Living The Red Life - Winning In The Game of Business with Sean Castrina

Episode Date: December 18, 2023

In this enlightening episode of "Living the Red Life," host Rudy Moore welcomes Sean Castrina, a renowned entrepreneur and business strategist, to share his valuable insights on growth and hiring strategies.The Expensive HireSean Castrina delves into the idea that significant growth often requires making expensive, yet game-changing hires. He emphasizes the impact of these strategic decisions on the overall trajectory of a business.Strategic LeadershipThe conversation highlights the importance of the roles within a business, drawing an analogy with chess. Rudy and Sean discuss how, just like in chess where the king is crucial, a business leader is central to success. However, the queen, symbolizing a strategic hire or a key team member, can often be the game-changer in this dynamic.Sean's ExperienceSean shares personal anecdotes and experiences from his journey, providing listeners with practical advice and real-world examples of how making bold hiring decisions can propel a business forward.Tips for EntrepreneursThe episode is packed with tips and strategies for entrepreneurs looking to scale their businesses. Sean provides actionable insights on identifying when and whom to hire to make a significant impact."Sean Castrina brilliantly reminds us that the cornerstone of transformative growth in business often lies in making bold, strategic hires. It's not just about being the king in the game of entrepreneurship, but recognizing the queen - that pivotal hire who changes the entire game. This is a game-changer for any entrepreneur aiming for the next level of success." - Rudy Mawer, Host of "Living the Red Life" Podcast.Connect with Rudy Mawer:LinkedIn - www.linkedin.com/in/rudymawer/Instagram - www.instagram.com/rudymawerlifeFacebook - www.facebook.com/rudymawerlifeTwitter - www.twitter.com/rudymawer

If you really want to grow, you got to do the expensive hire, the hire that changes the entire game. You're the king, but if you've ever played chess, you better have a queen. My name's Rudy Moore, host of Living the Red Life podcast, and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. Guys, welcome back to another episode of Living the Red Life. We've got a special session today. We're going to dive into the world of business.

All of our experience. I've got Sean here. He has a very, very popular podcast you've probably heard of. I've just been on it. The 10 Minute Entrepreneur. Welcome, buddy. Good to have you on the show. Great to be on the show, Rudy.

So I would love to kick off. I know we were speaking about it, but we've been doing this a long time. You even longer than myself. Do you want to just give the audience a couple of minutes of your story and how you ended up building all the great things that we were talking about? Yeah, I was, you know, I had my dream job in my early 20s. And at that time, I was naive enough to think that I would get a job and just work my way to the top. Same way I would view if I was in the military. OK, I joined, eventually be a general.

But I lost that dream job. There was a change in leadership in my mid-20s and out of the blue, lost it. And then I realized that I never wanted to work for anybody again. So entrepreneurship, you know, is, or working for yourself, you know, is the next step. And I started selling insurance and which is not fun, but you do, if you can sell, there's really good money in it. And that's the first time I started meeting millionaires, like really it transformed what I, you know, I would have been exposed to like middle class, upper middle class, secure, you know, kind of nothing higher than that. And then I was exposed to wealth, you know, where you got four or five cars, Mercedes, you're flying out to Vegas.

I remember having lunch with a guy and he said he had made $250,000 that morning in his IPO with, at the time, was American Online. Because I made a quarter of a million this morning on this little IPO I got in on AOL. And so at that point, I got my vision got expanded. That, you know, you either own a business or be really good in sales, because even the guys who were own these businesses, they were the best salespeople I ever met in my life. The founders, I mean, they absolutely were unbelievable at, you know, getting people to say yes to something they thought was good. And that kind of got the ball rolling. I want to revisit the sales part in a second. I would just love to skip forward now.

What's today look like for you? Yeah, today it's funny because I've changed my position, which is a pretty great. I remember I had this discussion with John Tesh from Entertainment Tonight, having a debate with him literally for 10 minutes on his podcast. And he was talking about passion, passion, passion. I said, John, passion has nothing to do with business. I'll sell a toilet if there's a margin on it and somebody's, you know, and people need to sit on it. I said, I'm passionate about golf and tennis. It doesn't mean I think they're a good business idea. It doesn't mean I started driving range or I buy a, or I buy it. I said, business pays for

my passion, John. And then he paused and he thought about it. He goes, yeah, you're right. Now that I think about the first business that I ever had that went out of business was a running store because I love running. I go, okay, there's my point. There's my point. So I don't have sexy businesses. I have a philosophy. I don't want anything that the AI, I don't understand it, but I don't want to compete with it. Amazon, I don't want to compete with Amazon. I don't want to compete with AI. I don't want to compete with software because there's just a new thing that comes out and whatever you did is worthless. So they're like my three things.

They're the three things I want to stay away from. So I got into home services and I got my guest house right now. They're putting new roof shingles on it. A robot's never going to do that. And when they can, we got bigger issues. You know, we got a lot bigger issues. So like one of my companies is putting a roof on there. So I want businesses that, again, fall into one of those three, don't compete with Amazon, don't compete with AI,

don't compete with software. I want something that involves human beings doing something. Because the margin is amazing and it's easy to out-market that clientele is that technician who owns the business typically, they don't know how to market. So it's never a fair fight. And I joke that every one of my businesses, I have a monopoly, I don't actually have one. But I have one, because I scream louder and more often than anyone. And so it's, it's, it's really been very good for me. That's an Yeah, definitely interesting, because we, definitely interesting because we don't do too much local stuff, but some of them come in now and again,

and that's kind of always like you look at their stuff and it's terrible, right? So it's like if you put an actual marketer and business owner in there and they do all the stuff the right way, I can imagine it's pretty crazy, that industry. So a couple of things I picked up on that I would love to stay and ask you more about. First is the passion thing. I think it's actually interesting because if I go a level higher, your passion is business, right? Exactly.

You're right. That's it. It's the chessboard. I'm fascinated by it. I am fascinated. Every little piece of it fascinates me how do you what is a good idea what makes it a good idea how do you launch it how can you beta test it how can you scale it how can you exit it who do you need to operate that's what it's it's the chip i enjoy

chess yeah me too yeah and i so i've ran a lot of different businesses you know i came from fitness then i went into supplements health stuff then i went into a lot of e-com, like selling everything, furniture, electronics, t-shirts, you name it. But they were all differently, very different, but also very interesting in different ways. And yes, because I've got that passion too. And I did try at one point, and I do want to revisit this when I have way more money to burn, but doing a couple of businesses that I were actually passionate about in my site, you know, in my weekends. Right. And they were, they, and I do have a dream one day that I have a few businesses that they don't have to make crazy money, but hopefully that's something that I actually enjoy just because it would be cool. But I think you have to throw away money to go down. Yeah. That's what I call hobby thing.

Yeah. Could, you know, there's people that you have businesses and it just plays in your area of passion. But if you make money on it, you're like, oh, that's great. Like if I could just break even, employ a few people. Example, I have a chiropractor and next to it, he has a golf simulator business. It's got like four golf simulators in there. He has no way he's making a dime on it, but it's right here.

He had the property within the shopping center. So he got it for like nothing. And he can go over at lunch and hit golf balls. That's an example of, okay, I own a business in my passion, but maybe I'm breaking even on it. He's making money, you know, adjusting people. I was going to open, there's a famous celebrity. I can't say who near me that I've done some stuff with. And I was going to open, there's a famous celebrity, I can't say who

near me, that I've done some stuff with, and I was going to open a gym with them. And again, I was like, you know, I was like, hey, I said to him straight up, I said, this would be really cool, and it'd be cool to work out here, but we're not going to make much money from this. So if we do this, we need to do all the online stuff too, so I can actually make some money and use this as a film center, basically, right? So that's always interesting. And I think you learn that as an entrepreneur, like just differentiating what are you passionate about versus what makes logical sense, money, the data makes sense,

the industry and all those things. And I would love to now circle back and talk a bit about selling as an entrepreneur and a CEO. And the reason why is I'm filming a big TV show right now. I just flew back last night from LA and we filmed the first episode. And I can't say too much about it now because this is going to air way before the show is finalized. But one of the most fascinating things I find with all new entrepreneurs, which I found in this show too, is they're also product focused. And I was saying to my wife last night when she

was asking me about it, I'm like, it's an inverse relationship. Like the world's best, like Elon Musk and all the big, big billionaires, they sell something before it's really made. They just make a prototype. But then it's like all the poor beginner entrepreneurs, including myself 15 years ago, we spend six, 12 months making it 10 times over before we even try and sell it. And I would love to see if you found that similar experience and why you think that happens. Number one is that we, the ignorance, and this is when you learn the game like you and I at this point, because we do it in complete reverse now. In the beginning, you believe you create a product. You're confident that you have

no data. Somebody is going to buy it and it's going to do well. It's just this, I'm going to make this pen. And I think this pen is better because it lasts longer. It never runs out, whatever the case may be. Now, we never thought to go ask people that work in an office, if it fits really good in their hand, is it too heavy because it's got too much ink? And the point is we never really got the true date on it or whether anybody even cared or wanted, or where they'd spend an extra 50 cents on a pen like that. We know now to beta test everything. I tell anybody, I just started another company. I beta tested it at the most basic level humanly possible.

Mailer to 5,000 homes that fit the demographics that we wanted. I bought a local phone number. I had all the phone numbers, everything getting forwarded to my main office. And basically, if it took off, I would field the team within 10 days and just tell people we had such an incredible response. We're a touch behind right now, but blah, blah, blah, blah, blah. The ignorant Sean 25 years ago would have had an office, Vans lettered, somebody sitting in there waiting to answer the phone and it's crickets. And I got to close the whole thing up because nobody's interested. Yeah, when this show airs next summer, I'll try and remember to send you the episode because you'll probably see me go in there and break a few hearts when I tell them stop making any more crap, you know, just start selling because it's, and I see the same in my mastermind, in my coaching programs. These people take months and months or even years

sometimes like developing, redeveloping, adding more products versus on selling. And it's just fascinating how, and then me and you operate like that, right? It's like, hey, let's throw up a lander and just, you know, when they buy or when they opt in or whatever, it redirects to thank you coming soon or whatever it is. Exactly. We had such an overwhelming response. We're 30 days behind, but we're going to mail you this free gift with it, you know? And then we, you know, we were smart enough to have a manufacturer lined up who we know can do it because they made like one for us. You know, we're smart enough to have that, but we're not past that. Yes, yes.

So that's one lesson. I love that as a first lesson for people today. What would you say is a second business lesson like that people can take away from today that you've learned over all your years in business? I like margins. Okay. You know, there's very few things that you can sell that have really super small margins that you can get really wealthy on. You know, I saw an interview with Jeff Bezos in like 1999 and he's like eight years into Amazon, they still hadn't made a dime. That is the outlier of outliers of outliers of outliers. Okay. Realistically, you've got to make money in a typical business. Understand, you know, 68% of businesses are small businesses. Okay. You know,

under 20 employees. I mean, I mean, I'd say the typical 20, you know, I think 98% are actually small businesses under the definition of 500. But with that said, you've got to have money to hire good people. You've got to have cash reserves. What's the first thing every small business does? They stop marketing. And it's all because of cash. They've created something that they sell for so cheap.

They've either picked a bad industry to start with. They went into something that there was no money in to start with. And the biggest thing that I've learned is I look for margins from the beginning. Like where can I get the biggest spread would be the example within home services. Okay. You can have a landscaping company, very little margin, very, very little more, how much to get to mow grass. Okay. Example. And a lot of equipment. Okay. You can have a house cleaning company. Again, very little margin, million house cleaners. You're all going to be fighting over who's $5 a week cheaper, or you can get into building custom tile bathrooms. Okay. Massive difference. You know what I mean? Massive difference between the two um we offer designers

to help you do your remodels and we offer engineers when you do addition in other words find something that has that in the scope of that the highest end of a specialty and margin in anything you do margin is king i mean to me it's... Yeah, I think because, and again, I saw this in the show and even in my members, because I think what happens when you start is you go, oh, well, if I make 50% on this product, that's amazing. I'm like, yeah, but you forget every expense that you need as a business. Ad spend might be 25%, 30% of that right out the gate. And you got employees, legal, HR, refunds, returns, like

everything, right? And it's like, you know, and then we look at these business models, we do it a lot. Even with celebrities, I get, I'm like, this is the first thing I tell them. I'm like, hey, you're selling t-shirts, you better have at least 75, 80%. And they go, no, no, no, it's my buddy's printing it, you know, I've known him for 20 years and it's like it works now because it's all organic. You just post on your Instagram. But when we run ads and we scale and all those things, it just doesn't work anymore. Yeah. That's why celebrities in my in my opinion, stay out of business other than licensing your name. Just whatever you do, just know I make this much on anything that works its way out, obviously you're approving it and stay in your lane because business is different. And as you said, everything is twice as much as you think.

It's going to cost twice as much as you think. It's going to take twice as long as you think. And again, I think margin is something that business owners really need to guard and know what your margins are at all times. That's the other thing that what your margin was two years ago is not what it is right now. Yeah. But have you adjusted your prices? Yep. Yeah. Especially as you scale, like, you know, I scaled one of my companies past 10 million. Um, and when I scaled it past 10 million, they're just the infrastructure changes the margin so much, the C-suite and all the legal and just the HR and then recruitment. So it's just the extra buffer stuff, even on the employee side, not for every company, but for most, is going to drastically change stuff, right? And I don't

think people understand that. There's a point where, and I'm at there in one of my companies, there's a point where you really need to decide if you want to go to the next level because your expenses are going to do just like what you said. There might be a sweet spot in there. You're at like five to 6 million. But if you go bigger, you're going to have to hire an operations person to really run operations. And they're going to be like a buck 50 a year. And then you're going to have to have a full-time, you know, somebody handling all your payroll and HR, like you said, so you just added another. So you're at 250, you're going to add about a million in expenses to make what you think is like three, you know, and it's you and as the owner, this is what I always say, as the owner, you're not going to

make another dollar, because you're only going to make money when you get over the 10 million, because this little jump from five to 10 is going to get absorbed inside. Yeah, we found that. And then you kind of have to read, you know, and then we we we pause once we got, you know, there and then readjusted. And then we and it works OK after a year because we cleaned up and like optimize everything again. And it's like you kind of like clear the fat. Right. And then we reoptimize. It's kind of I start in fitness is like you bulk and then you cut, you bulk and then you cut. So in some ways we did that and now we're in a really strong place in that one company. What about a third, you know, a third lesson I would love? I think these are awesome so far because a lot of people in my, you know,

listening to this are in that startup phase, right? A few employees, a few staff, few VAs, and these are so valuable. Yeah. I think the biggest, if you want to scale your company, which simply defined is you're growing it and it's going to stay there. It's not like a short little growth. It's not like a little marketing push. You're growing something that you hope sustains itself. There's nothing more you can do, in my opinion, than making the critical hire. If you look at, you know, Microsoft, you know, Bill Gates hired, oh, golly, I forget, Balmer, Steve Balmer as his assistant. At the time, 1980, coming out of Stanford, 50,000 a year. 50,000 a year in 1980.

That's serious money. Okay? You've got to remember, we look at, like, Steve Jobs and, you know, we look now at, you know, at Apple, you know, now with Tim Cook, employee. You got to make that critical hire. Sharon Sandberg with, golly day, Facebook. If you really want to grow, you got to do the expensive hire, the hire that changes the entire game. You're the king. But if you've ever played chess, you better have a

queen. So yeah, you need to, if you want to protect yourself, you've got to have other pieces around you. And what you typically do as a small business owner, you have all these frontline pawns. They're all making this amount of money. And the only way to win the game is to have your bishops, your rooks, you better bring in a whole different, and they cost a whole lot more. And I think that's probably the biggest mistake business owners make is they don't spend the money and or hire that employee that's so good that when you show up every day, because I have them at my place, I'm shocked they're there. I'm still thanking like every six months. I mean, you stop by and you say, man, I'm just so grateful, man, you've spent the last 13 years, you know, chasing this vision with me.

Yeah, it's funny because, I mean, I actually, it's weird you say this because I had this thought this morning about two hours ago before filming this about the first time I found that person. And I was probably 26 at the time. It was like the first big sort of like C-suite level hire, right? They weren't really C-suite because I was smaller then, but they were almost like a business partner in some ways. And it was a big game changer. And then we found one thing we found as we grew over to over 100 employees is we weren't hiring those A players fast enough versus the normal people we were hiring. And then we kind of became disjointed in leadership versus like bodies and doers. And it's always a balance because they're so hard to find those people. But it's so important. And I think for businesses, when you find that person,

it's like finding your husband or wife. Hey, now I have a partner to go on this mission with, right? Absolutely. And I'll be in my conference room with my partners and I'll say to them, I don't have to be, nor do I want to be the smartest person in this room today. Like I am open to an idea better than the ones that I'm getting ready to throw out here. And you guys are welcome to improve this, beat it to death. Like I always tell them ideas sound good in my head until I expose them to you all. Cool. Yeah, I like that. How do you want it then to finish? How do you find that person? What do you look for? Always be interviewing. If I can give you one piece of advice today, never, ever stop interviewing.

Always have an ad out there. Always be talking to that next person. You'll be shocked because you'll take a name down and you'll be like, you know, John, Mary, I can see you fitting, not right this second, but I'm working on something and I am confident I'm going to get back with you at a later date. Or they're so good, you got to bring them on. You just make the sacrifice. But just once a month, every two months, run an ad and just refresh the lineup. It's like what I say, like Nick Saban at Alabama. At one time here, very recently, he literally had five assistants in the top 25. Five assistants. He loses generally a coordinator every single year and very often two at one time.

But if you ever look, he always has what's called a special assistant. They're making a million bucks. He's sitting in the booth. It's a former coach that just lost their job or something like that. Always sitting in the booth. It's his absolute foremost. Steve Sarkeesian, all of them. Lane Kiffin, all of them. That's his model because he's got that bench. He's ready to rotate the next coach in because he knows he's going to lose him. Why? Because he is the best.

And when you have the best, it's hard to keep them forever. And you got to think like that. You have got to always be on a talent hunt. Yeah. No, I love that. I love that. So, so let's bring, you know, as we bring into a close, how do, obviously we got connected and we've both got great podcasts and you've got a wealth of experience. Where do people find you, learn more about you and maybe, you know, the start tuning in to kind of get more of this wisdom. Great. Thank you again for having me on the podcast. It's the 10 minute entrepreneur podcast. I like things in short doses. I don't have the attention span to listen to something for an hour and a half, to be perfectly frank with you. If that's the case, I'll listen to an audible book

on a plane. So the 10 Minute Entrepreneur Podcast can't get any more simpler than that. And then you can find me on Instagram. It's Sean Castrino. Great. And last thing I always ask, one word of wisdom as we end today, what would you say to your younger self? Dream bigger. It's not, it's not, you know, my son's 23 right now. And I always said I've accomplished a lot, but I should have even dreamed bigger. Amen. I believe in that too. Yeah. You're always, I say you're limited by your perception of reality. So yeah, I, I neat things, but I think I, you know, I hate, you know,

giving Grant Cardone credit for 10X, but it's very possible I could have 10X'd even what I've done. Well, it's never too late also. That's the beauty of the world we live in. Thanks, buddy. It's great to see you. Thanks for coming on. Guys, go listen to that podcast too.

A lot of wisdom and you will see the man in red himself on there as well. I will see you soon, buddy. Take care. Thank you.