Episode 176: Mike Flynn

Episode 176: Mike Flynn

Chris: 00:00 – Jim Collins coined the phrase “who luck.” And Collins, the author of “Good to Great,” was talking about the people who serendipitously seem to just come into your life at the right time and shed light on a complicated subject or help you with a tough problem. I have amazing who luck and I’ve written about that a lot in the last few months. A few weeks ago though, my publisher, Scribe, introduced me to another author, Mike Flynn. And Mike recently published a book called “Master the Key: A Story to Free Your Potential, Find Meaning and Live Life on Purpose.” I picked the book up and loved it, and then I was a guest on Mike’s podcast where I found out that Mike is actually a CrossFitter and not only a CrossFitter. His coach is Greg Amundson. Greg was with me in Kenya on CrossFit for Hope and was with me at St Jude Children’s Hospital. Greg was the first guest on this podcast and Greg was one of the OG CrossFitters who used to appear in one of the very first videos about Fran, Michael and Murph and all of those. If you’ve been doing CrossFit for more than three years, you’ve heard of Greg and he is Mike Flynn’s coach. So I asked Mike to come on the podcast, talk to us about how to identify and master your key, about his book and also how CrossFit helps him because I want listeners to this podcast to benefit from Mike’s knowledge and experience and also to find people like Mike for their own gym. Enjoy.

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Chris: 01:54 – Hey guys, it’s Chris Cooper here. If you are headed to the CrossFit Games, I would like to buy you breakfast. So here’s what we’re doing. Together with Healthy Steps Nutrition, we have rented out the banquet facilities at the Sheraton across the road from the CrossFit Games and we’re taking about 250 people a day. You can come in and have breakfast with us. We’ll be talking a little bit about business, but the most important thing that always happens at these breakfasts, aside from the bacon and coffee, is the conversations. We have limited seating that’s gonna fill up, you can fill in the form in our show notes and make sure that you reserve yourself a spot. We’re going to do it at 7:30 a.m. on both Saturday and Sunday of the CrossFit Games. We will see you in Madison.

Chris: 02:33 – OK, Mike, welcome to Two-Brain Radio.

Mike: 02:33 – What is up, man? I’m super pumped to be here.

Chris: 02:38 – Yeah, it’s so great to have you here. Now in your new book you say that everybody is born with the key to success. What does that mean?

Mike: 02:47 – Yeah, so the world that we live in today is very much externally motivated, externally driven, externally oriented and people’s definitions of success or they’re constantly looking outside for the key. If I just follow this program, I will be successful, right? If I just do X, Y, or Z, I will be successful, if I, you know, fill in the blanks, right? But what the key actually represents in the book “Master the Key: A Story to Free Your Potential, Find Meaning and Live Life on Purpose” is our identity, OK. The key represents our identity. So if you believe that, if you believe that the key to success is mastering who you are, then the journey is not something that’s external. It’s something that’s internal. Something that’s within, something that you already possess. This idea isn’t something that’s new. This has been around, you know, this Stoics have talked about this, the Bible talks about this, thinkers have of all types talk about identity and answering four fundamental questions that we go through. Who am I? How do I show up in the world? What do I do when I get there? And who do I do it with? What’s my story? What are my gifts? What action do I take? And who do I take it with? And those are the four pieces of the key. And you know, we can go anywhere you want with this, but it’s a daily practice to master each piece, right? Your story, your narrative, your giftedness, how you perceive your gifts, how you express them in the world, how you take action, you know, how you take risk, how you view risk, and then who you’re going to spend your time with doing all of this stuff. And it’s a daily practice that only we can master. It’s an intentional pursuit that each individual has to take on their own initially.

Chris: 05:05 – OK, so everybody has one of these pieces already. You know, they know their own story. How do they figure out the second piece, which is what is their key? What’s their special purpose?

Mike: 05:18 – Well, I actually think that not enough people actually know what their story is. And that’s why there’s so many people that are confused about the idea of purpose. And let me just back into that a little bit. Just to kind of give you some data that will help you understand that most people don’t have a clue about who they are. So Gallup, the big research organization, recently released a study that revealed that 85% of employees are actively disengaged at work, OK? Actively disengaged is the key phrase right. They’re cognizant of the fact that they’re checked out. That’s costing businesses $7 trillion a year globally. Here in the U.S. the number is 70% of actively disengaged workers costing companies $500 billion. I want to stay in the U.S. for a second because also in the U.S. there’s 150 million give or take worker bees out there, right? 40% of that 150 million are pursuing a side hustle that they’re quote unquote “more passionate” about than their day job, right? So here’s the thing, there’s two really big problems here. Number one, people don’t know what the word passion means. So they don’t know what they’re really passionate about and they don’t know what they’re passionate about because they don’t know who they are. The word passion literally means the willingness to suffer for something.

Mike: 07:18 – So you can’t really truly follow your passion unless you know what you’re willing to suffer for and you can’t really know what you’re willing to suffer for until you know and have directed, taken control over the narration, of your story, specifically the hard things that have happened to you and your life. The adversity, the challenges, the failures. It’s easy to think about the successes. It’s easy to like, you know, kind of stay there. It’s much harder to go deep and to analyze and reflect upon the brokenness, the hurt, the disappointments and insert hope there. And look at how we can use the fruit of those challenges in the service of others.

Chris: 08:13 – How do people explore those challenges and like kind of sit back through their own narrative to discover or even just think about and break down those things?

Mike: 08:23 – So at the end of the day, and we talked about this when you were on my show, that we want to feel effective. We want to feel powerful. We want to feel good at what we do. We want to be efficacious, right? Dr. Albert Bandura calls it self-efficacy theory. We want to feel confident. And so when negative things happen, especially things that we’ve poured hearts into or things that we expected to turn out a different way and they don’t, what happens is we go through something called identity foreclosure. I’m fat. I’m not a good business person. I can’t do X. Right? All of a sudden, our I statements become associated with this victim mentality, as Victor Frankl talks about it, right? And so we end up telling ourselves that we can’t do hard things. And one of—and that statement actually prohibits us mentally and emotionally from going down internally to mine the gold within, because that’s a hard thing to do, right?

Mike: 09:46 – It’s a hard thing to be quiet, to quiet the mind. It’s a hard thing to reflect on the past and to ask yourself what parts of my story have I struggled to own and why? Right? It’s hard to do those things because it requires us to maybe go back and explore some painful things, right? But the thing that makes the human race, you know, a vastly more advanced species than any other species on the planet, is the fact that not only do we have the ability to forecast into the future, right, to vision, right, what we want to accomplish, to see our future selves, but we also have this tremendous power to bend back time and direct light onto the past, right? The challenge is that most people, when they’re reflecting, they do it passively. They’re not actually doing it as part of a practice. You know, they’re just, you know, thinking about the past and it stirs up these negative emotions and then they shove it in the back in the corner and they try to move on in their day. But they’re actually missing out on a great opportunity because when we intentionally reflect back into the areas in our lives that have been full of challenge or adversity or struggle, we have the ability to direct the light. We have the ability individually to control the energy that is being placed on that thing in the past and to carry it forward into the future. And our brain doesn’t know what time it is, right? It doesn’t. We have the ability to go back and do a little like inception. And change the narrative right there. And there are six caves, you know, are you familiar with Joseph Campbell?

Chris: 11:47 – Of course, yeah.

Mike: 11:48 – So he says, you know, the cave which we fear to is where the treasure lies. So using that concept, there’s basically, in my view, there’s six caves that we all need to enter. And to go back into the deepest, darkest part of that cave and seeking the treasure, right? And they are faith, they are family, they are fitness, they are friends, they are finances and they are fun. Those are the six caves. I formally refer to them as the six bridges of personal growth and well-being. But in the book I referred to them as the six caves. And those are—everybody has challenges, has had challenges in each one of those areas. And it’s up to us to go back into it, to draw out the treasurer there.

Chris: 12:51 – So maybe you can give us an example, Mike. Like how would you actively explore those caves instead of just like passively dwelling on them?

Mike: 12:59 – Yeah. Well, it’s all about questions, right? The questions that you ask. And so in, in my book, at the end of each part, there’s actually a reflection and a response section. And it’s full of questions that the reader gets to explore. So we’re talking about story right now. And so a great question, and there’s dozens of them, would be what false stories do I hold onto? How did I acquire them and why have I held onto them? So this is an opportunity for you to engage your brain in a certain rigorous exercise. And I’m going to connect exercise here in a second because this is not just a simple how-to exercise. This is not like one plus one equals two, right? This actually requires you to do hard work to answer these questions. What false stories do I hold on to? How did I acquire them? Why have I held onto them? That’s the reflection section. But there needs to be, whenever you reflect, there also needs to be a response, right? Instead of a reaction. So immediately following the reflection questions are respond questions. How will I respond to victory? How do I clear a path for the future? Why will owning my story benefit me? All of these types of questions, and these are exercises, right? And so that’s why you and I were riffing on CrossFit because I think that the fastest way to remind yourself that you are effective, that you are powerful is to do something that physically proves it to yourself because you are connecting your mind and your body in a physically challenging, arduous manner that if you don’t bring your attention, your awareness and your focus all together in one laser beam, then you could potentially do damage to your body. But by bringing your awareness, your attention and your energy, your mood all together, you’re reminding yourself that you have control of your body and your brain cause you’re telling your brain what to do in time and space, right? And then you get to go immediately after that, if you follow this kind of advice, you get to go maybe do these reflection questions right after an intense workout and your brain is just going to be firing, right? You’re going to be seeing things, hearing things, remembering things, recalling things, creating new things, right? Because you have all of these neuro pathways that are firing. And that’s why doing something like CrossFit, like cycling, is an incredibly powerful way to begin to remind yourself of your story and your inherent worth and that you are powerful in any area of these six caves. So I hope that kind of answers a little bit of—

Chris: 16:18 – Yeah. I think you kind of wet our whistle to hear more about CrossFit too. And we’re definitely going to come back to that. But you just mentioned worth and in your book you said that worth has to come before why, you know, in the business community right now, everybody has read it starts with why and everybody’s talking about knowing your why before you do anything else. You know, Mike, you made the great point that you have to establish worth first. What do you mean by that?

Mike: 16:46 – Yeah, so one of the very first lessons that the janitor teaches to Steve in the book is that before you can find your why, you have to remember that you are worthy of one to begin with. And that is so important because ultimately when people are talking about pursuing their why, or finding their why, why is just another word for passion, right? Find your passion. Right? And so like Simon is absolutely right. You know, you need to find your why. You need to understand why you’re doing things because people buy your why. And if you don’t understand the fact that—let me back up for a second. Cause when you decide what your why is, what you’re saying yes to is competition, disappointment, setbacks, frustration, the people you know, mismanaging your trust. You’re also saying yes to great opportunity, more success than you could possibly imagine. Right? But it doesn’t happen without great amounts of hard work and sacrifice, right? And so you have to be very clear on who you are and that you are worthy of those things, right, in order to say yes to them. If you say I found my why and you know the example that it’s much easier to deploy Simon Sinex work at the corporate level, right? Cause Apple breaks the status quo and we make beautiful things. And oh by the way, we just happen to make computers. You know, like it’s much easier to do that at the corporate level. It’s much more challenging to do that at the individual level. And so when you say the reason why it’s so important to remind yourself that you are worthy first is because that sets you up to endure the suffering and the sacrifice that’s going to be required when you truly do find your why. You’re worthy of it, you progress from saying I can’t do hard things to starting to ask yourself, can I do hard things to saying I’m worthy of doing hard things to what can I do with the hard things that I’ve experienced?

Chris: 19:24 – That is great, Mike. And you know what? I think that is especially critical or maybe it is just more apparent when somebody reaches the Tinker Phase of entrepreneurship because suddenly if you don’t have a great sense of self worth, that’s when these problems come into play. Like the impostor syndrome for example. But before somebody even gets to that stage, how can they know if they’re headed down the wrong pathway? You know, you mentioned 40% of people have some kind of side hustle. How do you know that you’re in the wrong career? You should be doing something else?

Mike: 20:00 – That is a really good question and I actually have been thinking about that quite a bit and it’s challenging. You know, the reason why it’s challenging for people to recognize when they’re on the wrong path is because people are selfish. And we have this problem in the entrepreneurial world right now where we actually have a pretty scarce mindset. We have a mindset where there’s not enough abundance for everybody to succeed. And so we find ourselves in our little silos, right? Where we’re not going to like play with people, we’re not really going to be fully invested in community and we’re trying to go someplace fast instead of going someplace far. And that old African proverb, if you want to go someplace fast, go alone. If you want to go someplace far, go together, right? And so community becomes so incredibly important. And the three characteristics of a great community, are first wild curiosity, second collaboration, and third correction, right? And so what happens is when you are in a community that’s wildly curious about Chris’s success, that’s eager to collaborate with Chris, and Chris is eager and wildly curious as well. You spend a lot of time together creating and doing hard things, shared suffering, shared passion, shared this, that, right? And so when one of your community members sees Chris veering off path, or going in a direction that is totally counter to all of the experience that they’ve had, they can remind you, they can say, “Hey Chris, what’s at stake for you? Why does this matter? We’ve been spending all of this time doing this over here. So you’re deviating, why does that matter?”

Mike: 22:13 – It’s going to be much harder if you’re trying to do this alone. If you’re trying to achieve, you know, all of the success that the world has to offer by yourself, it’s not going to go as fast as you might think. And it’s gonna be incredibly frustrating and harmful to you because you don’t have anybody to share the suffering with. You know, that’s going back to CrossFit. But like CrossFit is a group workout. Everybody is suffering together. You cycle, you’re in a group of people that are cycling, climbing that mountain together. Right? It’s the buddy system. Like if you’re doing it by yourself, then you’re not going to know necessarily that you’re on the wrong path until it’s too late.

Chris: 23:05 – I get it. OK. So the key to knowing, then, is surrounding yourself with people who are going to correct you if you’re on the wrong path.

Mike: 23:14 – Yeah. People don’t like that. I mean, call it accountability, but you know, people don’t like being held accountable. They don’t like being corrected. But if it’s done out of love, if it’s done out of actually willing the good for the other, right. So community is the last piece in the key. But everybody, if they’ve followed the protocol of story, gifts, action and community, and they’re doing that on a daily basis, then the result should be that because I have a strong sense of my self-worth, I also have a strong sense of Chris’s worth. And so when I see Chris veering off path, I’m doing it because I love Chris and want to will the good of Chris. Right? And I want to see Chris succeed to the levels that I know he’s capable of reaching. And by the way, the person that is correcting doesn’t feel good correcting either. You know, it’s like, man, like it’s uncomfortable, but we have to have uncomfortable conversations with ourselves and others in order for the growth to happen that we want in our lives.

Chris: 24:36 – OK. Well, we are going to come to CrossFit very soon, but is it our duty to have these uncomfortable conversations with the people that we care about most? Even if you know, we might sacrifice the relationship to do it?

Mike: 24:56 – It is. It is. It’s incredibly, because there’s really not that many decisions that we have to make. We get what we tolerate. I forget who said that quote, but you know, life is made up of a series of choices. So if we make a choice not to have that uncomfortable conversation regardless of the consequences, then we have to own it, right? Then we can’t complain, then we can’t, you know, vent to other people that so-and-so is really bothering me or doing X, Y and Z. And you know, you’re making a choice to not have that hard conversation, but you could have that hard conversation and maybe instead of telling, you ask questions and it draws out—it becomes a conversation, right? The outcome might be better than what you’ve envisioned happening in your head because now you are both facing the same direction because you’re having conversations, right. Instead of questions. I mean, you’re asking questions instead of making statements. But even the default choice is still a choice. You know, the default choice would be to avoid that awkward conversation. I was giving a keynote to a big company in the Silicon Valley and I actually had them do three uncomfortable exercises. So I actually had the people, there were about 80 people in the room, and I had everybody partner up and turn to their neighbor. And the first exercise that I had them do was be very—and they’re like, you know, facing each other, right? And I said, “Be very loud. I want you to be loud. I want you to say, ‘I am powerful,’ looking at each other in the eye.” And everybody’s giggling and laughing. And then I said, after everybody calmed down and the giggling kind of died down, and I said, “I want you to look at each other again and I want you to whisper the same phrase.” People were so uncomfortable, so uncomfortable. It was really fascinating. You know, I had never done it before, but I’m like, I’m going to do this and we’re going to see how it works. But people are uncomfortable with the idea that we are powerful. Even the CEO of this organization was sitting in the back of the room after this exercise and he was nodding his head, you know, because being powerful requires us being vulnerable.

Chris: 27:37 – OK. What was the third exercise?

Mike: 27:42 – The third exercise was, oh shoot, hold on. Oh, the third exercise was, oh gosh, let’s see. The second one was, the second was no, the third exercise. The first one was I am powerful. I had them do that a couple of different ways. Second exercise was I am worthy. Saying the same thing. And then the third exercise was I am competing in my own race and I want to help you win yours.

Chris: 28:19 – Wow. That is powerful stuff. And every time we talk, Mike, I get more and more impressed. Not just at your intellect, but also your empathy. And you know, I know hundreds of CrossFit gym owners, maybe thousands. And if I had to pick the best one for you and say I could drop you anywhere in the world at any gym, I would say I pick Greg Amundson. Who’s your coach, Mike?

Mike: 28:47 – Greg Amundson.

Chris: 28:49 – There is tremendous serendipity, I think at this level in business and also in CrossFit. So can you tell us your CrossFit story?

Mike: 28:59 – I avoided CrossFit like the plague for quite a while because of my own limiting beliefs because of what other people said, right. Other people’s expectations, right? Other people’s fears, other people’s this and that. And so I was just your typical gym rat. You know, my fitness story is I was a competitive athlete in high school. I had the opportunity to play college football. That ended before I graduated high school due to a devastating knee injury. And then I just became like your typical gym rat, you know, and my health kind of went sideways a little bit in college because I wasn’t invested in anything. And then I actually got recommitted to fitness and I was all in and I had gotten down to 10% body fat, just at the 24-Hour Fitness kind of stuff. And then the financial crisis comes, and I’m skipping a lot of things, but I’m just giving you the fitness stuff, right? Financial crisis comes along. I’m the gym rat. I’m doing this typical mirror muscle, you know, just this and that, you know, there’s no community. Everybody’s got their, you know, you might as well be alone in this crowded room. Everybody looking at themselves in the mirror saying how beautiful I am, but how scared I am. And I had blown up to 250 pounds. And this was in 2009 and I bent over to pick up a sippy cup of daughter’s on the stairs and my back gave out and I was flat on the floor. And my wife was at the gym. I couldn’t get ahold of her. So I had to call my mother who lived 10 minutes away from us. She had to drive over and pick up her 250-pound son off of the floor. And that was one of my rock-bottom moments. That’s the physical rock-bottom moment, where I knew things had to change and I couldn’t do things the way that they had been done before.

Mike: 31:03 – So I still didn’t want to do CrossFit, so I did this other group training thing, which was good. And then I’m like, you know what? And then I saw a friend of mine from high school, his name is Steven Berrigan. He is an amazing guy. He’s over at CrossFit West. He had never lifted a weight in his life growing up. He was a soccer player. He was a runner, had done, you know, marathons and things like that. Never picked up a weight in his life. And I saw him at a Christmas performance and he was solid. And I’m like, dude, Steven, what? He’s like, yeah, dude, you should totally do CrossFit. You should try give it a try and so I’m like, OK. So then I embarked on my CrossFit research journey. I am in Santa Cruz and CrossFit is like Starbucks. They’re on every corner, right? So, I looked at CrossFit West, I looked at CrossFit Ready, I looked at CrossFit Watsonville. I looked at all of the CrossFits that were reasonably close to where I work on a daily basis. And then I found CrossFit Amundson, and it was very clear that Greg led with the mind and the spirit and then the body, right? And that his methodology, so far as I could tell, was incredibly close to the origin of CrossFit. Like how he programmed his stuff. And so then I signed up, I went in and it was an incredible place. It is incredible place, where the mind, the body and the spirit are being forged throughout every workout. And led by Greg, you know. And the other coaches there who he’s kind of taken under his wing. And so I have been there since 2014 and I love it. You know, and the first workout, the coach at that time, the head coach was Melanie, she would not let me put weights on the barbell. So here I am like this arrogant, egotistical person. I’m like, I’m going to do this workout with no weights on the barbell? Do you see me? By the way, I wasn’t even, I wasn’t in great shape then, but I’m like, I’ve done this. I know what to do, you know? But it was a mind-opening experience and has led to me ultimately deciding to start my podcast, which you were a guest on the Impact Entrepreneur Show which then ultimately led to the book and is leading to so much more. Because of the hard work that I’ve done in the gym, I’ve realized that I’m effective, that I can do hard things, that I’m worthy of doing hard things and then I can do hard things. I can do great things with the hard things that I’ve experienced.

Chris: 34:15 – That is amazing. And I think you know that that was part of the original intent of CrossFit, but nobody epitomizes or teaches that methodology as well as Greg Amundson does. And so for your listeners who don’t know who Greg Amundson is, I’ll give you a link. He was the very first guest on this podcast back in 2015 and when I was talking to Mike, to whom I was introduced through our mutual publisher, Scribe, we started talking about his gym. And a few hours later, Mike sent me this great photo of he and Greg holding this little piece of mango wood with the word CrossFit burned into it. And this is an amazing story because years ago, maybe 2014, Greg Amundson and I were together in Kenya and the only wood around to build desks for schools was mango, which is a very hard wood. And so they were taking little tiny pieces and we had this CrossFit brand and I was holding the wood and Greg was burning the word CrossFit into it. And we all took one of these home and Greg still has his, and I’m literally looking at mine in my windowsill right now. So, it’s just amazing, I think fate kind of brought us together here, Mike. I would love to help other people who own gyms meet more people like you. And so what I’d love for you to tell us is, you know, what attracts you as an entrepreneur to CrossFit? Why do you keep going instead of switching it up to go to something else? And then what can gym owners do to meet more people like you?

Mike: 35:47 – I love CrossFit as an entrepreneur because I spend all day making decisions and the one thing I don’t have to think about when I go to the gym is what workout I’m going to do. I love it, right? Like that’s number one. I know that it’s going to be hard, fast and furious. Like the longest workout we’ve done recently was Murph, probably, you know, back in May. Some people did Murph, like several rounds of Murph over a 24-hour period, including Greg, he did five rounds of Murph in 24 hours.

Chris: 36:27 – Oh my goodness.

Mike: 36:28 – We have another guy in our gym named Eric who did seven. Eric, he’s actually a former Regional competitor from Arizona, but he lives here in Santa Cruz now as a paramedic. Anyway. So I don’t have to think about the programming. I know it’s gonna be fast and furious. I know that I’m going to be around people that are engaged in the process of growing mentally, physically, and spiritually in that gym in particular. We’re going to do this stuff together. Everybody’s going to encourage you, no matter whether you are walking in that gym and haven’t lifted a weight one day in your life or you’re Greg Amundson, everybody is going to treat you as an equal and welcome you and introduce themselves to you. Nobody’s got their headphones on. There isn’t a mirror to be found in that place. And it’s just a growth chamber, right? So I think that to attract more—I was actually thinking about this this morning. I don’t do CrossFit because I have weight-loss problems. I do CrossFit because I struggle with self esteem. CrossFit reminds me that I’m worthy of doing hard—not to be a broken record, but this is important. And like CrossFit reminds me that I’m worthy, that I’m worthy of doing hard things, that I can do hard things, that there’ll be benefit and fruit from putting myself through hard things at the end of that. Right? I don’t do CrossFit because I’m trying to lose that next, you know, 10 pounds around the waist, which I am. That’s what you do Zone for or something else, you do Zone for that. I do CrossFit because I want to remind myself every day that I’m powerful and effective and that is the most important thing for every entrepreneur listening and every gym owner listening to remind their entrepreneurial clients of, because when they walk out of that gym and they go back to their business, they go back to their home, their relationships, they have to carry that lesson with them.

Chris: 38:52 – Amazing. So if I’m running a gym and I want to meet more entrepreneurs, Mike, I mean obviously I should be getting that message out on social. What are some other ways that I could do it to connect with more people like you?

Mike: 39:08 – Well, I actually think that this medium of podcasting is the fastest way to meet like-minded individuals today.

Chris: 39:17 – That’s interesting.

Mike: 39:19 – I think it’s a huge way to connect with people. I think that people who have podcasts tend to be more empathetic, and also driven, right. And eager to connect and eager to build community. So I think like one idea would be for these local gyms to start a local podcast or a local YouTube channel, right? Or something along those lines where they’re having conversations with their members and sharing their members’ stories, the testimonials, not about weight loss, but about what CrossFit has done for their mind. I think that would be really powerful. I think that, you know, like one of the things that Greg does, and I’m pretty sure most CrossFits do this as well, is the community workouts on Saturdays. You know, where the whole community, it’s open door, you know, it’s a pretty accessible workout to everybody. You can scale it up or down so everybody can do it. And it’s really community-building. I’ve brought my kids to it not every Saturday workout, but anytime there’s a big community workout like Murph, I try to bring my kids and involve the family. Right? That’s the thing too, like getting your family involved is really powerful. And then turning your gym into another learning environment. And so for Greg, what he’s done is, you know, he’s pursuing his masters in divinity right now. And so once a month, he actually turns the gym over on Wednesdays to like a chapel, right? Where he preaches a message, right? And he calls that Faith Works Ministry. Sometimes there’s a workout before, but oftentimes it’s immediately after the four o’clock class and he brings, you know, there’s music and it just changes. So it’s finding other ways to repurpose your gym to help the mind, body, spiritual development of your members. Don’t just think about your gym as a place for people to throw iron around. You know, it’s a mind gym. It’s a heart gym, it’s a spiritual gym. It’s a place for people to build relationships, right? Think abstractly outside of the box about all of the ways that you can use your gym to help me become the best version of myself.

Mike: 41:59 – So you have to understand who Mike Flynn is, right? What my struggles are. You have to understand that I struggle with self esteem, body image in particular, right? I’ve struggled since I was a little kid. You have to understand that about me. You have to know that I have asthma, right? You have to know that I have a wife and four kids and at peak traffic it takes me 40 minutes to get home. And so I have to leave like right at the end of the workout to jam out there so I can get home to help my wife with my kids. You have to understand the holistic aspect of the person. Right? And every gym can do better at doing that, especially with the members that have been there longer, they should go back and find out more, do a little bit more in-depth analysis of who’s in their gym and why they’re there. And that’s going to completely reframe how you program.

Chris: 43:02 – That makes a lot of sense. I think too, you know, maybe you can give us a little bit of—paint a picture of what it’s like to train in Greg’s gym, because I don’t think you can fake any of that. Right? You have to be authentic. And so when I’ve been to CrossFit Amundson, you know, you always face the ocean during your warm-ups and you know, maybe you can kind of paint us a picture of what goes on there.

Mike: 43:27 – So typically, you know—I’m a part of the four o’clock class, so we get there, around 4:05 we start our warm-up. Maybe it’s a run or row or whatever, you know, and it’s always dynamic. And then when we start doing our dynamic stretching and our warm-up in the circle where we’re loosening up and things of that nature, it’s always facing the ocean. It’s always starting to be mindful of your breathing, breathing in through your nose. It’s always, you know, start repeating a positive mantra or scripture or some sort of inspirational message in your head. Those are the things that he is always starting with. And then we typically will, after that, you know, we’ll break, get some water, whatever it is. And then before we do the whiteboard breakdown of what the actual WOD is, oftentimes he will, either before or at the end of the workout, he’ll either have some sort of a positive inspirational message to share at the beginning or at the end that sort of ties in with what the workout is going to require of us that day or of what it did require of us, right. If he’s doing it at the end, sometimes at the end, depending on the time, if it was a short workout and we have, you know, 15, 20 minutes left at the end of the workout, we’ll do some box breathing. We’ll do some, some meditation, we’ll do, you know, stretching, you know, that kind of stuff. A lot of times, you know, on Tuesdays and Thursdays, after five o’clock, he’s flipping the entire gym over into a Krav Maga studio. You know, and so like that’s another way, like you’re teaching people how to defend and protect those that they love and themselves. Right? That’s another way to repurpose your gym, right? So it’s an incredibly, it’s a very rich place. It’s like a banquet, you know, not only are you going to get like a great workout physically, but your mind and your spirit is going to be fed. Your heart’s going to be fed because you’re around people that you’ve come to love, because you’ve suffered around them so much, you know?

Chris: 45:48 – Yeah. I think that’s great, Mike, and all of this in 800 square feet, right?

Mike: 45:51 – Oh yeah, it’s super tiny gym, you don’t need a huge box, you don’t to have 50 yards of turf to push a sled on. You can take an 800-square-foot, thousand square-foot box, and turn it into a beastly place.

Chris: 46:13 – That’s great. Well, Mike, hey, thanks a lot for giving up some extra time than even what I asked for to talk to CrossFit gym owners and other entrepreneurs. We really appreciate it. I’m going to link to your book in the show notes so that everybody can get themselves a copy and it’s just such a fantastic, simple read with such a powerful message because you’ve framed it in a really sticky story. So thanks for that and thanks for helping everybody.

Mike: 46:36 – You bet, man. Thank you for the honor of being with you today on the podcast and hopefully breathing life into some people.

Chris: 46:44 – Absolutely.

Greg: 46:49 – As always, thank you so much for listening to this podcast. We greatly appreciate you and everyone that has subscribed to us. If you haven’t done that, please make sure you do drop a like to that episode. Share with a friend, and if you haven’t already, please write us a review and rate us on what you think. If you hated it, let us know. If you loved it, even better. See you guys later.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

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Episode 175: The Green Light Program With Vaughn Vernon

Episode 175: The Green Light Program With Vaughn Vernon

Greg: 00:01 – It’s Greg Strauch of Two-Brain Media and on this week’s episode we talked to Vaughn Vernon of Affiliate Guard. We talk about the Green Light program that they’ve started with this new act that’s going to be taking place of 2020 and we jump into the changes within the CrossFit certifications and the different certifications that Vaughn as an insurance agency will back so that you guys can take care of business. Subscribe to Two-Brain Radio to hear the very best ideas, topics to move you and your business closer to wealth. Two-Brain Radio is brought to you by Two-Brain Business. We make gyms profitable. We’re going to bring you the very best tips, tactics, interviews in the business world each week. To find out how we can help you create your Perfect Day, book a free call with a mentor at twobrainbusiness.com.

Greg: 00:57 – We would like to thank one of our amazing partners, Healthy Steps Nutrition. Are you struggling with creating a nutrition program from scratch? What about looking to save time on building another revenue stream? Are you looking for ongoing support on growing your program? HSN has built an amazing service to help guide you in building your very own nutrition program. They start with an onboarding training course that gives you one on one time with a mentor to help you build the nutrition program, not only to help you with additional revenue, but help your members reach their goals. They’ve helped over 400 gyms build profitable nutrition programs. Go to growyournutrition business.com to check out their free resources and to book your free call today.

Greg: 01:40 – All right, I’m on another amazing episode of Two-Brain Radio with the famous Vaughn Vernon of Affiliate Guard. How are you, Vaughn?

Vaughn: 01:46 – Doing good, buddy. Thanks for having me on again.

Greg: 01:49 – Oh, happy to. I love having you on. I love even when we were able to chit chat at the Summit about different things, things that gym owners go through, some of the things, stories that you hear, that you think, “Oh, there’s no way that’s possible.” And then you kind of confirmed, sometimes hey, yeah, this does happen. I’ve seen it happen. Or heard of it happening. And so it’s always good catching up to you, but really jumping onto today is kind of talking about some of the changes that we’ve had within the CrossFit certification realm. And really diving into that with the knowledge that you have of the insurance side. I mean, with the changes that have happened, there’s a few things that gym owners should know about that could affect them in a positive way or possibly even negative ways. So, let’s kind of jump into that. What are the changes that have happened with the CrossFit certification system?

Vaughn: 02:42 – I know enough about that to be dangerous. I try to focus on what has like the biggest ripple effect going into these gyms for these gym owners and coaches of what this landscape is going to look like in the future. For the fact that one constant in this life is change, right? So with kids training, this is the biggest change I have seen with kids training, that landscape is a lot different now. And you need, absolutely 110% need abuse and molestation coverage on your insurance policy. Minimum of 300,000 on an aggregate, 100,000 on occurrence. We need to have mandatory background checks done every year on every trainer that is interacting in any capacity with 17 years of age and younger. So not only is this coming from the insurance geek’s end of the stick, this is also coming from the Safe Sport Act that has been passed and come 2020, this legislation is going to be full circle in all these gyms, right? So in order to be in compliance with this legislation, you’re going to need to have, again, mandatory background checks on every trainer every year. You’re going to need to have an anonymous tip line via email and phone. If someone sees something inappropriate happening, they can anonymously tip it in. We’re going to have to have documentation for like accident procedures where something does happen, how you intake that correctly, documenting the occurrence. And if something does happen and you have a governing body come into your facility to investigate and you don’t have your ducks in a row, probably going to be a very character-building experience to say the least to address that. So I spoke on this briefly at the Summit with the Green Light platform that we’re launching. So this Green Light platform will make every gym underneath the Affiliate Guard flag in compliance with this new legislation turnkey. OK. Now, with training youth, it’s an entirely different ball of wax than training adults, right? For the fact that if little Johnny gets banged up, we’re going to handle that a hell of a lot different than we would if Johnny’s dad got banged up in the event of legislation, or excuse me, litigation. Does that make sense?

Greg: 05:52 – Yeah. What we do, what would be the real difference that a gym owners need to think about between an adult versus a kid if an injury happens?

Vaughn: 06:03 – Right, so with a kid, I mean, we got to make sure A, it’s a super safe environment, with the programming, with you know, if you’re doing obstacle drills or whatever, or just basic movement or if little Johnny falls over that he’s not gonna have his head break his fall for him on the rig or anything like that. You know what I mean? So it’s like a controlled environment. So look at it like this way too bro. So if a kid gets banged up, we don’t want to go to the mat, we don’t want to go down the litigation road for the fact that, you know, if it gets that ugly, who’s the court gonna side with, mom and dad or the fricking insurance company? So we want to handle that in an entirely different fashion than we would if an adult got injured because we can rely a lot more on the waivers. We can rely a lot more on, you know, he didn’t check his ego at the door. This is a self-inflicted injury, stuff of that nature. So it’s an entirely different mindset. Obviously we’ve got to have waivers in place for minors. We still got to do that. It’s just best practices. We should have policies and procedures in place to where if, say my son goes and works out and I can’t go pick him up or my wife can’t go pick him up and he gets a ride with his buddy’s mom and dad, we should have pick-up authorization forms in place. Does that make sense?

Greg: 07:35 – Yeah, completely. Completely. I mean that’s a huge factor. It’s a minor and I can only imagine the litigation route that could happen if you released him to so-and-so that said that they were an uncle or an aunt when they really weren’t. That could be huge. So that makes complete sense.

Vaughn: 07:56 – And then I got templates, all this stuff, after we’re done here, I can email you those templates if anybody wants to use them.

Greg: 08:02 – Yes. Yeah, that’d be perfect if you have them. Do you have them on the website as well? Cause we can definitely link on your website.

Vaughn: 08:08 – Yeah. Should be underneath my resources section.

Greg: 08:10 – Perfect. We will make sure that it’s in the show notes. So with these changes, what was the reason for you now coming out with this Green Light program through Affiliate Guard, and this kind of act that has come from federal government. What was the reasoning behind it?

Vaughn: 08:30 – Yeah man. So it’s unfortunately it’s the world we live in. This is in the wake of what happened with USA Gymnastics and this whole Me Too movement, variety of other scandals that have happened. I have been in the circle on this for about a year, about a year now of how this legislation is gonna look in 2020. And I have partnered up with some people who are, this is all they do. And we have been working on a proactive versus reactive platform to where all the i’s are dotted. All the t’s are crossed. Once this comes full circle, here’s—boom, turnkey. Here you go. I mean it’s so much admin work to get in compliance with this stuff. Nobody wants to take the fricking time to do it. Where you know with this new platform here, once you’re registered up, signed up, have your coaches do the background checks, all that, you know, you could be good to go in a couple hours and you’re done, moving on with life. So I would look at it like this too. Insurance companies, believe it or not, did you know that they like to make money?

Greg: 09:53 – I can believe it.

Vaughn: 09:53 – I know, it’s weird. So I’m thinking from the companies that I deal with, I’ve been talking to my reps about how this is going to look and all that stuff and they flat out are saying, you know, if there are not policies and procedures in place to be in compliance with this new legislation, if something did happen, the insurance company’s going to exclude that out of the contract because you, the policy holder, were not in compliance. So you’re basically going to be self insured if you don’t do this shit. That’s the bottom line.

Greg: 10:29 – Oh wow.

Vaughn: 10:29 – That’s the bottom line. Yeah.

Greg: 10:31 – Now with this Green Light program, I mean you guys have built it, so it is, if you’re an Affiliate Guard member and you have a policy with you guys, I mean like myself, that means I can basically go to you and it includes, I mean the background checks and all this paperwork and stuff like that. What are, is there additional costs or anything like that?

Vaughn: 10:50 – It is, dude. So, we’ve been kicking the tires on anywhere between 50 to 100 bucks for the whole year to have this tool, which is a smoking deal in my opinion.

Greg: 11:02 – 100%. I completely agree.

Vaughn: 11:05 – Yeah, it is, man. I mean, just the time alone it’s going to save you from the burden of not knowing where to go. How do I do this? What governing body do I show that we’re in compliance, all that crap. So, yeah, that’s how, that’s gonna look, I just had a brain fart, dude. I’m sorry. Don’t edit that out either, will ya?

Greg: 11:31 – No, it sounds good. So, with the Green Light program. What else is included into that? Like is there waivers and everything like that? Kinda like the release you were talking about?

Vaughn: 11:42 – Yeah. So we’re going to have obviously waiver template, stuff of that nature. A lot of people use, you know, Wodify, Mindbody online, whoever. That’s great. Keep those digital platforms there. That’s good. So, with these trainers, right, these background checks, so once these background checks are executed, so like 10 months down the road after that’s done, we’re going to be pinging you to get those refreshed. So annual background checks, it’s 15 bucks per trainer per year. That’s how that looks. Now we have also kicked the tires on doing a full like, employment application as well for these trainers, which would be a good loss control tool. You know, at the end of the day, trainers are representing your brand. If you know, you get a guy that has had a bad past and whatever, you know, you have full disclosure here of who you’re conducting your business with. It’s just a best practices position, right?

Greg: 12:48 – Yeah. Well that would be awesome. I mean, you got gym owners that are looking for coaches and you find somebody that’s got their L1, or any certification. You can get one online even and it’s not going to specify any kind of background check on them. So I mean you could be getting the wrong people in the door and not even know it. So that, I mean that would be huge to be able to do something like this. I mean 15 bucks, like that’s such a small amount of money for the risk that you’d be putting yourself into by having these coaches work with kids and be able to talk to these kids and groom these kids. Like you see in these situations that have happened with like you said with the USA Gymnastics team, you know, and you don’t even know what’s happening. So, I mean that’s just a huge risk for $15. I mean I would spend 10 times that amount per person if I knew it was going to help us be covered. And then also me not having to do the lay work as the gym owner.

Vaughn: 13:48 – Right. Yeah. We’re also going to implement in this too, and please don’t shoot the messenger on this. So every quarter we’re going to be pinging you with you going through your gym, checking out if your rig’s still secure, your ropes are secure, your rings are good. If you have squat racks bolted to the wall, that that’s all nice and adhered. So where if you know, God forbid a piece of equipment does fail and we get John a litigation and they say you never maintained your equipment or anything like that. We have that set piece to rely on as well. That scheduled maintenance is performed on the rigs and all that stuff. All the infrastructure of the box there.

Greg: 14:37 – I love that. And if any gym owner out there is listening right now, pause your podcast, go check every piece of equipment for safety and make sure it’s serviceable, as the military loves to say, make sure that everything is bolted down correctly. Because I know my staff does that on a quarterly basis. So I think that’s huge. If you’re going to be pinging the gym owner or the GM or the head coach or whoever is going to be actually going through and checking these things, having a checklist created for each piece of equipment and make sure that everything’s safe. I mean, the last thing you need is somebody doing a muscle-up on a rig and those bolts have loosened over time and that whole piece of equipment comes crashing down on them.

Vaughn: 15:17 – Yeah, that would hurt really bad. Gravity does not discriminate.

Greg: 15:23 – No, not at all. Not at all. So I love this Green Light program. I mean, I remember when we were talking about it, I remember hearing about it at the Summit. And I think it’s huge, and not the amazing factor of doing the background checks for the kids and the parents and everyone feeling a lot more safe with making sure that these people that are coming in are the right people if we want to call it that. But really from a gym owner side, I get super excited because this is gonna save them time. This is gonna save them money in the long run if a litigation actually did come forth. And it’s gonna save everybody a ton of time, ton a ton of headache, ton of stress. But it then also, I mean from a money standpoint, this is pennies on the dollar. I mean, I know my coaches have done background checks and it’s 50-plus dollars for each one of them at a minimum. And it’s not easy to do. It is not like, hey, fill out this form and you’re done. This is going like to police departments, and you guys are saving them time, money. You’re saving the headache, you’re helping out the staff, you’re helping out the parents that are bringing their kids there to make sure it’s a safe environment. And when you say, “Hey, we do background checks and every single person,” regardless, like for me, I would have every single one of my staff members go through a background check, whether they deal with the kids or not, kids are in the facility. So that means if we have a childcare area and people brings their kids, some people may interact, it may not be directly, but indirectly with these kids, I would much better my staff all have the checks then even having just one or two that are just doing the kids courses. So this is huge.

Vaughn: 17:05 – So let’s talk about noncompliance. So let’s say you sign up, you’re good to go. We’re gonna give you like 30-day window to finish all your registration and all that stuff. And we start seeing, you know, nothing’s happening. And if we don’t get a call to action, you’re registered on the Green Light, the whole policy is canceled. Boom, you’re out. So we’re taking a pretty aggressive standpoint on that for the fact that A, it’s, you know, kind of required now. It’s federal law and B, if you don’t want to comply with this tool that we’re giving you, I dunno if we’re going to be a good fit or not type-deal you know what I mean? You’ve got to take this stuff seriously.

Greg: 17:51 – So switching gears a little bit, I mean, anyone out there that does want the Green Light program better yet, when is that going to go into effect?

Vaughn: 18:00 – Well, believe it or not, developers are slow, did you know that? This thing was supposed to be live Monday and they’re saying now it’s going to be live 7/15. So it’s all but there, my friend. It’s all but there.

Greg: 18:20 – So if any gym has their policy coming due here shortly, it’s best to just jump on that train here. I mean, if they’re due August 1st, it’s perfect timing for them to jump in and start onto this Green Light program with you.

Vaughn: 18:33 – So let’s talk about—before I switch gears for two seconds, I’m going to get you links as well, how this legislation reads and all that stuff. So if these guys want to, you know, just kind of check out what the, the verbiage looks like on the infrastructure and all that stuff. It’ll be there in black and white.

Greg: 18:51 – Perfect. No, that’s huge. Thank you. Thank you Vaughn. I think everyone needs to needs to understand the verbiage and have it, but then even people that maybe aren’t using Affiliate Guard and they’re like, hey, I didn’t know about this legislation. My insurance company has not contacted me about any of this stuff that’s coming up soon. They can at least jump into your free resources and look at those different documents and decide if they, I mean maybe they want to switch over then because you guys are going to be keeping track of this stuff and showing them, hey, we’re going to be proactive and not reactive.

Vaughn: 19:24 – Yeah. I got to tell you, I don’t know any other outfit that is taking this approach on what’s coming down the pipe here. And the people that I work with, too, she’s been in, she’s been in the game for 40-plus years and she’s working really close with the law firm out of Connecticut that’s helping with this legislation as well. And I mean, we’ve got the A team working on this. They’re the real deal. And she’s got a son who just got a full ride scholarship playing lacrosse and you know, she sees it day in and day out too, man. So it’s like I said, you got the A team working on this. So yeah. It’s good stuff.

Greg: 20:07 – Yeah, agreed. And it’s stuff that’s definitely a necessity that wasn’t as a necessity in our minds. Not that it’s not a necessity, but five years ago, we weren’t thinking about this to this extent, but it’s definitely come to light.

Vaughn: 20:24 – Right? It was not even on the radar.

Greg: 20:27 – No. I mean, I look at it like this, 20 years ago when you would leave your kid home alone, when they were like 15, it was no big deal. Now that would be a huge deal. I mean, and that’s just the world we live in now. So it’s not that those people weren’t there back then. It just wasn’t as, I guess publicized, that, hey, these people are here, this is what’s happening. This is what they do. So I think it’s something that I wish we had back then, but I’m glad we have it now. I’m glad you guys are working on this and building out this Green Light program so that gym owners can, sleep a little bit better at night knowing that hey, their bases are covered to the most extent they possibly can be. So jumping into some of the certifications lately, now, CrossFit’s made some big changes. They’ve done some things with their certifications where, they have their L1, their L2, I believe their L3 even, but they’ve kind of gone away from having those like CrossFit Gymnastic certs or CrossFit Olympic Lifting certs. And they’ve kind of put that back on the other people, so that they are the experts and allowing them to continue being the experts. Now with running classes, and let’s say I have like a boot-camp style class, that isn’t CrossFit methodology and my coach wants their L1, but really they probably, it’s not as important as making sure they have a certification in small-group training or something. And I still love the L1. I think it’s a great certification. I love having all my coaches go through it, whether they’re working with a Oly club program or if they are going through with PT. I still think it’s a great program for everyone to still go through in certification. But kind of with the changes and everything like that, I know with Two-Brain, which we had Josh Martin on a little bit ago with the Two-Brain coaching, if somebody goes through that cert, you guys are actually also authorizing that to be a legitimate cert since it has been backed to be authorized for gym owners to use or their coaches to use, correct?

Vaughn: 22:38 – 100 percent correct.

Greg: 22:38 – And with that, is there other certs out there that you guys say, hey, if they’re doing some other small-group training besides CrossFit, you guys are saying, hey, these are actually legitimate certs that we allow as well?

Vaughn: 22:56 – Yeah. So we’re pretty flexible on that end of the stick. We just need these guys certified in the movement they’re instructing to their athletes for the fact that if we get sued, you know, these attorneys that want to go after the trainers, well it’s just the way the game is anymore. And so if this trainer does not have any certificates, I mean that’s negligence, then that’s going to be a really shitty day in court. Right? So we’re good with like Ace, NASM, USAW, Two-Brain. Just proving that we know our head from a fricking hole in the ground here, you know, and yeah, just keep records of all those certs on file there at the gym. Back in the day we used to make every gym owner shoot us up emails of who is a trainer, who wasn’t, and that just became a logistical nightmare to manage. So, we came up with, if we get sued and your trainer cannot provide any form of certification, we will not honor defense on behalf of that trainer. That’s how the game is played.

Greg: 24:05 – Awesome. No, that’s completely legitimized. Now one thing and I still get this, I still do my mentor calls, I still do the free help calls and I love both of those. That’s part of my Perfect Day. But I still have gym owners ask the question or better yet they make the statement of, well, I can’t have so-and-so coach my class because they’re going through an internship process right now with us because they don’t have their Level 1, and they’re always concerned with that. Now, can you give the actual statement of if somebody, is coaching a class that isn’t L1 certified, what are the requirements then?

Vaughn: 24:44 – So if they’re wanting to become a trainer and the owner of the gym or head trainer, GM, whatever, is there supervising and critiquing X, Y, Z trainer here, I am 100% OK with that stuff. All day long. Just as long as we have some formal supervision in place here. If the trainer just turns them loose, I’m out, I’m gonna go grab a coffee and someone gets injured underneath their direction. There was no certificates in play. There was no supervision in place. That’s where the line in the sand gets drawn.

Greg: 25:23 – OK. So if somebody is supervision certified for that type of training, whether it’s CrossFit, boot camp, whatever, they have a certification, you are still backing them as long as they’re within the facility or the grounds, on the property if somebody is coaching that program that isn’t certified?

Vaughn: 25:43 – Correct.

Greg: 25:45 – I just want to clarify that because I still get question even now when I jump on those calls that people still ask those questions and I want to make sure that they understand like, hey, this is coming from the insurance company. Now I would probably put a disclaimer out there that, hey, this doesn’t mean every insurance company does it, but if you fall under Affiliate Guard you’re good to go. You’re OK.

Vaughn: 26:05 – Yeah. I don’t know what other insurance companies platforms are and compliance and all that stuff that’s just coming from my relationships with my carriers, how they want that to look. Yep.

Greg: 26:16 – So the last thing I definitely wanted to hit on was the health-care insurance that you guys offer through Affiliate Guard. We talked about it before, but will you give us a little synopsis of what that is?

Vaughn: 26:29 – Yeah, so we do, it’s a concept called health sharing. It’s been around since the 80s. And it’s kind of a different animal. You gotta be a little bit more hands on. I’ll hop into an example here in two seconds. So this is straight up a demographic that’s in this pool together that are health conscious people. So we’re not in these pools with chronically ill people that are pounding the dollar menu for time all day, every day. That’s not us. OK. So I practice what I preach. I’ve used this form of health care for pushing three years now and I’ve had to use it several times. So, my wife went in for her annual, blood work came back a little funky. We went back to see the doc, doc says, Hey, look, premenopausal here, we should probably kick the tires on getting a hysterectomy done, right. And Jess and I were talking about it on the way home and like, yeah, it’s looking like this is what we gotta do and call the health sharing company. And they said, hey, let’s just do a second opinion. I signed some HIPPA forms, shot my forms down to them. It’s called Second MD, 10-minute phone call. They said, yeah, it’s time to get this procedure rocking and rolling. So they call me up and they say, go into the hospital and get the self pay rate. So I go in there and do that. It was over like 43 grand, something like that. So I send that over to health sharing company, within 72 hours they had that negotiated down to 19,000 bucks. They overnight me a check and we go to the intake there at the hospital and I’m getting ready to sign the check over to them. And I asked for a minute, I go, can I use credit cards to pay for this? And they said absolutely. So I flipped out every freaking credit card that I had and I got a shit ton of points and then paid my cards off with that check. Then you got to show proof of payment that everything’s done cause they got attorneys you want to talk to you if you take the money down to Vegas and decide to double it.

Greg: 29:00 – Yeah, very true. Right.

Vaughn: 29:03 – So let’s talk about this. So from blood work to hospital stay to surgeon, to anesthesiologist to medications, that whole procedure costs me 500 bucks out of my pocket. Right.

Greg: 29:20 – That is, I mean, yeah. That’s all I can say,

Vaughn: 29:24 – Yeah, it’s awesome dude. When I got—so next month will be my fourth year anniversary for my new hip. That costs me 10 grand out of my pocket and I had to refine my fricking truck to make that deductible. That didn’t make big boy very happy. Had I had this form of health care, that’s 500 bucks.

Greg: 29:46 – Wow. Is that now this program can be used for the owners? Let’s say like in my case I have health coverage through being a reservist. Does that mean that it will, my coaches could actually still get on this plan even though I have my own health coverage.

Vaughn: 30:04 – Absolutely. Owners and coaches all day long.

Greg: 30:09 – What is the best way? Is there, I’m guessing there’s a resource on your website for people if they are interested in this to jump into it. Cause I mean—

Vaughn: 30:16 – Yeah, there’s a landing page called affiliate share. It is kind of dated. I’m revamping everything on my website. So if you’ve got any specific questions, just reach out to me, I’m more than happy to walk you through it.

Greg: 30:27 – What’s the best way, and that’s a perfect place to wrap it up. What’s the best way for people to reach out to you if they do have questions, whether it’s about this Green Light program, whether it’s about the health care or whether it’s about, hey, I’m more interested in making sure that my coaches are completely good to go with their certifications. What’s the best way for them to get a hold of you?

Vaughn: 30:48 – Vaughn@affiliateguard.info or hit me up at the office at (801) 677-0076.

Greg: 31:01 – Awesome. Vaughn, it’s always awesome to catch up with you and have you jump on the podcast or when I get to see you in person at the Summit or even at the Games here and there. It’s always great to be able to sit down and talk shop with you. Hear all the stories of what people are willing to do or not do in their gyms and just the stories that I just can’t believe that this happens, but it does. That’s the scary thing. So, I love having Affiliate Guard. I am so happy that I have Affiliate Guard, because you guys have helped us out a ton in the past. A perfect example is when we got robbed. I mean, I was able to jump on the phone with you that morning and start the process so that we can make sure that everything is taken care of. So it is an awesome company that I love working with. And hopefully anybody out there that’s thinking about changing and they’re going from something else to Affiliate Guard, make the switch. It will be the easiest thing you’ve ever done, and it will save you a ton of peace of mind and any kind of risk. So thank you Vaughn for jumping on here. We greatly appreciate you. And we hope you have a wonderful rest of your week.

Vaughn: 32:09 – Will do brother. Good catching up, man.

Greg: 32:16 – As always, thank you so much for listening to this podcast. We greatly appreciate you and everyone that has subscribed to us. If you haven’t done that, please make sure you do drop a like to that episode. Share with a friend and if you haven’t already, please write us a review and rate us on what you think. If you hated it, let us know. If you loved it, even better. See you guys later.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

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Episode 172: Gym-Management Software: Our Unbiased Review

Episode 172: Gym-Management Software: Our Unbiased Review

Greg: 00:00 – Hey everybody, it’s Greg with Two-Brain Media, and on this week’s episode we talked to Jay Williams. Jay Williams is the Director of Products at Two-Brain along with being a mentor. He’s been with Two-Brain since the very beginning. We get into the major software companies that are in the CrossFit-gym industry today and the pros and cons of each. We also talk about the ranking system that Jay developed to give you the very best as a gym owner, and you’d be surprised of who scored the highest. Make sure that you guys subscribe to Two-Brain Radio to hear the very best ideas to move you and your business closer to wealth.

Greg: 00:38 – Two-Brain Radio is brought to you by Two-Brain Business. We’re committed to helping a million entrepreneurs find freedom and wealth. We’ll bring you the very best of the business world each week. To find out how we can help you create your Perfect Day, book a free call with a mentor at twobrainbusiness.com

Chris: 00:56 – Everybody hates their insurance company until they need their insurance company. My insurance recommendation is Vaughn Vernon of Affiliate Guard. Before I get into this story, I want to make it clear here that I don’t get any kickback for recommending Vaughn, but I’ve done it so many times. Whenever anybody online asks a question about insurance companies, I always say Affiliate Guard. Here’s why. Years ago when we affiliated with CrossFit, my insurance company dumped me, citing quote unquote “tractor pulls” that we were going to be doing, whatever the hell that is. I’ve never pulled a tractor in my life. I’ve driven lots of tractors and I can tell you, I don’t think I could pull one if I wanted to, but that’s besides the point. At that time, the person who swooped in and saved CrossFit gyms in Canada was Joanne LeGal, and if you’re in Canada, I recommend talking to her—period.

Chris: 01:45 – You don’t have to talk to her first. You don’t have to talk to her last. Just talk to her, period. If you’re in the states though, I recommend Affiliate Guard because the program that I get through Joanne in Canada is really, really awesome and all inclusive. Joanne’s personality, though, is what keeps me with their company. In the states. Affiliate Guard is run by Vaughn Vernon, a massive personality, a CrossFitter, a Jujitsu guy. He drives dirt bikes, he has good-looking kids, all that stuff and his policy is the best. It’s really, really tough to tell when you’re reading your policy if the benefits are the same as someone else’s because they obscure stuff on purpose. It’s just like taxes. However, when I’m looking at my policy, I ask myself, “Will that guy get up in the middle of the night and helped me out?”

Chris: 02:34 – This weekend was a great example of Vaughn’s personality. One of my friends and clients down in Florida had their garage door smashed open by a Mustang that was doing donuts in the parking lot and they texted me at 6:00 a.m. on a Sunday and I wanted to help. So I texted Vaughn, he’s two hours behind me and he responded right away. Your insurance company is not going to do that. As I said at the start of this, everybody hates their insurance company until they need insurance. And when you do need insurance, you want them to answer the damn phone on a Sunday morning and you want to talk to the head man and you just want to know everything’s going to be OK. With Affiliate Guard. It is.

Greg: 03:12 – All right, I’m on another episode of Two-Brain Business with the famous Jay Williams. Jay, how are you?

Jay: 03:18 – I’m great. How are you?

Greg: 03:20 – I’m doing well. So it’s been a little while since we’ve had you on the podcast. I want to say last time, about mid-year around this time last year was the last time you were on here. So anyone that hasn’t heard the other episodes that you’ve been on, can you give a little synopsis of kind of who you are within the Two-Brain Business along with the businesses that you own?

Jay: 03:39 – Yeah, yeah. So I am really Director of New Product Development here at Two-Brain Business. I’ve been involved since the very beginning with Chris. I also do some mentoring. I own a gym here in California where I am now, and another one in London, which is where I started, or my first gym back when Two-Brain was just an idea in Chris’s head, I was one of the first mentors. And so the business has kind of grown and I’ve kind of grown along with it.

Greg: 04:11 – Awesome. And if anyone hasn’t listened to your episodes, we’ll make sure to link those in in the show notes so that people can go back and kind of listen to all the struggles and successes that you’ve had because I mean, it’s not easy owning a business, especially in a different state, but really overseas, and kind of hear about your story and everything. So let’s kind of jump into the episode today. Now, big issue that we’ve seen within the industry of gyms is backend. So like the software of what owners are trying to look for, getting different kind of metrics out of it and that. So you actually started a really cool project a few months back and, it led to basically building a structure to kind of scale where a gym software is and basically the pros and cons and everything. So take us back. What kind of led you up to building the structure that you did and being able to evaluate these businesses the way you did?

Jay: 05:04 – Yeah, so before I owned a gym, I was actually a software developer and then I ended up managing a bunch of software developers. So I have some background in this I wasn’t a great developer or anything, but I at least kind of know what goes into some of it. And so whenever there was a software project or something that involves tech, Chris would always kind of get me involved. So a couple of years ago maybe we sort of put together a overly ambitious project on how to kind of build a basic website platform and like generate reports so that we could see what was going on inside all of the gyms in Two-Brain. And that kind of went sideways. So maybe, I don’t know, 12 months ago or so, Chris basically said, “Look, we need to figure out what is the best software platform that we can work with so that we can get these reports in front of gym owners and get them in front of us. So I need you to go out and evaluate all the software platforms and figure out which one is the best and then, and then we’ll figure out who we’re going to partner with for this year.” So basically, and this is kind of going way back, like when I first started my gym, we tried three or four different software platforms and none of them quite fit the bill exactly, so we ended up kind of putting together a hodgepodge of different things, which is what most gym owners do. And so I, over the years, it’s been 11 years now, I’ve always kind of paid attention to what’s out there to figure out what is the best one. If it’s time to switch, you know, is there a new one that’s coming up that is really good and how we could get the needs met for gyms.

Jay: 06:56 – Oh, just pause for a second here. What we ended up focusing on was the back-end software. So the things that people are using to do billing and booking at their gyms, to generate reports, to charge, you know, people’s credit cards, to put their classes in, that kind of thing. It’s really the backbone of the gyms, and when we look at kind of over the years, what are the things that people care about? What are the things people post about? One of the first things they post about in all of the groups, all the Facebook groups, is which software platform should I use? So that kind of led us down this path of let’s just pick the best one, partner with them and see if we can get the reports that we need out of that one.

Greg: 07:41 – And I know before in the past we have partnered with a software company and we know that they were going to deliver some stuff to us, didn’t really work out the way everyone wanted it to. So you ended that partnership with them, which everything was on good terms. And then it kind of led us into being able to create this scoring system that you’ve created to be really unbiased on everything. Right? There’s not one that we picked and choose and said, “This is the one we’re partnering with,” but more of, “Hey, this is how we’ve graded the top six best softwares that we have found so far.”

Jay: 08:20 – Yeah. So you kind of filled in that part of it. Like basically we have tried to partner with a couple of different software platforms, you know. Everyone kind of reaches out to us because of the size of Two-Brain Business and says, “Hey, we’d like to work with you guys. What do we need to do to work with you?” And we’ve had partnerships in the past that didn’t work. We’ve tried to work with some of the companies to say, “Hey, can you help us build what we need to build?” And we’ve just never had any success. And so when Chris came to me and said, “Hey, go solve this problem,” the original intention was that we would just find one and say which one is the best one to work with so that we can get what we need, right? Thinking that this wasn’t going to be a comparison post, it was more just going to be, go find the partner and then we’ll partner with them. What ended up happening was as I started to go through and evaluate all the different platforms, it was pretty clear that there wasn’t one that was going to fill all the needs. And I went back to Chris and said like, “You know, there’s some great things about each one. There’s some drawbacks from each one. I don’t think it’s time to have an official partner, but here’s all the information that I have about them. You know, let’s put this together into a post that we can share with everyone and tell them like what we think of it.” So that’s kind of what led us to this post. So this post is basically like the best gym-management software platforms and you know our review.

Jay: 09:55 – And so what I did with this is we had a spreadsheet with I think maybe 12 or 15 different gym-management platforms and I spent somewhere between an hour and two hours with each one. Some of them I had used before at my gyms and so we had kind of quite a bit of experience. Some of them I just had to get, I had to take my experience and then I had to get information from other people that were using them. And so I basically said, OK, based on these criteria we’re going to give them all a score and we’re just going to publish that score. So the five things that we cared about were just general functionality. So does it meet the basic needs of a gym? Reporting, so reporting is a really big one. We ask all of our gym owners to keep track of their average revenue per member, their length of engagement, their profit and a few other numbers. And if the reports don’t generate that stuff, then it makes it really hard for them to run their business. So usability, basically it’s like how easy is it for people to navigate around and do what they need to do? Integrations. One of the things we found was that there really, because there’s no perfect gym software, that means that you have to use other systems to do things like emailing clients or texting them or tracking workouts or whatever. And so it’s important for each of the softwares to be able to integrate with some of those systems. And then every software, like I said, has strengths and weaknesses. Some of them have lots of cool bonus stuff. And so we just included a category for bonuses. So each one of those categories, we did it on a scale of one to 10 and I just gave them a rating based on my impressions of those things compared to all of the other ones that we evaluated. So yeah, we’ll pause. Do you have any questions about that?

Greg: 11:57 – No, I mean, that sounds perfect. And to me, I mean I think too many gym owners jump on the phone with a software company and of course they’re telling them how their member app is amazing and how the sign-in app is amazing and all this other stuff. But it doesn’t really, they don’t really go into details of what the gym owner needs. And I know when I first jumped on my first call with a software company, they told me all the amazing things that’s going to help out my members but didn’t really tell me how it’s going to help me know the health of my business in the sense of what is my average revenue per member. How long is a member a member at the gym or length of engagement, what’s our gross revenue? They wouldn’t really tell you that kind of stuff compared to all of these amazing things that it can do. And I feel like those are like what you classified as the bonus stuff when really we need the functionality of it. We need the backend, the reporting, the usability, and then like you said, the integrations. Does it integrate with these other companies like Zapier, SugarWOD, whatever the other ones would be so that it can really flow correctly.

Jay: 12:59 – Yeah. And you know, this is the thing, like if you go to any of the websites for any of the softwares, all of them look amazing. They all look like, wow, this is going to solve all my problems. And when we started, when the word started to get out that we were looking for partners or looking for software, like we were getting contacted by all sorts of different software companies and they all wanted to hop on the phone with us and tell us how amazing they are and how their system is going to help solve all our problems. And we started doing that. I would hop on the calls and they would talk about their software and you know, kind of go down all of that route. Ultimately what it comes down to is if I don’t get my hands on it and actually see what it does and what it doesn’t do, then it’s all just kind of, it’s all pie in the sky, right? It’s like I’ve had enough experience with software in general to know that the promises don’t always match the reality. And I don’t come in expecting that they will, but that’s why I wanted to do this sort of hands-on review. Like, you know, you say that you can do all this stuff. Let me see how it actually works.

Greg: 14:11 – Agreed. I mean, of course they’re selling their product, right? They’re selling their service, so they’re going to try to make it as fancy or how amazing it is. And it’s gonna solve all your problems, but until you get your hands on it and do that, that’s the only real way to dig into it and see what does it really do and what does it not do. So, you had six software companies that you were able to actually go in and dig into this stuff. You had the five different categories to grade this off of, and each one of those, you graded from one to 10, correct? 10 being the best, one being the worst on each scale for each, function, reporting, usability, the integrations, and then the bonuses. Correct?

Jay: 14:52 – Yup. That’s right. So, you know, they all got a score out of 50, and all of them, like I said, they didn’t make the cut to be evaluated if they weren’t good. Like, all of these are ones that some of our clients are using and all of them have some benefits. And in fact, like when I look through this, it’s like, oh, I wish I could take this aspect of this software and combine it with this aspect of this software and then you create this amazing like combination of things. So, yeah, I mean, no matter what the score is, like, each one of these has a reason for people to sign up for it.

Greg: 15:31 – Agreed. And I don’t think we—I mean, as we’ve said before, this is unbiased. There’s not one software company that Two-Brain says “you must use this to get everything that you need for us to help you.” We just say, hey, whatever software you’re going to use, these are the things that you want from it. And these are the things you need from it. So, I think every single one of the softwares that was on this list all had one of our customers if not more of our clients using this, using one of the softwares if not more.

Jay: 16:02 – Yeah. And there’s a bunch of other ones that people use that that we only heard about or found out about after we published the post. So next year’s post is probably gonna have a few more. One of the things—so I can go through each one of these, but I think what’s interesting about this is because I did not come in with an expectation that any one of these is going to quote unquote “win,” one of the things that I looked at that I didn’t talk about on here is the level of support and communication that each one of them provides. And it’s actually why some of the smaller ones made the cut in terms of being evaluated versus a competing softwares, is like, you know, if they’re really good about communicating and they’re really good about saying like, “Hey, we’re going to work with you” and they actually demonstrate that they are willing to work with you, then it kind of gets them a few extra points and it gets them added to this list.

Greg: 16:59 – I would say, probably what, 2020 or later 2019, if we redo this and do a top 10 or even top 15, where all the software companies that are within the gym industry or even the service-based industry, I feel like you’re going to definitely add that to the categories and it will be really interesting to see where everyone kind of falls then with that support added to it. So, we’re not going to go through each one, of course, we’re going to link it in the show notes, the actual article so everyone can actually go through each one and dig into it. But out of the top six we had, we had Pike13, Zen Planner, PushPress, Arbox, Wodify and Mindbody. Now with these, I mean again, people can look in the article, there’s amazing things with some of them that did really great. And then other categories where they fell while other ones did really great in those categories and then fell in the opposite. So it seems like overall everyone did really, really well. There was no one that just was awful all the way around ’cause I feel like that would definitely not be a software that anyone would stick with for long term. And I can’t remember off the top of my head, but I feel like there’s some softwares in the past that are no longer software companies due to that fact. But I want to give—I mean if anyone’s listening and didn’t have time to read the article, kind of want to give the top one that scored the highest out of 50. And kind of the reasons why it did. ‘Cause to me, I will tell you, Jay, when I read this, I was surprised, I did not think that this was the software company that was going to be the highest ranking out of 50. It wasn’t on my radar for it. And then there was another one that was in the top three that wasn’t—I’d never even heard of this company.

Jay: 18:43 – So, OK. So Mindbody got the highest score and it was actually, like you said, it was unexpected. It does a lot of things really well. The main thing that it doesn’t do well is part of why it’s not expected. So the big thing with Mindbody is it kind of does almost everything, right? It’s like you can, you know, there’s appointments, you can charge people, there’s scheduling. I mean, it’s the biggest in the industry by far. And it does a lot. It does all of the things that you might need. The reporting is pretty good and they, you know, there’s ways to generate custom reports. The biggest drawback to Mindbody is that it’s very hard to use. And I think that’s where it stops people because there are so many options that it makes it so that you don’t even know where to start.

Jay: 19:33 – And so they do a lot of training and things like that. And so, like I said, the reason that it has the highest score is there’s lots of integrations, lots of bonuses, you know, lots of reporting, lots of functionality. I actually don’t use the system at my gyms because of the usability. And my comment to them when I talked to them was just like, “You know, look, how do you make this usable? Because so many gyms use it. How do you make it work for these new gyms that are coming on?” And that’s part of where they as a support team try to help bridge the gap. So when you kind of go down the list, you know, like you said, there’s one that you hadn’t even heard of. So the bigger ones really, Mindbody, PushPress and Wodify are kind of the bigger ones—or sorry, Mindbody, Wodify and Zen Planner are kind of the bigger ones. The smaller ones are PushPress and Arbox. And Pike13 kind of falls in between there. Arbox is one that made the list because one of the Two-Brain clients was very adamant that this is just an amazing software and I needed to talk to the founder and you need to check this thing out because it just does everything we want and they make changes all the time and it’s just amazing. And it’s based in Jerusalem and I went and checked it out and first thing I thought was like, ’cause I was looking at a version that was in a different language. The first thing I thought is like, “Oh this is never going to work. It’s a different language. The loading is a little bit slow because the servers are somewhere else, but it looks really nice.” And I talked to the founder and I shared with him our requirements. And backing up, I actually pulled together a list of requirements for all the stuff that we might need in a gym-management software. And I sent it to all the major software providers and said, “Hey, can you provide us with this stuff?” And so I did the same thing with Arbox. The next time I talked to him, he had actually built three or four of the things on my list into the system, demonstrating to me how it worked and it was like—and it looked amazing and it worked well. And I was like, “OK, like this is the kind of responsiveness that we would want with our gym-management software.” And so that’s why it ended up making the list. It’s a small company, they don’t have as many clients as some of the other ones, but the system works well and there’s a lot of things that it does well.

Greg: 22:04 – Yeah, I’d never heard of this company until I saw that post that somebody mentioned it and I knew you were going to dig into it. And that’s an amazing response from the owner to say, “Hey, what do you want us to help you with?” And then you giving them the list of demands and saying, hey, this is kind of what we need. And him already putting it into play. That doesn’t happen. And I think it happens more often with those smaller software companies than such as the bigger ones. But it’s really cool to hear that they’re willing to do whatever is necessary to fulfill a company that knows that hey, we have our entrepreneurs’ best goals and thoughts in mind and we want to make sure that we help them succeed. And it’s really cool to see a software company jump at it and say, hey, we want to to, and help out your clients, whichever way we can.

Greg: 22:52 – Yeah. And, you know, here’s the thing with the smaller ones like Arbox and PushPress, you know, we were rooting for these guys. You know, it’s like, we want small companies to be successful and you know, this is why we shared the requirements with them, like, everyone kind of gets a fair shot at it. But, you know, I was just really impressed by that response time because like I said, as a former software developer who lives very close to Silicon Valley, that’s the kind of thing you expect, like software turnaround is pretty fast. And I was also a project manager that would manage software developers so I can understand BS when I hear it. And when they say, “Oh yeah, I’m 90% done with that thing,” that means that they’ve barely started, you know, and so what I really look for is like, what kind of results can you generate? And that was a big win for them. So, yeah, I actually think, you know, when you look at things like Wodify and PushPress—or sorry, I mean Wodify and Zen Planner, they have a lot of the stuff that gym owners would need as well, and the scores were very close for some of these. You know, each one takes a slightly different approach to how they build the software and in some cases that hurt them in this evaluation because of what we are asking for. But it doesn’t mean that it won’t work for the business owner who fits that mold, right? So I think those are great systems as well.

Greg: 24:29 – Agreed. And I mean, out of the rankings, one through six, Zen Planner got a five and that’s a software company we use for my gym. It works. We’ve looked at switching over to some of these other companies that are higher on the ranking, but it just didn’t fit us as well as Zen Planner is right now. So people don’t need to fear that they have to switch over to Mindbody ’cause they got the best ranking. It was like what you said in the very beginning. It’s an unbiased grade and ranking of what they had to offer, and it doesn’t mean that every single one shouldn’t be tried by the gym or service-based business that is looking for something new. Get your hands on the products and actually really try it before you turn around and just say, O”K I’m gonna pick this one because it’s got the highest ranking.”

Jay: 25:12 – Yeah, I mean, I think if you were starting from scratch, like you were just opening a gym or looking for a new software, this could give you a good guide. If you’re looking to switch, I don’t know that it’s worth switching, because the cost of switching, if you’re an established gym is pretty high. Like you have to get a new system in there, sometimes you have to collect new credit-card numbers. You got to train your clients on the new system. And so if there were one that stood out so much that we said, “Gosh you guys, everyone has to switch to this,” then we would have said that. But that’s not the case. I think you pick the one that kind of fits your business model, fits your personality. If you’re starting from scratch or if you are just having so many frustrations with the one that you’re on that you just have to get off of it, then this is a good guide to use. But I do not recommend anyone switch. There a lot of other ways to get done what you need to get done, and I think all of these companies do a pretty good job with their support. And so if there’s something that you’re trying to do that you can’t figure out, like, email the support team because a lot of times they will be able to solve that for you.

Greg: 26:30 – Agreed. 100%. Now I know if anyone does want to read the article, we are going to post it in the show notes. So please go and read. We’re not going to dig into each one of these like that, but let’s say a software company is listening, Jay, we’ve kind of talked about it, hinted on it before about having kind of that list of requirements that we need for our clients to be successful in the things that we see as mentors to kind of have a standard so that everyone is getting a great service and then also going to be able to get the numbers that they need and be successful. How do they reach out if they want to reach out and actually get that list from you or contact you so that they can get you to evaluate their software?

Jay: 27:08 – Yeah, I think we actually published that after we sent it to everyone, so we can just include in the show notes. So I think it’s actually a blog post on the site. So we’ll just put that in the show notes and it’s basically like, it’s kind of tiered, of like, you know, what is the basic minimum and then what does it take to be Two-Brain compliant, and there’s like—it’s just a bullet-pointed list of here’s all the things that we need. So yeah, let’s just include that in the show notes.

Greg: 27:36 – Awesome. We will get that included in the show notes. Well, Jay, thank you so much for beign able to jump on Two-Brain Radio and going through this with us. I know a lot of people out there—I think the only thing that would supersede this on the affiliate owners page was “should I carry Kill Cliff or FitAID?” So I’m glad that we were able to do this in an unbiased way so that people could actually see the results, and if they’re brand new they can pick what they want and try different things. Or like you said, if you currently are a service-based business or a gym owner, don’t switch to any of the other ones just yet. Because until they actually give everything that is needed, it’s going to be more of a pain. So, this is just for people’s knowledge to realize that, hey, here’s kind of the ranking that we’ve seen in an unbiased way.

Jay: 28:19 – Yeah, it was a lot of fun. And I think we’re gonna end up doing this again next year and I’m hoping we have a few more on the list. And my preference is that we come out with one just clear winner that we can say to everyone like, this is the one you guys need to try this thing. And you know what, if we don’t, the feedback that we’ve gotten from these companies is that they’re all looking to improve and be closer to Two-Brain compliance. So maybe you’ll never have to switch.

Greg: 28:48 – Exactly. I hope for—either one of those sound amazing to me. And, of course the latter, if I didn’t have to switch, that would be best. But, I hope, like you said, next year we come out with one clear winner and say, “Hey, these are the people that everyone should be going to.” So Jay, thank you so much again for jumping on Two-Brain Radio and spending your time with us and talking about this.

Jay: 29:07 – Yep. Awesome. Thank you.

Chris: 29:08 – Hey everyone. Chris Cooper here; I’m really thrilled to see you this year in June in Chicago at the 2019 Two-Brain Summit. Every year we have two separate speaking tracks. There’s one for you, the business owner and there’s one for coaches that will help them make better, longer, more meaningful careers under the umbrella of your business. This year we’ve got some pretty amazing topics like the client success manager, how to change your life, organizational culture or the business owner’s life cycle, how to have breaks, how to have vacations, how to help your marriage survive, owning a business, motivation and leadership, how to convert more clients, how to create a GM position that runs your gym for you and leaves you free to grow your business, how to start a business owners group in your community and more.

Chris: 29:52 – Point here is to do the right thing that will help gym owners create better businesses that will last them for the long term, get them to Tinker Phase, help them be more successful, create meaningful careers with their coaches and give their clients a meaningful path to long-term health. We only do one big seminar every year and that’s the Two-Brain Summit and the reason that we do that is because a big part of the benefit is getting the Two-Brain community together and welcoming strangers into our midst and showing them how amazing gym ownership really can be. We’ll have a link to the Two-Brain Summit, including a full list of all speakers and topics on both the owners and the coaches side in the show notes. I really hope to see you there.

Greg: 30:31 – As always, thank you so much for listening to this podcast. We greatly appreciate you and everyone that has subscribed to us. If you haven’t done that, please make sure you do. Drop a like to the episode. Share with a friend, and if you haven’t already, please write us a review and rate us on how what you think. If you hated it, let us know. If you loved it, even better. See you guys later.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

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Episode 171: Free Trials (and Tribulations) with Kyle Racki

Episode 171: Free Trials (and Tribulations) with Kyle Racki

Greg: 00:01 Hey everyone. It’s Greg Strauch with Two-Brain Media. On this week’s episode we talked to Kyle Racki, CEO and founder of Proposify. We talk about Kyle’s new book, “Free Trials (and Tribulations),” along with learning more about Kyle’s life experiences that have led him to become a business leader. Subscribed to Two-Brain Radio to hear the very best ideas, tips and topics to move you and your business closer to wealth.

Greg: 00:26 Two-Brain Radio is brought to you by Two-Brain Business. We make gyms profitable. We’re going to bring you the very best tips, tactics interviews in the business world each week. To find out how we can help you create your Perfect Day book, a free call with a mentor at twobrainbusiness.com. We’d like to thank another one of our amazing partners, Level Method. As a CrossFit gym owner, I know retention is key to keeping my business going for years to come. Retention is not easy though. People want to see success and if you don’t show them early they’ll find a place that does. This is where Level Method comes in. With Level Method, you are now able to guide your members through an amazing structure; it’ll give them a path to success. Once you have success, you instantly have motivation for them to continue, which will now be delivered to your members. Start systemizing the creation of powerful moments for your members today. Go to levelmethod.com to book a free call.

Chris: 01:20 Hello Racki, welcome to Two-Brain Radio.

Kyle: 01:22 Hey, thanks for having me Chris.

Chris: 01:23 Yeah man, it’s a real pleasure. And you know, I got to meet you in person long before this book came out. You even mentioned back then that the book was coming, so I was anticipating it. It was even better than I’d hoped. So today we’re going to be talking about Kyle’s book, “Free Trials (and Tribulations).” I’ve got my well-thumbed and often-folded copy right here, but Kyle, you know, the listeners would love to hear your story first. So go ahead and I’ll let you tell it.

Kyle: 01:47 Sure. It goes back a while. So just kind of give them the broad overview, I guess. I run a company today called Proposify, which is a SAS business that helps thousands of teams write proposals, write, send and track. So the kind of the whole end-to-end process of that. We’re about 70 people, we’re based out of Halifax, Nova Scotia, and we’ve been on this ride now for five years. But prior to that I used to run a web design agency called Headspace—not the meditation app, which people often get confused by; just a really good name. Did that for about five years. That was the first business that I had started, did that when I was 24 and actually met my business partner Kevin, who’s 20 years my senior and we’re still together today running Proposify. So that’s kind of a brief work history, where I was a graphic designer by trade; went to college for that.

Chris: 02:32 OK. So we’re going to get to the “how to build a business while getting punched in the mouth” part later. But in the book you say you’re not a born hustler, so why did you want to start a business in the first place?

Kyle: 02:45 Yeah. You know, the idea of sales always really scared me, which is kind of a little bit ironic. Running a SAS business that helps sales teams with sales and doing a lot of speaking about sales. You know, I was never kind of the scrappy hustler in the sense of like the ones slamming cold calls and going and knocking on doors. I was always a little bit more shy than that, you know, but I wasn’t the kid—like if you ever hear Gary Vee talking about this stuff, he’s like, “When I was six, I was, you know, stealing the neighbors’ flowers and selling it back to them and getting other kids in the neighborhood to sell lemonade for me.” And that was sort of the Gary Vee thing. That was never me. I was kind of like the quiet artsy kid drawing.

Kyle: 03:26 So the idea to become an entrepreneur, which just happened kind of organically in my twenties when I was a graphic designer at an agency, and I have to thank the bad bosses that I had. There were these guys running these agencies really uninspiring. We had no idea what was going on with what were y’all trying to do? Maybe that was the millennial in me, but it sort of just inspired me like “I can do this.” They’re just going and finding somebody who has a web contract or whatever and I’m the one doing the work. Let’s just cut out the middle man and I’ll go out and find the web contract and do it right. So that was kind of where it started. Just the freelance lifestyle, living life on my own terms, being able to work from home, choose my contracts. That was really what appealed to me, and in order to get that I had to get out and kind of hit the pavement and find clients.

Chris: 04:15 What was that first transition like for you when you were working for an agency and then you decided, “I’m going to go out on my own and have my own agency”?

Kyle: 04:23 It was terrifying. Now it started as freelance so it was a little easier. It wasn’t like I was going and renting office space and hiring people, but yeah, it was always really scary. I found that because I wasn’t as—I didn’t think I was a good salesman, but I knew that I was good at what I did. I knew that that clients were happy with my work and I knew that I was professional in the way that I dealt with them. So because of that, it was actually, all I needed to get was a couple of contracts, make those client’ really happy and then they would refer other people to me, and eventually it was kind of the reputation in my local area that was sustaining me. I kind of went out the first month and just, you know, went to conferences and handed out business cards, got a couple of jobs and then from then on as a freelancer I didn’t actually have to do any more sales. They just kind of came to me that way. So I was like, “Well, that’s a lot easier.” It’s a lot easier to do that than to try to have to sell something.

Chris: 05:19 It’s interesting that you bring that up and listeners are going to hear later on why I think that you got a lot of sales training from a very early age, but so how did the process go then from owning Headspace to another business and now into Proposify?

Kyle: 05:35 Yeah, the agency was a massive lesson over the course of five years, many lessons, really, of what not to do, how not to run a business. And I learned the hard way, you know, a lot of different things from how to manage a team and inspire them and motivate them and how to go sell larger contracts and everything about owning and operating a business, I think that I failed miserably at it, but I’m also grateful to have had those lessons because they helped me succeed with Proposify. The transition between the two was really ugly and really messy. Essentially what happened was we started getting into building SAS products internally in the agency, mainly because we hated running an agency. We hated trying to sell one-off services. And Kevin, my business partner actually came from a product background. He had actually sold coffee back in the 90s through e-commerce. He had Manatee coffee in Florida, which he ran.

Kyle: 06:35 And yeah, we started getting into the product stuff mainly as a way to sort of build some kind of recurring revenue. But we always had, you know, these different harebrained ideas for different products. We never really took the lead start-up approach and went out and validated them properly. So we just kind of spun up different products, realized there wasn’t a market and moved on to the next. And then I remembered about this whole idea that I had back in maybe 2006 for proposal software. When I was working at agencies and then going out on my own, we always had to write proposals and I thought, “Well, this is a huge headache. Wouldn’t it be easier if there was kind of like a basecamp-type system to manage all your proposals. Just sort of sat on that idea for years. And then fast forward to 2011, 2012 we’re like, what product should we do next? Well let’s dust off this little idea and give it a try. Ended up gettin it into some people’s hands even in a very early stage. And even though our product sucked, the feedback I got, a problem was, “Oh my God, I hate writing proposals. I have to do it every day or every month. It’s the worst part of my job. If you can build anything that will make that easier, we’ll pay you money.” So that was sort of like the first indication that we were on the right track and kind of moving towards something. Getting it launched and then selling off the agency and going full time into it was a long and arduous process. But we finally got there.

Chris: 07:58 I think a lot of entrepreneurs maybe have that blank-slate fantasy of “if I could start all over with a brand-new company knowing what I did now, here’s what I would do.” But the reality is like it’s very hard to kind of shut one company down and ramp up another. So how did you work through that process of focusing on Proposify and you know, taking your foot off first base like you had with Headspace?

Kyle: 08:23 Yeah, you know, I think there’s always a bit of a leap of faith with any businesses endeavor, right? You try to get enough validation to go, okay, well there’s a market, we’ve got some good customer feedback. Like, it all makes sense. But at some point there is a bit of that like jump off the cliff and hope you land on your feet. So I think we were there with Proposify, we were never really sure it was going to take off. There was even periods where I really didn’t think there was any market there, there wasn’t even really competitors at the time. So kind of that was a bit of a scary thought. I’m like, “Wow, nobody else doing this or maybe only one other company is doing this. How big is the problem?” We were incredibly fortunate with our timing because the whole proposal software industry really took off in the last couple of years and there’s a lot of competitors now, but it was far from a sure bet. I think actually what really helped us, in a sick sense, was the fact that our agency business wasn’t doing well. So it was kind of like, well we can stay stuck in this, you know, shitty business that we’re losing money all the time and completely stressed or we can try something new. Maybe we’ll be in the same spot, but at least it’s different. At least we can kind of start fresh and not have all the baggage from that other business.

Kyle: 09:38 So I think, you know, the process of getting it sold, and when I say “sold” it’s with double quotes, right? We basically got rid of it. We got it into somebody else’s hands. We didn’t make a cent off of it, if anything we lost money in the transaction. But it was really just the act of like, okay, we need to file that away, start a new chapter and move forward. And luckily after six months of doing it full time, we started to see significant traction.

Chris: 10:04 One thing that impressed me from the start about you, Kyle, is your ability to shoulder risk and just appear completely unfazed. And we met either in Toronto or San Francisco with the Martel Group and I think at that time, Proposify wasn’t even profitable yet, but you were just completely calm about it. Where does that come from?

Kyle: 10:29 Well, I think when we talked, when we met, not profitable, it was really because we raised money. So we did have cash in the bank, but you know, were currently running at a loss, which all all start-ups who raise capital do that, they spend ahead of revenue. But yeah, risk tolerance, I think there is a certain amount of risk tolerance that I have or just maybe an ability to stay calm in stressful situations. I don’t really know where that comes from. I mean it certainly as a child I had to, in a lot of ways, hold in my feelings. I had to kind of internalize that stress and just sort of push through it so it could have come from that. You know, I wasn’t really allowed outbursts as a child, you know what I mean? Whenever I saw TV show where a kid was like, “I hate you dad!” I was like, “Oh my God, I would’ve got like, my head knocked off if I tried that.” So it could come from that. Just sort of like just being able to bear down when hard times come.

Chris: 11:29 Let’s get into that now, Kyle. So tell me about your childhood and how that has prepared you for entrepreneurship because you know, part of what makes “Free Trials (and Tribulations)” so interesting is your entire story, starting from when you were a little kid and leading up to age 30.

Kyle: 11:47 Yeah, so I was raised by my parents as Jehovah’s Witnesses. They converted back in the 70s when they were still young adults themselves in their twenties and so, you know, to me it seemed mostly normal growing up that way. I mea it’s hard to be a Witness kid because there’s a lot of stuff you can’t do. Celebrating birthdays, you know, hanging out with kids at school, like after school, going to their house, participate in sports. It’s a very, very strict upbringing for the most part. But you’re also kind of taught that you’re—it’s of weird, but like your group is the only safe one. Everybody around you, they’re all worldly people and Armageddon is going to come any minute and destroy them all. So you have to try to save as many as you can. So that’s kind of a weird way to grow up. I refer to it as a doomsday cult, which some people think is a bit hyperbole, but I think it’s close to the truth.

Chris: 12:51 Okay. So what that led to though, and you know, this is actually a recurring theme in the book is like not just here’s this, this hard thing that I went through, but also like, here’s how it’s helped me down the road. And I was surprised when you said that you weren’t naturally an outgoing kid because in the book you’re telling stories about, as a kid, knocking on doors to talk about religion. How did that go?

Kyle: 13:13 Well, you know, this is the thing, when you’re raised as a Jehovah’s witness, knocking on doors, preaching is expected, right? You don’t have a choice. So you either have to just figure out how to do it—and I mean this is the thing a lot of people don’t realize, but all Witnesses, when your door is knocked on on Saturday morning, the person on the other end probably doesn’t want to be there any more than you don’t want to have them there. They all think that they’re there, you know, with zeal and vigor or trying to save your soul, and that is a very small amount. The majority are like, “This is what I have to do.” They count their hours and have to submit them at the end of the month. It’s like a sales quota. So you’re praying that the other person doesn’t answer and we can just mark them as not at home and move on to the next one. But then if they do show up at the door, you’re like, “Oh crap, now I have to say something.” And so then you have to go back to your training and use your rehearsed presentation and you know, overcoming objections. And there’s a lot of like kind of overall sales training that you go through as Jehovah’s Witness to be able to create rapport with the other person, try to listen and understand their needs. All sounds a lot like sales training.

Chris: 14:24 So before I get to the sales training and how it’s benefited you, how often were those sales pitches on the porch successful?

Kyle: 14:31 Oh, very, very rarely. Generally the way it goes as a Jehovah’s Witness, when you do the door-to-door, you know, probably 70% of people won’t answer the door or they’re not home. Then of the few that you get probably, you know, 90% will say “not interested,” close the door. A couple will yell at you and then like out of the rest of them, they’ll usually take magazines. That’s kind of like the thing that people do because they think that’s what gets rid of you is they go, “Ok, yep, sure. I’ll take your Watch Tower and read it. Thank you.” But what they don’t realize is you’re inviting them back. As soon as you do that, you’re now a lead. You know, they don’t call them leads, but they’re basically “Oh, I placed some magazines. I’m going to write their name and their house number and now I’m going to come back in a week and try to give them the next set of magazines and then try to develop that into a Bible study, and after a Bible study, I’ll start bringing them to meetings.” It’s a very, very long sales cycle, a very long road to conversion. But actually, at least when I was a kid in the 90s and the Internet wasn’t as prevalent with information, that is how we Witnesses were created other than just being bred and raised in the religion.

Chris: 15:41 OK. So you’ve done an amazing job already of, you know, sharing how that process is a lot like lead generation and cultivation and nurture. So how has that prepared you for what you do today?

Kyle: 15:54 Well, even though overall my experience in that religion and the process of leaving it was an incredibly negative experience, although generally shaped who I am, so can’t discount that. I think that the greatest thing about it was when I was a kid—and unfortunately they don’t have this anymore from what I learned from those inside—is they used to have weekly public speaking training where you would get a talk slip maybe every month. That will be your talk you have to work on you, you do the research, you practice it, and then you go up, you deliver it to the congregation. Usually five minutes and then as you kind of get more experienced, you’d give longer talks and then literally like an adult or an elder or somebody on stage would grade you afterwards in front of the audience. They’d be like, “Well Kyle, that was a really good job on the talk. Noticed that you didn’t pause quite enough. You were kind of rushing a little bit.” They would actually critique your performance onstage in front of everybody. So there was a lot of like lessons I guess on being humble. Like, that was the one of the main things as a Jehovah’s Witness is you have to be humble, you have to basically take it. You have to take any and all kinds of abuse. Now realizing later on why they encourage these traits is you’re much more obedient and willing to follow the rules and not question authority, but I digress a little bit. The public speaking training was very effective and it helped me even today to be able to give presentations, and I think it’s a shame that kids are growing up Jehovah’s Witnesses now don’t have that.

Chris: 17:28 Exactly. Yeah. You know, that’s one thing that’s really missing from our schools, at least in Canada, that you’ll find when your kids are a bit older is there’s no public speaking training at all. And so I think that the best is probably somewhere in the middle. But did those skills directly help you when it came time to raise money for Proposify? What was that process like?

Kyle: 17:48 Yeah, I mean, I think when it came time to raise money, it was probably more so just being in business for quite a few years that helped that. To be perfectly honest, think my business partner is the generally the leading force behind raises, so I can’t take credit. You know, it’s very similar to our relationship at Headspace. When it came to sales, Kevin was much more the opener and I was the closer. Kevin was great at building and nurturing the relationship until it got to a point where, pkay now you have to present the plan or present the contract and then get it signed. And it worked very, very similar to our fundraising efforts where Kevin would develop all the relationships with VCs and different investors and show them our numbers and our pitch decks. But then actually, you know, hopping on a plane and going and pitching it would be us together. We would do that. So the presentation skills for sure probably helped. Although, we haven’t been super successful with raising money as much as others have, so I don’t know how great I am to be able to offer advice there.

Chris: 18:52 That’s okay. I mean, you know, what I guess I was getting to is that your first rounds came from somebody that you’d made a connection with another way. Right? Well maybe just tell us that story to start.

Kyle: 19:03 Oh, that was raising the first round for Proposify? Yeah, I mean when we were running Headspace, there’s a VC group in the city that I’m in, in Halifax, called Innovacorp, and we had actually pitched them on raising a seed round back when we were running Headspace, and they turned us down. Now, a year passed and we had come out with our MVP. He got some traction, he got some feedback, not a lot, but you know, I think we were at maybe 10 customers or something like that, paying 20 bucks a month. So very, very small amount of traction. But we had done it, we’d put something out there. And then we were getting towards the tail end of getting out of the agency business. I signed up one month to a pitch competition at the local kind of start-up group called Volta just to kind of pitch, more or less get out and practice, you know, and at that pitch competition, ended up winning the competition and that same guy from Innovacorp saw what we were doing and was like, “Oh wow, you know, you guys have come a long way and we should definitely talk.” So that was sort of the beginning of just getting in the door with them and then ultimately they said yes when we pitched the board on what we were doing.

Chris: 20:17 You know, there’s really, I think, two valuable lessons there. And the first is that just because someone says no once doesn’t mean it’s a no forever. But you know, the point that I was trying to reach here I guess would be, it never hurts to go out and make more connections. How has that helped you, you know, grow Proposify?

Kyle: 20:33 It’s funny because a lot of our members of our leadership, two in particular that come to mind, Ricky, our head of product and Jen of communications, you know, I have known them for 10 years. We actually met before I even started Headspace at the agency. And so, I mean it’s been a long, long relationship but now they’re members of leadership at Proposify. So I found that as you kind of go about your being in business or being employed somewhere, if that’s where you’re at, is and look at everybody as a potential lifelong connection, you know, people that you really click with and people that work well together. You know, you could be working at their company or they could be working at your company in 20 years. You have no idea. So the more of those relationships you foster and create and also prune, you know, the people that aren’t adding value or you don’t click with or you know, just basically being able to—I don’t actually believe that you have to be friends with everybody and you have to, you know, not burn a bridge; I think sometimes it’s great to burn a bridge, you know, just know who you work well with and enjoy their company and don’t spend time with people who are kind of energy drains on you.

Chris: 21:48 Can you give us an example of somebody that you’ve pruned? Maybe a client, maybe a staff person?

Kyle: 21:54 Yeah, I mean both of those, you know—hard to give out examples with staff. But I mean that happens. You always have the best of intentions when you hire somebody and over the course of time you sort of figure out they’re either not a cultural fit or they just don’t have the skills that you thought that they had and you’ve got to let them go. And that’s always hard. Sometimes you part on good terms and other times, you know, we had an employee who, the relationship was somewhat acrimonious as she left and ended up filing complaints and kind of going the legal route to try to get back at us. So that was unfortunate. But I mean that stuff happens. We always encourage our staff, like if you’ve got a customer who’s just unreasonable, rude, hangs up on you, swears at you, you know, just doesn’t want to—like a relationship in business, it has to be an equal exchange of value. So if you’re providing a service, you’re offering them value but they don’t want to pay you or they don’t want to live up to their end, then it’s not meaningful transaction. So that’s sort of the barometer for just fire them, you know? And you’d be amazed how many times an employee will think that the customer’s always right and you always have to say yes, and the ultimate goal is to keep the client. So when I would say, well, just fire them, just get rid of them. They’re always like, “Really? You can do that?” It’s important.

Chris: 23:19 It is. And you know, you’re a really great connector. So I’m going to bet that, you know, maybe you’ve had a friend who worked for you or a friend who was an early client and then you realize that, you know, while they were maybe a great friend, they were not a good fit for your business. How do you recommend people fire those clients?

Kyle: 23:38 Yeah, when they’re friends. You know, I’ve always been of the mind that you can certainly be going into business with friends and I’ve had pretty good success with it, but the person on the other end cannot look at it as, what’s the word? You know when you just hire your friends and family because they’re friends and family.

Chris: 23:59 Oh, nepotism.

Kyle: 24:00 Nepotism, yeah, like they have to know that okay, we might be friends and we might be able to go play, like Ricky and I play racquetball after work sometimes. You know, we’re very close friends. We were best men at each other’s weddings last year, but there’s still, we have to separate the business side of it. So when he comes to work, he comes at it with all of his energy, wants to be critiqued. You know, like, it’s actually a boss-employee relationship. He’s able to do that. He’s able to separate them. But I think when you hire your friends, you have to be sure that they’re not just looking at you to get them a free pass because we’re buddies.

Chris: 24:36 So how do you—what’s the first conversation when they’re hired, then? I mean, I’ve really struggled with this, so I hope you don’t mind me following this question a little bit more.

Kyle: 24:45 Yeah, the questions you ask. I mean, I think generally for people that I’m friends with, it sort of doesn’t need to be said, although maybe it does. That, you know, we’re entering into a contract here. Like, you know, you have to look at it with the same expectations that you would go into business with anybody, which is you have to live up to your end and I have to live up to my end, you know? And that means that sometimes you’re going to fight, which I actually think it’s great if you’re friends and you can have a good work fight. That’s how you get the best results, you know, you argue you and then oftentimes because they’re your friends, they’re more willing to challenge you, which is a great thing. Sometimes if it’s somebody who it’s like, they just met you, they’re a brand new employee, it takes them a lot of time to feel comfortable with challenging the boss because they’re used to environments where challenging equals getting fired.

Chris: 25:33 Right. That has come up recently, too. But you know, one of the most interesting parts of the book for me was you’re mostly writing about SAS business and software and stuff. But you have some really great advice for service-based businesses, too. And that’s who mostly listens to this podcast. Owners of gyms and hair salons and attorneys. And one of the things that you said in the book was that a service business can be lucrative for the founder if you go narrow and deep. What does that mean?

Kyle: 26:00 Yeah, I mean, you know, before you hit record, we were talking about websites, and I think this is a good lesson for all these different types of businesses, gyms and hair salons, you know, in the web-design business, it’s gotten very, very hard over the last decade because it becomes more and more of a commoditized service. So anybody can go and sign up to Wix or Squarespace or any of these do-it-yourself website builders, use a WordPress theme and it’s generally fairly fast and easy to get a really good-looking website up and running. So the mistake that I made with Headspace was we didn’t see ahead, and we didn’t focus on where the market was going. We kind of buried our head in the sand and just said, nope. It’s just the same thing Blockbuster would’ve done with Netflix, right? Like they bury their head in the sand, “no, people are always going to come to the store and want to rent their DVDs and pay their late fees” and they just refused to accept, you know, the reality of where things were going. And we kind of did the same thing on a smaller scale. You know, you’re going to be able to get a mom and pop to pay you 10k for a website. There are certainly people who will pay 10k and 100k and a million dollars for a website, but they’re probably not a mom and pop. So we didn’t see that coming. Now the way that agencies, the really good ones are able to do it now is they go super narrow and deep.

Kyle: 27:13 So, I use the example in the book of a local agency who kind of was our contemporaries at the time and they’re still running a 100-plus person agency, very successful and profitable. And what they did was they just said we only do travel and tourism websites, we help big brands, big travel brands, increase their bookings online and, and all their marketing, all their sales efforts, a hundred percent focused on big cruise lines and all these types of tourism and travel companies. If you’re the best in the world at something, then people will seek you from outside. They’ll want to work with the best. I like to use the example if you’re need a photographer, if you run an agency and you get the Corvette account and you’re going to do all the advertising for Corvette or for Jaguar or something like that, and you have to hire a photographer to do that, are you going to hire the photographer who does weddings and portraits and food shots? Or are you going to hire the photographer that does luxury cars? That’s all they do. They’re the best at it. Of course, you hire the specialist. For gyms and a hair salon, even though I don’t know a lot about those specific businesses, the same thing can happen on a local level because that’s usually, I think, where those types of businesses are competing, is for local business. Is they can be the best at X niche. Like you, you know a lot about the CrossFit business, right? So that’s, I guess what I mean by going narrow and deep.

Chris: 28:36 So I think a lot of people understand that concept logically. I think what maybe ties them up is this notion that it’s a zero-sum niche that for me to get a new client, I have to take a client away from you, but one of the first things that you said on this podcast was there are other proposal softwares out there now and that’s growing for everybody. So is it a case of just broader awareness that proposal software exists is benefiting everyone or is it something else?

Kyle: 29:05 No, I think that’s a great point. You know, even though there is more competition, you know, obviously that puts pressure on us to be even more focused and even more specific in our messaging because we’re not the proposal software for everyone. For people who, for instance, care a lot about the design of their documents and want total control over the customization of the documents, we can totally compete in that space. Not every piece of proposal software is like that. Some of them, you know, you just upload your word docs and you don’t care if they look good and it’s just all about the automation. For others it’s the simplicity, it’s like super easy to just type in the box, no training required. We can’t compete in that space.

Kyle: 29:43 So just kind of knowing where you fit in that space. But yeah, overall, proposal software, knowledge of it has grown in recent years. I think it’s the same thing with any business. My wife is a subscriber to five different gyms in our hometown. You know, those gyms might look at each other like they’re competition, but maybe you know, for certain customers and they’re just, “Oh, well if I want to do CrossFit on this day, then I’ll be a member of this gym. But you know, when I want to do hot yoga or pilates, I go to this gym.” I don’t know if that person makes sense. I obviously don’t know what I’m talking about.

Chris: 30:15 No, that makes perfect sense. And that’s something that I actually talked about in my first book back in 2012 was that that was where the market was going to go to, that I thought CrossFit was going to be one of five or six choices that made up your entire exercise portrait. So how did you determine where you fit in that niche though, Kyle?

Kyle: 30:35 I think a lot of it is know where you’re strong at already. I think it takes a certain amount of self-awareness both as a person and as a company to go like, what are we already really good at? What are our best clients? Who are our best clients rather. Because if we want to be more specific and have more of a focus as a company, we have to know, who are we all ready making happy? If we’re trying to go after, you know, huge enterprise clients but our best clients that are super profitable are you know, in this 200-employee range. Well, you know, why are we going over here when we’re already serving this group very, very well. And also, maybe because I have a design background, I always wanted a proposal software that was very customizable and you can just brand it to look exactly like your InDesign file. That was important to me and I assumed it would be for other people. Not every customer cares about that. The ones that do would use our software, not someone else’s. So I think it’s just a lot of self-reflection and going, where are we already strong? Let’s double down on that rather than trying to go over here and do something we’re clearly not cut out for.

Chris: 31:43 And how often do you talk to these, you know, these best clients? You know, maybe you’re familiar with Mike Michalowicz’s Pumpkin Plan. So his idea is that you identify your top three to five best clients first by the revenue that they drive and second by how you feel when you’re serving them. You know, do they fill you with energy? And, so you know, if you know who your best clients are and you’re very focused on serving them better, how often are you asking them about how you can improve your service or what you should be working on next?

Kyle: 32:13 Yeah, you know, I used to do it a lot more. I used to have conversations with virtually every single customer who signed up. Of course, companies scale and now we’re at about 8,000 customers. That becomes a lot harder to do. But you know, customer development is a big core part of who we are. So everyone from just having conversations with customers and just reading the conversations they’re having and seeing what customers are saying, listening in on phone calls that salespeople are making, there’s a lot of ways at scale I think to collectively cull information and just know as a group, okay we know we’re doing really well with these franchise groups for instance, but maybe not with companies that need CPQ or all their salespeople are in the field with iPads for instance. We know that if that’s their current reality, they’re probably not going to be super happy with our service. Now maybe that’s an area we can get better. But just kind of knowing where you play by talking to your customers or rather your employees who can talk to your customers.

Kyle: 33:20 Okay man. I think that’s great advice. So last question. What’s your actual role at Proposify now? How do you spend your day?

Kyle: 33:28 You know, I struggled with this I think a couple of years ago and that was what impelled me to reach out to Dan Martell and get his coaching because I didn’t know what I did anymore. I was used to being in the trenches, you know, designing and having customer support conversations and really like doing the work, and transitioning out of that and trying to build a company was a whole area I’d never really known what to do. So I’ve gotten a lot of help from that group that we were a part of, that I’m still a part of. And so, you know, I think the advice that Dan Martell gives us about, like setting the vision and building the team and keeping money in the bank are the three primary roles of a CEO. I try to stay focused on that stuff, and I think that I’m in a really good position where Kevin as a cofounder is really good at the money part. So that’s an area that I’m kind of week in, is like the operational, working with the accountants, kind of knowing where we’re at financially. He owns that. So it really gives me a lot of freedom to focus on vision and team building, which was the stuff that I actually really enjoy, is sitting with the product team or sitting with the head of customer success and just talking about like where are we going? Where’s the product going? Where are the opportunities, where should we be doubling down on? And then running the weekly sync meetings. Yeah, I mean that’s kind of what I do every day.

Chris: 34:49 It’s really cool, man. Well Kyle, you know, my favorite thing about “Free Trials (and Tribulations)” is that, even though there are a lot of hardships that you’ve gone through, it’s really, really obvious how surviving those things has separated you as an amazing entrepreneur and benefited you later in life. So thanks for giving me an hour and thanks for this book.

Kyle: 35:07 Oh, thank you Chris. A lot of fun.

Chris: 35:10 Hey everyone. Chris Cooper here; I’m really thrilled to see you this year in June in Chicago at the 2019 Two-Brain Summit. Every year we have two separate speaking tracks. There’s one for you, the business owner and there’s one for coaches that will help them make better, longer, more meaningful careers under the umbrella of your business. This year we’ve got some pretty amazing topics like the client success manager, how to change your life, organizational culture or the business owner’s life cycle, how to have breaks, how to have vacations, how to help your marriage survive, owning a business, motivation and leadership, how to convert more clients, how to create a GM position that runs your gym for you and leaves you free to grow your business, how to start a business owners group in your community and more.

Chris: 36:02 Point here is to do the right thing that will help gym owners create better businesses that will last them for the long term, get them to Tinker Phase, help them be more successful, create meaningful careers with their coaches and give their clients a meaningful path to long-term health. We only do one big seminar every year and that’s the Two-Brain Summit and the reason that we do that is because a big part of the benefit is getting the Two-Brain community together and welcoming strangers into our midst and showing them how amazing gym ownership really can be. We’ll have a link to the Two-Brain Summit, including a full list of all speakers and topics on both the owners and the coaches side in the show notes. I really hope to see you there.

Greg: 36:38 As always, thank you so much for listening to this podcast. We greatly appreciate you and everyone that has subscribed to us. If you haven’t done that, please make sure you do. Drop a like to the episode. Share with a friend, and if you haven’t already, please write us a review and rate us on how what you think. If you hated it, let us know. If you loved it, even better. See you guys later.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

Thanks for Listening!

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Episode 170: Buying Out A Partner

Episode 170: Buying Out A Partner

Episode 170: Buying Out a Partner with Ashley Mak

Today we are joined by Dr. Ashley Mak of Hudson River Fitness. Ashley recently bought out his partner and transitioned to sole ownership of the gym.

In this podcast, you’ll learn how he navigated every step of the process from creating an exit strategy, negotiating a fair buying price, working with lawyers and absorbing his former partner’s responsibilities.

 

Don’t forget about the 2019 Two-Brain Summit, June 8-9 in Chicago! This year we have some amazing topics and guests for both you and your coaches. Click hereto register and sign up now!

Links:

Simple Numbers
How To Buy Out A Partner – FREE GUIDE!

 

Contact:

ashley@hudsonriverfitness.net

https://www.hudsonriverfitness.net/

https://www.hudsonriverathletics.com/

http://www.amakpt.com/

https://www.linkedin.com/in/ashley-mak-35332991

https://www.facebook.com/amakpt/

 

Greg:                                          00:02                       Welcome everyone to Two-Brain radio. It is our mission at Two-Brain to provide 1 million entrepreneurs the freedom to live the life that they choose. Join us every week as we discover the very best practices to achieve Perfect Day and move you closer to wealth.

Greg:                                          00:25                       We would like to thank another one of our amazing partners, UpLaunch. Over the amount of time that you’ve had your business, how many people have come through your doors and never signed up for a membership? When I first opened, I remember getting everybody’s name and emails because that’s what I was told was the best way to start the conversation with potential new members. The big problem was I never knew what to say. Over many years, I spent countless hours developing plenty of emails to send to these new members or people that are thinking about signing up for a membership. This took a lot of time, probably way too long and could have been spent on more productive things. If you’re in the same situation I was, don’t waste any more time, and book a free session with UpLaunch. UpLaunch has over a hundred pre-built emails to convert new leads into members.

Greg:                                          01:09                       And when your members decide to take a break, they have a whole campaign to get them back through the doors. You have the ability to text message members right from the app, and with integrations like Google Calendar, Facebook and over a hundred more via Zapier. UpLaunch has you covered. UpLaunch was created by gym owners for gym owners. Head over to www.uplaunch.com today to get the conversation started with your future and past clients.

Greg:                                          01:35                       All right, we’re on another episode of Two-Brain Radio. We are with the famous Ashley Mak. How are you sir?

Ashley:                                      01:42                       I’m doing really well Greg. It’s nice and warm up here in Hoboken, New Jersey, and the sun is out and I can’t complain. It’s all positive vibes.

Greg:                                          01:52                       Excellent. So I wanted to bring you on because you guys have a unique story but not unique across all businesses and that is talking about buying out a partner. So let’s kind of give a background. So anybody that’s listening kind of knows who you are and the businesses that you own. And then we’ll kind of jump into the whole process of buying out your partner if you need to.

Ashley:                                      02:15                       Yeah, absolutely. So I am the owner of Hudson River Fitness, which is a strength-and-conditioning facility located in Hoboken, New Jersey. I actually started in the CrossFit world back in 2013 and I was coaching CrossFit from 2013 to 2016. During that time I was working with the owner of the affiliate and at the end of 2016 that was actually when I was presented with an opportunity to actually open up my own facility with the current affiliate owner that was working for. And so that’s when we actually opened up our doors in January, 2017 and that’s actually also when I started working with Two-Brain Business as well. Fast forward to now. So the gym is now a little over two years old, so we’re two years plus four months. And pretty much the great thing about how the business was run and what we were doing over at the gym with the help of Two-Brain Business was that I was in a position where I was actually able to buy out my business partner and become, say, the sole owner of the business, of the gym.

Greg:                                          03:19                       Awesome. Let’s kind of jump into that because it’s not, I know a lot of people out there listening to this are probably trying to navigate through a buying out a partner. I mean, whether that’s a partner that is mutual and everything’s going well and they just want to be able to own the entire business themselves, or maybe it’s a partner that they don’t get along with and they kind of jumped in to business with them and realized, “Hey, this isn’t the route we want to go.” It’s two separate routes and they need to kind of navigate to buying out a partner. So let’s kind of start from the beginning. You have the gym, you and the partner started this location and kind of let’s go from there to the point where you finally bought your partner out.

Ashley:                                      04:01                       For sure. And as I was getting prepared for today’s podcast, I actually listened to the Two-Brain podcast episode 81 where Chris talked about partnerships and how to get things started, and that really, it was great because it really did provide the framework and really just helped me understand how we were able to get into this partnership in the first place. And so even just with this business idea, Hudson River Fitness, just an idea that’s kind of like out in our brains, we were able to sit down, we sat down actually at the end of 2016, and we sat down and we talked about the different possibilities of what we could do as a partner. And the big things that we certainly focused on was making sure that we were outlining the responsibilities and the roles of like what each partner was going to do and really just understanding what our responsibilities were going to be.

Ashley:                                      04:54                       Obviously we talked about financials in regards to like how much we’re going to be investing and ultimately how much the gym was going to going to be making or what the gym needed to make in order to make this business successful. But then the last part is we opened up this gym, we were business partners or like, we came about doing this idea because we were actually good friends with each other too. And going through this process, actually had to prepare for—I mean, what we would call an exit strategy, making it so that in the event that our relationship does change, we do have an option for us to be able to get out of the partnership. And so we already outlined that from the get-go right before, even before we opened up our doors.

Ashley:                                      05:36                       And pretty much what ended up happening is we opened up our doors in January 2017, my business partner was actually the managing partner. He was the one who was really more so on the business accountability aspect of it. I was actually really good at the daily operations when it came to coaching, opening and doing all the sales and doing all those other things when it comes to actually operating the gym and the main goal was to be able to build this gym in our community, which is Hoboken, New Jersey, and really just focus on building community and also making this gym a successful opportunity for myself because prior to opening up the gym I was just a coach and I didn’t really quite sure know what my future was in the fitness industry and like what my path was. And here we were opening up this gym and growing it from the ground up, and over the past say, two years, the gym was able to grow not only in just its membership base, but also in the financials.

Ashley:                                      06:29                       We were able to sign on higher-value clients generating way, like a lot more revenue, which allowed the gym to be profitable, which led to a couple of different things. In some cases when it was a profitable quarter, we were taking that money home and then also there’s other quarters we were taking it and reinvesting it back into the business, whether it be to purchase new equipment or hire new staff, purchase new seminars, hire people to speak for our staff. And it wasn’t until the beginning of this year, 2019, where we had a discussion, me and my business partner, in regards to the future and where we really saw ourselves. Obviously the gym was doing really well, but really just trying to figure out what the next steps are as the entrepreneur. And that’s where we really had a serious discussion in regards to where we saw ourselves, what our futures were.

Ashley:                                      07:16                       And my business partner told me, “Listen, Ashley, my attention is going to start transitioning to other different avenues and other different ventures. Would you be interested and be in a position to buying out my share and being the sole owner of this gym?” And so that was his incentive to be bought out. My incentive to buy out my business partner was the aspect of having that, what I would consider a bigger financial upside. In essence, with the profits, when I had a business partner, the profits that the gym was making, it would obviously be split based on the percentage equity. And with that being the case, being that I was the person who was doing pretty much all the operations, the management of the staff and really growing the gym from the front lines, I thought this was a really great opportunity for me to be able to experience those positive benefits of being bigger owner in the gym that I was growing and running.

Ashley:                                      08:13                       And so we had that talk back in January and it was maybe about once we started having that talk in January, we actually began the process of actually running the sale in the beginning of February, and it took about 30 day. Pretty much it was from February 1st to initial close of sale where I was the sole owner of the business, March 1st, 2019. And during that time we had to take a couple steps actually because it wasn’t just like something where it’s like, “OK partner, here’s this check, now I own the business.” There are a lot of things that we had to certainly consider. And first off, the biggest thing that I had to focus on was really the idea of like how much am I going to buy my partner out for? And really trying to figure out the value of the gym and what’s a fair price.

Ashley:                                      09:03                       And so what we ended up doing was we had ongoing discussions. My business partner or my former business partner actually no longer lives in New Jersey. So we were kind of communicating via phone and email and that’s when we came to an agreement on our purchase price. And when it came to understanding like what a fair and reasonable purchase price was, I actually referenced this book called “Simple Numbers.” If you guys haven’t had the opportunity to take a look at that, it’s a good opportunity—it’s another book when it comes to just understanding the financials a little bit more.

Greg:                                          09:34                       And we’ll make sure that we link that in the show notes. So anybody that’s interested.

Ashley:                                      09:40                       Awesome. Yeah, it’s a cool book. And so going from that, it was really looking when it comes to the value of the gym, the valuation of the gym, they recommended three years of income that was generated by the business. Now, we weren’t a three-year-old gym. So what do we do when it came to just understanding how much the gym was valued. So what they recommended was you take that number, you take the average of the two years that you’re in operation and then you just multiply that by three and that just gives you a little bit more of a ballpark and then you end up buying out the percentage equity of the other partner based on that value. So we ended up coming up with a fair price. And from there I had to figure out, all right, well how am I going to pay for this? And I have to say one of the great things about being part of the Two-Brain family and being able to provide such amazing value to our clients and also providing opportunities for the coaches to grow, I was in a financial position to actually be able to pay this share of the business in essence out of pocket in cash. ‘Cause I was trying to figure out well, should I take out a personal loan, should I take out a loan from the bank? And actually prior to making this purchase, I actually discussed with the financial planner in regards to, all right, well I’m planning on purchasing this share of the business. What are my options? And so he said, “Personal loan out of pocket or from the bank.” Also, in some cases, some people can actually even take a loan from their actual business itself if there’s enough cash on hand. And what I found the most realistic for my situation was that I did have the funds to be able to purchase this share of the business with my own money, which was really exciting.

Ashley:                                      11:29                       And so I knew I was able to pay that. And then once we identified those financing options, I also had to look into the responsibilities that my business partner was really taking a hold of, taking responsibility for, which included him negotiating the lease, making sure that we have our payment processing under control, insurance, and even just management of the financial accounts when it comes to just overall payment processing. So those were the responsibilities that my business partner was taking over. Oh, in addition to bookkeeping as well. And after identifying that I had to understand, “OK, these are the things that I’m going to have to take over or I’m going to have to delegate once I have that changing of the hands.” And then as we were identifying that, we also needed to actually go into the actual legal aspect of things.

Ashley:                                      12:22                       The actual contracts in regards to the actual close of sale. So one of the interesting things for us is that we are still really great friends, my former business partner and I. And being that we were on the same page and we had a really great relationship when it came to hiring a lawyer and the mediators and really just coming up with that fair price and making sure that we are having that smooth transition, being that we were on the same page and we had a really great relationship, we just needed one lawyer, one attorney. This situation is a little bit different if you don’t have the best relationship or your partner’s exiting out the company in a different situation. Maybe not the best of terms or maybe just being like, I don’t know, any other situation aside from having a good relationship, that’s where the lawyers have to come in. Being that me and my partner were on the same page, we just needed one. But if you are in a different situation, you might need one to two or three depending on what your situation is. And so as the lawyer started to draft the agreements, he ended up sending it out to both of us and we were able to really read it out. And what we really decided to do instead of just dissolving our actual business and creating a new one, we just ended up restructuring the business itself. So instead of a partnership it ended up just being like a sole owner and that way pretty much all the bank info could stay the same, pretty much everything except just who actually owed the business, we were able to change that up.

Ashley:                                      13:53                       And then from there, once we came up with that agreement, we also notified the accountant who actually manages the business finances as well. So then that way they were actually in the know in regards to what to account for for taxes for this year. And then from there being that we were a new tenant in the space that we’re renting out right now, we ended up notifying the landlord as well saying, “Hey listen, this is the current state of the business. We’re still going to be in existence, but just the partnership agreements have changed, and Ashley is going to be taking care of the lease from now on.” So that was going to be huge because one, if we didn’t have a space we obviously couldn’t operate. And then from there—as we started, like this is all leading up to the actual execution. So as we’re doing all this planning, once we started making some moves, that’s when we actually started switching accounts.

Ashley:                                      14:48                       So payment processing getting moved to my name, the website getting moved to my name, all the Quickbooks and accounting and all that other stuff is going to be put on to my plate or put under my own account so then that way as my partner got phased out, he wouldn’t have access obviously because it wasn’t his business. And then that’s actually when we led to the actual execution of the buyout. So you’re looking at everything that we’ve done so far took about 20 to 25 days just because obviously things do take time and then we executed the buyout and we actually set a deadline. We said as of March 1st, 2019, Ashley will be the owner, the majority owner. Just to give you guys a little bit of a heads-up, I own 90% of the business and then my other business partner who does the majority of the marketing, he owns 10%. I wanted him to keep the 10%, my business partner, my other business partner for marketing, because that’s where I found the value. It’s like 10% of profits certainly goes towards marketing and that’s going to be his compensation. And then once we executed that buyout and then I sent some pretty large checks, around the moment that those checks got delivered, got deposited, I was the owner of Hudson River Fitness.

Greg:                                          16:02                       Wow. That is definitely a long process that you guys did very quickly because from what I’ve seen, when people are buying out partners or buying a business, it takes much, much longer. I mean close to, I mean even six months to buy it, buy a business or to purchase a business or to buy out a partner, like what you guys did. So it seems like you guys were very efficient and it’s nice that you guys were on the same terms, so it didn’t drag it out any longer. Let’s dive into one of the things you said in the beginning now. You said you had an exit strategy from the very beginning. What was that exit strategy? Was it basically this process is how you go about with the exit strategy, or what did that actually look like?

Ashley:                                      16:44                       Yeah, so the exit strategy, in essence what we did was we really just planned for the worst. So we actually outlined as many situations as possible when it comes to having to either have a partner buyout or just not be a part of the company anymore. The process itself, we actually did outline that specific process saying that it was originally the valuation of the business, the changing of the roles and tasks and ultimately identifying the financing options. But then when it came to the exit strategy, just really just identifying other routes. So an example would be, this is going to get kind of dark, but an example would be if I were to have died over the past couple of years with owning the business, what that would mean in regards to does my wife own the business or do my shares of the business get distributed? It’s been a while since I actually looked at that specific clause. We actually just wrote that one out and then I was like, well, I hope I’m not going to die over the next couple of years. But so we have that. But then the other situation was in the event that we ever actually were in a disagreement and just didn’t have a good relationship or the relationship that we had today. And really we outlined this plan that said if we weren’t on the right terms, we would have to have a third party, a mediator to actually help take us through this process, which is the process that which I just outlined. Does that make sense?

Greg:                                          18:07                       Yeah. No, it does. It does. And actually my fiance, she has a business partner. She owns an animal hospital, actually each have life-insurance policies. And in their partnership, it’s kind of like what you said, if something happens to either one of them, those life-insurance policies basically pay off the family members that had their family member pass away, and then the other person basically just takes control of the entire business. So that makes sense. Completely. And I mean, there’s no right way, or no wrong way to do it. The only wrong way would be just not to do it and not to have an exit strategy you put in there so that—no, that makes sense to look at every scenario you possibly could and figure out which one, or better yet, think of everything that could possibly go wrong and let’s get that in writing into there. Now that you guys, I mean you guys had that in place from the very beginning, which anyone out there that has a partnership or has formed one, make sure that that is put in there. You guys need to have that hard conversation. Sit down, talk about what happens if this happens, that happens, whatever, so that you guys can plan for that. Now you went into having the legal stuff done. You had the valuation of the business, which if anybody listening, we’re actually going to attach a Google Doc to this that everyone can, or a PDF that anyone can actually download and look at basically step by step of what Ashley has already talked about so that they can read it if they want to a little bit later. They can listen now and read a little bit later. But digging into this a little bit more, did you basically just write a check to your partner once everything was said and done or was it paid off over a certain amount of time? What did that kind of look like?

Ashley:                                      19:53                       Yeah. I would say that I actually wrote two checks. Just because it ended up coming, like the money ended up coming from a couple of different accounts just because when it comes to just saving up the money, I have in a bank account, which in regards to like saving the money, I just don’t touch it for big purchases like this. But I would say that one of the greatest things that Two-Brain Business has taught me was to be able to create these—one, create a profitable gym. And in essence that once I took this, once I was able to bring in profits month after month, I was able to save up enough money to be able to make this purchase possible. And I think that was one of the greatest things because I was trying to figure out like how am I going to pay for this big purchase? Like especially when the business is profitable and it’s like how am able to do that? And that’s what I ended up doing. I was able to pay it all up front, which was really exciting on my end.

Greg:                                          20:48                       Awesome. And not a lot of people can do that, which is what you kind of pointed out earlier, that if you went to the bank and got a bank loan, if you’re able to pay out of pocket, or actually having the business pay out, so like having a large profit account or something like that within the business where the business could basically pay for it, buy the one person out, of course that would minimize those funds down and then you would just take ownership over it and you wouldn’t have that profit of course in there, you’d have to build it back up. So that makes sense. Now, what was the process with actually having lawyers into this? Was it, I mean did it seem like it was more stressful having the lawyers or do you feel like the lawyers really helped mitigate all of that?

Ashley:                                      21:31                       Yeah, prior to actually speaking with the lawyers it just sounded like, it felt like a huge ordeal just going through all of this. To me, I was like, well, why can’t I just write out the check and just make this happen? And obviously with a business it’s a legal entity. So there’s definitely a lot of things on the back end. And I just realized, and this is something that I learned even just being a physical therapist, is that the lawyers are there to make things easier for us when it comes to all that legal stuff. And we were very lucky being that the lawyer who was actually taking care of the selling agreement, he actually wrote the operating agreement that we have when we first started the business. So he already had knowledge of the business already.

Ashley:                                      22:23                       But with even that, what I found was hiring the lawyer just made things a lot easier just because one, we were in a good position where both my partner and I, we were on good terms. So we were on the same page when it comes to what we both wanted. And so in essence that could have made things a little bit easier for the lawyer and the attorney. So with that being the case, to answer your question, working with an attorney actually made things a lot easier as compared to if we didn’t at all and kind of just did things back and forth ad hoc-type deal.

Greg:                                          22:51                       Okay. No and that’s the information I definitely want to get out there, is the ability for people to realize a lawyer is just going to make this a little bit easier on everybody. It’s going to allow them to kind of navigate through this process, which can definitely be emotional, especially if they have a partner that is not not friendly with this whole, if you want to call it break-up, but dividing the business or purchasing the business from them for their shares so definitely can mitigate some of that stress. Now that you’ve, I mean you bought the business, as of March, you own it 100% what would that look like from the business aspect of your members? I mean owning a CrossFit gym, we talk about community a lot and we understand the community. What happens there? What did you guys do to kind of navigate through any kind of stress from the members that could possibly say, “Hey, we want that partner to be the owner, not you” or anything like that. Like what did you guys actually do? What was the process to kind of let everyone at ease, let them know what was going on? But of course not giving probably too many details.

Ashley:                                      24:00                       Yeah, absolutely I have to say that this all started just even from the moment that we opened our doors, especially when it comes to identifying the roles of what each partner is going to be. So going into this, going into actually opening up this gym, we understood that the role of my business partner was the managing partner. He did a lot of the financials and he really just did a lot of the back-end type work. So there was only very few people who actually met my business partner.

Ashley:                                      24:30                       And so in essence, what that truly meant was everyone knew I was an owner involved. And so when it came to that transition, I know for our gym it was relatively easy. However, I certainly know that my agreement with my business partner was actually quite unique, especially when people are getting involved and say CrossFit gyms say the partners all want to be involved, but even from the get-go, my business partner said “I want to have a little bit more of a hands-off, not the front-facing but more of the back-end type of work.” So it actually led to the transition to be a lot easier because when it came to the daily operations and the general message, it was actually at least a year, year and a half since my other business partner, my business partner was actually on the gym floor and people were actually talking to him.

Ashley:                                      25:20                       So it just certainly simplified the process. However, I would say that if you have business partners who are say front-facing, what I found to be the most important aspect of all of this entire transition, not just on the sales closing but even the message out to the members is the idea of effective communication in regards to like what’s going to end up happening, but ultimately what it’s going to truly mean and helping leading into—was it fulfilling the goals of each party involved?

Greg:                                          25:56                       No, that makes sense completely. Now that you are sole owner of the business, is it everything that you thought it would be? Do you feel like having a partner? Now, I know you own 90%, you have a partner that gets paid dividends for the marketing side. But overall you’re running basically the show. Is it everything you thought it was going to be?

Ashley:                                      26:13                       Yeah, absolutely. I think if anything it certainly—it’s everything that I thought it was going to be and actually just, it’s kind of like as if you’re running with like those Nike sparq parachute things. It’s like you’re running with this parachute, but that parachute in reality, it was just in my head. Going through the sale actually just got rid of that mental parachute and it allowed me to just feel much more confident in regards to what I am doing in regards to the vision and direction of this business. And if anything, it actually helps outline a huge future for me. And especially being that my other business partner had his attention elsewhere, it was great because I was able to give him an opportunity for him to in essence focus his mind and his attention on other things that he wanted to be able to pursue as well. So to be able to have that, I guess I would say freedom, even though I have a lot more responsibility now, but it’s that responsibility but with the sense of “I can do this and make it a lot more things happen.”

Greg:                                          27:20                       No, that makes sense. I’ve never had a partner within my business. I’ve always owned my businesses completely. And I would say that it’s probably, you’re able to streamline things. You don’t have to ask, “Hey, can we do this? Hey can we do that?” But it’s always nice to have a partner that has their specialties. Like you said, your partner was doing all the financials and the back-end work that you weren’t taken care of or didn’t have to and now you do. So do you feel like taking on all of that work has become a challenge? Do you feel like it’s easier or do you feel like more likely to hire out some of that stuff that you don’t specialize in or didn’t specialize in that the partner did?

Ashley:                                      28:02                       Yeah. I think that when it came to taking on these additional roles and responsibilities prior to actually even talking about the sale, I just started to get a little bit more interested in regards to what my business partner was doing. I think if the buyout didn’t happen say, this year, it would have happened either at the end of this year or a year from now just because I knew that was where my head was going. So that’s actually over the past couple months, that’s actually when I started to dig a little bit deeper and trying to say “How am I going to be able to take this on? What are some things that I certainly need to understand?” And so I took it more so upon myself just because I was interested and I saw that happening, and the great thing was is that I think that my business partner also saw that happening as well, so we were able to have, a lot of our partner meetings was all a lot of him teaching me how to understand and run the financials so that I can have a better understanding of the business. And so maybe in a way he could have been grooming me for this initial purchase earlier this year. I don’t know. But I would say it was certainly something that if I didn’t take those like that month or two, getting prepared to understand the roles that he was taking, I certainly would have felt a little bit more stressed out, a little bit more concerned in regards to am I able to do this or is this something where I would need to hire out and hire someone who can manage that.

Greg:                                          29:32                       Now let’s say somebody out there that’s listening is like, “You know what? I want to buy out my partner.” And they get to the point where they are doing the valuation on the business and the valuation is probably a much smaller number than they think. Let’s say the business is not very profitable. They’ve been in business for maybe four years or something like that, but they realize with the liabilities that they have that the assets aren’t worth a whole lot. What do you suggest somebody in that situation—do you feel like it’s smart for them to buy out that other partner at that lower rate and kind of build it up the way they want to or is it better to stick it out and kind of get the business into a certain state where it makes more sense for them to do it?

Ashley:                                      30:16                       Yeah, I would say if someone was in that situation, there a couple of different pathways that you can choose, but it’s ultimately going to be important in regards to identifying what the other partner, like the reason why that that other partner wants to be bought out in the first place. If the other partner wants to be bought out because they’re just tired of having to, say, put so much work or put so much time into the business and say, be in this type of financial situation. It already says that the person who’s buying might not have enough of that support if they were to prolong that process. So it might actually be the perfect time to make that purchase just because you know that there would be an imbalance of energy. So I think that’s one situation in regards to after the conversation of why do you want me to buy you out in the first place.

Ashley:                                      31:11                       If on the other hand the partner says, “All right, well I think I want to be bought out, but I’m willing to stick it out for a little bit longer to make it a profitable entity.” That really tells me that that partner has still a little bit more energy in them to try to make it work. And so in that situation I feel like there is a little bit more of an energy balance, which in essence you can combine those energies and put it to work and make it and try at least one more time to be able to put the gym, the business, in a better financial situation. So that’s kind of how I see it. Like if you have a partner who’s just completely burned out, it might be the perfect time to buy them out now just because that they might not have anything left to offer you and so it doesn’t make sense for you to just have to carry on that additional weight, I guess I would say, as compared to the other option where it’s like someone who’s on board to make things work for you.

Greg:                                          32:07                       Got It. Well I think that’s a perfect place to wrap it up. Ashley, thank you so much for being able to jump on and sharing your experience of buying out a partner so that anyone out there that is thinking about doing this or has wanted to do this but don’t really know how to navigate, we will definitely make sure that we put your PDF in the show notes so people can download it and kind of dig through it and navigate their own situation through this. So if anybody had any questions for you, they’re like, “Hey, I want to do this. I listened to the podcast and Ashley knows how to do this and maybe he can help me out a little bit.” What’s the best way for people to contact you?

Ashley:                                      32:42                       Yeah, if you have any questions or just want to say what’s up, you can shoot me an email at Ashley@hudsonriverfitness.net.

Greg:                                          32:51                       Awesome. Well, thank you so much Ashley. Greatly appreciate you coming on here and sharing all of that with us and the audience and I wish the best for your ownership, sole ownership in the business and continue moving forward and doing great things.

Ashley:                                      33:03                       All right. Thank you for having me. Hey everyone. Chris Cooper here; I’m really thrilled to see you this year in June in Chicago at the 2019 Two-Brain Summit. Every year we have two separate speaking tracks. There’s one for you, the business owner and there’s one for coaches that will help them make better, longer, more meaningful careers under the umbrella of your business. This year we’ve got some pretty amazing topics like the client success manager, how to change your life, organizational culture or the business owner’s life cycle, how to have breaks, how to have vacations, how to help your marriage survive, owning a business, motivation and leadership, how to convert more clients, how to create a GM position that runs your gym for you and leaves you free to grow your business, how to start a business owners group in your community and more.

Chris:                                         33:49                       Point here is to do the right thing that will help gym owners create better businesses that will last them for the long term, get them to Tinker Phase, help them be more successful, create meaningful careers with their coaches and give their clients a meaningful path to long-term health. We only do one big seminar every year and that’s the Two-Brain Summit and the reason that we do that is because a big part of the benefit is getting the Two-Brain community together and welcoming strangers into our midst and showing them how amazing gym ownership really can be. We’ll have a link to the Two-Brain Summit, including a full list of all speakers and topics on both the owners and the coaches side in the show notes. I really hope to see you there.

Speaker 3:                               34:33                       As always, thank you so much for listening to this podcast. We greatly appreciate you and everyone that has subscribed to us. If you haven’t done that, please make sure you do. Drop a like to the episode. Share with a friend, and if you haven’t already, please write us a review and rate us on how what you think. If you hated it, let us know. If you loved it, even better. See you guys later.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

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Episode 169: Degrees of Coach Development

Episode 169: Degrees of Coach Development

Josh Martin is a visionary who coaches fitness.

You can hear his whole coaching story here, and his theory on building coaches to be your strategic advantage here.

Josh is one of the most popular mentors on the Two-Brain team, and he leads the Coaching speakers’ panel at the 2019 Summit in two weeks. 

At the Summit, Josh will make a “big reveal”: a new way to think about coach development in your gym, and some incredibly valuable tools to help build your system, develop your coaching staff, and guide them to meaningful careers in fitness.

Josh develops coaches in degrees. In this episode, he walks host Greg Strauch through the six degrees of coach development.

 

Way back in the day, there was this idea that if you are just an excellent coach,  you’d be the best coach ever and everything was going to work out all right with your business. And so it was this idea that excellence in coaching was tied to excellence in business and we know that’s not true. Being excellent in coaching is in no way related whatsoever to being excellent in business.

And so what we saw over the years, especially as excellence in business was pursued, is the pendulum kind of swung to where we were focused on a lot of the business side of things and that’s not a bad thing at all. I think that that is incredibly important for the sustainability of the whole system. But what we have to remember too as owners is that our coaches are actually the ones delivering the very service that we’re selling. And so if we neglect to develop them and continually develop them and make them better and better and offer them a chance at a meaningful longterm career, then all of a sudden we’re delivering a product that is just not worthwhile. And so that’s really where the impetus for this having a structure surrounding this came from.

I really see that there is a tremendous gap for developing your coaches in a is in a simple streamlined way. I think that there is a tendency to try and over complicate things and make it seem way more challenging and robust than it probably should be.

 

Josh’s Six Degrees of Coaching, in a nutshell:

First Degree Coach: The one on one coach that is following a template or a script. This coach is basically leading new members through an OnRamp program, or getting them ready to train with you.

Second Degree Coach: “Instead of just coaching people one on one, now we’re going to resource them with how to deal with a group. So we’re teaching a group from a template or a script with structure.”

Third Degree Coach: “Now we’re actually going to go back to one on one, but we’re going to introduce elements of program design.” This coach is a well-taught personal trainer who can lead a group by following a class plan, too.

Fourth Degree Coach: “As you graduate up to the next level, we’re just layering on a little bit more complexity so there’s a little bit more responsibility on behalf of the coach. So we’re still going to allow them to oversee elements of program design. But now we’re going to take this over an entire group population.” This coach learns to program for groups, based on historical results and data.

Fifth Degree Coach: “What we would term the head coach or the director of training for an entire facility. They’re assessing and evaluating the coaching staff. They are responsible for delivering continuing education in a very structured way. They would also be responsible for onboarding new coaches. They gather and assess this data so that we can use it to drive current and future programs. They’re looking at innovation and adapting that to their gym.”

Sixth Degree Coach: “A regional mentor for the head coaches or directors of training within a given area.
So they’re looking at their data to oversee a bunch of different regions. They are overseeing the head coaches and then they are onboarding new head coaches or directors of training.”

 

At Two-Brain, we don’t believe in ideas without action. Josh says:

What I’m kind of doing quietly behind the scenes is developing a service that we can deliver to people to take a prospective coach from zero to coach within four weeks.

 

For the last several months, Josh has been working dozens of extra hours to film video, write instructions, build templates–all of the things a busy owner needs to create a First-Degree Coach in four weeks or less. From there, the new First-Degree Coach is insurable; eligible for health benefits from the gym; and able to take new OnRamp clients off the owner’s plate. The gym owner can then move another rung up the value ladder and focus more on marketing, sales, or family time.

 

To create more time, most gym owners try to replace themselves with a perfect, expert coach. But what they really need is an amazing personality who can follow a template, buy them a few hours for higher-value work, and then slowly develop as a coach, one degree at a time. 

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

Thanks for Listening!

To share your thoughts:

To help out the show:

  • Leave an honest review on iTunes. Your ratings and reviews really help and I read each one.
  • Subscribe on iTunes.