TMBA612: Mailbag: Avoiding Drama in Your Business

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We are once again reaching into the mailbag this week to answer some pressing questions from the Tropical MBA audience.

This is a somewhat unorthodox episode, as we are “shooting from the hip” on a variety of items that have come across our desk in the past few months.

We’ll be discussing how to structure your teams (specifically in an agency), tips for staying focused on what’s important in your business, and how to avoid the dreaded “D-word” in your business: drama.

See the full transcript below

Listen to this week’s show and learn:

  • Two different methods for structuring teams in an agency. (3:50)
  • Tips for staying focused on what is important in your business. (7:50)
  • What our current productivity systems look like. (10:30)
  • How to avoid wasting time on the wrong problems. (12:51)
  • Why you should be avoiding drama in your business at all costs. (17:40)

Mentioned in the episode:

Before the Exit – Our New Book
Partner With Us
The Dynamite Circle
Dynamite Jobs
Dynamite Deals
Tropical MBA on YouTube
Post a Remote Job
Dynamite Jobs – Remote Recruiting Sales Page
Let’s Talk High-Level Podcast Strategy for 1 Hour
Derek Pankaew
Empire Flippers
Andrew Gazdecki

Enjoyed this podcast? Check out these:

TMBA562: Mailbag: Freedom, Location, and Love in the Age of COVID
TMBA590: Mailbag: How Long Does it Really Take to Achieve Freedom?
TMBA611: Should You Bootstrap or Seek Funding For Your Startup?

This week’s sponsor:

Today’s podcast is sponsored by Dynamite Jobs.

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Save time and stay focused on your business. Let our experienced recruiting teams do the heavy lifting for your next hire.

We’ll hash out your job requirements, give you insights about the state of the job market, and plan a strategy to find your next A player.

We introduce your team to the top candidates who match your desired culture and skillset.

A quick call with our team can help clarify your hiring strategy, with absolutely no obligation.

Hiring doesn’t have to be a pain in the butt. Check us out over at DynamiteJobs.com to find out more.

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Have comments about the show?

Do you have ideas for things you’d like Dan and Ian to discuss on future episodes?

Our producer Jane would love to hear from you at [email protected] or leave us a voice message using the record button below.

 

 

Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.

Cheers,

Dan & Ian


Full Transcript


Dan: Alright, Bossman, we’re recording. So many cool questions, prompts and ideas floating around in the Dynamite Circle forum and our inboxes. Thought we’d just poke around a few and give our thoughts on some of the ones that really jumped out at us as live and interesting questions for entrepreneurs.

The first is, ‘How do you structure your team?’ A DC member asks, and we’ll make them anon of course, it’s a private forum. So here it is: “Specifically directed at agency founders curious to know how others are structuring their agency team, do you have a specialist account manager who doesn’t, quote, ‘do the work, but just manages 100% of the client relationships’? Or do you have say, the person delivering the paid ads as a service as the direct contact to the clients, for example, and the same with all other areas of the business?” So it’s sort of this idea of, in a service business, if you sell someone’s time to a client, is that the person that then interfaces directly with the client? There’s a lot of different ways to think about this. I thought we could just talk about a few strategies, theoretical ideas around it, and how we manage our service business.

Ian: It’s a good question. It’s one that’s changing very rapidly to do specialisation on the internet. So this idea that essentially, you can be very specialised at what you do and make a living doing it, right. So you can go sell your services as an SEO expert on Dynamite Jobs, or Upwork, or any of these other platforms, and you can basically have these little fractional jobs. So you can work in a couple different companies doing that. Some of it depends on your scale. If you own one of these agencies, and you’re just starting out, I think, 10 years ago, you used to hire somebody with the most in demand skill set. So, ‘I’m going to be like your ads person. And then I’m also going to interface with your customers. And I’m also going to do the billing and all this stuff, on my side time’.

But now I think you’re able, because of specialisation, you’re able to hire for all the different individuals that you need kind of like a fractional cost, because you don’t have to bring these people on full time, you can bring them on part time. I’s kind of expected actually, these days that you’d be part time in an organisation if you have a specialised skill set. That’s how we’re approaching Dynamite Jobs too in a lot of ways. You know, some of the promotions and things that we’re doing for people’s job posts when they come to us, and then we go promote their positions, we have like some specialised people that are doing that. Also, in terms of recruiting product, we have some specialised people over there doing that, too.

So I think, Dan, if I was starting an agency today, I would hire a bunch of specialised people. I don’t think I’d hire a jack of all trades. One of the common positions that people come to us and ask us to help them hire is an operations manager, because that’s kind of the last holdout. Most founders are the operations manager, they are the person that holds it all together, they’re kind of the hub in the middle of this wheel. And then they have all these spokes. So they’ll come to us and say, ‘Hey, I’m kind of pulling the team together. I have all these contractors, but I really need to go out and do something higher value’, generally it’s business development or sales. ‘So I need somebody to come in here and do this operations role’.

Dan: One of the things I think is interesting is this concept that was brought up in the forum, and it’s been written a lot about on the web is – are you going to have a hierarchical structure or a pod structure. And of course, there’s overlap between what the two things are, but typically a hierarchical structure would have that founder, CEO, and then the operations manager, and then say, you’d have an SEO group with the top SEO person. And then SEO assistant, number one, SEO assistant number two, and you know, there’d be this hierarchical management of all the SEO and the company goes through this SEO lead.

And then there’s this alternative concept of pods, where you have an SEO person, a designer, a sales lead, all in one pod. And then that pod manages a certain number of clients. And, at least for us as like bootstrapping a relatively new service business, we’ve only been selling recruiting services for 12 months, the pod concept really resonated with us both from a strategy perspective. You look at what you’re able to charge for your service. And then you say, Okay, well, you know, ballpark, I’m trying to get my labour cost to less than 30% of what I’m delivering the service for. So that you know you have a margin leftover after all your expenses of executing the service. And so then you figure out what that fractionalized pod is going to be, and you try to get your costs there. And this is a way you can sort of brainstorm new businesses. So I think it’s kind of interesting – if you look at a traditional agency, you’d say, like a recruiting agency, you’d say, ‘Alright, well, I sold this to a client, now I’m going to have a recruiter do all the work. And they cost this’ and so your rates are gonna be a lot higher than if you had this cross functional pod that can essentially split up the work and do it for multiple different clients.

Let me give an example of how this works in the business brokership world, for example. If you go to Empire Flippers to sell your business, you’re going to, of course, talk to a salesperson when you call them, but you’re going to deal with different people in their organisation for every functional area of that transaction. And that’s different from dealing with one broker who handles you the entire time through the process. And the cost structure is different. So what they can deliver to you is a lot different. We do the same thing in our recruiting service, which is – when you call us, you’re going to talk to one person who’s not going to be the same person that’s necessarily doing the assessments on every single candidate. And that changes the amount that you can deliver, the value proposition you deliver. And this is sort of how we napkin math it, figuring out what that pod is going to look like.

A critical part of this for us is, typically, agencies are founded in the wake, so to speak of the expertise of the founder. So if you’re this amazing SEO person, or salesperson or business broker or whatever, you’re going to start a service business that often will do exactly what you’re great at. In our case, we’ve been pretty fortunate to know a lot about hiring and recruiting, but not to have been recruiters ourselves. So our pod structurally and practically started with an expert level senior recruiter. People might say, ‘Well, how are you able to sell that at a fraction of the cost that typically it would cost to engage such a high level person?’ And the answer is by having an operational pod that empowers that first key member. So, again, it’s a theme we see time and time again, when founders start agencies in the wake of their own expertise, in their own shadow, so to speak, they typically have a lot, a lot of challenges of separating themselves out and seeing this as the mechanical structure that it ultimately is. Alright Ian the next topic that jumped out at us – a little bit more lifestyle. I know you’re a big lifestyle guy.

Ian: Huge.

Dan: A forum member writes, ‘What guiding questions and prompts do you use to keep focused on what’s important?’ There’s a lot of interesting ideas that this particular member brought up that are important for them. But I thought, let’s just take a stab at it. We’ve been sort of cycling in and out of productivity systems and different business units for years now. I’m curious as to where you’ve landed right now in terms of – how do you stay focused on what’s important on a day to day basis. This is basically the job of an entrepreneur.

Ian: Well, we have a new business. So I can proudly say I have no lifestyle, that is my life. And I think that is the case with a lot of founders that are starting new businesses. It is like ‘ass in chair’ from nine to five, at the minimum, to try and figure this out. So the question here is like, How do you stay focused? For me, I’m trying to create as much optionality in the future for us in this business. So I focus on the revenue, at least at this point, Dan, because I feel like, if I can watch that and make sure that we’re healthy, and we’re paying our bills, and that we’re leaving enough room to grow, then we’ll have the most possible options in the future. By the way, I’m turning 40 this year, I think you’re turning 40 this year.

Dan: Thanks for bringing that up.

Ian: So in my 20s, I felt very differently than I do now in my late 30s, about how to stay focused. In my 20s, I felt like everything was an opportunity, and everything was an option. I really did. I was like, ‘I could do this, I’m gonna do this’. And I think we did a lot of things Dan. But I’m actually starting to see time running out. It’s a little bit morbid, in a lot of ways. But you just don’t have time for all this stuff. You don’t have time to pursue 50 businesses, plus, have a family, plus have all these hobbies and stuff like that. So, for me, actually, this issue of focus – every year, my life gets easier. Because I can say no to people that waste my time and to bad opportunities. And I can say yes to things that are really important that I feel like are going to move the needle forward.

So I think with me, Dan, personally, I think age is becoming a factor. I’m starting to understand that I’m not superhuman, in terms of being able to accomplish everything, and have all these dreams and have them all come true. No, there’s time for a limited amount of things to happen. And so that, to me, is motivating there a lot of ways because I can actually focus on the things that are important.

Dan: It’s a very existential answer, Bossman, I expected you to bring up David Allen, or your new productivity system. One thing I’ll say is that it’s a very powerful meta system as well. You’re talking about perspective in life and experience, actually, ‘Parkinson’s Rule’ applied to your lifespan. I love that. Well, you know, another one is asking yourselves, like, who’s a true stakeholder in your business? And how do you speak with them? I think that that is a very clear hack to a lot of this. Because one of the problems with simply prompting yourself everyday, like I have a personal productivity system, which is – I do management work for part of the day, I do administrative work for part of the day. But I do have some maker time. This is part of my maker time, right now, we’re making a podcast. It is one of the three things that I’m trying to accomplish today. Every day, I limit myself to only three things that I have a hypothesis will move the business forward. And I don’t include like a phone call on that, you know?

It’s just a simple little productivity thing, that kind of thing we’ve talked about for years here. But I don’t think that’s nearly as powerful as me and you actually talking, like this morning, we had a stakeholder call with our community manager, Vincent Ngyen, he called us up and said, ‘There’s some critical issues I got to bring to your attention. Because I’m a stakeholder here, it matters to me, how I’m performing in my job, how I’m coming across to our customers, what we need to do for them’. And yeah, good idea for us to ally ourselves with Vince, good idea for us to ally ourselves with each other. And that’s not the same as going to a mastermind. It’s not the same as going to a business networking conference. Having people, you know, Derek Pankaew, last week he mentioned that a lot of bootstrappers really underestimate the power of investors in your business, because you can call them up and their stakeholders, and they’re gonna say, ‘Hey, stop doing this thing that’s not useful to growing, you said you wanted to grow this way. Here’s how I think that’s gonna end up happening. And I’m invested’. And a lot of people that aren’t stakeholders, they’re not going to take the risk, to help you out to evolve in the ways you need to do to see the different outcomes you’re trying to create. I think again, that’s what’s crazy, right? Because we started learning, we’re trying to create a different outcome by definition, like we’re starting at zero, in our case, now we’re getting to this seven figure area. And we realise that we haven’t really gotten to eight figures before. So if we just continue to have the same sorts of outcomes, the same sorts of stakeholders, we might just end up where we ended up before.

Ian: Another thing to consider is like, the people consider these stakeholders to be different types of people. So it could be like an investor or could be an employee, but it could also be a customer. I think sometimes these customers too, as stakeholders, can be good, because they can be the basis for how you push your organisation forward, if they’re giving you good feedback, and you’re engaging with each other. And it’s a win win situation.

Dan: Or if they’re a great avatar.

Ian: Or they can be bad. If they’re wasting your time, essentially. So I’ll give you a couple of examples in our organisation and how I can spot these people. People contact us all the time for free information about what people in certain roles should be earning, ‘Hey, I’m trying to hire somebody in Vietnam, how much should I pay this person?’ with no prior engagement with our organisation? We’ve come up with a bunch of different ideas like, hey, maybe we need to come up with a PDF about what people in this region should be expected to make if they’re Python developers. We’re working on a difficult problem to solve.

If you haven’t engaged with me, though, this is a way where I could easily burn half a day answering your question, hoping that you’re going to become a client. I would rather answer the question of an existing client, because I know that we’re going somewhere together. Okay, another way that this happens is people engage with us on our recruiting product, they set up a call, and then it turns out they’re willing to pay someone that should be making, let’s say, $5,000 a month, $2,000 a month. And I think to myself, well, if I was in your position, I’d probably be trying to do the same thing. But that’s not how our business operates. We can’t successfully help you find this person in 35 to 45 days at that price range. It’s easy to get caught up in these conversations, Dan, especially if you’re early in the business, and you’re still trying to find product market fit. So you have to figure out a way to abandon these conversations as quickly as possible, and kind of get on to what’s important. I say that, because like, these people are stakeholders, in some ways, they do give you insight into the future and the types of problems that they’re having, and maybe even the types of solutions that you can provide them. But they’re also like a source of a trap, if that makes sense.

Dan: I’d like to underline this point, just to frame it up a different way, which is that as you grow a business, and we’re feeling this now, and we’ve certainly felt it in the past, is that it becomes a little less intuitive when things get bigger. I think a word traditionally used here is leadership, because in the early days, especially in a service business, you’re just being smart and helpful. And that’s why so many people get into these businesses, like the person who wants to pay $2,000 a month that was us like, that is a lot of really smart, awesome people. Like that’s legit.

Ian: Still is.

Dan: Yeah, that’s a totally legitimate thing in the world. We’re not belittling that. But the hard part is like in real life, you know, if someone walks up to you, while you’re like, at the gym, or whatever, and has a concern, you minister to that, give them a minute, you don’t say, ‘I can’t waste my time on this’, you know? But in a business, as a leader, as someone who’s building systems at scale, you have to find ways to move past that really, really quick.

And I do think it’s also part of the reason why, when we look at a lot of people who run eight, nine figure businesses sometimes you can find some people that are a little crazy. Sometimes you can find some people that don’t treat people particularly well, because there is a little bit of a nugget of a superpower there in not ministering to every emotion that comes across your desk. Certainly a challenge that we talk about on a weekly basis during the company. We want to be thought of as people who are helpful and who care. But the reality is as you grow and scale a business You’re not gonna be able to please everybody all the time and in every dimension.
One of the things we have on our principles, by the way, is to find ways to be minimally useful to everyone. And one of the ways you can do that is you can refer people to other service providers in your industry, which is basically what our company policy is, ‘Hey, you know, we realise that, like, we’re not meeting your needs right now. But here are some alternatives that you could take a look at’.

Alright Ian, the last one is a tweet we dug up from Andrew Gazdecki. And he writes that, quote, on Twitter, ‘Startups are hard enough, avoid drama at all costs, and spend zero time with time with. It takes way too much energy away from what really matters, executing’. Producer Jane found this particular quote, and it’s something that resonated with me. One of the things that a producer Jane wrote to us is like, ‘this is sort of in the vein of the recent Basecamp conversation’. And there’s a lot of conversations going around the startup ecosystem right now, which is like, should you allow political interests in your startup, which can often lead to internal fighting or debate, or people wanting to pull the organisation in different directions. And something about what Andrew’s identifying here has always really resonated with me about this, which is – as a founder, as someone who’s aka focused on what’s important. What’s important is your startup surviving and making a dent in the world. And the margins for doing that are so so thin. One of the things that can happen as you start to become a leader, as you start to work at scale, is the people that you’re leading aren’t necessarily gonna be as focused. They have a bunch of different interests, and they might bring them to the table. And I think as a startup founder, it’s really worth asking yourself, you know, what you’re going to stay focused on because, again, the margins are so so thin,

Ian: This is a very interesting topic, especially as you get to scale, and especially as essentially, the minority has more of a voice than they ever have, you know, I think a lot of good things are gonna come from it, I think a lot of bad things are gonna come from it. I’ll give you a concrete example. In our organisation, we recently had to part ways with somebody that was more interested in having kind of political conversations than they were developing code. It’s an interesting problem for us. Because, look, the way that we got here was by not focusing on these types of issues. I understand, though, as an organisation evolves and grows, some of these issues are going to come up, you might even feel like it starts to be some of your responsibility to address these issues. But, at that same time, you need to adjust your charter, you need to adjust your agreement with everybody in the organisation, or at least the founders to understand where everybody’s heading, because if what we’re gonna do is we’re gonna have these like political conversations in our organisational day maybe we should become some kind of like news outlet.

What I’m trying to do is get as many people into jobs and to get as many employers hiring people that need jobs, that’s the mission of this company. It’s very easy to say that, Dan, it’s very hard to do that in practice. Once you start to have a bunch of people around like you said, everybody’s going to start to have their own opinions about things and their geopolitical views are going to start to come into play. I don’t think there’s any avoiding that. So it’s very easy for me to say, ‘Hey, keep all this stuff out in the company’, I do think that there is a place for it. But I also think, especially in the early stages of your business, what Andrew is talking about here, you have to avoid this stuff at all costs, because that is a luxury, that is not a given, you have to work very hard to get to that place.

Dan: I mean, you’re using ‘these things’, well ‘these things’ are enormously complex issues that, again, take focus. I think it’s actually a great example that you brought up someone new to the organisation, someone that showed up, this is an example that has honestly been whispered about behind the scenes. Founders, there’s a certain there’s, there’s certain, like political aims right now, that someone who’s a very marginal member of your team, there’s certain topics that they can bring up, that sort of like the organisation can’t quash anymore, just because there’s a general political understanding that these five issues like need … if someone brings them up, like, that’s what we’re talking about, right? You can’t squash it.

And the reality is, people know this. People with not a lot of power in organisations, because, you know what, it takes to get power in organisation – a lot of time and incredible input and potentially, a long career of doing great work. And so why not just raise your hand and like, be the smart person in the room and like, bring up some enormous complex issue that now needs to be ministered to by the whole organisation. You look at ‘skin in the game’ motivation. If these particular individuals were really that interested in these issues, why wouldn’t they dedicate their career to it? Why would they take a salary at a startup? Well, because that’s where the salary is, because that startup is focused on generating revenue, which is what we’re talking about.

So I think the reality is that I’m very sympathetic to the view that everything is political. But I think it’s our goal to stay focused and to find ways to limit that focus. And if we really want to make an impact in the world, we know that that comes after the success. And that’s why this is an issue so many people are sort of talking about nowadays. Again, I’m all about all kinds of issues like nominally meaning like, talking about it.

Ian: Yeah, let’s have a conversation over a beer.

Dan: But when you hire somebody, and you pay them a tonne of money to do a specific important thing that’s critical for an organisation, I was really proud of you for moving fast on that issue. And saying, ‘I’m sympathetic, but you’re very young, you are not producing results here, and you’re very expensive. And like, you need to go do this. If that’s what you want to do. Go do it. And it’s not going to happen right here because we’re trying to get wonderful remote workers and run wonderful remote companies. And that’s our sole focus right now’.

Ian: I thought we’re going to talk about a variety of things today, but it seems like the hot topic is avoiding drama.

Dan: Well, let’s get focused. We’ve got another meeting. That’s it for the podcast. Thanks for joining me Bossman.