Should You Scale Your Business with Daniel Marcos

Daniel Marcos 0:24
So the story ends up I’ve been an entrepreneur for 25 years, I built my first company in 1998.

george grombacher 0:02
Daniel Marcos is a renowned leadership expert. He is the co founder with Vern Harnish and CEO of the Growth Institute. They are the premier online executive education platform. Welcome to the show, Daniel.

Daniel Marcos 0:14
Hey, George, thank you excited to be here.

george grombacher 0:17
Yeah, excited to have you on. Tell us a little about your personal lives more about your work, and why you do what you do.

Daniel Marcos 0:31
And they build the first FinTech in Mexico, where the first one to put financial information online stock trading, and everything from the Mexican market. And he was the first financial technology company, people were excited. We did great in growth of users, there was like, there was no one else in the market when we started, so we had a huge growth. And then we merge with an Argentina and a Brazilian company, and build a regional player operation nine countries, 1200 employees, and then sold it to Banco Santander. Oh, by the way back there, we sold 753 million, that in today’s world will be around like 3 billion. So we build a unicorn back in 98. When I was 25, I built my company, and they left when I was 29. So that gave me a really big platform and understand how to scale businesses very, very young. We were lucky as hell, you can imagine how lucky we were some example. We signed with Santander, two days before the peak of NASDAQ in the bubble of the 2000s. So we couldn’t be luckier. And after that, I thought I was a great trip north dragon, the Enclave moved to the US Open a mortgage bank for undocumented Hispanic. So I was a subprime, subprime. And you have to understand what happened to those seven. And they went completely under, I lost all my money, lost all the money over investors. And it was pretty rough. Just to give an idea, I gave a call to my wife after the meeting with investors that we decided to shut down and they wait for we need to talk. So I came back to the house. We’re living in Austin, Texas. We still live in Austin now. But we’re living in Austin. The meeting was in Dallas. So I drove from Dallas to Austin and came to her and said, Hey, so shut down the company. The good news is all investors agree they shake hands excited documents are no lawsuits, no nothing. But first, I lost all my capital, everything that I made on the first one. Second, there’s a million dollars of debt on the operation to close and I’m responsible for it. So I have million dollars in debt. The visa that we have, we’re from Mexico, it’s attached to the company. So no company, no visa. So we have three months to get out of the country, sell the house, get the kids out of school and everything. So you have to imagine that conversation. And he was he was painful. I was depressed, probably six or eight months, waking up crying in my bed, sweating cold. It was it was it was really a bad moment in my life. But after that, I said, What happened right after such a big success, and then a big failure, I questioned myself. And I’ve been reading and digging a lot in trying to figure that out. And I realized that no one really teaches you to be a CEO. And I had the fortune at the moment that I had, I had hired a firm to coach me in my first company. So when this happened versus Hey, why don’t you coach in Latin America? And I was like, come on, I cannot even be an entrepreneur myself again, how do you want me to coach others. And he said, That’s precisely why, because he went through such a hard process, they have to make sure it doesn’t happen again. So I’ve been coaching CEO since then. And being such a high profile intrapreneurs CEO in Latin America, I’ve coached some of the biggest companies in the region, family businesses, like the biggest rose company in the world, in Ecuador, the biggest sugarcane company in the world in Guatemala, I coach all the big families in Latin America, and now have the highest intrapreneurs. I’ve coached several unicorns in the region. So I’ve been coaching CEOs for 15 years. And just the perspective on of seeing 1000s of companies every year, just in the northeast, we’ve implemented scaling up and rolling methodologies in over 11,000 companies in 10 years. So the perspective that I get just from seeing everyone and talking to all of you guys, I learned more from talking to you that you guys learn from me. So it’s been a great run because of that. And of course, we’ve been able to have huge impact in companies and see through the lens years and years after the impact, not just on me on hundreds of companies do they went to a conference. And I just wanted intrapreneur were very successful, which were coming from Mexico. And he came to me and said, Hey, I have a gift for you. And he showed me his one page plan. He said remember, you caught me five years ago, and I wrote this one page plan with you five years ago. I missed it. For less than 5% I did everything we wrote five years ago. And he was huge. The company was doing amazing. So those are that’s that’s a background on why I’m here and growth easy to do what it what a story. Your slow fun, it’s been a lot of fun. There’s still more to come. Yeah,

george grombacher 5:21
for sure. You look like a young guy going from 25 to 29. And you have this blue ocean and you start the company and everything goes awesome. And the mortgage deal. And it’s just

Daniel Marcos 5:36
an idea, just to give an idea how hard was one unicorn there? There was no venture capital fund in Mexico or Argentina. Like the only country with venture capital funds in the region, like 98 was Brazil, and had like, two. That’s it. So to do a unicorn with no venture capital is nearly impossible.

george grombacher 5:56
But not totally impossible. All right. So what a rewarding thing to have this person come up to you and say, hey, look, we you coached me five years ago, I I nailed everything within a couple of percentage points, but it worked out exactly like you told me it was going to. So what’s is there is is there a secret to the way that you’re coaching, what is what is what, what is different, that makes it actually work.

Daniel Marcos 6:24
So when you’re scaling up as the base of everything we do, plus many other things, if you go to Growth Institute, we have 120 courses, and probably 1215 mashups of courses. But here’s, here’s the basics of it, we first help you understand where you want to be in the future, you have to have policer, clear of where you want to be. And I’ll give you an example. The other day, I get hired by two brothers, they were co owners of a company and said, Hey, Daniel, I want to do something my brother wants to do something different. So what how you to tell us was wrong? No, like, well, that’s kind of aggressive. But let’s, let’s sit down. So we met in the room. And I’m gonna make an analogy just to play with it. Right? So imagine you’re in Austin, Texas. And one said, I want to go to the east. And I was like, great. What do you want to do? And the other one said, I want to go to the west. And I was like, boy, where do you want to reach? What’s your destination? And both said, want to go to the beach? Like, fine. If you’re in Austin, your lease, you’re gonna hit Florida or Georgia, you’re gonna get to beach. If you’re in Austin, you go to the west, you’re going to hit California, you’re going to get to the beach. Both of you are right. Now what has to be wrong? No, no, if you’re, if your objective is just to go to the beach, both of them will take you. So first have humps and clarity of where you want to go. And that everything starts there. And once you get it in your mind, like intrapreneurs, we’re like a, like a dog that we just hold on to the bone and don’t know what to let go. Now, when you see the vision. So first, have that clarity of vision. And then if you have the clarity of vision up here, and here, you have a lot of habits of execution. And here’s where we come with three disciplines of execution of scaling up priorities, KPIs regular meetings, and we get much more disciplined in the day to day operations. And then there’s two things that kind of propel this. One is cash growth sucks cash, and we figure out how to make a business that has a better cash cycle than the competitors. Because he wants to scale fast, you’re gonna need cash. And if your business cycle, or your cash cycle requires a lot of cash, you have a problem. And the second one is getting the right people. We always said, if you think hard enough material is, it’s sorry, if you hire a professional, it’s expensive. Wait until you’re hiring the material. So we help design a functional org chart or what the company really needs. And then understand what capabilities each position needs to have. And then compare to the people that you have today. And people like Oh, my corporate comes so far away from what I need. And here’s kind of the key the way we explain it. Today, imagine you’re doing $5 million, and you want to be doing $20 million in five years. I say you’re operating today with a mindset tools team of a five or probably even a $4 million company, and you’re stretched. That’s why you’re having so much drama. So my question is, Who do you have to be calm as a CEO as a leadership team to be able to command a $20 million company. And once they realize they understand that they have to evolve first, then this game over, right? But if they have the clarity in the future, now they understand who they have to become and their cash cycle is efficient. You’re off to the races. So in the world, let me just put a perspective on this. The economy Today, sir, on $90 trillion, when we crossed the 2000, y2k, the economy was like 21 22,000,000,000,002, they were 93, there were like four and a half times bigger than where we were, in the 23 years ago. If you cannot make money in $90 trillion, we have a problem. If you cannot find clients in a trillion dollars, we have a problem. And a lot of them have a problem of strategy, and represent. So let’s figure out the strategy. And don’t get in love with it with a product in love with a problem. So as an example, here, I’ll give you an A Yeah, the other day, we got an entrepreneur. He said, Hey, I see your videos, I want to sell my company to next I want you to help me. I was like, Great, let’s do it. So I told him, what do you want to do? And he said, have 20 stores that I sell shoes for women? I want 200 stores in the next 10 years? And I was like, yeah, that will tarnish your company. Sorry, I cannot help you. And the guy said, What do you mean? Now like, because if I help you get to another source, you’re gonna go broke faster than you will broke on your own. So I’m not gonna help you. And the guy even got offended, like, What do you mean, I’m gonna go broke, I’m gonna make a lot of money. And I would like know, your love and your focus is opening stores, the process of buying shoes is going to change dramatically in the next 10 years. And you’re so focused on opening stores that you’re not going to see the change of process of buying shoes, people are going to buy shoes online, in catalog, you’re going to take a picture or your phone, and you’re going to 3d print it in a printer next next to you is going to be many other ways to get a shoot, what’s not going to change, woman will see what to buy 40 pairs of shoes every five years or whatever. So instead of focusing on opening stores, less focusing on helping women buy shoes. And when we change the behavior, and we change the long term objective, to an objective of help women buy shoes that help them go with elegance and quality or something I don’t remember exactly how everything changed. Because now that we’re not limited to store store, store store store store. Now they were completely open, like, Oh, can I can I sell online? And can I do this? And can they do this? No, like, yeah, so so it’s very small changes that you have to do in the planning, and the strategy that changed the game completely on how we operate.

george grombacher 12:27
Should every company scale and grow

Daniel Marcos 12:29
Norway, indeed, in my numbers, just 4% of the company should scale 99 Six should not scale, we’ll give you put numbers in the US. The US has 32 and a half million companies today, just 6% of the company. So the US do over a million dollars, and really to do between 1,000,002. So really just 4% Probably do above two or 3 million. I believe a lifestyle business that has below 15 employees is the best combination of capital, and lack of drama and quality of life. And that’s why it’s called a lifestyle business. Most of us should have a lifestyle business. So I have a model that I teach that I there’s five stages in a scale up in the rescale up for me, stage two is nine, six to 1520 employees, I recommend so many companies to stay on stage to never go to stage three. Because if you process the 1520, you have to go to 80 to 100, you cannot see the middle, you go through a value of death between 20 and 80 100. That if you stay you want to stay in the middle, you’re going to be miserable. Let me tell you what happens. You need to have after 1520 You have to build a layer of serious managers are leaders. And that leader needs to have enough employees for it will be worth it to have a leader. Right. So for that leader to have enough team and for you to pay the salary of the leader, you need to go to 80 or 100. If not, you don’t have enough hands to execute what the leader is deciding. So that process takes you between 1520 to 80 to 100. So or stay below 20 Or go above 100. And by the way, that value of debt is so painful. And your margins get smaller, you lose money sometimes you have to get investors loans. It’s very very complicated. You will do that valley of death just if you want to do a company that is sellable. If you don’t go be if you don’t want to sell your company never go above 80 or 100. Because 80 or 100 it’s now you have a company that does have that much risk because he doesn’t depend on you. You have a leader that is responsible in each of the important areas. And now your company has a enterprise value You, and you’re going to sell it. So I tell people or stay below 20 And keep your company for many, many years, or take it above 100 and then sell it for a really good price.

george grombacher 15:12
I think it’s, I think it’s great that you’re so definitive about that, I’m sure that you turn away a lot of people who would be clients of yours by saying that

Daniel Marcos 15:22
100% But like, I help a lot of stage two to stay on stage two and be very efficient. But I we know exactly the company has the capability, there’s a market or is not even worth it. The client going to charge you 200,000 Last year, whatever to, to lie to you and get you into more trouble. No way. And here’s, here’s, of course, I’m telling you probably the generals, 85 9% of companies out there, there’s always going to be outliers, you’re always going to have Instagram, that was sold for 12 billion with 12 employees, right? You always got to have those. But the bulk of the companies in the world, that’s how they operate, that’s where they are

george grombacher 16:02
of the people that that, that enter into your universe, how many have that crystal clarity on what they want in the future before meeting you. Usually

Daniel Marcos 16:13
they come with an internal behavior. And we help them turn it into an external behavior. So they come and said, I want 100 other company. And they’re like, okay, but that’s an internal, that’s what you want. The only way you’re going to get 200 other company, is you have to give an impact to the world of $100 million. So what’s the impact, and when you change the strategy to the impact, everything changes. So I’ll give an example. Graffiti may be hacked, my, my long term goal is to help 10 million liters of mid market companies be able to do two things, scale their impact, do what they do in a bigger way, and reduce their drama in their operation. If I helped me leaders, like you guys to do that, enough, is gonna come back to me to get to my number. But but here’s the problem, people said, I want to build a company. And I was like, but you can never be 100 of the company if you’re on at least 100 million worth of value to the market. So let’s get crystal clear on the value you’re gonna provide. Are you going to help the world and then we’ll see how that impact will translate to 100 million. And then wolves get back to who you have to become you and your team to command the 100 million dollar company. And once they have all of that, then it’s easy to scale.

george grombacher 17:38
Or know that you know what? Daniels right or is wrong, I’m going to stay right where I am and feel, figure out how to, you know because once you go through that process, I have

Daniel Marcos 17:48
a client in the US as six full time employees, like six or seven part times for events and stuff. He does 8.5 million in revenue. And it’s 3 million to his pocket. And I’ve been coaching him for like six years. And he’s done your your job is that I don’t make a mistake. I think my company makes way more than they need. I just need me not screw it up. So whenever I come with ideas and changes, you said no, no, no, no, no, you’re gonna do anything. But imagine, George, if you could have your company giving you 3 million a year profit for 10 years. Like what else he right? The guy has the simplest life, no drama, no big expenses, payrolls. It’s easy. So my job is to convince him not to do changes. And by the way, in six years, two changes we’ve done to the business, but three, the the other 97 ideas that he woke up with. They’re gone. And he loves it because of that.

george grombacher 18:56
That’s awesome. Well, Daniel, thank you so much for coming on. Where can people learn more about you? And how can they connect and learn with the Growth Institute?

Daniel Marcos 19:04
Oh, all the social networks growth, easy to grow the school.com. That’s where we have all the programs that we teach, that we’re doing today mostly is fixing or building company universities. So let me just finish with this. Everyone says, I want the self managing company, every entrepreneur dream is to have a self managing company. The problem is we don’t have enough capable leaders to be able to run our company. So once you have your strategy and your systems and all that they need to feel your company with capable leaders. Well we do is we get your team today and make them capable to scale a company. We teach them how to read financial statements, how to take decisions, how to negotiate, how to hire, the typical things that they don’t teach you in college, but it’s very important your leaders are able to do to really be able to build a self magic company.

george grombacher 19:57
If you enjoyed this as much as I did Sure, Daniel you appreciation and share today’s show with a friend who also appreciates good ideas go to growth institute.com and dig deeper into everything that Daniel has been talking about today and so many great resources, figure out where you’re at in the best direction and figure out how to get there and how to stay there once once you do in fact, get there.

Daniel Marcos 20:20
Again, growth change so many of us once once it’s working, don’t change it. Right, right.

george grombacher 20:25
Thanks again, Daniel.

Daniel Marcos 20:26
Thanks, Josh.

george grombacher 20:28
Till next time, remember, do your part by doing your best

Transcribed by https://otter.ai

george grombacher 16:00
So if I want my iPhone, and my Tesla and my Bitcoin to work, we need to get the metal out of the ground.

Pierre Leveille 16:07
Absolutely. Without it, we cannot do it.

george grombacher 16:13
Why? Why is there a Why has production been going down.

Pierre Leveille 16:21
Because the large mines that are producing most of the copper in the world, the grades are going down slowly they’re going there, they’re arriving near the end of life. So and of life of mines in general means less production. And in the past, at least 15 years, the exploration expenditure for copper were pretty low, because the price of copper was low. And when the price is low, companies are tending to not invest more so much in exploration, which is what we see today. It’s it’s, it’s not the way to look at it. Because nobody 15 years ago was able to predict that there would be a so massive shortage, or it’s so massive demand coming. But in the past five years, or let’s say since the since 10 years, we have seen that more and more coming. And then the by the time you react start exploring and there’s more money than then ever that is putting in put it in expression at the moment for copper at least. And what we see is that the it takes time, it could take up to 2025 years between the time you find a deposit that it gets in production. So but but the year the time is counted. So it’s it’s very important to so you will see company reopening old mines, what it will push also, which is not bad, it will force to two, it will force to find a it will force to find ways of recalibrating customer, you know the metals, that will be more and more important.

george grombacher 18:07
So finding, okay, so for lack of a better term recycling metals that are just sitting around somewhere extremely important. Yeah. And then going and going back to historic minds that maybe for lack of technology, or just lack of will or reasons, but maybe now because there’s such a demand, there’s an appetite to go back to those.

Pierre Leveille 18:33
Yes, but there will be a lot of failures into that for many reasons. But the ones that will be in that will resume mining it’s just going to be a short term temporary solution. No it’s it’s not going to be you need to find deposit that will that will operate 50 years you know at least it’s 25 to 50 years at least and an old mind that you do in production in general it’s less than 10 years.

george grombacher 19:03
Got it. Oh there we go. Up here. People are ready for your difference making tip What do you have for them

Pierre Leveille 19:14
You mean an investment or

george grombacher 19:17
whatever you’re into, you’ve got so much life experience with raising a family and doing business all over the world and having your kids go to school in Africa so a tip on copper or whatever you’re into.

Pierre Leveille 19:34
But there’s two things I like to see and I was telling my children many times and I always said you know don’t focus on what will bring you specifically money don’t think of Getting Rich. Think of doing what you what you like, what you feel your your your your your, you know you have been born to do so use your most you skills, do what you like, do what you wet well, and good things will happen to you. And I can see them grow in their life. And I can tell you that this is what happens. And sometimes you have setback like I had recently. But if we do things properly, if we do things that we like, and we liked that project, we were very passionate about that project, not only me, all my team, and if we do things properly, if we do things correctly, good things will happen. And we will probably get the project back had to go forward or we will find another big project that will be the launch of a new era. So that’s my most important tip in life. Do what you like, do it with your best scale and do it well and good things will happen.

george grombacher 20:49
Pierre Leveille 21:03
Thank you. I was happy to be with you to today.

george grombacher 21:06
Damn, tell us the websites and where where people can connect and find you.

Pierre Leveille 21:13
The it’s Deep South resources.com. So pretty simple.

george grombacher 21:18
Perfect. Well, if you enjoyed this as much as I did show up here your appreciation and share today’s show with a friend who also appreciate good ideas, go to deep south resources, calm and learn all about what they’re working on and track their progress.

Pierre Leveille 21:32
Thanks. Thanks, have a nice day.

george grombacher 21:36
And until next time, keep fighting the good fight. We’re all in this together.