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Mr. Biz Radio: Four Things Every Business Needs to Be Successful

Unedited transcription of the show is included below:

 (00:04):

Welcome to Mr. Biz Radio Biz Talk for Biz Owners. If you're ready to stop faking the funk and take your business onward and upward, this show is for you. And now, here's Mr. Biz Ken Wentworth. All

(00:19):

Right, welcome to another episode of Mr. Biz Radio, me, Mr. Biz Ken Wentworth. And this week we're gonna talk with a very successful business person, and we're gonna talk specifically about the value equation. Now, what does that mean? Well, we're gonna get into that but the value equation's gonna help you run your business much more effectively and much more successfully. Our guest this week, for those who are listening and not watching not <laugh>, not viewing, who can see Chris already? Christopher Volk, he's the author of The Value Equation, hence what we're gonna talk about today. He's been instrumental in leading in publicly listening, three successful companies, two of which he co-founded. The most recent is Stor Capital, which is S t O R, on on New York Stock Exchange, where he served as founding Chief Executive Officer. And then as executive chairman, he has also he has written about corporate finance since early in his career and has created an award-winning video series about the topic. And he's a regional winner of EYs, entrepreneur of the Year. Chris, welcome to Mr. Biz Radio. Thanks for joining us.

(01:23):

Hey, Ken, I'm delighted to be here, and it's great to see you.

(01:26):

Yeah, likewise, likewise. So, gosh, so much I want to talk about obviously we're gonna dig into the value equation, but before we get into all that, why don't we start with you know, what was your entrepreneurial journey? You've been, you know, I have had a long, illustrious career. How did you get started in all this? Where did this all, where did it all start, Chris?

(01:47):

Yeah, so I mean, it starts with like, with most of your listeners, I imagine. I mean, you start off with nothing <laugh>. So you graduated from college and you got nothing, and you got a beat up old car. And I took a job with a, a bank in Atlanta, Georgia, and learned a lot about business from there. And, and went to work in Arizona with one of my customers. And somewhere along that journey, I decided that it was a good idea to take that company public. And so I convinced them to do this. And and we ended up listing a company in 1994, and I became president of that company and on the board of directors. And ultimately we sold it to GE Capital. It was the last company that Jack Welsh bought. And and that was in 2001.

(02:34):

And and I lasted the GE capital maybe 18 months, because, you know, you're going from a company that's got 250 people in it, and you're now working in a company with 350,000 people in it. And and for people that are entrepreneurial in nature and, and like to sort of see their fingerprints on the business it's hard to see your fingerprints on a company that big. And so, so I left and he and I together started a company that we also listed on the New York Stock Exchange a couple years later. Both these companies, by the way, would buy real estate that was used by businesses in their, in their business every day. So, for example, it could be earliest companies started off with restaurants, but later on we got into other kinds of profit center assets, whether it's manufacturing or veterinary clinics or early childhood education.

(03:24):

We would own the real estate and rent it to the people that were running it. And it was a way for them to finance their real estate. They could go to a bank or to a landlord. And so I spent a lot of my career convincing people they were better off with the landlord than a banker. And and so when I left GE I was 47 years old. I was you know, I'd saved up some money. I was willing to take a risk and, and start a company all by myself. And so that's what an entrepreneur does. I mean, you, you, you get to this point where you say, Hey, I, I don't wanna look back at my career and say I didn't give it a shot and I'm gonna give this shot. And so we, we've started the second company and listed that on the New York Stock Exchange and grew it.

(04:04):

And then it was listed in 2004, and we sold it in 2007 to some Australians. Stayed for a while and, and later on left and, and then 2000 and 10, I had an idea for another company and raised some money from investors to do that with some other people. And in 2011 we, we started store capital and store capital was the most successful of the three companies. And we listed that in the New York Stock Exchange in 2014. Our investors included Warren Buffett at Berkshire Hathaway, which is only real estate investment trust investment and grew the company to over 9 million, 9 billion in equity capitalization. And at the end of 2021, I, I stepped down from being C.E.O. To do stuff like this and talk to you.

(04:55):

Wow. so, gosh, so many different things. So the companies, so you, you're your founding companies or co-founding companies, and you get 'em listed, and then both of the, the ones you mentioned seemed like it was a pretty short, you know, three, four year reign between taking them public and and selling them, you know, what did, what did that look like? I mean, and, and answer that one first, if you would, please. I got, man, I got so many things here. Chris

(05:24):

<Laugh>. Yeah. Well, the first one was we were public for seven years. So okay. Seven years for public company is probably not too bad. You know, GE at the time was triple A rated. We were triple B rated. They wanted to be in our space. I didn't especially want to compete with a triple A rated company that had a cheaper cost to capital than we did. And so the idea was to basically take our platform, which is better than theirs and, and give it to them. And they would do all kinds of great things with it. Of course, none of that ever happened, by the way. I mean, GE blew up essentially, but and then the second company West Fast. I mean, we took it public in 2004. We sold it in oh seven. Again, we had an offer from some Australian investors that was very attractive.

(06:08):

Our investors made a 19% compound annual rate of return. I mean, these companies returns ranged between 12% and 19%. And the last one is kind of like the 13, 14%, right? And, and, and all that stuff is better than the stock market. So we did really well on all of 'em. And but anyway, so, so we had an opportunity to sell it, and it seemed good at the time, and and our investors did very well. And, and I think that's what you do. You're, you're trying to sort of listen to your investors. You're trying to do the best thing for your stakeholders to make the organization competitive and give people opportunities. And so we did that.

(06:45):

Now, you, I think you mentioned this but I wanna make sure I, I understand. So it sounds like all three are real estate based companies, is that correct?

(06:55):

All three are real estate based companies, although I would, I really view them as being almost like non-bank financial services companies. So, okay. And but you look at the left side of our balance sheet, and there's just a flat ton of real estate on it. And so sometimes people say, you know, what you do is real estate, and that's not really what we do. The reason the real estate's there is because we're providing a financial service to the tenant. And the, and the tenant has this choice of like you know, how do I want my capital stack to look when I'm financing this business? And I could go to a bank, I could put up equity, I could borrow the real, you know, borrow money and own the real estate, or I could not own the real estate and just rent it from Chris. And so we convinced them that rent from Chris is like a better idea.

(07:38):

Gotcha. Well, it's interesting and I'm, I'm sure that since this is well in your, your wheelhouse, you know, it's interesting to hear, even with McDonald's, I mean, everyone looks obviously at McDonald's, and you know, McDonald's in, in a lot of ways is a real estate company because they own the real estate where all their stores are. And of course they're ubiquitous globally now. It's just crazy.

(08:01):

Yeah. So the guy who was the general counsel for McDonald's was on our board of directors, and he is the guy that went to Ray Crock early on and convinced him to own real estate because it was a way to have better control over franchisees. It was not really viewed to be an investment at the time. It was a way to sort of muscle the franchisees if he needed to do it. And this was, you have to remember, it was a rough and tumble world back then, and it eventually has become basically the backbone of McDonald's. They're one of the world's largest real estate companies.

(08:31):

Yeah, absolutely. And a lot of people don't realize that. Funny you mentioned that. I know we gotta hit a break here Chris, but for anyone out there, if you're an entrepreneur, if you have not seen the movie The Founder, you gotta watch it. It's about the McDonald's story and specifically Ray Crock. And it's probably not what you think about Ray Crock. I'll just say that much. We're gonna hit a break here. We're gonna come back after the break. We'll give the Mr. Biz tip of the week. We'll continue talking with Chris Volk, and you can find out more at his website, thevalueequation.com.

(09:01):

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(09:40):

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(10:10):

Got a question for Mr. Biz. You want answered on air, email it to This email address is being protected from spambots. You need JavaScript enabled to view it.. Now once again, here's Mr. Biz.

(10:22):

All right,

(10:22):

Welcome back to Mr. Biz Radio. And as we always do at the top second segment, it is time for the Mr. Biz tip of the week. This week's tip is actually a quote from someone that's it's kind of a, a friend slash mentor to me. Mr. Brandon Dawson, for those of you are loyal listeners or viewers of the show you've heard me mention Brandon many times before. He's a, a business partner with Grant Cardone, et cetera. And ironically enough, they have some real estate hoardings as well with with Cardone Capital. But his quote is, and I I find this pretty amazing quote. It's one of those things that you gotta kind of digest it a little bit and think about it. But his quote is, what you think is what you say, what you say is what you do and what you do becomes your legacy.

(11:06):

Uh there's a lot of different things you could get out of that quote, I think. But what I get out of it is you gotta be careful what words come out of your mouth, because those are gonna be the things that you focus on and things that you do, especially as a leader. And obviously we're gonna talk with Chris about leadership as well, but also, you know, the things that you do create your legacy. So it's, it's about doing, you know, we talk about it being entrepreneurs, et cetera, and, you know, Gary Vaynerchuk, Gary v pretty, pretty famous guy in the entrepreneur space talks about, you know, ideas are crap. He says a little more bluntly than that, but it's about execution. And so what I take from Brandon's quote is, is you gotta be very careful, especially as a leader about what you say but specifically take action.

(11:49):

So many people who are entrepreneurs are never get off the ground as entrepreneurs, I think, think they just, they're afraid of the risk or they have too much fear, and they just don't take action. Take action and figure it out. You're gonna make mistakes. I mean, it's just the long and short of it. You're going to make mistakes. Don't be afraid to take those ac those actions and learn from them and do better the next time. So that is a Mr. Biz tip of the week. This week. Let's get back into talking with Mr. Chris Volk. Again, you can find out more. He's the author of The Value Equation. Follow him on LinkedIn as well as go to his website, thevalueequation.com. So Chris, let's talk a little bit, what I guess how did it evolve with all your broad experience you've had and with taking companies public and, and selling, selling companies, et cetera. What led you to write this book? The Value Equation?

(12:37):

Well, the, there is an equation, but we won't necessarily go into that. But you know, I've been writing articles my whole career. And in 19 99 before we sold our first company to ge, I wrote a book I mean, I wrote, wrote an article, and that was published that basically introduced the value equation and the article won an award. And and then after that, I was writing more and more articles about this stuff. I was always interested as a credit guy, I was always interested in business models, you know, and how business models work. And and I would sit there at a spreadsheet, at a computer spreadsheet, and I would design company after company where I would be looking at lots and lots of businesses, and it all started in banking and whatnot.

(13:29):

But and if, as I did this, my earliest financial models were pretty long and complicated, but I realized that you could basically do a universal business model with as few as six variables. And and those six variables became the value equation. And then what you can do is you could start to throw away the spreadsheet. I mean and for entrepreneurs, if you're, if you're thinking about how wealth is created, well, most wealth is created by business owners. I mean over two thirds of millionaires are business owners. And, and, and what drives their wealth is really solid business models. And and so the more you understand about business models and what we have as you know, what we can control as leaders of companies then the better you have as a chancellor for, for success.

(14:24):

And so so in writing the value equation in the book, it's basically a synthesis of 20 years of writing and lots of years of running public companies and focusing on my cost of equity, which I was always trying to make a return on capital that was, or return on equity higher than what it cost. I don't want my equity guys just getting what they want. I wanna make a better return than that cuz if I can make a better return than that, that's where, where shareholder wealth gets created. And so all the guys that are at the top of the Forbes 400 have by and large companies that are insanely unicornish. They are huge returns to addressing big markets. And, and it's the returns that create the value, you know, the, the assets just don't appreciate, you know, real estate doesn't just appreciate, you gotta have higher, higher levels of cash flow, nice rates of return. You have to have a good business model.

(15:18):

Yeah, absolutely. So I guess again, I don't want you to give away too much of the secret sauce, especially during the third segment I wanna talk about. I know you have, you know, four things that any business needs to be successful, and I wanna make sure, so don't give up too much of that secret sauce. Cause I wanna make sure we, we have time to talk about that during the next segment. But you know what I mean, I guess especially with your experience and not only taking companies public, but also then suc being successful in selling them to, to large entities and having large entities be investors in your companies. You know, what's, what's one of those things that you see people, business owners, swing and miss on the most often?

(15:59):

Well, this comes down to, you know, when you're setting up a company, the, the, the first thing you're doing is you're solving a problem. You know, I mean, and the problem could be is, you know, arrange from providing a sandwich to launching satellites in the space and you, and you have to think through the problem you're solving, who's gonna care wh which customer is gonna care. And then you have to build a business model around that. That's, that's also super hard. And you gotta get a team of people that's interesting. And it's hard. If you can have a problem that you're solving a business model around it and a solid team of people, there're 10,000 or so private equity firms that would love to, to back you, you know, it's almost easier to find the money than it's to find the solid people, the good problem solving solution and a business model.

(16:49):

If you can do that, then you're, then you're kind of on your way to getting it done. And you've gotta ask yourself the hard questions. Why would this business guy, why would this shareholder buy my stock and, and not buy somebody else's stock? You know, what, what's special about me? And all companies, even if they're startups, have a moat of some kind. I mean, there, there's some reason why they exist, you know, and that there's something that's that they have going for them. And that's what you gotta harness and take your best shot and go out and raise some money.

(17:21):

So I gotta ask this we've only got about a minute and a half left before we gotta take another break here. But this has to be something that was near and dear to your heart, whether you wanted it to be or not. I'm sure you kind of forced into this. What's one thing that from resources for your company, hiring people, what's one thing that you, that's not so obvious, maybe that, you know, obviously you've, I'm sure you've hired hundreds of people, if not thousands over the years. What's one thing that you look for in a resource when you're hiring something regardless of the position, regardless of the level? What is like one thing that might even be something intangible that, that, again, maybe people just don't, don't even consider when they're looking for resources? Cause I know it's so difficult right now.

(18:03):

Well, first I, one of my sayings is you can't train smart, you know? So sometimes when you're interviewing people, you got smart people and you have people that aren't so smart, <laugh>. So you, so you're always better off, you know, hiring the smartest people you can find. You want people that can solve problems. They're critical thinkers. You know, businesses are, is fundamentally creative, you know and and it's fundamentally virtuous because you're solving problems for lots of people. I mean, you're, you're giving benefit to lots of people, which, which is one of the great things about business. And and so you want to solve, find people that can help you solve problems. You want them to be able to write you want them to be able to articulate and, and, and, and sell the product. And and then I can train him on anything after that. I can train him on, on almost any, any part of the business after I find out.

(18:55):

Yeah, yeah. Oh, man, I, I, I want to, I'm gonna hit a break here, but I want to comment on that as well because I, I think I, I've lived that and breathed it as well. So come af back after the break on Mr. Biz Radio.

(19:08):

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(20:09):

Check out all three of Mr. Business best-selling books at mrbizbooks.com. Now, once again, here's Mr. Biz.

(20:19):

Alright, Welcome back to this show. And we're talking again this week, this week with Mr. Chris Volk. You can find out more at his website, thevalueequation.com and that's also the title of his book. Definitely recommend going out and checking that out. We're gonna scratch the surface a little bit on some of the things that you can, you can find in that book. But you know, I wanted to kind of pick up on what you had mentioned. Chris, you know, I had a mentor that many years ago you know, when I worked in a corporate world and I was at a Fortune 15 company and hiring tons and, and tons of people over the years. And pretty early on as I was sort of evolving as someone hiring people and what should I be looking for and things like that, I had a, a mentor who said, hire people.

(20:59):

And I think this touches on exactly what you mentioned, hire people who bring you solutions, not problems. And I said, well, it's inevitable you're gonna have challenges and problems and, you know, whatever. And he said, no, that's not what I mean. Yes, you're gonna have problems and challenges, but there's a difference between an employee that works for you and comes to you and says, Hey, boss, X, Y, z broke. And basically dumps the problem on you or the pro the employee who comes to you and says, Hey, boss, X, Y, and Z broke, and here are two options on how we can fix it. Which direction should we go? Massive difference, massive difference. And you know, I think that ties into what you were mentioning, Chris, as far as, you know, people that are a smart and they're creative, right? If you're just gonna, as an employee, if you're just gonna come and dump the problem in my lap and I have to figure it out, then maybe I don't really need you, right, <laugh>, because I can fix the problem myself. So I think that's a key. And I found over the years critically important as you mentioned, is I think people who possess some of those tangible as well as intangible skills end up being the best employees. Because whatever you throw at them, they'll figure it out. You know, the problem solvers as you had mentioned. So I think that's a, a sage advice. And like I said, I know I lived it as well.

(22:14):

And one time I wanna make sure I walked, I'm sorry, say one, one of one time I walked into my, my longtime business partner's office when, when I was relatively a new employee, and I I gave him a problem. And and he says, well, how do you fix that? And he says, well, I'm not really sure. I said, you're the, you're the ceo, E O <laugh>, I'm just gonna tell you I've got this problem. And he says, never come into my office again unless you have a solution. I said, done <laugh>. And so just a short story we're I was on a receiving end of that advice.

(22:45):

Yeah. Yeah. Pretty interesting. Well, look, I wanna make sure we have enough time here and, and times as always running out quickly. But I know you have, you have four things that you'd like to mention that, you know, any business, regardless of what you're in needs in order to be successful. And so I wanted to, if you could outline those four things for us, Chris.

(23:05):

Well, we sort of already touched on 'em. I mean, the, the four things are, are gonna be that you, you have a problem, you wanna solve all, all businesses solve problems. And so let's say you've take Sergei, Brendan, and Larry Page, they started Google. The problem they were solving was how to make internet searches better. You know? So they devised a way to do that. Then the second step is how do you bridge that solution to creating a business model? I mean, and that's not as easy as it sounds. It is, it's, it takes some thought process as to how you're gonna create a business model around that. They ended up creating an insanely great business model, which harness a simple solution to a problem to, to get generating advertising revenue and using data to be able to create enormous returns for Google shareholders.

(24:03):

By the way, I mean, there's not a chance that these two graduate students at the time thought they would ever be billionaires. I mean right? They were just plotting along like the rest of us, you know? But what they had going for them was they had a hugely scalable company, a very big idea that was not just national, but international in terms of scope. And you tend to find that with the unicorn guys at the top of the food chain. And, and of course, you know, my businesses were less unicornish. I mean, you know, we're, we're solving problems for a lot of people. We had investments in, in all 50 states and whatnot. But but you know, not really on the scale of something like a, a Google and the business model, by the way that we had, wasn't as good as theirs.

(24:43):

Doesn't, doesn't mean that we didn't do all well, but it just, it wasn't as good as that. Yeah. The, the next thing is obviously the team. I mean, you gotta put together the team of people that are gonna do it, and they should have complimentary skillsets. It shouldn't be the same person four times over, you know, I mean and and they should listen to each other, <laugh> and and realize what their strengths and weaknesses are and play off each other. And if you can do that, you've got team, you know, you've got a problem that you can solve in a business model now you're on your way. And the last thing I would say that would really help is, is understanding what your core competencies are. I mean in companies especially young companies if people get focused on things like what their values are, whatnot, I find their values are all the same.

(25:32):

They all want to be honest, they all want to be you know, treat their customers with respect. I mean, you can go through the whole list of, of corporate values and, and I like 'em all, you know, but core competencies are different. Core competencies are what are the things that are really essential for this particular company at this particular time that we can do right now that we do really well and that we wanna really focus on? And and if you think about core competencies, there are probably just four or five things that companies would want to do at any point in time. And if you're an entrepreneur, entrepreneurs are the worst. They're yes. You know, we're, we're, we are you know, we, we basically are optimistic. We are attracted by shiny objects, <laugh>, you know, right? We wanna get to, we can get distracted super easily, you know, we want to go on to the next big thing.

(26:18):

And and so when you're doing core competencies, you're saying, no, no, you can't do this. We're building this company and we're focusing on these four or five things that we do exceptionally well. And if we're, if we're if there's something else that's not on those four or five things, let's ignore it. Like, we're not gonna, we're not gonna deal with it. We're focusing on these things because these things are essential to our business model that we created, which is the second step, right? And and so once you do that, that you're focusing on your core conferences, you get your leadership team to buy into that, then that leadership team will get all the employees to buy into it as well, right? And so this is how you create corporate culture, is where you're pushing down the things that you're good at and things people should focus on and not deviate, and it gives you a better chance for success.

(27:00):

Yeah, I love it. And, and you know, one of the things that I see often in, in what I do, and we're dealing with clients every day is, and I even saw it in the corporate world actually, the first time I saw it was in the corporate world, was where you mentioned having, you know, having that great team with complimentary skill sets, we so often, I mean, it's human nature that you either consciously, maybe, or at least subconsciously you hire people who are like you, right? Because presumably you like yourself. And so you know, I, I had a real quick innocence in corporate world where we all took, there were eight of us on the leadership team, including our, our our leader, and we took the Myers Briggs and seven of the eight of us were all E NT js.

(27:45):

And he thought that was great. He's like, oh my gosh, this is great. You know, E nt js are natural leaders, et cetera, et cetera, which sounds great, but it really made me think that, gosh, we're kind of missing out because we're all kind of have the same mindset around things. Not just skillset, obviously very important as well to have those complimentary things, but even the way you think about things and approach problems, we need someone, e and T's need someone who gets stuff done. Cuz you know, they're like what you had mentioned before, you know, we're they're chasing the new shiny object. They're leaders, they don't want to get in the weeds, so they need someone who's operationally sound. That's maybe another, you know, four letter Myers Briggs person type thing. And then, you know, on the creative side, you know, having someone like that.

(28:28):

So I think it's very important to make sure that you're self-aware enough. You know, I started to do that when in a corporate world is when we lost someone. I would assess the leadership team and say, you know, of the core competencies that we need in this leadership team, what are we missing now that this person is gone? What do I need to make sure this next person coming in has to, to fill out the full skillset that we needed for that team? So I think that's critically important, something that oftentimes I find that, that leaders miss out on

(28:55):

To I totally agree.

(28:57):

Yeah. Awesome. Awesome. Well, look guys, look, we're out of time here, unfortunately Chris, but I really appreciate you coming on. Show number one, go out and follow Chris on LinkedIn. He's Christopher Volk on LinkedIn. Go to his website, thevalueequation.com. You can find his book there as well, which is obviously called The Value Equation. Fantastic information, Chris. As always, time flies when you're having fun. So I really appreciate you coming on the show.

(29:21):

Well, Ken, it's been a my pleasure to be here. Thank you so much for having me.

(29:24):

Yeah, absolutely guys. Thanks so much for watching or listening, depending on how you're consuming the show. Have a great week as always. And don't forget, Cash Flow is King

(29:38):

To become part of Mr. Biz nation, follow him on all social media platforms or never miss a show by going to mrbizradio.com. If you prefer free video content, visit the Mr. Biz YouTube channel or check out his streaming channel, which is available on 100 plus streaming platforms at mrbiznetwork.com.