Entrepreneurship Podcast post

Success in Business with Michael Zalle

George Grombacher January 20, 2023

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Success in Business with Michael Zalle

LifeBlood: We talked about success in business, what’s truly required to fund a business, the stumbling blocks that trip up would be entrepreneurs, dealing with failure, and how to manage emotions with Michael Zalle, Founder and CEO of YellowBird.

Listen to learn why successful entrepreneurship demands you focus on data over fear!

You can learn more about Mike at goYellowBird.com, Facebook, Twitter and LinkedIn.

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Our Guests

George Grombacher

michael zalle

Michael Zalle

Episode Transcript

Unknown Speaker 0:00

Unknown Speaker 0:15
what’s up? This is George G. And the time is right welcome today’s guest strong and powerful Mikesell. Mike, are you ready to do this? I am ready to do this. Yes. Let’s go and Mike this is this is our third time. So you are you are piling up appearances on my podcast

Unknown Speaker 0:34
I you know what this might be a new record for me I tend not to do the same. The same podcasts and sessions multiple times I’m enjoy your so much I I just can’t stay away, George.

Unknown Speaker 0:48
I love it. Well, to refresh everybody’s memories. Mike is the founder and CEO of Yellowbird. He is a why driven leader has been responsible for creating, building, launching new concepts of companies resulting in multiple successful exits over the course of your 25 plus year career. So Mike, tell us a bit about your personal life more about your work and why you do what you do. Great intro, thank you. Um, you know, why I do what I do is such an interesting question. And I’m realizing as I get a little bit older, that it’s maybe not as over the plate as I thought it was, as I come to realize what really fires me up and gets me out of bed every morning and then I love is might be a might be a little bit deeper of a of a question than I otherwise would normally say. But about me I you know, I’m a, I’m an old dude with a wife and two kids, I have been married 22 years, to a great partner, Jennifer and I got a son who’s just about to graduate from Brophy here in Phoenix, Arizona, and a daughter who’s just about to go into Xavier. So one going out of high school and one going into high school and one going into college, apparently, which is exciting.

Unknown Speaker 2:08
What I do, and my, my passion is

Unknown Speaker 2:13
the integration of human beings and technology. And the you know, it’s such a cliche in the wide driven world, but really the the ability to meaningfully meaningfully impact human beings through technology, I love TAC I’ve been in my entire life, my entire existence as a, as a an adult, if you can call me that, is the process of finding technologies that have a positive impact on the world. And it’s, it’s a passion of mine.

Unknown Speaker 2:48
Nice. Well, I appreciate that gratulations on 22 years of marriage and on raising what sound like responsible young adult, young young people soon to be responsible young adults. So thank you, I game is not over. But they are pretty darn good kids. They’re pretty darn good kids. And, you know, I’m very proud of both of them. They’re very different. But they both have good values, and they’re good human beings. And that is because of my wife. There you go. I really has time. I have the best partner in the world. Yeah. Nice. And she has raised some exceptional kids, I help as much as I possibly can. But she’s the one who will literally read books of you know, textbooks with my children if they need it, just to make sure that they get what they need to out of their out of their schooling and their lives. So it’s a great thing. Awesome.

Unknown Speaker 3:45
So raising a child takes enormous resources, it takes money takes attention takes energy. Just like starting a company takes money, attention to energy, and probably a lot more than we realize. We had a chance to catch up a month or so ago, and we talked about doing this episode, you said you know what, I don’t think people really realize just how much money it takes to start a company. So that’s what I’m hoping to talk about today. Absolutely, I’m happy to do it. And it’s not even how much money as much as it is the process you had need to go through in order to fund a startup. So it’s not really a dollars and cents thing as much as it is understanding what’s necessary to end not getting over your skis in C. It’s the piece that I get asked the most from young entrepreneurs, people who want to start concepts, like how much does it cost to do X? And the reality is, is that you almost don’t even you shouldn’t even think of it that way. You know, there are one baby step in front of the other ways of building an MVP a minimum viable product to validate if your idea is even worth

Unknown Speaker 5:00
pursuing. And I often say, to my wife’s dismay, I’ve done this four times,

Unknown Speaker 5:08
you should just start. And even if it’s something little, just start, and it gains momentum, and you get the support that you need from the community. And you can figure out based on having the conversations, how you will fund it will generally work itself out, if there is a demand. And it’s, no, it’s not easy. I’m very blessed and fortunate to have had enough capital myself to build the MVP on my own without having to borrow money or things like that. But the more important piece, a piece that most people get stuck at is the talking about, you know, being afraid to talk about their concept, being afraid to talk about their value proposition, being afraid to talk about, take really tough feedback, and think to yourself if it’s real, or if it’s just somebody else’s fear, you know, a lot of people give you advice, because they’re afraid, you know, they’re afraid of failure. And so they tell you all the reasons, it won’t work. But then when you really think about it, like those aren’t really, really valid.

Unknown Speaker 6:19
That being said, eventually, you’re going to have to raise capital.

Unknown Speaker 6:24
And whether that means you raise it, through loans from yourself, through your retirement or through your savings.

Unknown Speaker 6:33
Whether you raise it through friends and families or partners, or you go to the tech community, we have a wonderful startup tech community here in Phoenix, eventually, you need to put some capital to work in order to go from concept to an actual running business. And often, that’s where people get stuck the most of how do we do that? What is the first step? And for me, what I like to try and explain to folks is talking about your concept, get it? Noodle it around, go to go to coffees with people go to happy hours, invite somebody to your home to to splash around ideas. And yet no, you’re not inviting them to be your partner, you’re inviting them to go down a journey with you to validate if it’s even a possible solution that’s worthwhile. And if you are fortunate enough to get one or two or five or 10 customers, potential customers that would try something, and you have to ask the question, what do you pay for this? Which is always a good question. Not would you use this? Would you pay for this? Because it’s a business, then, then when you have that you have an indication you have a little bit of confidence. Okay, now, if I build this thing, I know I have a few folks that have said I will pay for that. And that starts the snowball.

Unknown Speaker 8:08
Don’t overthink, it’s a big part of all of this.

Unknown Speaker 8:13
I love it. So, so many different tripping points, or I mean, maybe just walls where when people run into them, it causes probably a good percentage of people to stop. It’s like, okay, I’ve got this idea. But I ran into this thing, it’s my minimum viable product, I stop here, people get over that hump. And then it’s be comfortable to talk about it and share the ideas and to ask for advice and to take criticism. And then it’s the ask, would you actually pay for this? Yes. And the interesting piece of the equation,

Unknown Speaker 8:49
and many people don’t really understand this is you don’t have to make a company profitable immediately. And so they get overwhelmed by the concept of

Unknown Speaker 9:06
wow, this is going to burn, there’s going to burn some capital, there’s going to burn some money. And you know, I’m going to be losing money for six months or a year or three years or five years or whoever. I mean, depending upon what the business is. Now, obviously this three or five years, I think you’re you’re gonna be in some trouble if you don’t have a have a plan around that. But my company’s we built it with the intent of losing money for three years. We knew we were going to do that.

Unknown Speaker 9:33
We’re burning less than less money every month and every quarter the the growth rate is exceptional and the profitability per transaction, which is what you need to look at, not as a company, but per transaction is getting more profitable. And so when you start looking at that, you say, All right, I can see a path to profitability, I can see path to making this work, and that will help you justify in your own head.

Unknown Speaker 10:00
Think which is the first piece of the equation, justify in your own head in your own heart, that you actually have something that has a path to be impactful both in your own terms of success, and economic success, because if it’s a business eventually, and not so eventually, in a recessionary period, you’ve got to have a path to make money.

Unknown Speaker 10:27
So with with earlier companies that that that you’ve been involved with this is which iteration of, of your entrepreneurial journey is Yellowbird.

Unknown Speaker 10:40
So I have been involved as an operating partner and owner in, in two companies, I have been a founder and operator into other companies. And, and then I have been an investor and a board member in one company.

Unknown Speaker 10:58
And that excludes my other investments in other companies. So I’ve got five or six,

Unknown Speaker 11:04
you know, swings at bats. Some have been very successful.

Unknown Speaker 11:09
Many have not, I was part of a de novo bank, as they call it, which is basically a fancy word for saying a startup bank in and it was really great idea in in 2006. We got our charter and went through FDIC and dfi, which is the Federal Department of

Unknown Speaker 11:32
it’s basically the insurance FDIC and Department of Financial Institutions. So one is the insurer, the Federal insurer buying banks, and the other one’s a financial regulatory body. And so between the two, we got our everything done. And we, as founders of the bank, put money together. And that’s pure risk capital. That’s not money going into the bank that is 100% risk capital. That’s highly, highly speculative. And we had to get a certain amount of money raised from companies. And it wasn’t raised, it was actually deposit commitments, going to various companies and saying, If we open a tech, focus small business here, would you be interested in depositing money with us and letting us guide you on your, in your banking journey, and I wasn’t going to be a banker, I was going to be on the board of directors. And if the bank was making money, I’d be participating in that. And if the bank was not making money, then no, I participate that too. In the in the, in the Oh, eight meltdown hit.

Unknown Speaker 12:38
And our charter got pulled, and it went away.

Unknown Speaker 12:43
And there was nothing I could. And there are certain things in life that you have to just say, alright, wasn’t meant to be. And not dwelling on it not Oh, man, if I wouldn’t have put all that money into something or man, why did we do this everything else, the probabilities of it being successful, and of it not being successful? Who wouldn’t have seen a financial meltdown of Oh, eight coming? Like, well, The Big Short guys did, but with the exception of them one.

Unknown Speaker 13:20
This coming and my timing just stunk.

Unknown Speaker 13:24
And the reason I tell you that is even when you’re doing everything, right, and we had, we had 11 of the best tech entrepreneurs in town on that board, we had a great CEO, who was a multi time bank CEO, we had the charter that was hard earned, and we got it. We had everything we were about to open the doors.

Unknown Speaker 13:49
And the meltdown happened, and it all shut down.

Unknown Speaker 13:53
And I don’t say that to scare people. But

Unknown Speaker 13:57
I’ve also have a very similar story with Yellowbird, exactly the opposite. We got going and it was all coming together. And we were all figuring it out. And it was, you know, as I like to say, three people and a goat. And you know, we had a minimum viable product. And we were, you know, we talked to 100 customers that might be able to use our service and we talked to 100 professionals that might be willing to sign up on our service to be matched together. And in that circumstance, we kind of caught lightning in a bottle. And um, and it worked and, and then it didn’t and then it worked again. And then it didn’t it because that’s how startups are you know, you’re like oh my god, that was a great month. Oh, no, that wasn’t a good month. Oh, wow. That was a great month. It’s like and you go what’s going on different this month and this month and you’re trying to figure out what why did we get these big orders here and then they all stopped and why did this customer love us and the same customer in the same profile? didn’t love us for some reason? You know, or

Unknown Speaker 15:00
We days you’re trying to figure out like, what do we say to this group that we didn’t say to this group? And

Unknown Speaker 15:05
that’s the beauty and the fun, but it’s also the stressful part about it. Because it’s, it’s the aggravation of trying to do the New York Times crossword puzzle. Like, you’re for a moment you feel like a genius. moment you feel Canadian going.

Unknown Speaker 15:21
For letters, why can I think of this? Oh, you know, it’s the same thing. Why did the other word come out so easily? And this word is killing me? Right? It’s the same thing with the business.

Unknown Speaker 15:34
What a great metaphor, that is our analogy or another.

Unknown Speaker 15:38

Unknown Speaker 15:40
I mean, perfect. You feel like like, like, you’re the best business person in the world, one minute, and then you feel like you don’t know how you ever made $1 The next minute, yet you show up every day? You’re you’re leaving your how, how do you manage your your, your your emotions, unless you’re a Vulcan or something? Yeah, it’s, it’s very, very challenging. It’s very challenging. You know, there have been, and I will say this, honestly, and not something I talk about a ton. But there have been multiple occasions that

Unknown Speaker 16:17
I was trying to figure out how we were going to make payroll. And, you know, I have a wife and two kids, and so does my co founder, Michelle and her husband and two kids. And we had, we were waiting on a check to hit from a venture capitalist on one of our rounds that was going along, and payroll was coming, and perspiration was on your, your forehead and you’re like,

Unknown Speaker 16:44
Okay, we’re gonna figure this out, and we’re gonna make this happen. But I’m not sure how, and you know, you’re going through every scenario, it’s like, okay, can you? Can I borrow from my 401k? Can I, you know, what’s going, where’s my wife? Gonna say, if I even asked to do that? What does that mean?

Unknown Speaker 17:01
Do I have any investors in the earlier rounds? I’d be willing to loan us money? And are we actually even would they? Would I be comfortable even asking for that?

Unknown Speaker 17:12
You know, just because you have capital, are you willing to put more money in? Even if you have it? Are you willing, you know, that’s gonna buy you, it’s gonna buy you 30 days, I mean, what’s gonna happen next 30 days is going to not put you in the same position as you are today. These are all the things that go through your your head. And,

Unknown Speaker 17:33
you know, as you sit there, and you have to remember that it’s working, like and don’t, or it’s not, and be honest with yourself, and that I’ve had to do that too. And say, No, I’m not putting any more money in and not here.

Unknown Speaker 17:48
But, you know, I’ve had, I’ve had those situations to say, All right, I, this isn’t going to happen. And the hardest thing in the world is knowing the difference in that when it’s your fear that’s speaking, in when the data actually tells you, this isn’t working.

Unknown Speaker 18:11
And the data, like everything else, whether it’s personal finance, whether it’s investments, whether it’s your personal health,

Unknown Speaker 18:22
data doesn’t lie. And that’s where things come really.

Unknown Speaker 18:29
You know, that’s when things you should be looking at the data as the truth teller.

Unknown Speaker 18:36
And for me, that’s the most important piece of being an entrepreneur is you can be a great salesman, you can even sell yourself for a little while. But at some point, you have to look at it and say, Is it really working?

Unknown Speaker 18:52
You know, not Am I lying to myself, if I if I, you know, if I just keep pushing, it’s gonna work. At some point, you’re nine months in, you’re a year and you have history, you have data. That’s the piece where you look at it and say, You know what, this is going I can see a trend up into the right. This is working.

Unknown Speaker 19:16
Okay, I’m going to do I’m going to keep going, this is i This is going to happen. And it’s when it’s bouncing along pure flat on the floor for nine months, a year. Like I’m burning my savings. That’s when you say okay, let’s be honest with ourselves. And in honestly, I commend all the spouses that go through this with us. My My wife is a friggin gem. And she’s risk averse, which is the craziest part of all of this Shammi I always say she should have married an accountant

Unknown Speaker 19:55
you made a terrible decision.

Unknown Speaker 19:57
You know, it’s turned out okay for

Unknown Speaker 20:00
Are us but again, see, but so far, so good. So good. Exactly, exactly. Your vs data. Yeah, yeah, I’m grateful for you sharing that with with everybody because there’s so many people who are

Unknown Speaker 20:17
wanting or considering entrepreneurship and to be able to take a sober, comprehensive look at everything that’s that really is required or in everything you’re going to go through and experience. I think that the more people know that, that the better. So thank you all or nothing either. That’s the other thing I would tell people. You don’t have to quit your job and drop everything and give your entire life and soul to a concept that may or may not pan out yet. You can stay gainfully employed. I know a guy in town here who’s got a million and a half dollar business. And, you know, that’s, you know, that means he’s doing $100,000 plus a month, and in gross revenue, not not profit, but just gross revenue. And he’s got a job. And he’s, you know, he’s figured out how he wakes up very early in the morning. He outsources a whole bunch of stuff, he checks in on people that are doing things for him during the day while he’s doing his normal job. There will be come a time where it becomes obvious that in order to get to the next level, you have to do it full time. You’ll be surprised how long you could go.

Unknown Speaker 21:29
You know, it’s it’s, people think, well, in order to show my commitment to this idea, I need to do this full time. And your stress level that is it will become paralyzing, if you do it too early.

Unknown Speaker 21:46
That makes sense.

Unknown Speaker 21:48
Well, Mike, thank you so much for coming back on. Where can people learn more about you and how can they engage? So I would love for people to link in with me on LinkedIn, it’s Michaels dot Zelle, za ll E. Go yellowbird.com is our as our company and we are a two sided marketplace for environmental health and safety. So safety people, anything involving and safety, we’ve got you covered on our platform. And if anybody wants to engage with me, I would love I’m an open connector. I get more than enough pitches. So go Lincoln with me if you just want to pitch me things, but if you really want to build a relationship and a connection, I’m happy to connect with you on LinkedIn. Excellent.

Unknown Speaker 22:32
If you enjoyed as much as I did, shall make your appreciation and share today show the friend who also appreciates good ideas. Find Michael on LinkedIn, it’s Michael Zell it’s Z EY l l e and then check out his work at go yellow bird.com all things Environmental Safety and just if you are a safety professional or if you have a company where there’s people, check it out and find out if there’s an opportunity to to work together. Thanksgiving Day. Thank you so much. This was fun. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai

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