem do people feel like they have? I mean, at the moment Facebook trained us to want to generate certain kind of responses. We want Likes, we want Comments, we want some kind of currency that proves we consumed other people's attention, and that they've granted us some kind of approval. Is that they only purpose that we could use this platform for, and is that the only purpose these reaction features are designed to support? Scott: Well, obviously not. I mean, that's not the only purpose. Facebook's purposes might be at cross purposes with those of us who want to actually build communities online, and help people develop deeper, meaningful relationships. That's why I think that these are light weight, but not very meaningful. They might suffice in those ambiguous situations, especially in a network like Facebook, where very often you are not close friends with the people who are on your Facebook network. So, sometimes commenting deeper on something could become awkward, because you just aren't that well connected, but you want to acknowledge. So, I think there's room for the social grooming that a Like, or any of these kind of reactions would provide, but I think that we should be thinking about, as designers, and as people who are fostering online communities, how to help people get to that deeper conversational engagement, that Sherry Turkle is point out, even though we are still on our devices. Randy: Right. So, I think I can summarize my thought on this, clearly, which is, any interface that allows a single click for me to add angry, without and object on it, decreases my chances of influencing the person, or the event, I was angry with, because there is no context provided. So, the one way we can improve using these tools is if I choose angry, I do actually have to say at what. Scott: Well, and as a designer, we could even prompt people that if you choose ... Randy: Exactly. Scott: ... that if you choose something it would give them the ability to provide the context, rather than the context-less emoticon. Randy: Yeah, so, agree and disagree are missing. We know from helpful/unhelpful movie reviews that two of those icons are going to be re purposed for that, because they already are. If they had helpful and unhelpful we know those would be mapped to agree and disagree, for controversial objects. So, is angry going to be the new disagree? Scott: Yeah, I think so. Marc: So, is this all because typing a few characters, a comment, a short message, is too burdensome, and is it too burdensome because of the time, or because we're doing it with one thumb, standing in a checkout line, and that's why we really need, at most, the two to three to four tap method for replying to complex situations. Rather than the forty- or fifty-tap necessary to actually type out a five- or eight-word sentence. Scott: I think that's a good point. I don't think that these systems are being designed with user convenience in mind to necessarily help us to communicate with each other better. I think that they are there to help us generate notifications, so that we come back to the application faster and more often. Randy: A single click on a face has striped almost all semantic meaning from the event. Scott: I think you have a point that this particular system is being set up, and this particular way, because mobile devices are being used for the quick in and out, you know, quick check. Users are using it that way, and Facebook and Twitter are adapting to that particular use in order to capture that behavior. That's what it is, it's a behavior capture system. They're getting somebody's attention, they want to get somebody to "engage," even though I don't think that's engagement. Then they're going to pull all that data together, and they're going to use it as either targeted advertising, or use it to generate more notifications to bring the original posters back to the application, where you deliver more ads. Marc: So, I would say it as this: Why not to like the new Like - I'm angry, you might be happy, but we might not be able to tell. Randy: That sounds like a great summary to me. Scott: Yeah. Yeah. Randy: Thanks everyone. I hope you're enjoying the new format. Go ahead and say thanks, guys. Marc: Right. Scott? Randy: Say thanks. Scott: Oh, that. I'm not. I'm like, now I'm lost. Marc: You're not thankful? I'm thankful. Thank you everyone. Scott: I'm Angry. Thanks. Randy: Okay, that's great. That's an ending. I'll take it. Scott: I don't know why. I'm just Angry. Marc: Well, I'm going to be Grumpy in a minute, so ... Randy: I might even keep a little of this. Marc: Bye-bye. Randy: All right. Outro: For links, transcripts, and more episodes, go to Social Media Clarity dot net. Thanks for listening.

David: What are the 3 pillars of local SEO? Why are real reviews important? What is rich media and why is that important as well? Those are just 3 of the questions that I intend to ask today's special guest, Scott Gallagher. Scott, welcome to DMR. Scott: Thanks David. David: Scott helps small businesses get qualified leads from the organic channels of the internet. He's co-founder of Local Marketing Source and founder of WON Marketing. Scott, you focus on local SEO, but you don't like to call it SEO, why is that? Scott: That's true. We do. The practice of SEO or search engine optimization essentially is just that it's trying to optimize content to satisfy the needs of search engines. At some point in time in my business career several years ago, I started to look at this and think about what the search engines are trying to accomplish. When I was back in school and spent all this money on getting my university degree I got in marketing, a specialty in marketing with a Bachelor of Commerce and ... David: Was that worth it? Scott: Well, as it is, that's arguable. There's definitely some aspects that I learned. The definition of marketing, David, and this is not word for word, but you can go to Google and get it from the AMA which is American Marketing Association and that's, creating content that has value with an audience and distributing that content to where the audience is going to reside. I took a step back and started to think about that, "Wait a minute ..." David, "... this is just creating content to a customer segment." It really is just marketing.