EP 52 - Trent Dyrsmid - Built to Scale: How Systems Drive Business Growth
|Awesomers Origin - We'll talk to an Awesomer about where they came from, the triumphs and tribulations they have faced and how they are doing today. An Awesomer Origin story is the chance to hear the backstory about the journey our guest took on their road to become awesomer. These stories are incredibly varied and the takeaway is that awesomers come in all shapes, sizes, backgrounds, creeds, colors and every other variation possible. On your awesomer road you will face adversity. That’s just part of life. The question as always is how YOU choose to deal with it.|
|Trent Dyrsmid is a serial entrepreneur, husband, and father. His 3 private companies generate millions a year in revenue. Profit Magazine named Trent’s first company as one of Canada’s PROFIT 100 fastest growing companies for two years in a row before he sold it for 7 figures in 2008. If you want to discover how to create business systems that will allow you to rapidly scale your eCommerce company, Trent is the guy to follow.|
Built to Scale: How Systems Drive Business Growth
Systems are a foundational piece of a successful, highly efficient and profitable operations.
Today’s guest is Trent Dyrsmid. Trent is a serial entrepreneur, husband and father. His three private companies generate millions a year in revenue. One of his first companies was even named as Canada's Profit 100 fastest growing private companies two years in a row. He also created Flowster, a platform for building standard operating procedures. Here are more golden nuggets on today’s episode:
Trent’s origin story.
How he documents systems using the “CTODD” method.
The importance of having systems when running a business.
What Wholesale E-commerce Business Systems (WEBS) is all about.
So listen to today’s episode and learn more about how you can build systems to rapidly scale your company.
1:37 (Steve introduces today’s guest, Trent Dyrsmid.)
3:27 (Trent talks briefly about his business.)
8:03 (Trent talks about his origin story.)
11:58 (Steve shares his story as an aspiring fighter pilot in high school.)
13:02 (Trent reflects on one of his life’s defining moments.)
35:28 (Trent talks about his favorite business tools.)
45:36 (Flowster as a platform for building standard operating procedures.)
49:17 (Trent talks about WEBS.)
1:02:07 (Trents final words of wisdom to Awesomers.)
Welcome to the Awesomers.com podcast. If you love to learn and if you're motivated to expand your mind and heck if you desire to break through those traditional paradigms and find your own version of success, you are in the right place. Awesomers around the world are on a journey to improve their lives and the lives of those around them. We believe in paying it forward and we fundamentally try to live up to the great Zig Ziglar quote where he said, "You can have everything in your life you want if you help enough other people get what they want." It doesn't matter where you came from. It only matters where you're going. My name is Steve Simonson and I hope that you will join me on this Awesomer journey.
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1:37 (Steve introduces today’s guest, Trent Dyrsmid.)
Steve: You are listening to episode number 52 of the Awesomers.com podcast series. and as we've established a tradition at this stage, all you have to do is go to Awesomers.com/52 and you can see all of today's show notes and details and get any little links and things that we talk about in today's episode. Now today my special guest is Trent Dyrsmid and I think I got that right but I never know. And Trent is a serial entrepreneur, husband and father. His three private companies generate millions a year in revenue. Profit magazine even named Trent's first company as one of Canada's Profit 100 fastest growing private companies in two years in a row, before he sold it for seven figures way back in 2008. If you want to discover how to create business systems that will allow you to rapidly scale your E-commerce company, Trent is a great guy to follow. I really appreciate Trent's kind of systemic perspective and his foundation that the systems run the business and the people run the system. It's a great testament to his accomplishments that he's been able to systematize and just keep replicating that success over and over again. Welcome back Awesomers, it's Steve Simonson and guess what, today I'm joined by a very special guest and his name is Trent Drizmit?
Trent: Not even close Steve, Trent Dyrsmid.
Steve: I even went and I practice all right. So just full disclosure, Trent may not know this but the audience knows I pretty much mess up most of the guest names. And it's not for lack of trying, I literally went to YouTube. I watched one of your videos and I thought I had it, and well I didn't. So my total is dropped to below 40% for the month. So sorry but I'll get better, probably not. All right, so Trent first of all thank you for joining us. I'd love to have you here and we've already read in your bio and so forth that you've provided to us. So they kind of have a general idea but in your own words, kind of tell us where you live and kind of what you do on a day to day basis. If you would.
3:27 (Trent talks briefly about his business.)
Trent: Sure. So I am a Canadian living in Boise, Idaho with my wife and family and I have a couple of different online businesses. We have a pretty successful rapidly growing Amazon wholesale business. And to make that business successful, I ended up creating an extensive library of standard operating procedures just for our internal purpose as well. As luck would have it, word got out when I spoke about that at a conference a few years ago. And so that's become a product that is marketed under my BrightIdeas blog and podcast brand. And that product is called WEBS and we've now iterated that product. We've done two launches and now it's going to be in our own software this next time, around this fall. And that software is called Flowster, which lives at Flowster.app.
Steve: I like that Flowster, that's kind of a call back to the old Napster days huh.
Trent: Something like it's a play on the phrase workflow.
Steve: I like it. Yes it makes perfect sense. That Millennials, I have to look up what Napster was and how it destroyed the music industry. But I love it. So Flowster obviously the premise of any system building is getting a good workflow, right? And making sure that step A and B and C it's all lining up and easy. Is that the principle of that software?
Trent: Yes, absolutely. If you look at it. Doesn't matter what industry you're in or what business you're in. Businesses ideally are going to be broken down into repeatable processes. Maybe it's onboarding a new customer, maybe it's managing a pay-per-click campaign on Amazon, maybe it's sourcing a new product. As this morning we had an employee termination, so maybe it's an employee termination or maybe it's a new hire. Everything that you do in a business is going to be broken down into a process. And I read the E-myth by Michael Gerber when I started my first company way back in 2001. So I guess that makes me a little older, a middle-aged. I'm solidly middle-aged.
Steve: I like that. Yes.
Trent: Well yes, and that really his ideology of as the CEO, I should spend my time working on the business and not in the business. That really hit home with me for a couple of reasons. One is I like to not be bogged down in minutiae that is important but it is a part of running the business. So I thought well, how can I make sure that I don't have to get bogged down in that stuff? And I needed to do a couple of things. I needed to document my systems and then I needed to delegate it to people on my team. And so I have this little acronym that I created for myself called CTODD. C stands for create. T stands for tests. O stands for optimize. Oftentimes that's my job. And then there's Document and Delegate. And that to me in my world that's how I like to run my businesses. I don't want to work in any of them, I like to work on all of them.
Steve: I love it. I'm also big fan of the E-myth and read it back in the late 90s perhaps even middle nineties, probably not long after it came out to be honest. And it's very instrumental in my life as well. And this is one of the reasons why I love to have Trent come and share some of his systems. Not just philosophy but some of the results that he's been able to create. And we're going to dive into a lot of that systems talk. But we're going to do it after we kind of get into your origin story. And we're going to dive into that right after this.
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Steve: Okay we’re back again everybody. It's Steve Simonson and I'm joined by Trent whose last name will go unpronounced. I'm going to try it again Dearsmith.
Trent: Dyrsmid, just like you're writing a letter to the guy named Smid. Dyrsmid.
Steve: Oh Dyrsmid. Boom! Done. Alright see, I like that, what do they call that where you do the sounds? Mnemonic device?
Steve: We just developed a mnemonic device. Dyrsmid I said it a thousand times. I've got the name finally. So I want to have you just dive into a little bit of your origin story and you mentioned that you are from Canada. But where were you born precisely?
8:03 (Trent talks about his origin story.)
Trent: Langley, British Columbia.
Trent: Way suburbs even. It's in the Fraser Valley which is the nearest big city Vancouver BC.
Steve: Nice, okay and how about your parents? Were they entrepreneurial nature? What did they do?
Trent: Not really. My mom never really had a career to speak of. She did work for the government at one point in time and then my dad for most of my childhood was a real-estate salesman. So that's somewhat entrepreneurial for sure and he was always moderately successful.
Steve: Fair enough. You know real estate pros have to run out there. They have the crazy hours. You'll hear the stories about the real estate guy. So you know this guy's making a killing and it works not at all. And I don't think that exists in real estate. You really have to move to make money in that business. How about any siblings?
Trent: Yes. I have an older brother from the original set of parents. My parents like many other people, my parents divorced and I have a younger half-sister and a younger half-brother that I know a little bit. But we didn't have a whole lot of opportunity in our childhood to interact. We've become connected as adults.
Steve: How about that. Yes. It's a all kinds of different families. Any of your siblings show entrepreneurial orientation like yourself?
Trent: My brother and sister both work for the government. And my brother works for a building contractor, swinging hammers and building houses.
Steve: Nice, okay. The government's almost the opposite of entrepreneurial in many ways.
Trent: Very much so. Very much so.
Steve: So that's fascinating. How about university? Did you attend college?
Steve: Well jeez, if I haven't gone to college. I dropped down after a semester and I'm not sure anybody should continue to listen. What possibly can we know. So that's interesting. What led you not to go to university? I know what it did for me but you know why…
Trent: So I was a big fan of Star Wars and I wanted to be Luke Skywalker? So the nearest thing to that would be being a fighter pilot. So when I was in high school my ambition was to get into the military in Canada and become a fighter pilot. And while I was going through... which is a whole other story, while I was going through the process that I ultimately did get accepted as a pilot, I got a sales job, selling office equipment. And much to my surprise or maybe it wasn't my surprise, I'm not sure but I was quite successful at it. And so that would have been way back in about 1991. So you can adjust back for inflation. Anyway I was making about $5,000 a month way back then, selling photocopiers. I was assigned a territory and I'd go and knock and I'd bend into every single business in my territory. Multiple times over the years that I did that job. So that's foiled college for me because - hey I wanted to be a fighter pilot. And ultimately like I say I got in but due to Canadian budget cutbacks, my tenure in the Air Force was prematurely, that plane landed early. And so then I was like, oh I'm not going to, why would I go back to college? I'm making all this money, I should just get a better sales job. And so I got a job as a stockbroker or a financial adviser as we called them in Canada, for one of the the big firms that was owned by one of the big five banks. And because I had learned how to cold call and speak to people selling photocopiers, I was wildly successful as a stockbroker. And I went on to make quite a bit of money in my very early 20s.
11:58 (Steve shares his story as an aspiring fighter pilot in high school.)
Steve: I love it. That's it's fascinating. Actually I also want to be a fighter pilot in high school. And I went, I was going to high school on an Air Force Base quite familiar how and they had an ROTC program in my high school as an Air Force ROTC program. So in 10th grade my friends or ninth grade, even they would have uniforms on. They go through the ROTC program. Yes we call it ROTC but the minute I had my eyes checked, it's like, “Nope your eyes are not pilot material.” Then I'm like, I'm out. The last thing I'm going to do is follow orders from that ding dong over there. He's my friend and doesn't know anything but he's a higher rank than me. This doesn't make sense. So my military career ended up very early as well. So it's fascinating where you shared that. Now you talked about some of your first jobs but think about from those first jobs to now, was there any defining moment that stood out in your mind? Anything that that you reflect on today and go, “Man if I didn't go left and I instead I went right, it would have been a different life for me.”
13:02 (Trent reflects on one of his life’s defining moments.)
Trent: Yes. I think that the office equipment job put me on a track that had a huge impact on the rest of my life because it was from that, I was actually quite a shy kid in high school. I was known at lunchtime, well not known, only known in my mind. Rather than have to go and talk to people. I didn't really know very well or what have you. I would go sleep in, I find a classroom where I could just sleep for the lunch breaks. I've never talked to anybody. So I wasn't exactly your outgoing flower as it were. I had a couple of buddies that I rode dirt bikes with and those were the only guys I would talk to.
Steve: Probably a new level of introvert there, the sleeping introvert -
Trent: Yes, yes pretty much.
Steve: So how do you think that transition happened from that person is highly introverted to being able to get out there and sell office equipment?
Trent: Well I think I will have to credit. I was really into Tony Robbins at that point in time. His personal power stuff had just hit the market and I was consuming that like crazy. And I was really driven. I didn't want to be poor. We grew up very poor and I actually wrote a blog post about this the other day. And in my little mind at that point in time poverty equaled violence. We had been violence in the household that I really didn't like. And oftentimes it was the byproduct, if not enough money at the end of the month. So I thought to myself, well I don't want to be... I don't want to have violence in my life. I don't want to be poor. So I need to find a way to not be poor. And I didn't know any entrepreneurs. I didn't know what an entrepreneur was. But I knew some people that were in sales. And one of them was selling photocopiers and so he introduced me to the sales manager who was also a young guy maybe four or five years older than me at the time. And he'd broken every record in the book and he was making $100,000 a year selling photocopiers. And I was 20 or 21, whatever it was and I'm like that's just a ridiculous amount of money. And so I thought, well I mean if you're going to give me the job, I'm going to do that. And he did and he was really really good at training me and role-playing with me. And told me what books to read. Didn't have podcasts back then, so I wasn't listening to any of those. I was listening to a lot of tapes put the tapes and the cassette of them in the car. And every time I was driving around the territory, I'd be listening these tapes all day long. Tom Hopkins was kind of my guy back then.
Steve: Oh he had some great sales. Story still has great sales stories but Tom Hopkins for those who haven't ever endulge. He's a great sales trainer, highly funny and engaging guy. Yes very good call back.
Trent: How to master the art of selling by Tom Hopkins probably made me a couple bucks by reading that one. And so that led me down a path. I'm having that success and at that point in time I was foolish with my money of course and spent it on cars and all sorts of things like that. But it just made me want to do more and do more. And how I could be more successful. And I stayed on that path of working for other people in a sales role until I was 29 or 30 somewhere around there.
Steve: And then what ultimately led to the transition going working for someone else in a very successful atmosphere. By the way a lot of people would have felt perfectly comfortable with the results you were producing. So there had to be something that push you to make a transition.
Trent: Yes. I don't you know the last job I had was a pretty easy job. And I was making about $200,000 a year doing it. And I look back sometimes, I think why do I leave that job but something it was boring and I wasn't intellectually stimulated. And that was a problem for me and I just thought there's got to be. I know how to sell stuff and I met this guy who was the I'd the tech guy. The IT guy that came into our office and fixed the computers. And part of my job was entertaining clients at sports games. And I would have the booth, the box like corporate box a lot and I'd always have extra seats because our basketball team in Vancouver sucks. I became friendly with this felon and I invited him to bring his girlfriend or whatever to use these seats that I had. And someway somehow we just got end up talking about maybe forming a company and IT company together. Because that's what he was doing. I like that well. You know how hard could that be. And ultimately we decided to do that and that was in 01, just like right around 9/11. And that was when I be officially. So I quit, my $200,000 year job. I sold my house and I cashed in everything I had to create as much, because he had no money. And I created as much liquidity as I could and as much time free time as I could to start my very first business. Which is still in business today. I don't own it anymore but it's still a company that's in business today.
Steve: First of all, I love that evolution of the ideas and the very motivation of my mind isn't stimulated. I have to make a change just based on that alone. That drives a lot of our behaviors for those of us who are afflicted with that. It'd be a lot easier to just sit on a beach I suppose but myself I find that same kind of push, it pushes me to do stuff even though there's other times where I'm like, “Why did I push myself into that?” But I suppose my question to you is a lot of people out there, they're so afraid of making this change. You quit a lucrative position, a big paying job, sold your house. A lot of people are like, “No I can't start a business until I have all my ducks in a row, until it's no risk to me.” How do you talk to somebody like that who has quite a difference in their viewpoint?
Steve: That's a tough one. It's about I mean to put it in perspective, at the time I was not married. I didn't have kids. So I didn't have other people to provide for. So that made the decision I think easier. But I suppose it comes down to priorities and sacrifices all fueled by desire. I had a high level of desire. I remember listening to all the tapes in the car and seeing guys on covers of business magazines. And I remember thinking, “Are they really that much smarter than me?” I mean could I maybe do that? I don't know but if I stay in this job I'll never find out. And so I was able to play a trick on my mind or I don't even know how to describe it to be honest with you. But it didn't seem like that big of a deal at the time because I thought well I could always go get a job like this again. I really needed to and that was last job I've ever had. Never had one since. And so I don't think I have a great answer to your question unfortunately, other than to say to people you have to really figure out what do you really want and what are you willing to pay to get it. Because there's going to be a cost. Make no mistake about it. If you're making the transition from W-2 employee to employer, there is going to be a cost. And it will most likely be far more painful than you can possibly imagine at the beginning. And if you knew how painful it was going to be, you'd never do it. Because in my case I said to this fellow, I said, “This is how much money I have. Do you think that we could start this company and break even within three months?” And he didn’t know, but he said, “Yes sure!” And so I think that I was making my decision kind of based on - well, I'm only going to be out of money for three months and then I'll have money coming in again. Because I didn't know anything about business stuff. It took five years for that business to break even by the way. And by the time it did, I was 400 grand in debt. If someone had said to me, “Hey it'll take five years and you're going to be this much in debt.” There's no way I would have done it. But I didn't know that. I didn't have that information at the time. I had just a little bit of information which I think maybe that's the thing that gets in the people's way or in some people's way. Is they want all this information to make a decision and they get so much that it scares them and they don't make the decision. So they just dream and procrastinate and read what other people versus I have always been ready fire pain kind of guy. I never want to like spend weeks and weeks and weeks doing research. And that has cost me on occasion but for the most part it served me very well.
Steve: Well, I definitely appreciate the fact that if we have all the facts we’re rarely going to make a move right any time. I called my fleet of lawyers about some opinion, most of their answers are based on maybe or it depends or no. Right? They're highly risk averse whereas when we see a new idea or new concept like your new Flowster software idea. If we went and talked to a bunch of smart people they might go, “Oh no, that type of business is very competitive. There's already a lot of us.” They would give us many reasons why it might not work. But you know in your heart that it's going to work because it's a core part of who you have become as a systems guy. And for me it always ends up saying, I can't imagine myself not doing it. Whether it succeeds or fails is a secondary question at that point. Is that kind of?
Trent: I don't know if I saw it like that in the beginning, I didn't so much think it wouldn't work because I thought, “Well it's not going to be that expensive to start.” And in hindsight, it was a really crappy business model. I'd never do it again but I didn't even know what a business model was. I didn't understand product businesses versus service businesses. I just thought sell stuff, make money. So being naive, I think to a certain degree was helpful to me because at the time you talk about a space being competitive. If you open the yellow pages and tap IT consulting company, it's like the yellow page is that thick. There's a million of them, there's no differentiating between any of them and it just comes down to dollars per hour. When we can get more into business model later because we did iterate from that. But I think by just not really knowing what I was getting myself into made it relatively easy, to make the decision to do it.
Steve: I love it. A little bit of naivete goes a long ways in the recession. And so give me a time maybe along your journey and at any point. Was there ever a point where you wanted to give up and go back $200,000 a gig or whatever?
Trent: Oh I can tell you have a very specific time. Yes there were many times but this is the one that stands out most. So when I was a stockbroker, I was fortunate that one day. I did a client this fellow walked into the office. It was very wealthy man, he didn't have an appointment which in our practice was highly unusual. Because I was in a very successful practice but I only took people by appointment and the reception came back and said this fellow's here and he wants to know if anyone's available. And I said well if he doesn't mind watching me eating my lunch, I'm happy to chat with him. So we ended up making a trade for him and I did very very well for him. On that very first trade, I think we broke even on everything after that. But nonetheless I was the golden boy because first impressions are what they are. And so after I started my... I just remembered my first business, was actually I forgot one. It was a flop. So I had this idea to start at what's called an... and it's laughable, now an E-commerce service provider. Kind of like a Shopify but for B2B players. And this was way back in 2001. So anyway he gave me a bit of money to try and make this thing go. And after five or six months of me and a business plan on the laptop, I said it's not going to happen. I'm outgunned on every front. I don't have a prototype. I don't have anything. So I gave him what was left at this money back. And then I went off and I did a business that's still, it's called Durand. And I did Durand with that fellow. And so as I started in, when we were running Durand. And we were burning through all my money because of course we didn't break even in three months like it said we would. I started to run out of money and I just started spending it. One point when we weren't getting clients fast enough. I got an office. I heard some salespeople. So now I'm right in pretty big checks every month. And so savings doesn't last very long when you're writing ten thousand, twelve thousand dollar checks every month. And so John my, I call him my rich dad. He's the investor who came into my office and when I was just a stockbroker. And so John, he lent me 25,000. Couple months later that was gone, he lent me another 25,000 a couple months later that was gone. And then to your question there was one particular Saturday morning when I didn't have payroll for Monday. And I went and I had a breakfast with John who I had become quite close with. At this point to them I still do business too with John to this day. By the way I've just bought a 1.3 million dollar building and he helped me with that. And I said to John, I said you know here's the situation, here's what we are progress and so forth and so on. But I don't have any money for payroll on Monday and he looked at me and he's got a very very dry sense of humor. This man I love him to pieces and he said, “Isn't it time you should shut it down?” Because we've been in business about 18 months at that point in time and John's been a real estate guy's whole career. So he had no understanding of the business that we were doing. He just knew that he was betting on me like the business plan was irrelevant in his mind. It was all about what's this guy right here. And for me at that point in time shutting it down would have meant personal bankruptcy because I had liabilities and excessive assets. And so I had no way of paying all that off. And so shutting it down wasn't an option. I know it's not time to shut it down and we've been growing revenue and I knew that we were close to break-even. Because we had a recurring revenue model in that business. That's how we iterated the business model which that's a funny story. And so I convinced him to give me another 50 grand but it I didn't want to take on any more debt because honestly I was just too scared. So I said I need another 50 but let's do this let's take the existing 50 that you lent me add 50 more to it and convert it to equity. How much of my company do you want, he said well how much of it do you own. And I said 80%, he said great I'll take half.
Steve: Whoa yes, I guess he’s a good deal maker.
Trent: So John teaches through lessons.
Trent: He's always been exceedingly fair but he teaches through lessons. So because he gave me the opportunity to buy it back later at a higher price but I guess it's capitalism. That's how it works.
Steve: That's right.
Trent: So my options were go bankrupt or say yes. Well you know which one I picked right? Say yes and from that moment forward we stopped bleeding cash. Because I knew we were close and we got to break even. And the only thing he helped me with after that is we needed an operating line of credit which ended up having to cosign for another hundred grand. Just cause in that business accounts receivable were always just a bear and that was it. I had no idea that people wouldn't pay you on time. But really you send them a noise, they don't pay, come on. Now I never get into businesses with accounts receivable, never. None of my businesses have a are everything I get paid up front, except Amazon. But they pay on time every two weeks. So that was a moment in time where if John had decided we were going to shut it down. I wasn't going to really have a choice in it. Because I didn't know anybody else with money. I didn't have any other credit resources available. I didn't have anything else to sell like I was literally out of money and he saved me.
Steve: I loved it. Well just first of all it was a lucrative lesson in terms of being able to save the company when you're up against the wall like that. You got to make payroll. The out is a terrible outcome right? You have to go bankrupt. And when you sign for leases and you have all these obligations, there's so many things that require personal guarantees. Which I'm not a fan of. If you can avoid signing personal guarantees please do so, but all of that pressure must have been extraordinary at that time.
Trent: Yes. Not nearly as bad as when I ended up selling that company but yes. I talk about as an entrepreneur. You must have the ability to embrace economic pressure and not collapse and not lose the ability to think into function. And depending upon how much economic pressure you've put yourself under that can be very difficult but you just suck it up buttercup. Because you got to keep going if you can. And to put it in perspective, I didn't go from not in debt to four hundred grand in debt in 24 hours. It was the old joke - how do you eat an elephant? One bite at a time. Well how do you go into big debt? With one loan at a time. They just keep on piling on top of each other and that's what happens for me.
Steve: And this is a not uncommon story to be quite honest. You guys were smart because over time you pivoted the business model. It sounds like you stop doing the fee-for-service and kind of fee for time specifically and you did a fee for kind of a package service. Is that…
Trent: Yes, we got away from doing the hourly rate stuff because that's hopeless. And instead we had customers sign annual contracts and that we would debit their bank account on the first of every month. And then I tried some systems. I tried to figure out how many different pieces of software or how can we automate more of this laborious stuff that we have to do to get our cost structure down. So that we could increase our margin because of course you know customers are contracted to pay us ten thousand a month or whatever it was. But if I can get my cost of delivery down than my profit margin. And we got reasonably good at that.
Steve: No that's a really good. and spoiler alert you were able to sell that company and had a positive outcome in the end. Yes?
Trent: I did. I sold it for 1.2 million dollars.
Steve: But it was a very arduous process and this is ultimately what has led you to probably consider other businesses that have different business models. That fair to say?
Trent: Oh absolutely. And yes to put it in perspective, when you make a bad business model choice like I did. So that business it took me eight years to make my 1.2. Well I only made after the time. I paid off the investors and all the other things I was left with about seven hundred grand. I'm going to make seven hundred grand on this building I just bought. And the whole thing took 90 days versus eight years. So good business model versus bad business model real estate is a very good business model if you do it right. E-commerce businesses anything that scales, the important thing to understand is can you grow your revenue significantly and quickly without growing your headcount significantly and quickly? In service businesses you can't and product businesses especially like a software company you can and Amazon business is about as passive as a product business as you can get. Because there's so much of the fulfillment piece. And the traffic piece that comes from the Amazon mothership that you don't really have to have that many employees.
Steve: Yes, it is highly leveraged against somebody else's fixed overhead. And you use it in a variable expense way right. So when you're doing online sales and you're using the Amazon FBA or fulfillment by Amazon model, you're leveraging all of their warehouse costs all of their everything and robots and all that stuff and you just pay your little fee for each of the little item that goes through the system. It is a very flexible model. I like that a lot. So we're going to take a quick break. When we come back, we're going to dive into a little bit more about that system stock. I want to learn more about WEBS. Did you call it WEBS? The systems?
Steve: It maybe closer as well. We're going to do it right after this.
Empowery, the name says it all. Connecting E-commerce entrepreneurs with great people, ideas, systems and the services needed to sustain business dynamic into growth. Empowery is a network; a cooperative venture of tools and resources to make you better at what you do. Because we love what you do. We are you. Visit Empowery.com to learn more. You're listening to the Awesomers podcast.
Steve: Okay here we are. It's Steve Simonson back again on Awesomers.com. And Trent and I were just talking about systems. And one of the things I should ask you Trent is, do you have a favorite tool or business process app? Anything that you care to call out that you or your team uses on a day-to-day basis? The Flowster out of the equation for them all.
35:28 (Trent talks about his favorite business tools.)
Trent: I was going to say that would be the big one. In addition to that Trello. We're big fans of Trello that's one of our core tools. HubSpot is another of our core tools. Slack is another of our core tools. I spend about 2,500 bucks a month on software, so we get a lot of tools.
Steve: Yes, I think that tools are only good if they're used and they're used in a systematic way. And that's clearly one of your strengths. We talked about the E-myth and kind of your maybe that was at the beginning of your view of systems as a core part of running a business. How was that evolved over time? From the time you kind of read the book and started thinking about it till now?
Trent: Well in the beginning because my first experience was with an IT company, I didn't know how to do any of the IT stuff that the company did. So there was no opportunity for me to have any role and I just said to my co-founder I said, “I want you to document everything.” He read this book I want you to document everything and I never looked at any of those processes because it would have been like reading Russian. Because I didn't know how to do any of that stuff. And so when I started my Amazon business that's I think when I really went back to the well and embraced it. Because I've been using Virtual Assistants from the Philippines now for I think nine years. And so I'd had a lot of experience with that. And of course I'd created training videos and other type of things but when I started this we were able to go from zero to a hundred grand a month, in five months. Largely because product sourcing which is in the wholesale model, which is extremely laborious. I just broke it down into steps and I documented the haircut of every one of those steps. Because I knew I don't want to do any of that stuff myself. I knew it wasn't going to be time effective and I immediately hired I think was 2 or 3 or maybe even before I don't remember. Because I had a member of my team doing hiring for me of virtual assistants and that was it just the business just took off because our output was so high. Because we had lots of people at 2 bucks an hour following these systems and executing the work in the way that it needed to be done. And then of course as when you start sourcing products and you start growing revenue, you have all sorts of other things you need processes for. Well now we're onboarding new suppliers and now we have shipments and we have reconciliations and we have listing optimization and we have pay-per-click management. And now we have HR and we have finance and like all this other stuff just kind of happens. So it was very natural as I hired people like point upstairs because they'll sit upstairs. It was natural as I hired them to indoctrinate them all into this, is how we operate. Like there's a joke in my office that you're not allowed to fart unless you have an SOP for it. And it's kind of true we've literally have an SOP for everything and I've trained them all on how to create SOP’s. And it's absolutely a part of the culture and I can't even imagine trying to run a business without all of these processes in place.
Steve: I love it. The personal gas generation SOP coming soon. That's a pretty good one. Now let me ask you this because I love systems. I love the mentality and I really I want to reinforce the Awesomers on their list and that often our ego gets in the way or our own ignorance gets in the way. And by that I mean when we start doing things, we think we're the only ones who can do it well. We're the only one you know if you want something done you gotta do it yourself. All of this kind of stuff is mentally kind of put into our minds or maybe we think it genuinely. What's your thoughts about that?
Trent: Well as a CEO you get to make lots of choices. And one of the choices that you can make is you can have growth or you can have total control but you cannot have both. So there are many people out there who are control freaks. And so they don't get any growth they remain a one-man show and they get by. And that's not me, because I don't want to do all the day-to-day stuff. I became an entrepreneur because I wanted this entrepreneurial lifestyle. I wanted flexibility in my schedule other people didn't have or couldn't have. I wanted to be able to go where I want. To do what I wanted when I wanted for, as long as I wanted with whoever I wanted. Freedom. It's my number one value. And so when I decided that I would choose growth over control, well what is a way to minimize the risk of having things out of control. And that's to define processes for how things are going to be done. And then accept the fact that everybody you hire is probably only going to be 80% as good as you. And in some cases as your company gets bigger and you can afford more talented people, they're going to be better than you. But in the beginning they're not but be okay with that. Because you like well they might be 80% as good as me but we're doing three times as much of whatever as I could do on my own. Therefore the net, net, net is more than I could accomplish on my own. Well why wouldn't you do that?
Steve: It's really good math. I do fundamentally agree and there is an evolution in hiring. So when you start out and you start talking about VA is doing a particular process. Maybe there are kind of base level in terms of skills and pay and so forth. Over time you can find people in every category that exceed your own capabilities in my opinion. And your role as a CEO really should be to find that talent pool and put them into place. If you really do want to have a business that's growing and scaling and leveraged versus just being kind of the one-man patent in your office right. If you just wanted to be commander all the time, it's not as effective as an organization. And I think that's something that people need to understand that it's possible to do. It's not just a nice dream. It is possible to do it and you're living proof.
Trent: Yes, it is possible. I think the other thing that people should think about, is if you don't have a team you don't have a business. You just have a job, you're just self-employed, that's not a business that's I work for myself. Because if you stop working, the money stops coming in. That's not a business. A business is like my Amazon business, I don't have a day-to-day role in that organization. I haven't for the last year, as one person is left and while we replaced them. Yes I'll have to put the hat on for a bit and fill in while that person is... well that role is open but that in my mind is the difference between having a business and just having a job. Where you're your own boss. Are your clients for your boss. And again that doesn't really appeal to me because I mean act as I prove proved in my sales career. If you get a good sales job and you're really good at it you could have worked for somebody else and make 200 grand a year. You don't need to go. And most small one-person businesses they don't even make that much money.
Steve: No as a matter of fact, you know it's funny as you were talking about that the old phrase from Michael Gerber kind of jumped into my mind. Which is you don't own a business when you're that one-man show, you own a job as you described. And this idea that we any of us that are trying to put a business together. If we don't take the steps of saying what we truly want and and what we're trying to design in terms of an outcome, then we often find ourselves kind of making ad hoc decisions. And they're not always good decisions. Whereas I believe your philosophy about systems. If we put it in place and we break down the processes so that it minimizes the risk of delegating, right? Other people could handle it. Those are one of those things on the road, that they keep you on the road, the guardrails. Yes, that's another session where we just do the guessing games. But having guardrails or what the systems and processes are all about in my view and then you get good people to execute it. But they get better and I suppose, is it fair to say that over time they are the ones who are actually making the systems and documenting those versus you.
Trent: Oh yes. I'm not super involved now in updating the existing SOPs because I don't do those jobs anymore. I don't often create new ones, once in a while I do. But for the most part all even that has been delegated to the team. Now you do need to have quality control in place. I'm fortunate I have a very bright wife and she is the basically the president of the Amazon business. And there's some things that she does better than me. There's lots of things in my mind that I do better than her but she is good enough at overseeing the SOP process. That when I look at SOPs that she's created or that the employees that report to her have created. I look at them and I'm like well you know it's not like I would have done it any better than that. So that's good enough. Now if I didn't have her then of course I'd have to… that would be one of the rules maybe that delegate would have been final keyway or for new SOP. But essentially you know she's on the team.
Steve: I love it. And again that kind of role can be delegated to somebody who's capable. You know my organization's in the past, we've had full training teams and they would create documentation. And they had their own methods of kind of validating and testing and so forth. And it just depends on the size of business that you are today. If it's just you, you're going to have to take some of that documentation but it can be moved to others in short order if you show them the way. And I'm hoping that Flowster will be a relatively easy way for people to kind of control their systems and put their systems in place. Is that a good guess? Fair to say?
45:36 (Flowster as a platform for building standard operating procedures.)
Trent: Yes, absolutely. So Flowster rather than a software app like normally, when you go sign up for software it was designed by the engineer to like HubSpot CRM. It does this thing it functions as a CRM. Flowster is more of a platform. It's just going to be coming on a beta here soon and be available. And it is a platform for building standard operating procedures. However the hell you want to build them, in whatever industry you're in, for whatever you need to do. Over time as we develop more partnerships with people who have knit domain expertise, like I have a lot of Amazon seller domain expertise. So we created SOPs for that market. The goal with Flowster, to find other domain experts in other markets who can create SOPs and put them on the platform. So those SOPs can be purchased by people in that industry and ideally as well. We'll have developers that end up developing third-party apps and third-party integrations kind of like the Salesforce platform. Obviously they're little bigger than this but that conceptually, it's the same idea. You've got this marketplace where there's third-party apps that enhance the functionality of the platform. Now there's going to be some critical mass and so forth and so on and that's required to attract those developers. And that might take a little while especially because we're not seeking venture funding and that's what Flowster is intended to be as it stands right out of the box. If you're an Amazon seller you can come by and do your SOPs. Plug them in there and if you're using all of the same apps that I'm using you've literally just replicated my infrastructure. And you could call it plug-and-play if you're not willing to spend twenty five hundred bucks a month on software or whatever to get all the apps that I use in my business. And all the SOPs are written for all those apps. We've given you a huge head start and you'll go in and you'll hit the edit button and you'll make some changes. We don't use HubSpot, we use close.io. Okay we'll make the changes to make a few different screenshots and make a few adjustments. And now your SOPs are customized for closed by. If you use some other repricing tool that we use, again same idea. You can see what we've done and just make the little changes that you need to make. If you don't want to switch over to the same repricing tool that we use and over time I hope that we end up having success in more than one industry. And that we have partnerships like I say with the domain experts in those industries and then the apps that are used by the people in those industries. We would have solid integrations for. So there's many years of development ahead of us yet.
Steve: Well I really do like the whole the very premise of becoming a platform right. And this concept of it's too simplistic to just call them systems of procedures right. The idea of a complete company workflow in all of those various categories. I'm sure there's countless others you talked about. It just a couple there repricing tool or hiring and firing through termination process. There's so many processes that need to be done. That's actually your business operating system at the end of the day. And it deserves a platform. Very interesting idea.
Trent: Yes, we think so.
Steve: Yes. Let's talk a little bit more about WEBS and what you guys have done, oh and your last couple releases. A lot of people actually getting involved in when they get access to WEBS.
49:17 (Trent talks about WEBS.)
Trent: So WEBS like I said to you earlier before we record, I didn't ever create WEBS with the intention of it being a product. I created a scratch manage. My company was growing like crazy because we had developed systems for sourcing and because of the fact that we were landing all these accounts. Now we needed systems for everything else that an Amazon seller does. So we set out to create them. And then I was invited to speak at the wholesale formulas annual conference about you know to tell my story and of how we grew so quickly. and I got up on stage and I said hey everybody, I'm going to explain to you my product sourcing system. It's pretty complicated and I don't have anything for sale at the end. So take good notes. And I proceeded to just info-dump for free and as you might expect not that I really expected it to be honest with you. People who came up to the microphones and up to the stage afterwards overwhelmingly their question was what would you sell us? A copy of your systems so that we don't have to go and create them from scratch. Because we put a year in to develop them. Developing them at that point and I said well yes let me think about that. And so we went into the first launch really not sure how it would go. And I'd had no real experience in creating that level of a product before and the sales numbers that came in were wildly ahead of our expectations, almost double. And so that right away clued me into the fact that wow there's actually quite a demand for done-for-you SOPs that are specific to a given niche. And so then we made mistakes, we didn't anticipate the customers wouldn't understand like zaps in the beginning. I had created zaps to save a couple of most clicks here. And there none of them were mission-critical but I'm such a process nerd. I'm like I can save to most clicks. I'm going to make me this app well. And I had worked with zapier to get zap templates. So that customers didn't have to recreate these things from scratch. Well it was a nightmare. I mean people they literally couldn't even figure out how to import the zap templates into their zap account. And our helpdesk blew up and so we're like that was an awful experience both for them and for us. And so then we got rid of the zaps in the second one and trying to simplify things. And ultimately that's what led to the decision of I need my own software platform because I need to be able to do these integrations. I need a way to efficiently send updates. I needed a way to efficiently create integrations without people having to rely on that beer. And yes we're going to have his app, your integration. The coding is almost done for the for the eager beavers and this to the kids that sit with the propellers on their head like me at the front of the class. But that's not everybody. Now everybody wants to do that that's not their thing. So we want to make it much much easier and that's kind of why we decided we needed to create our own platform. And so now WEBS which stands for Wholesale Ecommerce Business Systems. Like I said a few minutes ago if you use all the same applications that I use, it's a plug-and-play system because it's what my team uses. Like what we sell is not any different than what we use. The only thing we took out of it was our user names and our passwords and special IDs and stuff like that. Other than that it's a tentacle and if you're not willing to use all those apps, yes you're going to have to hit the edit button and you're going to have to make some changes. So maybe turnkey is the right word for you but it is for the person who says I'm just going to use everything trance using. Because a lot of its some of its free some of its not for. Yes you guys spend some money on it you don't need to spend $2,500 a month there's apps that I use that did have nothing to do with whips. And so you don't need to go get those apps but you're going to have to buy some of them. And it is a way for an Amazon seller to be able to focus their time and effort on what really counts and not get bogged down and hadn't trying to recreate all this stuff. Because for example product sourcing. I have a couple for example by the name of Kip in April who had a successful RA business. Prior to becoming a WEBS customer and they were uncomfortable about the future of RA because of Amazon cracking down on receipts and so forth.
Steve: And may I just interrupt and say RA for everybody keeping score home is Retail Arbitrage in my estimation.
Trent: Yes it is and in Amazon doesn't really like it. And so they wanted to transition to wholesale. And when they first got WEBS and they looked at it they tried to read everything from anten which is like the worst thing and effort to do. Because you wouldn't buy a McDonald's franchise and then sit down with a franchise book that's like 9,000 pages long. Read the whole thing and then decide you're going to start your business like that would be ludicrous. You would flip like it's going to have sections in it, right? Operations how to cook a hamburger, how to hire staff whatever it's going to have sections. You're going to go to the section you need to go to for the thing you're working on and you're going to look at the standard operating procedure which is relevant to that thing. And I thought that would be obvious to people who bought WEBS. And much to my surprise it wasn't. Many people sat down and read it. Kipps and April, he sat down and read it and they became very overwhelmed. And they suffered from analysis paralysis. And one day on a coaching call with them I said, “Can you explain to me like what happened?” And they told me this and I said you're kidding. I go, “That's not what you're supposed to do.” I said you're just supposed to go like into the sourcing folder and start on step 1. And they went oh, I've never sold this thing as a product. It never occurred to me that people wouldn't just do that. And so they now are a raving web supporter because they said once we realize that it was like a fast food menu that we just go if we want dessert we go to the dessert section and see how to make chocolate pudding. And we follow that recipe. Or in a non metaphor if we need to source products we go to put the product sourcing folder and we start a chapter 1 which is finding competitors, in step 2 is product extractions and then it just continues on. And they said once we got that figured out we just ignored all of the parts of WEBS that we didn't need yet. We didn't sit and read them. We didn't look at them. We just focused on what we needed and that was what made it wildly successful and overwhelmingly. People who have succeeded in their Amazon business as you doing using WEBS their story is like April and Kipps. They've come to understand that it's not a training course it's not like you're not. So it's you're not supposed to read the whole thing, watch the movie from the beginning to the end. You just skip to the part that you need and use that part. And if people can manage to wrap their mind around that then they end up becoming wildly successful because it saves them a whole bunch of time.
Steve: Well it is. I love this. The origin of both WEBS and Flowster because both of these things were born out of it your own needs right. You need it for your own wholesale business systems and procedure. So you wrote them down and you're really good at it. You have your own take on it and then everybody else who got wind of it. Okay you could save me a lot of time, what do I got to pay you to get a look at those, right? And this is the done for you is a really powerful methodology. And I really encourage people to utilize it where you can because it's a highly leveraged move. You can't buy time literally but this is the closest thing to it because it took you guys an awful long time to build those procedures. Yes?
Trent: Very much so. Essentially all this is it's kind of like buying an Amazon, a wholesale franchise like if you go to buy a franchise of anything what do they give you. They give you a formula that has been proven to work and they give you all of the supporting documentation and training that you require to use that formula to succeed.
Steve: Yes, that's hashtag franchise prototype everybody.
Trent: And so we didn't invent the fact that selling wholesale on Amazon works. It's widely known that that works. So that part of the formula I didn't have prove to anybody we then created the operations manual. And now have training material that shows people I did. This is another thing I didn't understand. I didn't understand that we would need training material to show people how to use an SOP because when I wrote the SOP I wrote it so that I could literally just assign it to a VA and they would start to read the instructions and just do the thing. Who knew ironically enough now we have we've had to create an extensive library of training videos to talk about the SOPs which still I don't fully understand how that works. But nonetheless it's what people required for the most part. So we were very happy to create it to make it easier on them. So much like a franchise we're providing the operations manual and the training for the manual and Amazon already proved that selling on Amazon is a good idea.
Steve: So it is an evolution all of these businesses in process. I just love the fact that you guys are very tuned in to what your audience is telling you, right? When you see somebody who it's not lining up and you just solve the problem. You're like oh okay we'll make some videos or okay let me tell you how to actually use this stuff a little bit better. This is a fundamental of a responsive company. So kudos to you guys for making that work man. Oh man this has been extraordinarily insightful. I love what you're doing. I want to have you get out your crystal ball before we go and and tell me what the world of Amazon or systems or anything you care to speculate on looks in five years. Tell me in five years, is E-commerce going to continue to go up or we consolidation come in any speculation you care this year?
Trent: Wow that's a tough one. I don't know that I've ever had a particularly good crystal ball. I feel confident that E-commerce will continue to grow. I think Amazon has so much of an infrastructure that the lead that they have will be hard to erode unless they get into problems with the Justice Department for being a monopoly. That could be an issue. Third party sales are not going to go away on Amazon anytime soon because Amazon makes a lot of money from third-party sellers and they don't have inventory risks. So that's not going away where the challenge where the changes are going to be. It's very competitive and you are going to have to I think focus on a specific niche. I think you're going to have to get very very good at targeting potential suppliers and putting your sales hat on and showing them why you're the best. You know why you're the best partner for them to go with. I think of CRM software people still need it. Yes is it super competitive right. It is because there's a lot of platforms to choose from. Does that mean that they all just throw their arms up in the air and say oh gosh it's too competitive to continue. No they just figure out how to be better. So you need to be the person who can figure out how to be better. How to outmaneuver your competitors and there's lots of different ways to do that. So I see a tremendous opportunity for people who have those skills to succeed as an Amazon wholesale business. Now maybe you don't want to be an Amazon wholesale but maybe just going to be an E-commerce business. Well obviously there's a massive opportunity for that as well because never before has it been easier for someone in their garage to create a brand and take that brand to the global market. I'm in the Sun called entrepreneurs organization and there's a fellow on there. Him and his wife spent a couple of years developing menstrual cups. And I mean gosh his business is just exploding I interviewed a guy on my show. The other day the founder of pop sockets these things that go on the back ear cell phone they're going to sell. He started in 2014 formerly they're going to sell 60 million of these things this year. 60 million. I interviewed the founder of Son frog the world's largest t-shirt platform he did a hundred million in his second year. Without E-commerce how does that even happen?
Steve It doesn't. It's amazing well just there's so many routes to get to where you want to go and this is the thing fundamentally entrepreneurs are wonderful problem solvers. So they have to be problem solvers at the end of the day. If they're going to kind of get through right. And I think your your predictions of by the way are really spot-on. And opinions that I share and who knows what the future brings but I think you've made some pretty good bets right there.
1:02:07 (Trents final words of wisdom to Awesomers.)
Trent: Yesm I want to echo one thing you say there. It's so important because I know there's a lot of people out there who sell training courses and there's a lot of people who buy training courses. And training courses can be wonderful but if you are not a problem solver by your very nature I don't know that. No matter how good the training course you're given I don't know that. You have that, you'll be successful long term because the problem with anyone's training course is every day that goes by that training course is one day more out of date. Because stuff changes all the time and that's where the problem solver skill set comes into play. You have to be if you buy my SOPs. Things are going to change and we're going to issue updates but maybe you find a better app that you like better and it's doing better than what we're doing. Solve that problem adapt the SOP to them to use that other app instead of the one we're using. And you'll be more successful than us. That is by far in my opinion the most important skill or maybe personality trait for an entrepreneur to possess.
Steve: Very well said. We are in the business to solve problems that's why entrepreneurs exist. We have to add value along the way. There's many other things but if we can't get up in the morning and know that there's going to be a problem that we need to solve. And ideally our people are solving a lot of the problems as things go on. And you do your very best to avoid the problems but at the end of the day that the onus and the burn of responsibility ends up on us for the big problems and that's just part of the deal. And I quite agree with you if you don't have that personality type or you think that owning your own business is not going to be just one series of problems after another. You should open your eyes because it is just one problem after another.
Trent: That's what it is every day.
Steve: I love that very good words of wisdom to that to leave on. Thank you again for your time Trent. It's been a real pleasure and I love the system's mentality. I'm a big fan and we'll make sure we get links to to all your good stuff, the podcasts and the other things as well on here for everybody out there to get. Thank you again for joining us.
Trent: Steve thank you very much for having me on the show and I hope that everyone who took the time to invest and listen I'm really truly hope that you got something good out of it.
Steve: No doubt they did. Awesomers, I will be right back after this.
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Steve: Boy, if you didn't know that systems were important, as you may recall I often talk about strategy systems and scale. Trent is a perfect example that should give you all the support you need to know. That systems really are a foundational piece of a successful and highly efficient. And therefore profitable operation right. Too many times we get kind of mixed up with this idea of how much revenue did I turn over. How much money kind of pass through the top-line but we forget about what trickles down to the bottom lines. And ultimately are not just the profit but our own sanity is the result of good systemization. A business that operates without systems is something that tends to be more of a day-to-day firefighting enterprise for entrepreneurs and that's not nearly as fun as a systemic run business. Where a predictable result kind of is accomplished every time. And we used to say the system runs the business, the people run the system and if for whatever reason something comes out of the system, something breaks and we have to handle that with a human. That's okay, we just have to figure it out and decide is this going to happen over and over? Is somehow the system we have no longer coping with whatever the dynamic changes are in the market? Fine let's tweak the system, let's make it better and modify it. But if it's just one of those single times where we need to handle with a human because of some weird anomaly ain't no reason to systematize that. Go back to business don't worry about it and that fires put out. You don't have to worry about it. So really systemic thinking can be a way of life and as I mentioned just a moment ago your own keys to unlocking a sane sustainable business. Really in my view rely entirely on systems at the core of it and really great people running those systems. Now this has been episode number 52 in the Awesomers.com podcast series. And as always just go to Awesomers.com/52 to find all of the show notes and relevant details and you can do that right now. And by the way don't forget to jump on the mailing list that's there. You get lots of fun, little systems processes and videos will be sent to you at no cost, no obligation. We don't beat you down and try to get you to buy our t-shirts or anything, just go there and check that out and as always the show notes and links that we've talked about will be there as well.
Well we've done it again everybody. We have another episode of the Awesomers podcast ready for the world. Thank you for joining us and we hope that you've enjoyed our program today. Now is a good time to take a moment to subscribe, like and share this podcast. Heck you can even leave a review if you wanted. Awesomers around you will appreciate your help. It's only with your participation and sharing that we'll be able to achieve our goals. Our success is literally in your hands. Thank you again for joining us. We are at your service. Find out more about me, Steve Simonson, our guest, team and all the other Awesomers involved at Awesomers.com. Thank you again.