On this week’s show, I sit down with Adam Anderson to talk about the 19 companies he’s started, 14 of them which have turned into what he describes as “nonprofits” (ie, companies that he lost money in).
We discuss the four stages of entrepreneurship, some of the businesses he’s started in the past including a failed gaming cafe, as well as his new business, Hook Security.
Sites and Resources Mentioned:
- Adam Anderson
- Adam’s Books
- Four Hour Work Week by Tim Ferriss
- Eating the IT Elephant by Richard Hopkins
- Ready, Fire, Aim by Michael Masterson
- Built to Sell by John Warrillow
Kevin Graham: Please welcome to the show, Adam Anderson.
Adam Anderson: Thanks, Kevin. I'm really, really thrilled to be here. I really appreciate you giving me the opportunity to chat and share some of my stories with your community.
Kevin Graham: For the listeners who might not know about you. Can you give us a brief rundown on who you are and what you've done across the years?
Adam Anderson: Yeah, absolutely. So again, I'm Adam Anderson. I'm a Virgo. I like long walks on the beach. But as I'm in my 40s now, those blocks are shorter. And it's more like sitting on the beach, and having people bring me beverages. But I'm sure that's not exactly what you were talking about. The entrepreneurial journey I've taken was very unintentional. I never really planned on being one. But I always did plan on being my own boss. So I didn't know what that was when I was thinking of that. And so, I'll jump to the end of the story. At this time, I've had 19 companies, 14 of those have turned into nonprofits, meaning many failed, and I guess my primary charity I donated to were marketing people who promised me they can get me customers if only I would spend $25,000 on a marketing plan and $5,000 a month for them to launch ads for me.
Adam Anderson: I feel like I single handedly supported the marketing community for the last 10 years. But the 14 companies that failed, that there are a couple more that didn't. I sold one cybersecurity company successfully, and I've taken that money and I have started a fund. So I have a fund called the [inaudible 00:01:30] Group Fund. I am basing my investments off of all the things I learned from Virgin Unite, hanging out with Richard Branson, and the President of Columbia, President Santos, Prime Minister [inaudible 00:01:44] and just how they have envisioned the future of the world is how I want to invest into my companies. And so, I felt the best way to put a dent in the world going forward is to create a fund that supports entrepreneurs who are thinking profit, people and planet.
Kevin Graham: One of the things we were talking about before we hit record was that in your current selection of businesses that you're working with, rather than an owner operator model, you're doing a model where there's a CEO that's in charge of that business unit, and the CEOs report back to you. So can you tell me a bit more about that and how that all works?
Adam Anderson: Yeah, so I had an executive coach that I hired, and he helped me think bigger and said, "What do you want to accomplish?" And I said, "Well, I want to be one of the guys who is responsible for space exploration. I want to build a space hotel." And he said, "Cool, how are you going to do that?" I said, "Well, I probably need to generate about a billion dollars a year." He said, "All right. How are you going to do that?" Well, in my mind, building that kind of company is really, really hard. But building a million dollar company is pretty easy for me. So what if I just built thousands of million dollar companies by coming up with a system that launches other companies. And so at this stage, what I'm doing is trying to discover how to scalably launch companies where I am not the operator, and I can put CEOs in front of them.
Adam Anderson: This is not an original idea. And there's a lot of funds out there. And there's a lot of organizations that have hundreds of companies inside of them. So these are the companies that I am testing the model with. I've got a CEO who runs everything in the traditional way. I've got a president who is executing on a known business model, but isn't changing things very much. And I'm just trying an awful lot of things to find out which one of these are successful, and which one of these are repeatable.
Kevin Graham: Last year you gave a talk about the four stages of entrepreneurship. Can you sum that up in a few minutes for the audience?
Adam Anderson: Yeah. So when we were in Austin, I was asked, "What does it look like to progress through your entrepreneurial life?" I did some big thinking, and I came up with the four stages, which is businesses happening to you, that's you being a victim. Like something's happened, and you have to start a business. Either you've been fired, or you're just frustrated, or you have a calling you have to answer. Businesses happening to you, and you're an army of one getting started. Then it's going to be businesses happening by you. You've moved from victim to hero, and you're like, "Yes, I've got this." You begin to grow, and you're beginning to hire people now, but you're still primarily there. If you disappeared from the business, the whole thing would crash. And everyone's very, very busy. But no one really knows what's going on. But you're succeeding and you're growing.
Adam Anderson: Then businesses happening through you. And that's when you step away, and you have people doing things and you're kind of like telling the boat where it needs to go. But you are not the one with your hand on the wheel, or the one who's working on the engine or working with the sales. So your company is now moving. It's made up of systems and processes. And you've moved from having superhero people doing superhero things to having elegant processes and systems where normal, wonderful people can execute those things for even better results.
Adam Anderson: Then finally, you get to businesses happening for you. And that's when you are all the way out. That's when you have moved to the point where your business operates, and how you develop and generate your wealth is independent of how you spend your time. It's completely appropriate to be in any one of those and never progress to the next one. But I don't know if you remember this, Kevin. But when we were down there, that really didn't resonate with a lot of people. So, I had to use a different set of stages. And so, there's this amazing business consultant and theologian, Eric Cartman from South Park, and his four steps are basically the same.
Adam Anderson: It's startup, cash and sell out, bro down. And so, I got an awful lot of joy because those are so much more clear, my stuff sucks. But they're all the same. The stages are the same. You're going to start up your company, you're going to cash in and do the hard work, then you're going to sell out and step aside. And then you're going to bro down, which means that you have complete freedom of your time away from how you are actually generating wealth.
Kevin Graham: How did it feel going through that bro down phase of your previous cybersecurity company?
Adam Anderson: It's shocking. I bro down first by firing myself from my company. I removed myself as an employee, made myself the chairman of the board, a board of one, me, representing all the stockholders, me. And I went through a huge identity crisis because I began looking around and seeing I don't have a role in this company. And when I sit in this corner office, and then get bored and walk through, I actually screw things up. I distract people from what they're supposed to be doing. There was a huge identity crisis and a huge value crisis because I found that I was identifying my personal value in what I could produce as the CEO. And when you fire yourself, or when you get into bro down, the phone stops ringing. Nobody's wanting you to go and speak at the conferences. Nobody's wanting you to go on this trip. And all of a sudden, you're watching somebody else get all the accolades and get all the credit, and it is shocking.
Adam Anderson: If you have been identifying as this is how I get my self worth, and then you take that away from yourself, I tell you what, the very definition of failure that I love is being super successful at something you don't care about. When you move to the point where you have gotten successful, and put yourself in a place that you no longer care for, then this victory really is very hollow. I spent the next four years trying to figure that out. I scratched the itch by starting more companies. I love startups. I love the idea. And so, while I had other people running my company, I went out and started more companies.
Adam Anderson: The thing that was shocking to me is when I finally sold Palmetto Security Group, after 13 years of ownership, when I think nine years of operational ownership, and then a total of 13 years of ownership. When I got the money in the bank account I hit a whole nother level of depression and it was shocking because I was like, "I haven't even worked in that company for four years." But there's a second step down of where I had my identity now wrapped up and I'm an owner of a multimillion dollar company. Now I'm just an owner of multi millions. And that doesn't replenish itself unless you get back to work. So, it was shocking. I believe Tim Ferriss calls this the void. When you enter the void, and you just don't have something that fills you back up again. And from the outside, you're successful, and you should be very, very happy. But on the inside, you're like, "What's my purpose? Who am I?"
Kevin Graham: And so, you filled the void by starting new companies. Is that right?
Adam Anderson: I did. I also filled the void by doing some pretty unhealthy self destructive behaviors. I felt entitled to day drink, honestly. I felt like look at me go, I can do anything in the world I want. Therefore, I owe it to myself to show everybody that I can do it. It was very unhealthy and unproductive to search for your identity in what you feel other people think you should do. I was shocked that I ended up there because I'm pretty self aware. I do a lot of work understanding why I do what I do. And being able to attack that I did like a year of super unhealthy behaviors because I was empty, and I didn't have anything to fill it back up again. It's a warning sign. You need to be very aware that after you sell your company or after you've reached certain plateaus, where you've set yourself free from trading time for money or time for purpose, that depending on your personality, you might go sideways, and you might do some pretty self destructive things.
Kevin Graham: But the day drinking that we're going to do in October at [inaudible 00:10:09] Bangkok, that's totally fine, right? That's business drunk.
Adam Anderson: Well, no, no, no. It's time zones. So, it'll be nighttime in South Carolina, but it'll be daytime in Bangkok. So, that's fine. By the way, I really want to put on a class for how do you consume alcohol over a long period of time in a business setting without becoming sloppy and ineffective. That's a MBA class that needs to be taught in colleges across the world. How to network with alcohol.
Kevin Graham: Just still under the college thing as well. You're actually an entrepreneur in residence at Clemson. What's that like?
Adam Anderson: That was pretty cool. So, I was entrepreneur in residence at Clemson University for three years. The MBA folks were putting on a one year entrepreneurial and innovation focus MBA. So, instead of taking two years to get a Masters of Business Administration you can do it in one year, and you can start a company. And by this point, I was like, "Oh, my goodness, I have no idea what I'm doing. I've been running my company for six years. We, I think, just went over two million dollars in revenue. I've got 20 people who depend on me in making right decisions to pay their mortgage." I'm like, "Oh, my goodness, what am I going to do?" I don't know what I'm doing." A lot of fear based stuff. I dropped out of college. So, I'm a dude who knows about computers with a high school diploma, running a multimillion dollar company. And by the way, it felt really great.
Adam Anderson: I went, and I met the dean of the business school, and I said, "Hey, I'm really interested in your one year entrepreneurial program." I'd like to take it, but I'm running a company. So, I don't want to do any homework. I'm not going to do any homework. Any assignments you give me, I'm not going to do unless they directly apply to my current business. And I need you to know that if it's finance related or something related to something I don't want to do, I'm going to have one of my people produce the data. So, we'll be doing that. The second thing is, I travel a lot. My big customers out of Amsterdam. I got to go there six, seven times a year. So, I will only show up for classes that I want to show up for. And I just might not make it there. So attendance won't be a thing. Oh, and the second thing is don't care about your degree. I'm here for the information. So, I'm probably just won't take any of your tests. I'm just not going to do that. I'm not going to worry about that."
Adam Anderson: The guy's name was David Wyman. He's the dean of the business school over at the College of Charleston now and he said, "Huh, hey Adam, how about this? Why don't you just sit in the back of the room, and you show up whenever you possibly can. We'll call you the entrepreneur in residence, and when you hear something in the classes that you're like, Oh, I have a personal experience with that you just speak up and tell us about it." And so, I left thinking, "Sucker, you're letting me in and for free." And he was thinking, "Sucker, usually we pay entrepreneurs to do that." So, I accidentally volunteered for three years, and it was fantastic. It was great. I was able to hang out with 20, 30 young entrepreneurs, babypreneurs every year. My first year, I mentored six folks. I found out I was too much. I eventually paired back, and some of my employees today are entrepreneurs who I mentored during this process.
Adam Anderson: We have an absolute rock star sales guy at one of my cybersecurity companies who I knew him for over four years because I was able to do that. And if you want to cut in line and find out who you need to hire to put in your company, go volunteer at an MBA program because you will see the best and brightest and you'll be able to test drive their work ethic, and their ability to produce. And to me, that's awesome.
Kevin Graham: I might have to try this entrepreneur in residence thing myself.
Adam Anderson: Absolutely. It'll be a trip.
Kevin Graham: What does it feel like to be back at square one and starting new companies or back at the startup phase from Professor Cartman's work?
Adam Anderson: Yes, the great professor Eric Cartman. Dude, I'll be honest, I love it. But I'm having a scarcity mindset. I'm really having a scarcity mindset. Because when you get a plunk of money in the bank account, that doesn't go up, and I'm deploying capital right now. I've deployed a lot of capital, and you don't launch five startups without spending a lot of money, and I have spent a lot of money. So, I have to remind myself that a scarcity mindset leads to scarcity of resources and it's a huge mind game to stay in the right mindset where you are available for the world to do great things for you. Because when you're in a mindset of scarcity, that's exactly what you find. You find scarcity. When you're in a scarcity mindset, no one buys. When you're in a scarcity mindset, no one will invest. When you're in a scarcity mindset, things are hard. When you're in the mindset of a abundance and ease then that's naturally what happens. It's so weird that your mindset and your beliefs absolutely feed into your results.
Adam Anderson: Beliefs are interesting. So, this is a story about beliefs, I was going to do a cross country road trip with my family, it was back in the 80s. And I was about, I guess, six years old. We were driving from Florida to California. My dad had to plan the whole thing, and he was a military man, and this was before cellphones on the internet. So he had to use a rotary phone to call ahead and use a map, like a physical map that you fold it out to figure out where you were and drive. And so, he's planning the whole thing out, and he's on a schedule. And by God, we were going to stick to the schedule.
Adam Anderson: Unfortunately, there was a risk. He now had two boys in the car who are going to have to have unplanned bathroom breaks, and depending on those bathroom breaks that was going to screw his schedule up quite a bit. So, what does any military man do, he mitigated risks. He found a solution, and he taught my brother and I how to urinate into Pepsi cans. He would drink the Pepsi cans, they would be empty, and then we would pee in them, and there you go. So everything's going great. And by day three, my brother and I, we had mastered our craft. We were so good at it, in fact, that we no longer sought parental supervision, or permission to execute our new skill set.
Adam Anderson: So, one such occasion, I had to answer nature's call. I reach forward and I grabbed the Pepsi can but there was something different about this one, Kevin, it was cold. So my six year old brain didn't really process the significance of that. I did my business and I put the camera right back where I found it. So my dad then reach down, and he picked up that Pepsi can. And right after doing that, he lent out a stream of curse words, so foul and powerful that I use them with my kids today. It's fantastic.
Adam Anderson: The reason I told you that story is there was a belief problem in the car. Whose fault was that was that? Was it the adorable six year old who peed in the Pepsi can? Yes. I own some responsibility. But because my father didn't recognize that things had changed, there was a new risk in the car, there was a new data point, which is six year olds who can pee in a can. He didn't modify his behaviors, because he believed he was safe. And so, when I'm talking about belief, I'm talking about the fact that if you stay in an old belief system, if you don't recognize the world is changing, if you don't see how you show up to the world, belief leads to emotion, and emotion leads to behavior, and behavior leads to habit. And if you only execute out of habit, and you do the same things over and over and over again without checking in on your beliefs, hey, if what I believe is true, is all this still happening the right way? Then you're going to have some horrible consequences.
Adam Anderson: In entrepreneurship as you're going from stage to stage to stage, the belief systems and what you're trying to do have to change. In startup you believe you have to hustle, and you do. But by the time you get to cash in, if all you're doing is hustling, then you're actually getting the way of your people. You have to change your belief. Otherwise, you can't change your behavior. Does that kind of makes sense?
Kevin Graham: Yeah, what's it like though going from the later stages and having a bunch of money in some of the previous companies and having to go back to maybe the bubble gum and sticky tape sort of patching it together and making it happen?
Adam Anderson: Well, I will be honest, it is easier. It is absolutely easier to do it because you've done it once, and you now know how to do it. And I know exactly what I want to do. By the way, there are two different ways of going back to the beginning. There's going back to the beginning after your company has failed, and you have to start from scratch. Then there's going back to the beginning where you have the funds and the budget to go hire smart and amazing people to go on the journey with you. So, I am in that boat. I was able to spend very little money testing these business ideas until it was time to go and grow them and scale them.
Adam Anderson: I also knew I'd never really wanted to do that startup CEO thing again. I didn't want to be the guy who was staying up at night wondering about payroll. I didn't want to be the guy who wanted to worry about every single customer interaction. I wanted to be the guy who is going to be able to coach the guy who had to worry about all that. So that was the role that I picked for myself. And by being very, very clear about the role that I was going to play going forward in all these companies really helped to put firewalls in between me and the traditional hustle stress that you would feel. So, I made sure I worked with people who are willing to hustle and startup because I'm not willing to hustle anymore. I'm willing to grind. Grind is when you know exactly what you should do, and you just get to it. Hustle is I got to be busy for the sake of busy because I don't know what's working. And when you're doing ideation and experimentation, you need hustle. You need to test all this stuff. And it's not me anymore.
Adam Anderson: So, going back to it with the capital to actually deploy it again. And remember, I've failed so many times at this point that I have emotional lessons on all of the different aspects of business. I really feel like at least for Hook Security, that company is my swan song right now because all of the lessons I've learned I've put into it. I have an infinitely scalable product with an infinitely scalable sales force that does long term recurring revenue for a price point that is a no brainer to buy that has a really high lifetime value customer. And it's just putting fuel into the rocket, and it's a security product in one of the fastest growing markets. And so I'm not going to lie, Kevin, it is a lot of fun. It is so much more fun being in startup land than it is an owner operator land in stage three. So, I know where I need to live now. I need to be in bro down, and a little bit of startup,
Kevin Graham: Right. With Hook, and I know we've got a whole portfolio of 19 companies that you've started, five of which was successful. But let's use Hook because you were talking about it just then, and it sounds like that's your prize jewel in your portfolio at the moment. Can you tell me about a point in that business where you start to get initial traction? And what would you attribute the success of that to?
Adam Anderson: Sure. So, I started as the sole entrepreneur, and I knew that the channel that I wanted to sell through was other people. I've had very, very difficult time with marketing. I think we mentioned that I'm the nonprofits or I just... My companies failed because I couldn't connect with my customers. So I decided this time I'm not going to do that. I am not going to try to convince a human being to buy my product. What I'm going to do is work with people who already have convinced human beings to buy similar products, and they want to sell mine too. So, that meant I was going to work through distributors.
Adam Anderson: I had a good buddy named Toby Stansell, track record of success. And I went to him and he has a huge... He's president of a firm right now that has 2,000 CPAs. And I said, "What can I sell through all these CPAs. And he said, "We're currently selling cybersecurity products, and we need a new one." I went through about five or six different products until I found one that his people wanted to sell. So, all right cool, I got that. Now before I'm willing to let him sell I think I've got the right product, but I don't know. Now remember, Kevin, I've spent zero dollars. Well, that's not fair. I've spent... I bought a lot of Guinness at this point, but that doesn't count. So what's my next step? Well, my next step is I needed to find a prospecting cold call monster who was absolutely bulletproof that if I gave him a budget to buy lists, and I paid him enough money to sit there and call people that he could try to sell this product.
Adam Anderson: By the way, I never want to write another software product. My last one I spent $650,000 on it blew up, and I'm out that money. So instead of writing my own software, I found somebody who already had the software and the product that Toby wanted to sell, and I white labeled it. That means I licensed their stuff, and put my logo on it. So, now instead of spending $650,000 on a software product, I only spent $1,500, and that'll be $1,500 a year. Then they sell me licenses at a discount, and I sell them to Toby at a markup. Then he sells them to his customer at a higher markup. But let me get back to our sales guy, Brad.
Adam Anderson: Brad is one of those crazy mutants sales people who can be told no 200 times a day, and still strut around like he's an awesome human being. He's bulletproof to negative feedback. That's what you need at this stage. So rather than building a whole development team, rather than going to go... No, all I want to know is can we sell this thing? How do we sell it, and why do people buy? I engaged with Brad for three months. I said, "All right. Here's your office, here's your phone, here's your lists, go try to sell this thing and come back in three months, tell me what worked and what didn't." And so he went and did that. He brought back, this is how sales work. This is who's buying, this is why they buy. So, great. Now I've got the game plan. Next step is we went and found a CEO because I know I didn't want to CEO this thing.
Adam Anderson: I found a selling CEO. A selling CEO is one who all they care about is sales. They can do the operations, they can do all that stuff. But getting a selling CEO matched up with a sales guy on the front end means that they understand that we're building a sales based organization, not a technology based organization. So, they went another three months, and they began signing up managed service providers, distributors, and they just kept slowly adding them and they kept learning and they're learning. Now, both of these guys are taking very low salaries. Both of these guys are in it for the game, the long term, they want equity. And because I'm building a company that I want to turn into a billion dollar company, absolutely you can, we'll put you in there for options.
Adam Anderson: I also told each one of them that if we don't hit goals that I'm closing the whole thing down. I was very, very clear because entrepreneurs have a tendency to have an emotional attachment to their business. And I'm like, "You know what? I've done this enough. We're going to let data prove that we should do this again. Keep your resumes ready because if this doesn't work we're closing the whole thing down. You guys are going to have to find jobs." So, I attracted people who understood the entrepreneurial journey, and wanted to hustle. I didn't attract people who wanted a job. That was very, very important.
Adam Anderson: Eventually, after six months of this, we got to the point where we had tested enough that I told them to go out and form a brand new company with clean books that we can then transfer everything into. And then I would start going to try to raise money. We did a small seed round. I put another $150,000 in the company. We hired two more guys, where one guy was amazing channel sales guy. So, he knows how to go to your distributors and say, "Hey, you're only selling our product to 5% of your customers. Let's get that to 10% of your customers." And I had a chief revenue officer. That's the guy in charge of marketing and sales, and the chief revenue officer is all about how do I enable those distributors to sell 25% into their customer base.
Adam Anderson: So, at this time Hook is a sales organization that has one sales guy who brings in distributors. We have another sales guy who supports those distributors to actually do the sales efforts. And then we have another executive sales guy who goes out and helps to enable the giant system of how do distributors sell our products. All the while being supported by a CEO who's all about deal flow and all about closing business. And so, today, we have all the logistics. We're up to 27 distributors, each one of those guys have hundreds and hundreds of customers. Matter of fact, my favorite distributor, he has I think 400 doctors' offices, and 200 dentist offices that he runs the ITs for. And he said, "If you're buying this from me, you have to pay for... if you're buying my services, my support service, I require you to also buy Hook Security. And 100% of them did it within a week. I'm like that is the guy. That's the way to go.
Adam Anderson: And so, it's just been shocking. We're having rapid, rapid customer adoption, and the product can handle it all. But here's the thing, it's a slow going thing. When your price point is less than two dollars per user per month, you need hundreds of thousands of users to really get this thing going. And it's going through the channel is very slow. You kill today, and you eat four months from now. So, we're in the middle of a capital raise. We should close out this round probably by July, probably in the next couple of days, actually. Then we're set up to go to the next thing. So, it's just been a joy to watch it go. It's also been heart racing because we almost ran out of money like five times. But it's exciting. And you just work hard and you scrappy. And if you surround yourself with people who are also excited, happy and scrappy, then it's just been a joy to watch happen.
Kevin Graham: Yeah, it certainly sounds like it. You mentioned that you almost ran out of cash on five times already in the short history of Hook. I know that's definitely not your first company. You've got that whole back catalog of companies you can draw from here. But I was wondering if you could go through any of those companies you've had, and tell me about the best unexpected crisis story that you've got of something that's happened in one of your companies and how you handled it?
Adam Anderson: Does it have to have a happy ending?
Kevin Graham: It does not have to have a happy ending.
Adam Anderson: The one that jumped in my mind, I'm sure there's probably better ones. But for the sake of time, I'll just say the one that just jumped into my mind because each one of these companies have scarred my heart with a particular lesson. And since we're talking about cash, I'll tell you the story of the company that gave me my best lessons in cashflow. And for listeners who don't know, cashflow to me is the amount of money coming in and the amount of money going out. Revenue minus expense equals profit. And if your expenses are due before the revenue comes in, you're out of business, if you don't have enough cash in the bank. So, managing cash flow, how much am I spending versus how much is coming in versus how much is in the bank. Once you hit zero, you're done. Most employees do not go like, "Oh, shucks, you're out of money. We'll stick around for another month until all that payroll comes in."
Adam Anderson: This company's name was LFG Gaming, Looking Forward Group Gaming. It was a nerds paradise. It was an internet cafe. And I had 25 high powered gaming computers that also had all this education stuff on it, so kids could come in and pay an hourly fee to have access to these computers. I had like eight Xboxes, and play stations, and it was wonderful. We made probably 3,500 bucks a month in revenue. My expenses were about 14,000 because I was just buying ad space, I was marketing, I was doing all that, and that is bad. Revenue is 3,500 minus 14,000 equals this doesn't work.
Adam Anderson: But I was still in my 20s man. I was still in my 20s, and I had million dollars coming in a year from another company. And I was making 40, 50% profit margins. So I had huge amount of cash burn that I could just go and experiment. And so, I did about $250,000 put into this thing. And Holy crap, I looked at it and I was like, this is a really expensive hobby. Why am I doing this? It was when I really first had it. Because when you're doing cybersecurity consulting for large enterprises, you set the math up to work immediately. And there's no marketing or sales. You're a selling consultant, they just keep buying. So I had no idea how customer acquisition worked at that point. And I overspent trying to acquire customers and I didn't understand total lifetime value of a customer. If I spent $14,000 to get you into my store, and you're going to be spending five dollars an hour, you got to be there a long time before I make my money back.
Adam Anderson: So yeah, that I closed down. And I learned another lesson. Cashflow is important. But also the contracts you sign are important. I don't care if you have ADHD and you're dyslexic like myself, you still have to read the legal docs. I did not realize that I had signed a five year personal guarantee for that space. So I was on the hook to pay for that space for five years. Even though we were only in there one before I decided to close the company down. So I had to end up spending a lot of money to break that lease. Yeah, go team.
Kevin Graham: Yeah, definitely sounds like you almost built yourself this personal man cave.
Adam Anderson: I did.
Kevin Graham: Had the idea of, yeah, let's just try and charge for access. But-
Adam Anderson: Yeah, that's another lesson. Talk to your customers. I built what I wanted. I built what a late 20 year old who still loves playing video games, what he wanted. It was a classy place. It was cool. It was all this stuff, and it wasn't what the current high school boy wanted. The current high school boy wanted a whole lot of Xboxes, and I filled it up with computers. I spent way too much money because I didn't talk to my customers.
Adam Anderson: So, that's also when I learned. Whatever your vision for your business is it's not really the vision that's going to happen. If you force your vision into the world, then you better be lucky and super genius. And most of us are not. Most of us need to listen to what our customers are asking for and say, "I have money. I have this pain point. Or I want this pleasure point. And I will give you money to make that happen." Then we just do that inside the framework of what you're trying to get done. Because when I forced my vision in there, man, these kids didn't care. The Xboxes were filled up every day. Those computers sat empty. Those Xboxes cost me like 200 bucks for the Xbox and 200 bucks for the TV. Those computers cost $2,500. It was just ridiculous.
Kevin Graham: Yeah, but there's definitely something fun about building one of those high powered gaming rigs or 10 of them.
Adam Anderson: Yeah. So much fun building it that you want to pay $14,000 a month? I mean, we had a good time. And the other side of that was what I really should have done is just done what you said, I would have gotten more joy out of having my personal man cave like that. But instead, I deployed $50,000 to outfit the inside of a store without understanding how to sell. And I thought I was going to make money off of selling coffee and selling drinks and all that stuff. I didn't read the contracts that said I was not allowed to do that because there was already a coffee shop in that strip mall.
Adam Anderson: One of my major revenue sources on my spreadsheet that showed me it was good idea immediately went away. So cashflow, do you really understand your business? And do you really understand how much money you're spending versus what you're bringing in for a total lifetime value of a customer, and when you're going to realize that value? And preach your fricking contracts, man. Just read them. You have to. You don't just... I know there's a lot of pages, you've got to not just sign them and walk away.
Kevin Graham: Yeah. Moving on to the next section of the podcast, and this is the last section before we wrap up. What books do you think had the biggest impact on you in deciding to become an entrepreneur?
Adam Anderson: Well, I would say the boring answer. The 4-Hour Workweek was solid. I felt like I was already on a tipping point, though. I feel like I was really close, and the 4-Hour Workweek didn't sound like it was new stuff. It would just sound like, oh, yeah, yeah, those are the things I'm naturally thinking. But he's just codified them. He just put them in a good way. I actually liked reading a lot of the biographies about CEOs. So there's one about the CEO of IBM, about how to eat the elephant. And the idea that IBM had to in order to survive give up its mainframe business that was making the money in order to build its client server business. Because that's the way the world was going. That really triggered in me that what I'm doing now is not going to get me where I want to go. That sometimes you have to stop the thing that is being super productive, and super awesome. Because you want to do something bigger.
Adam Anderson: I think those two books being that I was in the cybersecurity business, a biography about a tech CEO. And the idea that you can do business different and you can do life different from the 4-Hour Workweek, I feel like were really the one two punch that kind of helped inspire me to take that next step.
Kevin Graham: Right. And what about books that have had the biggest impact on you in the last couple of years?
Adam Anderson: Every time someone asked me that I say go read Ready, Fire, Aim. Ready, Fire, Aim basically takes these four steps, stages of entrepreneurship and tells you exactly how to do each one. And so, the tagline is Zero to 100 Million in No Time Flat. The gentleman who wrote the book, I don't want to say his name because I think I'm going to butcher his last name. He has 12 companies right now that he is chairman of the board and special advisor and investor in. So, the model that I'm trying to build where I've got multiple companies that are rocking and rolling, I'm basically using Ready, Fire, Aim as my playbook for how to build multiple companies where you do not manage them, and there's somebody else doing the work.
Adam Anderson: There's a line in it, where he says, "All right, I find the entrepreneur who has the energy and the talent, but they don't have the experience or the money. And I provide experience through coaching and the money through startup capital. And they provide the energy, the work and the knowledge, and I then split it 50/50." So. I'm like, that's perfect. You come in as a business partner who helps doing the thing. So, I haven't really landed on what the right answer is. But Ready, Fire, Aim is a fantastic book to read, no matter where you are in your entrepreneurial journey.
Kevin Graham: Awesome. Were there any others?
Adam Anderson: Well, there's this author, Adam Anderson, and he's got, I think, four or five books on cybersecurity out there. You should totally go buy my books. It will make my mom happy. No, honestly those are good books. But there was a good one called Built to Sell, and Built to Sell is a narrative on how do you take a company that is in cash in where it's superheroes doing superhero work to businesses happening through me, which is sell out? So, how do I go from the second phase to the third phase, because until you reach that third phase, you can't sell your company. You are the product when you're in the second phase, and you can't sell your company until you get it to the third phase or somebody else can step in, and it can be going through them instead. So, Built to Sell is a fantastic book on, all right, how do I become an adult company that produces predictable results that somebody else can treat as an asset?
Kevin Graham: Awesome. Well, I'll include links to both of them as well as your author profile on Amazon so that people can click through and have a look at your books as well. Just to wrap this up here. Thanks again for agreeing to jump on the podcast, and it's been a lot of fun. I've heard a bunch of new stories from you that I haven't heard before. So, that's been great. Where can our listeners connect with you if they want to reach out?
Adam Anderson: Yeah, so I have recently consolidated everything to adamandersonceo.com. And from that point, you can get to me on YouTube, you can get to me on Facebook, LinkedIn, everything is Adam Anderson CEO. But the easiest way is to go to adamandersonceo.com, and you can see all the cool stuff. But my hobby this go round is I love leaving one minute business videos. And so, we've got about 100 one-minute business videos, which if I am correct, Kevin, you said those sunglasses you wear in every video is stupid. You should stop doing that. So, I'll have you know that I have stopped wearing those stupid sunglasses in every single video. Thank you for your coaching.
Kevin Graham: I don't recall saying that at all. [crosstalk 00:40:28]. I think I would have said, "Those sunglasses you wear in every video look amazing. You should totally wear them in everything." You should totally wear them for this podcast interview.
Adam Anderson: Yes, I'm wearing them now. Yeah, brother, so adamandersonceo.com, you can find all that stuff there. And yeah man, I really appreciate you giving me a chance to chat. This has been a whole lot of fun.
Kevin Graham: Awesome. I'll include a link to that as well as everything else we've discussed in the show notes. It's been great having you on the show. Adam, I look forward to hanging out with you again in Bangkok later this year. Have a good day.
Adam Anderson: Thank you sir.