In this interview with Larry Kesslin, Chief Connector at 5 Dots, we discuss the value of mastermind peer groups for CEOs and Business Owners. Larry is Co-Author of BreakPoints: Where Businesses Get Stuck…And How They Get Unstuck, will discuss:
– What you should look for when considering joining a mastermind group
– Where you can find the right mastermind group for you
– How joining a mastermind group can help you to achieve your goals
– How you can live a more purposeful life in you join the right peer group
Larry Kesslin is a serial entrepreneur and the founder and Chief Connector at 5 Dots, a company that helps other companies grow their businesses. Larry has spent the last 25 years helping companies grow their businesses in part by building and facilitating peer accountability groups. He is the co-author of BreakPoints: Where Businesses Get Stuck and How They Get Unstuck. Larry’s focus is to help other people build more purpose driven lives while at the same time being successful. Larry is a member of Rotary International and a board member at U-TOUCH, an amazing organization changing the trajectory of young people’s live in Uganda.
Patrick: This is Patrick Henry, the CEO of QuestFusion with the Real Deal…What Matters. I’m here with Larry Kesslin. Larry has spent the majority of his career building peer mastermind groups. I’m delighted to have him here today. He’s lived on the East Coast most of his life and has been in San Diego for the last seven years. We met each other through some networking events here.
Larry is a serial entrepreneur and the Founder and Chief Connector at 5 Dots, a company that helps other companies grow their businesses. Larry has spent the last 25 years helping companies grow their businesses, in part by building and facilitating peer accountability groups.
He is the co-author of BreakPoints: Where Businesses Get Stuck…and How They Get Unstuck. Larry’s focus is to help other people build more purpose driven lives while at the same time being successful. Larry is a member of Rotary International and a board member at U-TOUCH, an amazing organization changing the trajectory of young people’s lives in Uganda. Welcome, Larry.
Larry: Thank you, Patrick. It’s a pleasure to be here.
Patrick: Tell me about your experience with peer groups and how you got started in that. What kept it going?
Larry: I was working for the General Electric company back in the early 90s. I quit in the beginning of 1993. I met a gentleman who started a radio show about entrepreneurship in 1994. I joined him, and the internet started booming. The radio show was called Let’s Talk Business. It was a show that interviewed entrepreneurs.
We got to meet Richard Branson a couple of times in person, Wally Amos and Ken Blanchard, who wrote the foreword to BreakPoints. I got to meet some amazing people on that journey. We started to build this technology to allow entrepreneurs to collaborate online in 1995. We invested about $100,000 in software. We built this collaboration tool. About halfway through the project, we invited a dozen prospective members for our online community into a room. Imagine this, in 1995. I’m a degreed engineer.
We’re working with these small business owners. Halfway through the conversation, one guy raises his hand and says, “What’s email?” We’re talking about this collaborative space that we’re building. We built an Instant Messenger before ICQ was bought by AOL. It was a really cool project. I sat there and thought, “Houston, there is a problem.” I think we were way ahead of ourselves.
There were other people in New York and other places around the country that were starting to build face-to-face communities for entrepreneurs. I stayed away from the virtual collaboration world because of my experience back in the mid-90s realizing that, entrepreneurs are human creatures. They need human connection.
Ever since that point, we said, “If we’re not going to build an online community, what about a face-to-face community?” On my birthday in 1996, which is September 10th, we held our first community meeting of about 75 entrepreneurs in the room. We launched the Let’s Talk Business Network.
It was a network of entrepreneurs in New York City. That rolled into another opportunity. I was on a board in DC with a woman who was head of S&B Marketing at Lucent at the time. She said, “Larry, I have 1400 business partners that resell my phone systems. All we do is teach them the technology. Could you help them run a better business?” They were about to spin out a new company called Avaya, which is a known company today.
This was back in 2000. They did a roadshow called Avaya Live. They said, “Larry, can you come do a workshop in each of our 12 city tours?” I said, “The best thing for me to do is sit in a room, invite the owners in and have a roundtable discussion.” That’s what we did in 12 cities.
After the fourth city, I realized something. There were business models at the time like YPO and YEO, which is now EO and Vistage. There were all of these organizations that were all locally based. They would bring people into the same city that did different things.
Here I was in this community of people doing the same thing in different cities. I ended up launching a company in 2001, which was eventually called 4-Profit. We ended up bringing together people that did the same thing at different cities, versus bringing people in the same city that did different things.
Patrick: You had people fly in for these peer groups?
Patrick: How frequently would they do that?
Larry: We started out with four times a year and one day. We realized that four times a year was too frequent. It came too fast. We ended up settling at three. We realized that, if we did a day starting at dinner the night before and going through to the next dinner, people had to be out of town for two nights. We moved it to start at noon on the first day and finishing by 3:00 on the second day.
If we did it in Chicago or Dallas, just about everyone could get in the day of and leave the night out. They were only out of town one night. We ended up doing three meetings a year. We had clients from all across the US. We sometimes had clients come from Florida. We had someone come from London.
We ended up aligning ourselves with the major manufacturers in the IT reseller world. We started with Avaya in 2001. In 2003, IBM hired us to build a program for their resellers and ISVs, or independent software vendors. In 2007, we launched a program with Sysco. In 2010, we launched one with ShoreTel.
We ended up building a team of close to 10 of us. We were doing peer group coaching. We had three sales managers, two leadership development resources, two ex-CEOs and a marketing manager. We could go into any one of those companies in that industry and help them transition their company for where they wanted it to go.
Patrick: How many people were typically in a peer group in your model?
Larry: We started out with eight and realized that the ideal number for our group was between ten and twelve participants per group.
Patrick: How many people would show up at the quarterly meetings?
Larry: At least eight or nine. The best meetings were when we had nine or ten people. We had meetings were things just happened. I ran the business through 9-11. We had meetings where less people came. Some of the best meetings were only four or five people.
People really got to know each other. Some people would video in. We could have some people participate virtually. I think the size of the group is important long term. There are certain times when having less people can be very effective for the people in the room.
Patrick: Since you were in this peer collaboration space, you’ve studied some of these other models. We talked about Vistage and YPO. Talk about structured versus unstructured and what that means. Maybe people have heard of peer or mastermind groups. What are some of the fundamentals associated with these groups? What is some of the language associated with it?
Larry: The mastermind itself was first brought up in the book Think and Grow Rich by Napoleon Hill. Napoleon Hill studied all the great readers of the first half of the 20th Century. If you look at Rockefeller, Ford and Carnegie, they all collaborated with each other. The more they collaborated with each other, the better their ideas got.
Napoleon Hill started researching all these people and said that was the model to greatness. In the late 80s and early 90s, it started to take shape. YEO was born. Doug Mellinger, Vern Harnish and a few others started YEO out of ACE, which was the Association for Collegiate Entrepreneurs. YPO is even older. There are barriers to getting into YPO and EO. EO is the Entrepreneurs Organization. You need to have over $1 million in revenue. For YPO, I think it’s $5 million, a certain number of employees and a certain history in business.
Both of those organizations are self-directed peer groups. They call them forums. The forums are run by the participants themselves. They can go through training. I know many of the trainers that have trained the groups to self-facilitate. If you look at Vistage, Renaissance Executive Forums, Sage and most of the other organizations, they have a professional facilitator or someone who has experience in running a business that is facilitating those meetings. The structure is pretty similar.
Most of the groups I’ve been to will break up their meetings into different components. The most important for me when I started a group, in the early stages of growing a group, was getting the group to get to know each other. The real leverage comes when you know the other people in the room, who has the history that you want to learn from, who is giving you ideas, and who is giving you facts.
I start every meeting by saying, “Talk from your own perspective. When you say something, say, ‘This is something I did’ or ‘This is something I thought about.’” They are very different. Just because you think about it doesn’t mean that it will play out the way you thought. I’d rather have people talk about things from their personal perspective of what they did versus what they think.
One of the most important things in any group is confidentiality. What is said in the room stays in the room. I’ve had people come back years later and say, “I talked to my wife about this.” Then you get together with that person and their spouse. Some information comes out that you really didn’t want to come out. We don’t want that. We call it pillow talk.
You have to keep the stuff in the room that’s said in the room. One of the most powerful things is to use a process. EO and YPO are very big on questioning versus stating, and the best way to get to the root cause of things. Typically, when an entrepreneur shows up in a group, the problem they’re bringing to you is not the problem. In many immature groups, someone brings in an issue, and they start trying to solve the problem. That’s typically not the problem. Most of them will go through a process where you’re asking a lot of questions to get to the root cause of the problem.
Patrick: The Socratic Method.
Larry: Exactly. Most of the people who are in peer groups that are not professionally managed will end up solving a lot of surface level issues without getting to the underlying core root of the problem. I’ve used this a lot. When I see people who are thinking about peer groups, I say, “I go to a conference. I meet a guy. He gives me some great advice.” I call that bar talk. You meet someone in a bar and you hear their story. Their story sounds great.
If you were to see them in a peer group over a year or five years, you would realize that story in the bar is just that. It’s a story. The reality is, the more you can spend time with people that you get to know and understand, you create a brotherhood. The different groups that have evolved over the last few years, I wouldn’t say there is a right way and a wrong way. I know some people in YPO, in a Vistage group and in an industry specific group, which is the business that I ran for almost 15 years. There is no right answer. There are just more places to get learning.
Patrick: Based on my experience with what’s worked and what hasn’t, some of this goes back for 20 years. Some of it is over the last three to five years and the struggles with Entropic before we sold it, growing it and having challenges, and then also starting QuestFusion where I’m in this open landscape environment. It’s not industry specific. It’s more horizontal with various entrepreneurs doing various different things.
There are three legs of the stool in terms of getting other people’s help. One is having a mentor, which I’ve always had.
One is being in a peer group. If you’re part of a management team and it’s a high functioning management team, you have a built-in peer group there. As a CEO or business owner, there are things that you don’t want to and shouldn’t talk to your management team and board about, until the time is appropriate.
If you’re brainstorming with your board all the time, it’s not a good thing. You need to have solutions to problems. Yes, you have to bring up problems. I’m all for transparency. But if you’re constantly throwing problems on the table, that’s not leadership or management.
The final thing is open networking. I’ve gotten more refined models that work for me in the peer groups setting and in the networking setting. At your suggestion, I jumped to the three-question survey within my network. There was a lot of receptivity and answers to those questions.
It was really interesting for me. There was confusion about what a peer group really is. Is it networking? Is it an advisory group? Can you talk about that? When you talk to people about peer groups, do they generally understand what you’re talking about or do they think it’s something else?
Larry: Most of them are confused unless they’ve been in one. Even if they’ve been in one, sometimes they’re different. If you look at EO and YPO, you’re forbidden from doing business with the other people in the group. That’s a code that you live by. With other groups, you don’t. I know there are certain groups in town where a lot of people are doing business with each other.
It changes the dynamic of the group. We had coaches that I hired to facilitate our peer groups. I didn’t want them coaching the people in the group. When you’re coaching a person in the group one on one, and then they come into the group, I did the same thing. I was a coach and I had people show up for the groups. The most amazing part is that they’d say one thing to me in a one-on-one session. Then they’d show up totally different for their peers, which is bizarre for me.
Patrick: That’s not uncommon though.
Larry: I show up as myself all the time, which gets me in trouble sometimes. But I’d rather be myself because then I always remember my story. Then I’m just me. A lot of these people are showing up as different people. I didn’t understand it. It’s the hubris, the ego showing up, versus the vulnerability.
The best groups are the ones where people get vulnerable. It’s the ones where people stop trying to be “the man”, “the woman” or the leader and just be a human. I use the term “human doing” versus “human being.” A lot of us show up as human doings. The most powerful groups are when people show up as their full selves. “I’m having problems at home. I’m having problems with my kids. I’m having problems with my wife, and this is all affecting my life.”
Patrick: That doesn’t happen instantaneously in any team environment. It takes some time before trust develops. In your experience in the peer groups that you’ve run, how long does that take before people do show up more as human beings?
Larry: I had a group that launched last year. One guy showed up so vulnerable. One of the other guys in the group said, “Oh my God. It is so powerful that you did that with people you barely knew.” It made the group show up more powerfully. I think there are certain people who just show up that way naturally within a group.
For the groups that we ran, we would do three meetings a year. It took a year for the group. We would do a meeting, a phone call in between, another meeting, a phone call in between, and another meeting. By the end of the first year, we had 90-plus renewal rates from those groups. People started to see the value of it and what it could be. It takes time. If you’re doing a monthly meeting, I would say you’ll know by the six-month point whether that group will really gel and which people need to go. I loved to try and put the right people in the room. What do those right people look like? What does the mix of the room need to look like?
Patrick: What makes a good peer group?
Larry: The participants make a good peer group, if you get the right people in a room. The facilitator is never irrelevant. They start to become the teacher of everyone. There’s a blend. I’ll go through the journey of an entrepreneur. When entrepreneurs are less than five to seven employees, at least in the world that I lived in, they were less sophisticated.
They started to grow through the process. When we dealt with companies, our smallest clients in our peer groups were 10 employees. We went up to 125-employee companies. In each group, we tried to build a mix between the bigger companies and the smaller companies.
Let’s say there are 12 people in a group. I think what makes a good peer group is that there are at least four or five people in that group that are truly your peers. The ideal is never to be the biggest or smallest guy in the group. You want to be somewhere in the middle. That’s what worked best for me and other people that I knew.
If you were always the biggest guy in the room, you needed to be more like a mentor because you weren’t going to get a lot of feedback. If you were the smallest guy in the room, you need to know when to shut up. The challenge I had with the small guys is that they had so much pain and would take up so much time that it didn’t affect anyone else.
When managing a group, if you’re going to bring smaller companies into a group with some bigger companies, you had to make sure the smaller guys knew their place within the group. They should do a lot of stuff one on one outside of the group versus taking group time.
Patrick: With the three legs of the stool, they should have been working with a mentor as opposed to bringing every single thing to the peer group.
Larry: Yes, because that’s the only place that they know. They are inexperienced in understanding what the journey looks like. The group is important. The facilitator makes the group more valuable. I’m a very loose facilitator. I like helping people get to the root cause of their issue. I’m not big on the whole closure accountability.
That was not a big part of my process, although, at every meeting I would ask people their biggest takeaway from the meeting and the top three things they want to accomplish by the next meeting. We’d follow up on that. There are some facilitators that are very strict. They go by a certain methodology. “This is what we’re doing every meeting.” That wasn’t me.
I hired people who did that. Some of those groups ran better. Some people liked the structure. Some people like the looseness better. When I’m running my own group, I like creatives. I like people who like to think out of the box. Those are the people who work best in the groups that I facilitate. I think a facilitator is important for the make-up of a group.
Every group is going to be different. The group itself is unique. What I’ve found on my journey is that we created some best friends. If you think about the business I was in, taking people from different cities that did the same thing, all around the same age, they grew up in the same industry and didn’t know each other well.
Patrick: There weren’t conflicts because they were geographic-specific and there were territories. Even though they were in the same business, they weren’t competing with each other.
Larry: Correct. Once I got to companies that were over 125 employees, they tended to be regional, if not half the nation. I could never find peer groups for them because they always competed with someone else. Typically, we were targeting 20 to 100 employee-companies. That was our sweet spot. That was the best place for me personally. I enjoyed the creativity of working with smaller companies. I left GE at 29 and vowed I’d never work for another corporation again. I’ve kept my promise.
Patrick: It’s worked out well for you.
Larry: It’s worked out pretty well. I have no complaints. I’ve been able to have a wonderful life. I looked at the whole working 50 weeks a year to get two weeks off. That didn’t work for me. I’ve had the freedom to do the things that I want to do by taking risks. To me, the entrepreneurial journey is all about risk.
Patrick: Risk reward. You hopefully have the ability to judge risk reward better than the general person.
Larry: That’s the challenge. Part of my last business, I was working with Sysco, IBM and major manufacturers and distributors. I did all the programming. What we developed as a team was called Understanding Your Partner’s Business.
I would talk to the manufacturers and distributors that had never run their own businesses before about what it means to be an entrepreneur. One of my last slides said that entrepreneurship is all about risk and potential reward. The more risk you’re willing to take, the more the potential reward. It’s not the more reward.
Patrick: Not necessarily. You can take a ton of risk that has no upside at all. That’s discernment.
Larry: I agree.
Patrick: One of the benefits of being in a peer group is that you get the benefit of other people’s experience, not just your own. You get eight people in a room who are doing the same thing. You’re definitely going to get exposure to problems that they’ve run into. Maybe it’s not the ultimate solution.
When I’m coaching people, I tell them, “I’ve seen this movie before. I’ve seen it in three different variants. It always turns out the same way. You can go ahead and do it if you want to. That’s your call. It’s your business. But this is hopefully of some value to you. This is not what I think. This is actually what happened.”
Larry: We talked earlier about the concept of the circle of knowledge. The circle of knowledge is all the knowledge that exists in the world. There are three pieces. The first piece is the stuff that you know. I know my name. I know my birthdate. I know where I was born. I know my wife’s name. I know her birthdate. Those are important things to know. The second piece is a little bit bigger than the first piece. It’s the stuff that you don’t know. I know that someone can get to the moon, but I have no idea how to get there. I know there’s such a thing as scratch golf. I know I’ll never do that.
Those are things that I don’t know, but I consciously don’t know them. The biggest piece, 99% of knowledge in all the world, is stuff that you don’t know that you don’t know. When you join a peer group, you see things that you never could have imagined in a business. I have some examples that are painful. I know some people who went off the rails because of things that happened in their business. They destroyed their lives because of it. They were things that were totally out of their circle of knowledge.
Patrick: They would have been addressable if they would have had the knowledge and information available. It wasn’t unknowable. If someone had experience with those particular things, they could have benefited from that knowledge.
Larry: No question. The people who got the most out of the groups were the people who showed up and really shared what was going on. There were people who showed up all the time, and they showed up as their story. Those are the people who kept coming back over and over again. They were nice people and they did good work. They built decent companies.
The guys who really built companies were guys who showed up and shared what was deeply going on with them, the things that troubled them, the things that got in the way. The group was there to support them on their journey and become their brothers. We created some best friends. I know that to this day. We had a trip in Chicago. I had a facilitator facilitating the group.
We had this dinner at a beautiful steakhouse. The guys went out afterwards. I went back to the hotel. I got the meeting the next morning and said, “Where is Tim? Where is another guy?” They said, “You didn’t hear?” I said, “Hear what?” They said, “Tim had a little too much last night and fell down a flight of stairs. He’s in the hospital.” These guys did so much together. They had so many bonding opportunities. They were gone for two full days with their tribe, and they didn’t get that very often.
There was a lot of camaraderie building. They shared intimate details about their businesses, which helped them immensely. There is real value in the experience and wisdom that a facilitator brings and that other people in the group bring.
Patrick: Getting back to tools, in the 90s, we didn’t have all of these tools. Now we have this overwhelming plethora for tools and networks. I’m in a couple of LinkedIn groups. I’m in a couple of Facebook groups. I use Slack for my Inc contributed articles because Inc has everything on Slack.
I’ve used Asana with our software developers. Some people also think of those as mastermind groups or peer groups. Talk about that, the benefits and disadvantages as well as the difference between that and getting together with a group that you break bread with.
Larry: You can’t replace human touch. The tools are really great for aggregating the information that’s collected. The tools are great for staying connected between face-to-face gatherings. But there’s nothing like sitting down and seeing someone’s eyes, their confidence or lack of confidence.
One of the challenges is dealing with teenagers and the lack of emotion that they can describe in a text. They’re responding to a text in a way that’s not the way the other person intended. There’s no way to discern emotion or body language through text. It just doesn’t exist. Data suggests that 7% of all communications are the words themselves and 55% is body language.
If that’s the truth, then how can the virtual world replace what it is that we can do in person? We’ve done video calls. I’ve tried just about everything. Other than Sysco’s telepresence or these fully immersive virtual communities where you can have people in different places, see each other and almost share a meal in a virtual environment, you’re still only getting a fraction of the value of a face-to-face community.
Patrick: You’re not a believer in things like Zoom, which we use for our video conferencing? That is quite valuable. I’ve done these kinds of things with people throughout the world, like Germany and the UK. I had some great conversations. I agree with you. When you sit down with people, you’re talking with them at the break, and having a meal with them, the depth of relationship is much deeper. There’s no way to do that virtually. If you don’t get to know people, it’s tough.
Larry: There was one guy in our group where everyone said, “I wish I was like Bob.” He called himself a stupid Texan. He was one of the smartest men I’ve ever met. He’s fourth generation business, in business for 100 years. He ended up buying a Sysco reseller down in Texas. He was the most inquisitive human being I’ve ever met in my life. He would talk to someone and say, “Tell me about yourself.”
On a video conference, there is no place for that dialogue to happen. On a break, Bob wants to know how your kids are doing. He wants to know about your wife. You do that at dinner and in between sets. That’s hard to replicate in a virtual world. To me, that’s where the depth of relationship happens. That’s where your judgement of who has value to what you’re doing comes as well.
You learn who someone is as a human being. That is critical. That’s hard to do virtually. I was just talking to someone yesterday who runs groups for CTOs here in town. They have 11 groups running, one of them virtual. It’s going really well. I could see a virtual group working really well for technical resources.
It’s not as much about the human dynamic. There’s something about the entrepreneur, the CEO and the owner of a business, where you live in such an isolated world that you don’t have a lot of people to talk to. Most people will share three major places. They’ll share all of their information with their spouse, their lawyer and their accountant. Their lawyer doesn’t run their business. Their accountant doesn’t run their business. Their spouse does not run their business. If they do, then you need some space outside of the business to have a relationship with your spouse, other than the business.
That’s where the peer group is insanely valuable. You can spend time with people that are dealing with similar issues. They have no vested interest in your business other than seeing you do well. They are there for you. It’s an informal advisory board, yet it’s a peer advisory board. They’re helping you and you’re helping them.
Getting an advisory board is also valuable. There’s nothing wrong with doing as many things as you can. The more information you have, the more knowledge you have to grow your business effectively. Business is not complicated; people are complicated. Business is where you find a product or service that you can sell for more than the cost you deliver. Deliver it effectively and take care of your clients.
Whatever that looks like for you, whether there is IP attached to it or not. At this stage in my career, I’m in my mid-50s. I’ve done enough service work. I’m looking at profit. I’m looking at stuff that you can sell. If I do a good job, I can sell lots of it, and it’s not me. I’ve sold me for 25 years.
Patrick: Yes, it can be more scalable. There are service businesses that can be scalable as well.
Larry: There’s no question. I’ve been down that road, too. What I’ve learned about myself is that I’m not an operator. I’ve learned where I fit. This whole journey has been just that. This is one of the things that a peer group is really powerful for if you do it in the right way. I do a lot of work around behavioral styles and helping people understand themselves.
Once they understand themselves, they can understand the dynamics of the group. The dynamics of the group and how a group interacts with each other is a metaphor for how their own companies are working. They’re going to see people in their group who act like someone in their company. I’ll give you the CFO/CEO/sales manager example. I have written so many blogs and articles around this. I’ve even had conversations with audiences about CFOs and financial people saying, “All sales people lie.”
I ask them, “Why do you thinks sales people lie?” They say, “When I ask them what happened at the meeting, he will say he doesn’t remember. As a CFO, I remember every conversation I’ve had for the last 20 years.” Most people believe that other people function the same way they do. Then I can see why a finance person gets pissed at a sales person. It’s the same thing with the dynamics with a CEO.
Patrick: In that example, you have someone who likes to live in a black and white world dealing with someone who loves shades of gray.
Larry: And they see 50 clients in a month. In my sales process, I have 15 to 20 questions that I start with. If I hit a chord on the third one, then I don’t get to four through twenty. I just go deep on that one. I don’t know whether I hit the fourth, fifth or seventh chord with that client. I really don’t remember because I’ve seen so many people since.
The finance person has no idea and can’t imagine living in a world like that. There is a lot of animosity. The same thing happens in your group. You’ll have owners who are finance oriented. You’ll have owners who are sales oriented. You’ll have owners who are operationally oriented. You start to see the roles of different people on your management team within your group, and you see how the dynamic works there. It’s a really good incubator.
Patrick: As you know, I’ve been running companies for the last 18 years. This is my fourth company. That CEO and business owner role is very isolating, especially as you’re building a bigger business. You have lots of employees. You have your team. You have your board.
You have advisory boards. But there’s not one place you can turn, unless you have a true peer group of other CEOs and business owners where you can confide and have trust. I’ve also had some amazing mentors. It’s about the whole you. It’s about your life. It’s about the fact that your kid has a drug problem, you’re going through a divorce or you’re having difficulty in some aspect of your life.
It’s not just about the business. It’s very difficult to talk about those types of things in a business setting with your team or board. If part of the conflict is with your spouse, you can’t talk to them about it. Share your experience with this, with some of the peer groups that you’ve run and been involved with.
Larry: The most powerful conversations we’ve ever had in groups revolved around those painful issues in people’s lives. One of my clients in Florida has a CFO. She just had a baby that they knew would have a hole in their heart. When you’re in a group with people like that, people know. They want to support you. They want to be there for you. It’s all about developing a support system. We were not meant to live on this planet in isolated boxes, yet that’s how we’re building our lives these days.
I had one client who boggled my mind. It took us a while to get him into a peer group. He finally joined and we started working with him one on one. I said, “How often does your leadership team meet?” He said, “What do you mean? We don’t.” He had been running a business for almost 20 years.
He had 95 employees. I said, “Tell me how this works.” He said, “Everyone comes to me with all of their problems. I try and solve them all.” I said, “Now I know why you’re stressed. You don’t have all the answers. How do you empower your team?” It’s like coming in at halftime with your basketball team and talking to each player, one at a time, and saying, “Go back on the field and play better now.”
There are ways that we see the world based on our own framework. You think, “Businesses must act this way because that’s how I was raised.” The truth is, in these groups, you get to see how other people function. We did a lot of reading. Every meeting, you would have to read a book. We only did three meetings a year. We brought in outside speakers to talk about everything from ESOPs to legal stuff. When you bring in outside experts who bring value to the group, then you start to build a dynamic and a reservoir of knowledge and wisdom.
I’ve seen situations where someone had a problem health-wise and their wife was dealing with something. In another city, there was an expert who was someone’s friend. Then they were on an airplane to that hospital the next day, getting that dealt with. You can’t replace things like that.
YPO is probably the most well-known for that. Their international network is amazing. I have a number of friends who are YPO members. I have a good friend here in town who has been in his own YPO forum here, and now he’s in a forum for transitioning to sales. They have forums for everything.
A lot of them are self-directed. One of the powers of self-direction in those groups is that you learn to be a better leader within your own organization by being a partial leader within the forum and holding other people accountable. All of the tools that you learn to self-facilitate will help you in your own company’s development.
Patrick: Can’t you do that in a facilitated group, too? You can have a token passing where someone is virtually the leader for that meeting.
Larry: We never did that. We had people host meetings. The facilitator was always the facilitator. We had a methodology. We used the Socratic Method when people brought up real problems and we did deep dives with people. We taught the group to question. People get smart. They start asking questions that are pointed, that don’t sound like questions, but they are.
How do you get that methodology built within a group? That’s the important job of the facilitator. The dynamics of the group are hugely important. When you have one bad person in a group, I would switch people between groups because I didn’t think they were a fit. There were some groups that were much more tolerant of people who spoke too much. There were some groups that were all about details and getting stuff done. Depending upon the territories, I had overlap in certain cities. I would move people from group to group periodically.
A group can get stale after a certain time without new blood. I have friends that have groups that have been together for 10 years. It’s the same 10 to 12 people. It gets deeper and deeper. You start talking about things that you never would have imagined to share with these other business people. That’s something that I’ve learned in my own life.
The more vulnerable I am in meeting people for the first time… I do a lot of networking and meeting people for the first time. I stopped asking what they do. If I like you based on who you are, then I’ll find out what you do, or someone will have already told me. I’m more interested in the person. Their business problems won’t always be business problems. Who are you? What makes you tick? What do you most want out of this business?
A business is a vehicle to meet the needs of your life. I don’t believe our culture functions that way. Our culture functions in a way that your business is your life. It doesn’t leave much room, especially coming from New York. One of the reasons I moved to San Diego is because I wanted to have a life. I didn’t want to have business, and then some time where I did some other stuff.
I had the freedom in New York, but I couldn’t find anyone to play with in the middle of the day, unless they were making millions. I wasn’t making millions. I was making a decent living. Everyone else who was making a decent living had a job. In New York, it’s 7:00 to 7:00. You get home for dinner.
Then you’re ready to go to bed and do it all over. That’s five days a week. You get a couple of days to play with your kids, and that’s it. In San Diego, I can find people to do anything I want, just about any day of the week. If I want to play tennis in the middle of the day, in the middle of the week, people live that way here. That’s part of their life here. That’s one of the things that attracted me, as well as the weather.
Patrick: Talk about networking and accessing your peers’ networks. This is not in the sense of trying to do business with your peers or their networks. The expansion of the network seems to be one of the biggest benefits. Someone might know someone. I use LinkedIn for this. If I want to meet someone, I’ll look to see if someone in my network knows this person. In peer groups, it’s even more so.
Larry: When you know what you’re looking for and you can articulate it clearly, people in the room will know something or someone. It all comes down to the fundamentals. If you look at Lencioni’s Five Dysfunctions of a Team, the foundation of it is trust. If you have trust, people will introduce you.
I don’t like joining other people’s network groups. There are 15 people in a room, and I will like three or four. Then there are 10 people I have to deal with every time I go to the meeting. I’ve always started my own. I always handpicked the people that I want to spend time with.
I’ll take the time to build it over a year or so, or more, rather than asking someone else if I could join their group. I just never found it valuable because I didn’t want to build trust with some of the people in the room. The foundation of trust is what makes everything work.
When you have that trust, people will open up everything to you. The more trust you have, the more genuine people will be. The more willing they will be to open up those relationships, whether it’s a doctor that they know, a potential client, a strategic alliance, a direction you’re going with a new part of your business. There are doors.
You seem to live in a pretty big world, as do I. But that’s not true of most entrepreneurs. Most entrepreneurs I’ve met live in very small worlds. They have the 20 to 30 people they know through their kids’ friends. Then they have their clients. Then they have a handful of people.
Patrick: It’s changed for me over the last three years. When I was running a big, international company…
Larry: You had no time.
Patrick: No. I’m on an airplane 65% to 70% of the time, traveling, meeting with customers and employees in remote sites. It’s a different lifestyle. I did it from San Diego. I didn’t really benefit from the San Diego lifestyle in that period of time. I still enjoyed myself. I enjoyed what I was doing.
I’m very achievement oriented. It was gratifying in terms of a lot of the things that we were accomplishing. We were making money for a lot of people. It was a cool thing. Now I have a little more balance in my life. I love that, too. It wasn’t that I hated what I did before and I love what I do now. That aspect of being a CEO, especially a public company CEO is tough.
No one is going to feel sorry for you. At the same time, you find ways to deal with that through having the right mentors and peer groups. If you do networking, it’s typically networking within your industry. You just don’t have time. There have been a couple of times in my life where I’ve had the wide-open space opportunity, like when I went back to grad school.
I have an engineering undergrad. I worked for five years. Then I decided to get an MBA. Because I had no guilt about looking at other business opportunities, it provided me that wide-open feel to talk to different people. “Should I do consulting? Should I do investment banking? Should I go back into industry? If I go into industry, should I go into finance or stay in the operations and marketing side?”
That was a great time of my life. For someone like me, you have to get back to the productivity and achievement side of it.
Larry: I’m almost in that same place right now. I said goodbye to the business I had for 19 years at the end of 2014 for a lot of reasons. I took six months off to travel the world with my wife and kids. I came back to San Diego two years ago and started from scratch. I had a really good idea of what I was going to build when I came back. It didn’t work out that way. Now I’m in a place where I say, “I have certain skills. What do I do with those skills?” I think most entrepreneurs don’t do that. They end up in a business. They end up doing whatever the business requires. They don’t learn to surround themselves with people who balance them.
There are all of these different issues. During a peer group, you can start to see them. I don’t know if you’ve ever read Patrick Lencioni’s books. He has nine different books. In each one, he talks about something in his life that was easy and something that was hard. It’s the perspective of the two. Why is one person’s life easier than the other?
It’s because they do the right things, and they do the right things right. Most people don’t know what that is because they’ve never run a business before. The most successful business owners tend to have had some bruises.
You mentioned how you told someone, “I’ve seen this play out before. I know it’s going to happen this way.” Sometimes people just need to learn the lesson themselves. No matter how much you tell them, “It’s going to work this way,” they still say, “I need to learn this one on my own.
Patrick: Yes, which is fine. It’s their life. It’s their business. Let’s talk about the survey. You asked me to do a survey within my network of three questions. Have you been in a peer group? Are you in a peer group now? Are you interested in joining a peer group? A lot of people came in with anecdotal information. It’s split 50/50.
About half the people have been in peer groups. Some of those people haven’t been in peer groups as we’re talking about that. They’ve been in advisory groups. People had some experience with peer groups.
Only about 14% of the people surveyed are in a peer group now, yet 80% of the people are interested in joining a peer group. There is this disconnect. I pushed it a little further than that. I combined two questions together. Of those interested in being in a peer group, are they participating in a peer group now? Only 14% are. What’s the why beneath this. There are three reasons. I don’t have time. I don’t want to spend the money. I’m not sure I’m going to get value out of it. Talk to me about those three things and how you’ve addressed them in building peer groups.
Larry: The easy answer about time is that you don’t have the time not to. I can save you more time. In the groups that we have, you’re going to spend about half a day per month. If I can’t save you four hours a month through the group’s efforts, then I’m an idiot. Cost wise, everyone has things they need to decide on when it comes to spending money.
There are lots of things that you can spend money on for the cost of a peer group. I don’t think you’ll find a more cost-effective investment in your business than a peer group. Some of the peer groups run as much as $1100 to $1200 per month. On the lower end, they are $500 per month. That is where you will see effective groups. You asked earlier about groups with no fee. I think people need to pay. Something for nothing has no value.
Patrick: With all the research I’ve done around that, the level of commitment isn’t there if it’s not pay-to-play. Honestly, $500 is two reasonable dinners, as long as you don’t buy expensive wine. If you’re frugal, it’s about five dinners.
Larry: It’s still not crazy. The value that you get from it, for most of the clients we’ve dealt with over the years, they would have one situation a year that would pay for their entire membership. Just about every member, every year, had that “aha” moment that made the entire investment worthwhile.
Patrick: That’s been my experience, too. It’s the high impact element of things. I have a story that makes this point. My best friend lives in Saint Louis. We played high school football together. We’ve known each other for a long time. He is a mortgage broker. He built this massive mortgage business.
He was top 30 under 30 in Saint Louis, and then top 40 under 40. He got completely wiped out during the real estate downturn. He still has a mortgage business now. I recently bought a house here. I’m an independent business owner now. It’s very difficult even for doctors and lawyers here to get a traditional mortgage. I went to three different companies here.
Because of that relationship, and because he knows what he’s doing, he was able to get me a traditional mortgage at a reasonable rate and save me $100,000 over a period of five years. That’s the thing that I’ve seen with peer groups. It’s having an advisor. It’s having a mentor.
When you’re in a particularly difficult business situation and you don’t have a path, someone has an insight. It’s not like you get huge value every single meeting. There’s one thing. You say, “This will save me a couple million dollars,” or “This is going to make me $10 million,” or “I eliminate this massive amount of risk for my business that I didn’t even know existed.”
Larry: I’ll give you another twist on that. In the peer group meetings, most of the people that I focused energy on felt guilty for taking time away from the group. The funniest part is, it’s the people who are participating in the process who get more value than the person we’re trying to solve the problem for.
You get to creatively think. A lot of times, you’re triggered by something that they’re going through that will let you see your business in a different way. The person who is going through the problem is going through the problem. They’re going to try and solve the problem.
Patrick: You’re in the woods. You don’t have that 5,000 or the 30,000-foot perspective. That’s one of the things that I love about what I’m doing now. I get to leverage my decades of experience doing this with other entrepreneurs. I met with a guy yesterday. He wants to raise money. They have some litigation going on. His existing investors don’t want to put more money in.
I was able to give him some perspective on that. He had a gut feeling about it, but he was being pushed in a direction. Why do you want to do this now? Why not wait three months? These are the questions you’re going to get from someone that you’re asking to invest in this business. It’s not going to be a good conversation. You have to disclose this stuff. If you don’t, then it’s fraud. It’s interesting to have these types of conversations with people. He was so excited.
He came to retain me to help him with something. I said, “Three months down the road, if you still decide you want to work with me, I’m happy to help you. All you’re going to do now is spend money on something that isn’t going to address the issue that you have. You need to spend your effort on addressing this issue as opposed to doing this.” It was really great.
Larry: It happens over and over again when people feel like they have no choice. What a peer group will teach you is that you always have a choice. There are some choices that are better than others. I wrote a blog this morning about this. I’ve facilitated 500 plus peer groups over 20 years. I’ve met a lot of business owners.
I’ve seen a lot of stories. It all comes down to the shortest path to the objective that you want. How do you get from where you are to where you want to go? It starts with understanding where you want to go. That’s part of the peer group as well. It’s about helping people clearly identify why they have a business. Most people don’t understand the impact that they have.
I saw more people who were better off getting jobs than owning their own business. They thought they had more freedom, but they really didn’t. They had more stress and responsibility. Their house was on the line. They didn’t realize how much pain they were in until someone said, “My life looks like this.” They said, “How do I do that?” Then you take them on that path of helping them.
Patrick: Early in my career, in my 20s, I was involved in this workshop organization. We had peer groups associated with it. There were two things that they talked about. You have 360 degrees in a circle. When you’re making decisions, you only see 0 and 180. Having other people around you, you can see these other alternatives. Stand two feet away from a curtain. How many folds do you see? If you step back 10 or 20 feet, you see vastly more folds and opportunities. Accessing the mastermind, when more than one mind gets together, as long as you’re asking questions, listening and willing to learn, the world opens up.
Larry: The biggest thing that I’ve seen in this process is the ego. You can let go of the ego and be okay with being yourself, let the answers evolve through the process. You don’t have to have all of the answers all of the time.
There is the client that I was talking about before, that never brought his leadership team in. He thought he was supposed to have all the answers. The truth is, you don’t. There is no way. There is so much information out there. There is no way that you can have all of the answers to everything.
Patrick: It’s fascinating to me. Limited success combined with ego puts up a barrier. They say, “I am successful.” Think about how much more successful you could be if you had an open mind and were receptive to some of this other input. You need to have discernment. You get input all the time.
You have to put some of it by the wayside. Working with entrepreneurs throughout my career, there are some people who are incredibly hard headed and unreceptive to any kind of input. They have that ego and shell. I have a little of that inside myself. You need to have that drive.
You need to have that passion. But if you have it to the point where you can no longer learn, that becomes a problem. It usually leads to business failure or business mediocrity.
Larry: And don’t join our peer group. We don’t want them in the group. They’re no fun. If you put the right people in a group, it’s a ton of fun. I enjoy the philosophical conversations of why. You look at Simon Sinek and the why behind it. You can do tactical stuff whenever you want to.
It’s very hard to get a group of really smart people together to talk about the things that matter most in life. That’s the piece that we avoid as a culture. As families, we’re living in a small nucleus. Our ancestors lived in large communities. As business owners, we live in this little world versus being part of a much bigger community that helps us on our journey. There are so many guides there. You asked me before about the size of a group and what makes a better group.
This is the thing that I’ve seen. It’s not an idea. I’ve seen the littlest guy in the room come up with the best opportunities and pursue things that the bigger companies will eventually adopt. It’s not the big that eat the small. It’s the fast that eat the slow. The faster ones are usually the smaller companies. If you’re in a group with smaller companies, you get to see some things where people can see results on really quickly.
If you’re a bigger company, you’re not going to see the results because you have all of these things to manage. You can watch littler companies do really cool stuff. You can say, “I see where he’s going with that. I can now adopt that into my business a lot easier than if I would have tried to do all those things myself.” There is some real value to having different sized companies as long as you feel that you have enough people in the group to be peers.
Patrick: And a level of mutual respect.
Larry: You can’t be in a group with people that you don’t appreciate.
Patrick: That diversity does help, in age and size, as long as you feel like you can relate from a peer level. I learn things all the time from people much younger than me. They grew up a different way than I did. They can think of different ways to do things. One of my main software developers is in Poland. I’d never met him.
I had a two-year relationship with him, but I was able to meet him and his girlfriend. He’s one of the smartest software people in Poland. He was accepted into all of the special programs. Being able to hang out with him was so much fun. I’ve learned so much from him because of how he grew up.
His way of thinking is so vastly different than mine, and the guy is less than half my age. Every time I talk to him, I learn something. I really appreciate you being here today, Larry. We might ignite more peer group activity from this conversation. Based on the survey, there is a market need out there. Thank you, Larry.
Larry: It’s been a pleasure
This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.