Self-Made Man Podcast with Keith Cunningham

Hi, my name is Mike Dillard, and this is Self-Made Man, the podcast for those who want to leave their mark on the world and create a legacy of honor, integrity, and achievement in every aspect of your life. I'm glad you're here, and once again, it is time to forge your destiny. We all strive to do our absolute best in our businesses and in our lives. We try to hire the best people, create the best products, and make the right decisions. We all put so much effort into making progress, but is that really where we should be spending our time? Well, today our guest poses an extremely interesting question. Where would you be today if you could simply go back and unwind the biggest three mistakes that you've made in your life? Maybe that was a bad investment decision. Maybe it was a poor relationship choice. Or maybe you trusted the wrong person in your business. Well, I don't know about you, but if I could simply go back and unwind those events, I would be a hundred times better off than I am today, despite all of my efforts to grow. The advantages that we can gain in life by simply making better decisions far outweigh all of the hustle and grind that we could ever muster. This is the revelation that Keith Cunningham had nearly 30 years ago. After amassing a real estate fortune worth well over $100 million, Keith suddenly found himself filing for bankruptcy at the age of 40. At a time in your life when you're supposed to have it all figured out, he found himself with less than nothing. He actually owed millions in taxes to the IRS thanks to something incredibly insidious that you're going to learn about today called phantom income. Well, this crisis forced Keith to reevaluate his life and how he made his decisions. and the process that he created as a result would change everything. He quickly rebuilt his fortune and has since dedicated his life to mentoring entrepreneurs like you and I so that we can learn from his experiences. He's one of the best in the world at what he does, which is why you'll find him on stage at every Tony Robbins event leading the lessons on business and entrepreneurship. Today's episode is one that can radically change your life for the better, so get ready to take some notes and please help me welcome... Keith Cunningham. If you loved today's episode, make sure you head to selfmademan.com and tap into the world's first e-learning platform that's been built just for entrepreneurs. It's where you can get the knowledge and skills you need to take your business and life to the next level. Welcome back. Today, we're joined by a gentleman that I've considered a mentor for many years and have learned a lot from. He's a fellow Austinite here in Texas and someone that... I really am excited to introduce to you guys here today, Mr. Keith Cunningham. Keith, welcome to the show. Thank you very much. Absolutely. Well, I've been looking forward to this interview for a very long time, especially having read a couple of your books, including the latest one, The Road Less Stupid, which has been absolutely fantastic. But I know a little bit about your story, Keith. I shop at some of the businesses that you own locally here around Austin. And I pay attention to how you run those. And I've just learned a lot from you from an observation standpoint. So if you could, I'd love it if we could dive into your story, because you've got one hell of a history as an entrepreneur. You've had your victories. You've had your defeats. But you probably have more experience than anybody else that I know when it comes to business. Thank you very much. I'm very, very flattered that you would have me on this podcast, Michael. So thank you. I heard a. poem one time that goes like this, money talks, I can't deny. I heard it once. It said goodbye. So that's probably a really good lead-in to the first 20 years of my 45-year career. I started my career in the early 1970s after a graduate school, MBA, University of Texas. I got started with two guys here in Austin, Texas, who were not only my mentors, but they were icons in the business world. They happened to be, among other things, in cable television, and so I started my career in cable TV. With their commitment that if I went to work for them, they would teach me everything they knew. I had a big concern about... whether or not the education I had gotten at University of Texas was going to be sufficient to allow me to be successful in the real world. And I knew that there was a gap between what we were learning in theory and what actually worked. And so when I took the job, a condition was that in effect, we would mind meld and they would download to me. their prior 30, 40 years worth of experience and get me up to speed as quickly as possible. And that's exactly what happened. They were great mentors. And I ever since that mentorship from them and them hiring me, I've always been a big believer in having a mentor, having a guide, having somebody around you who has already made some of the mistakes and knows the pitfall, Falls can peek around corners and see trains coming that maybe we want to dodge or maybe trains coming that we want to catch. I was with them for about 10 or 11 years. And in the early 1980s, there was a real estate boom that was happening in Texas. And I decided I could make more money faster in real estate than I could in cable television. And so I morphed. my career and morphed my expertise from raising money and doing deals in cable television to raising money and doing deals in real estate, which was a really good idea until it wasn't. It's like most of our good ideas are really good. I love to tell people, Mike, all my problems started out as a good idea. I've yet to wake up in the morning and say, okay, today's the day that I'm going to screw up the rest of my life. But I had this good idea that real estate would be a great vehicle for me to morph into. And so I did. And I made another stupid amount of money. I made a bunch of money in cable television. I made a bunch more in real estate. My experience... experiences is that you never know how far you can go until you've gone too far. So I pushed the outside of the envelope on the amount of debt and how aggressive I was in real estate. I had hundreds of millions of dollars of real estate, hundreds of millions of personal liability debt. And there's a great saying from Bill Gates that I really like. Bill Gates said, success is a lousy teacher because it lulls smart people into believing they know what they're doing. There's a lot of truth to that. I think that I made the mistake that just because I caught a big wave, it made me a good swimmer. And I see over and over again, not only in my own career, but in other people's careers that I work with. and are on my board of directors or that I advise, I see people make the mistake of they got lucky, but they think it's because of talent or expertise. And a little bit of both is usually required. Where it gets dangerous is when you say, okay, well, the reason I have achieved all this success is because I'm a little bit like Haley's Comet. You know, a guy like me only comes around about once every 70 or 80 years or so. And that kind of was, it was a good way to describe my approach to business in the mid to late 1980s. As we all know, anybody that was around at that point or has read any of the business press, the late 1980s, early 1990s was a debacle. It was a total wipeout. To give you an idea of how bad it was, in 2008-2009, there were a total of a dozen banks that failed. That's the total number of banks that failed. Between 1988 and 1992, 3,500 banks failed. So to say that it was cataclysmic would be an understatement. It was a far-fetched... far worse than what happened in 2007, 2008. So I got caught in the middle of that. You know, success tends to breed hubris and comfort. And so I was feeling very comfortable and very cocky. And all of a sudden, it turns out, Warren Buffett said, you never know who's swimming naked until the tide goes out. And the tide went out. And I had made a lot of money, but I also had a lot of debt, and my assets were no longer worth the amount of debt that I owed. So I wasn't even a break-even. I was, you know, $50 or $100 million upside down. Literally, the amount I owed exceeded the amount that I had by that amount. I spent four years trading with my banks and my banks failed and then ultimately with the government who took over the banks, kind of trading with them, horse trading with them. They wanted a little bit of my cash and a little bit of my property in exchange for reducing or eliminating the debt that I had. And I had hundreds of millions of dollars of debt and a very extensive... real estate portfolio. So it took me four years to get out of debt. Now, here's the interesting part. I got back to zero, which was really, really good. I was proud of myself for just getting my gosh, I was so far upside down. W.C. Fields said one time, I sure hope I break even on this deal. I really need the money. And I was in that same situation. I just wanted to break even on this thing and get out. And. And my account, I did, I got even, and my accountants came to me and said, Keith, in the process of you getting out of all this debt and horse trading back and forth with the banks, you've created something called phantom income. And phantom income happens when, if I owe a bank $10 million, but I only repay $6 million, then $4 million is income. Even though I didn't really ever have the cash, I just, it's income because they forgave $4 million in debt. So I said, okay, well, how big is the problem? And my accountants told me, well, you owe the IRS $9 million. And I didn't have $9 million anymore. I used to, but I didn't now. And so on February the 12th, 1991, I did the worst thing imaginable for me. which is I had to declare personal bankruptcy because it was the only way out of this liability that I had to the IRS. And around how old were you at the time? I was 40. Wow. I was 40 years old. So to say that it was a midlife crisis would be an understatement. You know, I had made a ton. I had made $100 million. I had lost it and all that and was broke by the time I was. 40. And 40 is supposed to, I just turned 40 this year. That's supposed to be when you're fat and comfortable, right? Well, you know, the problem with 40 is you're still trying to recover from all of the irrational exuberance of the 30s. I can appreciate that. Yeah. So it was a wake-up call for me. And the way I describe this time period is a little bit like being a basketball player and it's halftime. and you're trotting off the court to go to the locker room to get ready to play the second half. And that's kind of how I felt. As I was leaving the court to go to the locker room, I glanced at the school board, and the school board said it was 87-3. The other guy was winning. So here I am in my halftime. I'm stone cold broke and I'm asking myself the question, how do I win this game? How do I win this game? What went wrong? And it turns out, how do I win this game is a bad question. The question that I ultimately got to was, how am I going to play the second half? And it's not a matter of winning and losing, it's how I'm going to play. And once I've made that distinction, 18 months into this sabbatical that I had taken, where I grew a ponytail and got my ear pierced and started studying the world's religions and great philosophers and all theologies, I ultimately came to the conclusion that there's a big difference between making it and keeping it. Those are two different skill sets. You can get lucky and make it, but you're not going to be lucky and keep it. It requires skills and tools. And I had the tool belt, I just forgot to use it. And so I exited the sabbatical, cut my ponytail, and I stumbled across a strategy that allowed me to rebuild my net worth very, very quickly. I got the idea from Lee Iacocca, who was the number two guy under He Ford, who when he let, he was fired by He Ford. And so here's the president of a major motor company that is unemployed. And at that time, Chrysler needed a CEO. So Chrysler hired Lee Iacocca to be their president. And Lee Iacocca said to Chrysler, look, I'll come be your CEO. And I want my compensation to be a dollar a year, but I want 15 or 20% of the stock. If we fix it, we're all going to get rich. If I don't fix it, it only costs you a buck. And Chrysler did that deal, and Lee Iacocca got rich. Well, I used that same strategy. I had a guy come to me. in the early 1990s who I knew in business. He had a company that was in trouble and he said, Keith, would you be willing to come in and help us fix this company? You know a lot about business. You know a lot about businesses that are in trouble. You've dealt with this yourself. So come help us. And I cut that same deal, a very nominal salary in exchange for a chunk of the upside. And the deal worked. And we all did. fabulously well. And I did that same thing four different times over the ensuing six years. And one of them didn't work. It was too far gone or I didn't have the ability to fix it. But the other three worked spectacularly well. And what I know from my background is that turning around a business is the hardest thing to do. There's nothing in business that's harder. than one that's sick that you're trying to save. It's far easier to start one than it is to turn one around. So I had this success. I was rebuilding my net worth, which, in fact, I rebuilt all of it over the years. And I started buying businesses. I figured out that starting a business is probably more risky and has more brain damage than what I want to encourage. And so I started finding businesses that had robust revenue, cash flow, employees, processes, systems, a brand. And I would find really good businesses and I would buy them. And I would say that I copied a lot of what I learned from Warren Buffett on how he goes about approaching a deal. I'm obviously much smaller. My deals are much smaller. But it's the same kind of strategy of let's find really good businesses that I want to hang on to. I don't want to day trade. I'm not looking to flip. I'm buying them for the cash flow. I'm not buying them because I'm passionate about it. I'm buying them because these are businesses that I think have a long-term future. And I know how to run them. So I built up a little small portfolio of businesses, half a dozen businesses. over the years and simultaneously began doing some teaching. I had a number of people that saw what I did, how I got through my bankruptcy and recovered, and I had a number of people come to me and say, how did you do that? And so I started teaching, and actually that's been my primary vocation for the last... I'd say 20 years. I probably spend more time in the teaching world than I do anything else. I still have a portfolio of businesses. I'm still active in our businesses, which I think makes me unique. I think most people that teach business, in large part, haven't done it. They understand the theory, but they've never really done it. They're not eating their own cooking, which is why there's so many really... bad ideas out there that are getting peddled in the business book world. So I've spent a lot of time over the course of the last 20 years advising, coaching, being on a board of directors, teaching four-day MBA course that I wrote and I teach, how to buy or exit a business, all this stuff that I've done. in the teaching world is a complement to the work that I continue to do as a business guy. So I'll just say this, to put Keith on a bumper sticker, I would probably say at my heart, I'm a business person. And the teaching part is the part that gives me fulfillment. I heard a very powerful distinction years and years ago, that pleasure... is all about stimulating your senses. Happiness is from gratitude. Those are two entirely different things. Pleasure and happiness are two different things. Success is getting what you want. Fulfillment is giving what you got. And I have been in a mode of transitioning over the course of the last 15, 20 years from a success-only mode to a success plus fulfillment mode. And the fulfillment actually is a result of the teaching. The success is a result of the businesses that we own. Absolutely. Well, I've got a couple of questions that I want to circle back on for you real quick. The first is, what was the answer to your question? When you said, how am I going to play the second half? What was your answer? Boy, that is a great question. During my sabbatical, I had a Hindu guru. that I literally, I had studied under, probably one of the most insightful people I've ever met. And this guy said something to me, Mike, that resonated with me. It still does every day. Every day, it's been 27 years since he said it to me, and every day I think about this. And what he said was this, Keith. hell on earth would be to meet the man you could have been. When I talk about that, it makes the hair on the back of my neck stand up. His point to me was that there's a difference between day trading with your life, which I think I had probably done, and making a long-term investment. And, you know, what am I truly committed to achieving with my life? And ultimately, I would say it came down to this idea of mastery. You know, how can I design and then work towards a life that produces the outcomes that I think I want, as opposed to, you know, being in a barter, exchange, or day trading kind of mode and sleepwalking through the... through the process. And so, you know, I decided that if I was going to play this thing, I needed to play it for keeps and not play it according to other people's standards, but instead to define my own vision of excellence and then get busy creating the life that would allow for that outcome. I've always said that if I had an opportunity for one last thought, one last thought, and then I died, I would love for that last thought to be, whoa, that was spectacular. Yeah, wow. That is one of the best all-time quotes that I've ever heard, the hell on earth quote, because I totally agree. It means a lot. It stands for regret. It stands for the fact that you didn't believe in your potential or didn't have the courage to pursue it. And wow, that's just unbelievable. I'm glad we circled back on that for sure. So this is going to be a bit of a transition from something that deep to something that's not quite as deep, but I still want to cover it. What are some examples of some of the businesses that you... currently run still? And I'd love it if you could talk about some of them that are here in Austin. Well, so I'll talk about it, but I'll do it in a very general kind of way. We happen to like the car wash business. That's a business that we've been in for a long, long time. These are car washes that have 70 or 80 employees. They have full service detailing. Full service detailing. They're extremely profitable. Obviously, very weather dependent. But we like those kinds of businesses. We like businesses that are basic. We love the pest control business. I don't care what happens on the internet. I don't care what 17-year-old kid is sitting in his parents'garage in Palo Alto, California with a six-pack of jolt. If you have bugs and you want your bugs killed, somebody's going to have to walk up to your house. and they're going to have a spray bottle of some sort. Now, what's in that bottle may change, but if you have a dirty car, you're not going to get it washed on the Internet. We like service kinds of businesses where we can differentiate ourselves, not based on price, but rather based on the service or the intimacy that we can create with our customers. None of the businesses we own are... are the cheapest, including the work I do in teaching. We are not the cheapest, and that's not what I'm optimizing for. I believe that you can provide full value at full price and differentiate yourself from everybody else by not what you're doing, but how you're doing it. You know, if I ask... If I ask everybody listening to this podcast to think about their favorite restaurant, the restaurant they would love to go to if they were really going to celebrate, the reality is nobody is thinking about McDonald's, and yet nobody has made more money in the history of mankind in the restaurant business than McDonald's. And it's not because they have a great product. It's not what they do. It's how they do it. And the same thing is true with our business. It's true with every business. Your success will have very little to do with what you do and everything to do with how you do it. And yet most business owners spend the majority of their time obsessing about what to do. You can name me any product or service. I don't care what it is. It could be chewing gum. It could be shoelaces. It could be car washes. It could be... seminar, podcast people. It could be anything. It doesn't matter. Give me one week, and in one week, I'll name at least one person who's made millions and at least 100 people who've gone broke doing the exact same thing. It's never what you do. It's how you do it. And so what I'm looking for in our businesses is how do I build a moat? How do I distinguish what we're doing from what everybody else is doing. And, you know, to give you an example, in the car wash business, it turns out that, as in every business, there's a big difference between what the product does and what the product offers. And most business people have not made that distinction. What our product does in the car wash business is it gets bugs off windshields. That's what it does. And every other car wash out there, Spends all their time thinking about how do we get bugs off windshields? How do we do it consistently every single time? Well, I mean, look, that's important if you're going to get a car wash, but at the end of the day, that's not the most important. Our product, what it does is get bugs off windshields, but what it offers, the reason people wash their car has nothing to do with bugs on windshields. The reason people wash their car is to feel better about themselves. It's the same exact reason why they shine their shoes. They want to feel better about themselves. They feel better with shiny shoes. They feel better with a clean car. Well, good. It turns out the business we're in is not the car wash business. We're in the self-esteem business. And most people have never made these kinds of distinctions, and so they wind up competing. based on what the product does instead of what the product offers. We just differentiate with all of our businesses from our competition, and therefore we have some very, very successful businesses. You know, one of the primary questions that I try to get our customers and clients to think about is to acquire the ability to truly identify what it is that you're selling. which is what you just talked about. And it's not intuitive. That answer is not obvious. And for most new business owners, especially if they're brand new, they don't understand the difference between what you just mentioned, the product that you're selling and why people are actually buying it. I have sold a lot of courses on marketing over the years, and nobody wants to buy a freaking course. Nobody wants to sit there and watch 25 hours of me on a screen flow, walk them through a marketing campaign. And I know that. I know that what they really want is to get rid of the financial pain that they have in life or to prove to their friends and family members who've doubted them that they have what it takes to become successful or to experience freedom and the freedom to do things with their family that they can't do at the moment. And so really understand what you're actually selling is, I think, step number one to any successful business. So thank you so much for bringing that up. Thank you. And those are two points that you've made so far today that have had to do with asking the right questions. And I think that's the perfect transition into the book that you're just coming out with. It's called The Road Less Stupid. And I've dove into it. I think it's absolutely fantastic. And at least in the first few chapters so far, the primary theme seems to be... How do you ask yourself the right questions instead of the wrong ones so that you can get an answer that will, you know, help you achieve the goal that you're actually after? But if you could, let's dive into why you wrote this book. I wrote this book because the dumb tax that I have paid over the years, which has been breathtaking, is at the root of all the... The misfires that I've had financially and in business, at the root of every single one of them, was a missed assumption or an overly optimistic assumption about the outcomes. I was all offense and no defense. And yet, if you look at any championship team, look at who wins the Super Bowls. And nine times out of ten, it's the team with the number one defense, not the team with the number one offense. And yet, as business owners, we're not trained to think defensively. It's actually the purpose of a board. A board is designed to help the business and the management identify risk and gotchas and what can go wrong. A board's job is not to help you design. how to grow the business. That's up to the CEO and the management team. A board's job is to say, look, slow down here a little bit, cowboy. Let's figure out if there's something that could go wrong. My favorite question to ask when I teach business owners, which I have an opportunity to do literally all over the world, and I probably teach 30,000 to 40,000 people a year in my life. speeches and presentations, et cetera. But my favorite question to ask is this, how much money would you have right now if I gave you the ability to unwind any three financial decisions you've ever made? And what most people will tell me is, oh my God, if I could unwind this decision or that decision, shoot, I'd have two times, I'd have five times, I'd have 20 times more money. And it turns out when you look... Back in hindsight at those faulty decisions, more often than not, it's obvious the missed assumption or the overly optimistic, irrational exuberance that snuck in someplace. And nobody thought about the risk. And looking back on it, it's obvious. But at the time, it wasn't. So I happen to my experience is I happen to believe that. The key to getting rich is doing fewer stupid things. If we could just do fewer stupid things, we'd have more money. But what sabotages us is not that we aren't doing enough smart things. Shoot, we're doing enough smart things. It's just that we pepper in some incredibly stupid things that wind up sabotaging. So we go two steps forward, three steps backwards, and we wind up spending our lives financially treading water. And it's not because there isn't an opportunity to be successful. It's because of the saboteurs. So this is another way of saying that business is an intellectual sport. Business and money and investing does not... well to your emotions, your gut, and your glands. And most people are glandular when it comes to their businesses. They don't have the skills and tools or the intellectual discipline to really figure out, okay, what needs to happen here in order for this to be successful and what could go wrong. I love the story of Albert Einstein. Albert Einstein was a professor at Princeton for 20 years and in his third semester of teaching, his fellow professors came to him and said, dude, you're going to have to change it up a little bit. And Albert looked at him and said, what are you talking about? And the fellow professor said, look, you're given the same exact final exam question every single semester and the students are on to you. They're smart. They talked to each other, and they've all figured out, oh, Albert is not changing up the questions. And so the professor said to Albert, you've got to change this thing up. And Albert said, I'm not going to do it. I'm going to keep asking the exact same questions every single final exam for as long as I teach at Princeton. And the professors looked at him and said, why? And he said, because the answers keep on changing. The answers keep on changing. We miss that in business. A great idea five years ago could be a horrible idea today. A horrible idea today could be a terrific idea. 18 months from now. But we don't tend to think like that. We are obsessed with finding answers. And so I like this idea a lot of smart people have really, really good answers. Geniuses have really, really good questions. How do we design questions that give us insight that will allow us to produce the outcomes that we want? And we don't get that insight by finding answers. In fact, finding answers is what shuts the brain down. The instant we think we know the answer, we quit thinking. And more often than not, the answers, as you said just a second ago, it's not that obvious. A lot of times you have to spend some time really thinking through. So, you know, I had a business associate that I... did some business with years and years ago who mentioned to me that he had a thinking time scheduled on his calendar for four o'clock in the morning two days later. I mean, four o'clock in the morning is ridiculous. But what was impressive is that he actually set aside time on his calendar to sit down and think. And when I first heard that, I went, oh my gosh, that is brilliant. But I didn't do it. You know, all of us have learned things that we thought were really, really good, and then we don't follow up and do it. Well, that all happened when I was in my 30s, and by the time I was in my 40s dealing with a bankruptcy, I had learned some valuable lessons. And so this idea of setting aside time for thinking is critical. And so for the last 28 years, I've had thinking time on my calendar. And... You know, as many as three or four days a week, I'll set aside 45 minutes. I turn off the phones, turn off the computer, lock my door. Everybody knows that I'm in a thinking time mode. I got a thinking chair. I got a thinking pen. I got a thinking journal. And the key to thinking time is developing a very, very powerful question before the thinking time. And I spend 30 to 45 minutes. concentrating on this one question, attempting to come up with ideas or options or choices that weren't immediately obvious. And sometimes the thinking time is on priorities, and sometimes it's on the machine that I need to build, the structure, organizational structure. I might have thinking time on marketing. I might have thinking time on customer customer. Service, I mean, one of my favorite questions that I ask is, how big would my business be if I still had every customer who ever tried me? Turns out the reason our businesses are not growing has absolutely nothing to do with the fact that we're not adding enough new customers. We're adding new customers. Every one of us are. The reason our businesses aren't growing is because we suck at keeping the customers we already got. It's crazy what we do. One of my favorite questions is, what don't I see? What don't I see? And the one thing that none of us can see, and it's a reason to have a board, it's a reason to have a mentor, it's a reason to have a coach. The one thing none of us can see is our assumptions. So I think it makes sense to question our assumptions. What assumptions am I making that give me what I see? These are incredibly powerful questions. And so sometimes they're bigger questions like that, and sometimes they're more blocking and tackling questions. You know, a blocking and tackling question might be... What could I do to improve my situation or make things better? What must happen to cause customers to buy from me? What must happen to keep them buying? What could cause them not to buy? Those are world-class questions. Probably not answerable with just one or two thinking time sessions. So over the course of the last 28 years, I've developed hundreds and hundreds and hundreds. In fact, in The Road Less Stupid, I think there's over 700, I think there's 704 questions that are some of the best questions that I've developed. And each chapter in The Road Less Stupid is, you know, two or three pages long. And... has some sort of story or some sort of runway that gets you to a thinking time mode. And if you choose to adopt thinking time as a discipline, I think you'll wind up making more money and achieving your outcomes with a whole lot less brain damage. You know, one of the most important questions that you've talked about throughout your career as a teacher, and one that's brought up in the book as well, and And it's a question that I think about often personally, which is how do you move from the operator of a business to the owner of a business? And I was wondering if you could talk about that for a little bit. What a great question. Operators are doers. Operators are, and most of us go through this stage. Unfortunately, most of us get stuck. at this stage because we don't have the skills and tools that will enable us to transition from operator to owner kind of role. But operators think in terms of time and effort. They think in terms of controlling it. They think in terms of sweat. They think in terms of doing it and are constantly in a reactionary kind of mode. There's never enough time. And the reason there's never enough time is because there's only one of you. The motto of the operator is, if it's going to get done, then I guess I'm just going to have to do it. That's the motto that they live by. Nothing is ever good enough when it's done by someone else. And usually that's because the people that they've tried to hire in the past, they didn't know how to... hire. They didn't know how to delegate. They abdicated instead of delegated. They did not hire A players. They hired munchkins. They hired C players. They hired five footers and said, go dunk the ball. Well, I'm going to tell you something. If you're five feet tall, a lot of things are going to happen, but dunking a basketball is not one of them. They're afraid to pay the money. for an A player. And so the key in terms of skills and tools to transition from operator to owner are things like leverage. The big difference between an owner and an operator is that an owner has leverage and an operator doesn't. And the leverage comes from A players, people that can dunk the ball, people that... that have got demonstrated execution intelligence. They're not people you're going to train. They're people that have been there, done that. This is not their first rodeo. Leverage happens as a result of measurement and accountability. It's how do you build a dashboard with standards and measurements that enable the A player to be successful. In other words, how do you build the yellow brick road that gets somebody from Munchkinville to Oz? I think owners have a desire to create a structure and a machine, and most operators abhor structure. It's structure is what's missing, but they don't want the structure. One of the reasons most people start their businesses to begin with is because they don't want to work for the man or have a job or have all that structure. I'll put this on a bumper sticker. Opportunity without structure is chaos. Structure is the price that you have to pay for entrepreneurial success. Most people that are operators spend the majority of their time lurching and reacting to whatever the environment is in the moment and owners think and design and plan. Operators have no clue how to delegate. or how to hire somebody, make sure that there's clarity and engagement on getting the job done. Most operators abdicate. They have a job to do. They hire somebody. They throw the thing in the person's lap. 90 days goes by. The job ain't getting done. There's a missed expectation. The culture isn't a fit, and the whole thing is a mess. Most operators are all about control. And that's what management does. Management is about control. Leadership is about inspire. They're two entirely different things. And instead of me controlling the people that work for us and our businesses, I'd rather be the leader. So I've developed some processes, some tools that allow the dashboards to control. So it's not me having to control, it's the dashboards and the processes that we have that alert people to either hits, wins, or losses, misses, wins or misses on their performance. If you take a look, all of us can do this. If you go back to high school, remember back to high school, junior high, some cases elementary school. There was always some kid in your class that made straight A's. I mean, it didn't matter what grade it was, what subject it was, they made straight A's. And these A players'favorite day of the year was report card day. That's their favorite day. Now, for the C players, like me, report card day was the worst day. I hated report card days because I had to go to school, get my report card, had to come home, tell my parents, look, I made four C's, a D, and an F. And every time they'd look at me and say, oh, Keith, you can do better than this. Dad, oh, man, I'm disappointed. A players go home and everybody says, oh, you're so smart. We love you. You're the greatest. Let me give you a clue. This is for everybody. A players love to be measured. Anybody that doesn't want to be measured doesn't want to be held accountable. And accountability is critical for success. It's critical for the transition from operator to owner. So there are skills and tools that are required in order to be an owner. And the problem most operators have is they're good at their profession, but nobody's ever taught them the skills and tools. And that's what all of my teaching, the four-day MBA, the board of directors, the books I write, the software I've developed, every bit of that is designed as skills and tools for the owner of a business so that I can facilitate the transition from operator to owner. So I would... highly, highly recommend, guys, if you're listening to this, obviously go pick up a copy of the book, but also take advantage of 4 Day MBA and Keith's Boardroom program. Keith, I've got a few of my really good friends, Fernando and Tim and Matt, who essentially run my first business that I built today. And they've been going through Boardroom. And the transformation they've seen over the last year from, let's just say, operators to owners has been phenomenal. And for the first time in their career as entrepreneurs, they're growing a real sustainable business with predictable revenue and a budget. And they're seeing their business grow substantially. So it's just been awesome. Yeah, they're all stars. They are like most people that I work with, Mike. They want the outcome, but they lack clarity and certainty. of the tools and the execution in order to create those outcomes and deliverables. And that's what I teach. I'm glad you said that. The way most people start with me is they may have heard me speak sometime, like on this podcast. They do a little research on the internet and find our website, Keys to the Vault. They may read a book. And ultimately, they wind up coming to the four-day MBA. And from there, it can transition into other things we do like the boardroom. And that's really what Fernando and some of those guys, it's really what the bulk of the people do that wind up studying with me long term. They get a taste and then they decide they want more than a taste. They want an entire meal. And so the people that do what I teach inevitably will achieve the success that they want. It's not that hard. It's not easy, but it's skills and tools. And if you learn the skills and tools, then you can get the results you want. You just got to learn them and then apply them. And you're right. Those guys have done a phenomenal job, and I'm very proud of them. Well, you know what the real issue is here, and I've just observed this in myself and in others, which is the fact that You can achieve some level of financial success as an entrepreneur in the online world without having any real actual business acumen. Meaning, you can figure out how to sell products on Amazon or you can write an e-book and figure out how to sell that or record a webinar and figure out how to sell something with that. And essentially, you can just make a seven-figure business learning how to sell something online with that particular skill set. But what's never really being taught outside of what you teach, and honestly, I can't think of anyone else who teaches how to run an actual business, are the steps beyond that. Okay, great. I've figured out how to create an offer that sells. And people will find out within two to three years that offer fades and then all of a sudden they're back to square one and they don't have a business anymore. Or they assume the money is going to continue to roll in as it is indefinitely and forever and they'll change their lifestyle. They'll change... their offices and upgrade all of their staff and everything like that. And then they don't know how to read financial reports or through your software, how to look for patterns from a revenue standpoint that could be pointing to a really tough challenge in the months ahead. And they find themselves starting back over at square one and never really getting that education on how to actually build a real business. And I think that's the difference between what you teach and what everything else out there being offered is about. I agree that there's a big difference between being professionally competent and being financially, from a business standpoint, successful. Having a successful business. I know lots and lots of professionals that... They've learned the skills of the profession and they're competent. They're extremely competent, but they are missing the skills of building, designing, running, leading a successful business. I think both are required. It's not one is more important than the other. Both are required. Somebody's got to know professionally what to do in your world, the online world. Somebody's got to know. how all this works. And since there's a limit to how much time any of us have, it's the one thing that you and I both have in common with each other and we have in common with Bill Gates. We all have the exact same amount of time. And so the question is, how do I leverage and design a machine, a structure, an organization chart with A players that allow this business to grow beyond what it can if it's just a solopreneur. Some businesses operate just fine. I don't happen to be a believer that if you have a job or if you are a solopreneur, then you're somehow a failure or a loser. I think that's crazy. I just think that if you want more than... The key is going to be to learn the skills and tools that will give you access to the success that you want. It's no different than golf or hockey or downhill skiing. Lindsey Vonn is not winning gold medals or any medals because she got her mind right. The's winning gold medals because she's extremely competent at what she does. And she spent years and years on the practice field to get that way. The problem is downhill skiing is not particularly leverageable. The has to be the one to do the work. It doesn't mean that she isn't successful or that she's a loser. It just means, okay, well, that's what she's designed. It's the difference between there's a Michael Dell model and there's a Michael Jordan model. Michael Jordan, in order to make money back in the day when he was shooting hoops, had to be on the court, and he had to be the guy shooting the hoops. Tiger Woods has to be the guy making the putt. That's a lower leverage, not unleverageable, but it's a lower leverage opportunity. They have a different model than Michael Dell. Michael Dell's model was he put together the first few computers, and then he figured out, oh, he can hire other people to do some of this. He just has to make sure they're A players. He has to put them in the right structure and the right culture with the right leadership, with the right metrics. build the yellow brick road so they can be successful. And so I agree with you, Mike, that it's this idea of adding the additional tools is critical to making the transition from operator to owner. Absolutely. Well, Keith, we're coming up on our time limit here, and I want to be respectful of that. This has been... Been such a treat. Thank you so much for the time today. And obviously, people can go to Amazon and pick up a copy of The Road Less Stupid, advice from the chairman of the board. And guys, I'd also highly recommend Keith's other books as well, Keys to the Vault, being another fantastic one that I have on my bookshelf. But Keith, where can people go to connect with you, learn more about your coaching and boardroom and the other services that you offer? So you can easily go to our website, Keys to the Vault. dot com. You can also shoot us an email at info at keys to the vault dot com. You can call us on the phone at 512-231-9944. And we're happy to talk to you and explain to you what we do and how our courses work. All of our courses are relatively small, maybe 50, 60 people. I teach 100 percent of them. We don't have any guest speakers. I've always felt like if you, the people that come and study with me, Mike, want hay before it's been through the horse. And so I'm the person who does all the teaching. So, you know, contact us. And if you feel like we can help you do a better job of learning skills and tools and designing your business, we'd be happy to engage with you. That'd be phenomenal. Well, Keith, thank you so much. This has been fantastic. It's really a pleasure to have you on the show. And thank you so much for your contribution to all of us entrepreneurs out here. My pleasure. Thank you, Mike. All right, guys. Thanks so much for listening. As always, make sure you go check out the new selfmademan.com platform. That's where this podcast episode will live as well. And if you loved this show in particular, please go leave us a review on iTunes, which would be unbelievably appreciated. So thank you so much, and we'll see you next week. Take care.

We try to hire the best people, create the best products, and make the right decisions. We all put so much effort into making progress, but is that really where we should be spending our time? Well, today our guest poses an extremely interesting question.

Where would you be today if you could simply go back and unwind the biggest three mistakes that you've made in your life? Maybe that was a bad investment decision. Maybe it was a poor relationship choice.

Or maybe you trusted the wrong person in your business. Well, I don't know about you, but if I could simply go back and unwind those events, I would be a hundred times better off than I am today, despite all of my efforts to grow. The advantages that we can gain in life by simply making better decisions far outweigh all of the hustle and grind that we could ever muster. This is the revelation that Keith Cunningham had nearly 30 years ago. After amassing a real estate fortune worth well over $100 million, Keith suddenly found himself filing for bankruptcy at the age of 40. At a time in your life when you're supposed to have it all figured out, he found himself with less than nothing.

He actually owed millions in taxes to the IRS thanks to something incredibly insidious that you're going to learn about today called phantom income. Well, this crisis forced Keith to reevaluate his life and how he made his decisions. and the process that he created as a result would change everything. He quickly rebuilt his fortune and has since dedicated his life to mentoring entrepreneurs like you and I so that we can learn from his experiences. He's one of the best in the world at what he does, which is why you'll find him on stage at every Tony Robbins event leading the lessons on business and entrepreneurship.

Today's episode is one that can radically change your life for the better, so get ready to take some notes and please help me welcome... Keith Cunningham. If you loved today's episode, make sure you head to selfmademan.com and tap into the world's first e-learning platform that's been built just for entrepreneurs. It's where you can get the knowledge and skills you need to take your business and life to the next level.

Welcome back. Today, we're joined by a gentleman that I've considered a mentor for many years and have learned a lot from. He's a fellow Austinite here in Texas and someone that...

I really am excited to introduce to you guys here today, Mr. Keith Cunningham. Keith, welcome to the show. Thank you very much.

Absolutely. Well, I've been looking forward to this interview for a very long time, especially having read a couple of your books, including the latest one, The Road Less Stupid, which has been absolutely fantastic. But I know a little bit about your story, Keith. I shop at some of the businesses that you own locally here around Austin.

And I pay attention to how you run those. And I've just learned a lot from you from an observation standpoint. So if you could, I'd love it if we could dive into your story, because you've got one hell of a history as an entrepreneur. You've had your victories.

You've had your defeats. But you probably have more experience than anybody else that I know when it comes to business. Thank you very much. I'm very, very flattered that you would have me on this podcast, Michael.

So thank you. I heard a. poem one time that goes like this, money talks, I can't deny.

I heard it once. It said goodbye. So that's probably a really good lead-in to the first 20 years of my 45-year career.

I started my career in the early 1970s after a graduate school, MBA, University of Texas. I got started with two guys here in Austin, Texas, who were not only my mentors, but they were icons in the business world. They happened to be, among other things, in cable television, and so I started my career in cable TV. With their commitment that if I went to work for them, they would teach me everything they knew.

I had a big concern about... whether or not the education I had gotten at University of Texas was going to be sufficient to allow me to be successful in the real world. And I knew that there was a gap between what we were learning in theory and what actually worked. And so when I took the job, a condition was that in effect, we would mind meld and they would download to me. their prior 30, 40 years worth of experience and get me up to speed as quickly as possible. And that's exactly what happened.

They were great mentors. And I ever since that mentorship from them and them hiring me, I've always been a big believer in having a mentor, having a guide, having somebody around you who has already made some of the mistakes and knows the pitfall, Falls can peek around corners and see trains coming that maybe we want to dodge or maybe trains coming that we want to catch. I was with them for about 10 or 11 years.

And in the early 1980s, there was a real estate boom that was happening in Texas. And I decided I could make more money faster in real estate than I could in cable television. And so I morphed. my career and morphed my expertise from raising money and doing deals in cable television to raising money and doing deals in real estate, which was a really good idea until it wasn't.

It's like most of our good ideas are really good. I love to tell people, Mike, all my problems started out as a good idea. I've yet to wake up in the morning and say, okay, today's the day that I'm going to screw up the rest of my life. But I had this good idea that real estate would be a great vehicle for me to morph into.

And so I did. And I made another stupid amount of money. I made a bunch of money in cable television.

I made a bunch more in real estate. My experience... experiences is that you never know how far you can go until you've gone too far.

So I pushed the outside of the envelope on the amount of debt and how aggressive I was in real estate. I had hundreds of millions of dollars of real estate, hundreds of millions of personal liability debt. And there's a great saying from Bill Gates that I really like. Bill Gates said, success is a lousy teacher because it lulls smart people into believing they know what they're doing.

There's a lot of truth to that. I think that I made the mistake that just because I caught a big wave, it made me a good swimmer. And I see over and over again, not only in my own career, but in other people's careers that I work with.

and are on my board of directors or that I advise, I see people make the mistake of they got lucky, but they think it's because of talent or expertise. And a little bit of both is usually required. Where it gets dangerous is when you say, okay, well, the reason I have achieved all this success is because I'm a little bit like Haley's Comet.

You know, a guy like me only comes around about once every 70 or 80 years or so. And that kind of was, it was a good way to describe my approach to business in the mid to late 1980s. As we all know, anybody that was around at that point or has read any of the business press, the late 1980s, early 1990s was a debacle. It was a total wipeout.

To give you an idea of how bad it was, in 2008-2009, there were a total of a dozen banks that failed. That's the total number of banks that failed. Between 1988 and 1992, 3,500 banks failed. So to say that it was cataclysmic would be an understatement.

It was a far-fetched... far worse than what happened in 2007, 2008. So I got caught in the middle of that. You know, success tends to breed hubris and comfort.

And so I was feeling very comfortable and very cocky. And all of a sudden, it turns out, Warren Buffett said, you never know who's swimming naked until the tide goes out. And the tide went out. And I had made a lot of money, but I also had a lot of debt, and my assets were no longer worth the amount of debt that I owed.

So I wasn't even a break-even. I was, you know, $50 or $100 million upside down. Literally, the amount I owed exceeded the amount that I had by that amount. I spent four years trading with my banks and my banks failed and then ultimately with the government who took over the banks, kind of trading with them, horse trading with them.

They wanted a little bit of my cash and a little bit of my property in exchange for reducing or eliminating the debt that I had. And I had hundreds of millions of dollars of debt and a very extensive... real estate portfolio. So it took me four years to get out of debt. Now, here's the interesting part.

I got back to zero, which was really, really good. I was proud of myself for just getting my gosh, I was so far upside down. W.C.

Fields said one time, I sure hope I break even on this deal. I really need the money. And I was in that same situation.

I just wanted to break even on this thing and get out. And. And my account, I did, I got even, and my accountants came to me and said, Keith, in the process of you getting out of all this debt and horse trading back and forth with the banks, you've created something called phantom income.

And phantom income happens when, if I owe a bank $10 million, but I only repay $6 million, then $4 million is income. Even though I didn't really ever have the cash, I just, it's income because they forgave $4 million in debt. So I said, okay, well, how big is the problem? And my accountants told me, well, you owe the IRS $9 million.

And I didn't have $9 million anymore. I used to, but I didn't now. And so on February the 12th, 1991, I did the worst thing imaginable for me. which is I had to declare personal bankruptcy because it was the only way out of this liability that I had to the IRS.

And around how old were you at the time? I was 40. Wow. I was 40 years old.

So to say that it was a midlife crisis would be an understatement. You know, I had made a ton. I had made $100 million.

I had lost it and all that and was broke by the time I was. 40. And 40 is supposed to, I just turned 40 this year. That's supposed to be when you're fat and comfortable, right?

Well, you know, the problem with 40 is you're still trying to recover from all of the irrational exuberance of the 30s. I can appreciate that. Yeah. So it was a wake-up call for me. And the way I describe this time period is a little bit like being a basketball player and it's halftime.

and you're trotting off the court to go to the locker room to get ready to play the second half. And that's kind of how I felt. As I was leaving the court to go to the locker room, I glanced at the school board, and the school board said it was 87-3. The other guy was winning. So here I am in my halftime.

I'm stone cold broke and I'm asking myself the question, how do I win this game? How do I win this game? What went wrong? And it turns out, how do I win this game is a bad question.

The question that I ultimately got to was, how am I going to play the second half? And it's not a matter of winning and losing, it's how I'm going to play. And once I've made that distinction, 18 months into this sabbatical that I had taken, where I grew a ponytail and got my ear pierced and started studying the world's religions and great philosophers and all theologies, I ultimately came to the conclusion that there's a big difference between making it and keeping it.

Those are two different skill sets. You can get lucky and make it, but you're not going to be lucky and keep it. It requires skills and tools.

And I had the tool belt, I just forgot to use it. And so I exited the sabbatical, cut my ponytail, and I stumbled across a strategy that allowed me to rebuild my net worth very, very quickly. I got the idea from Lee Iacocca, who was the number two guy under He Ford, who when he let, he was fired by He Ford.

And so here's the president of a major motor company that is unemployed. And at that time, Chrysler needed a CEO. So Chrysler hired Lee Iacocca to be their president. And Lee Iacocca said to Chrysler, look, I'll come be your CEO. And I want my compensation to be a dollar a year, but I want 15 or 20% of the stock.

If we fix it, we're all going to get rich. If I don't fix it, it only costs you a buck. And Chrysler did that deal, and Lee Iacocca got rich.

Well, I used that same strategy. I had a guy come to me. in the early 1990s who I knew in business. He had a company that was in trouble and he said, Keith, would you be willing to come in and help us fix this company? You know a lot about business. You know a lot about businesses that are in trouble.

You've dealt with this yourself. So come help us. And I cut that same deal, a very nominal salary in exchange for a chunk of the upside.

And the deal worked. And we all did. fabulously well.

And I did that same thing four different times over the ensuing six years. And one of them didn't work. It was too far gone or I didn't have the ability to fix it. But the other three worked spectacularly well. And what I know from my background is that turning around a business is the hardest thing to do.

There's nothing in business that's harder. than one that's sick that you're trying to save. It's far easier to start one than it is to turn one around. So I had this success. I was rebuilding my net worth, which, in fact, I rebuilt all of it over the years.

And I started buying businesses. I figured out that starting a business is probably more risky and has more brain damage than what I want to encourage. And so I started finding businesses that had robust revenue, cash flow, employees, processes, systems, a brand. And I would find really good businesses and I would buy them. And I would say that I copied a lot of what I learned from Warren Buffett on how he goes about approaching a deal.

I'm obviously much smaller. My deals are much smaller. But it's the same kind of strategy of let's find really good businesses that I want to hang on to.

I don't want to day trade. I'm not looking to flip. I'm buying them for the cash flow. I'm not buying them because I'm passionate about it. I'm buying them because these are businesses that I think have a long-term future.

And I know how to run them. So I built up a little small portfolio of businesses, half a dozen businesses. over the years and simultaneously began doing some teaching. I had a number of people that saw what I did, how I got through my bankruptcy and recovered, and I had a number of people come to me and say, how did you do that?

And so I started teaching, and actually that's been my primary vocation for the last... I'd say 20 years. I probably spend more time in the teaching world than I do anything else.

I still have a portfolio of businesses. I'm still active in our businesses, which I think makes me unique. I think most people that teach business, in large part, haven't done it. They understand the theory, but they've never really done it. They're not eating their own cooking, which is why there's so many really...

bad ideas out there that are getting peddled in the business book world. So I've spent a lot of time over the course of the last 20 years advising, coaching, being on a board of directors, teaching four-day MBA course that I wrote and I teach, how to buy or exit a business, all this stuff that I've done. in the teaching world is a complement to the work that I continue to do as a business guy.

So I'll just say this, to put Keith on a bumper sticker, I would probably say at my heart, I'm a business person. And the teaching part is the part that gives me fulfillment. I heard a very powerful distinction years and years ago, that pleasure...

is all about stimulating your senses. Happiness is from gratitude. Those are two entirely different things.

Pleasure and happiness are two different things. Success is getting what you want. Fulfillment is giving what you got. And I have been in a mode of transitioning over the course of the last 15, 20 years from a success-only mode to a success plus fulfillment mode.

And the fulfillment actually is a result of the teaching. The success is a result of the businesses that we own. Absolutely. Well, I've got a couple of questions that I want to circle back on for you real quick.

The first is, what was the answer to your question? When you said, how am I going to play the second half? What was your answer?

Boy, that is a great question. During my sabbatical, I had a Hindu guru. that I literally, I had studied under, probably one of the most insightful people I've ever met. And this guy said something to me, Mike, that resonated with me.

It still does every day. Every day, it's been 27 years since he said it to me, and every day I think about this. And what he said was this, Keith. hell on earth would be to meet the man you could have been.

When I talk about that, it makes the hair on the back of my neck stand up. His point to me was that there's a difference between day trading with your life, which I think I had probably done, and making a long-term investment. And, you know, what am I truly committed to achieving with my life? And ultimately, I would say it came down to this idea of mastery. You know, how can I design and then work towards a life that produces the outcomes that I think I want, as opposed to, you know, being in a barter, exchange, or day trading kind of mode and sleepwalking through the...

through the process. And so, you know, I decided that if I was going to play this thing, I needed to play it for keeps and not play it according to other people's standards, but instead to define my own vision of excellence and then get busy creating the life that would allow for that outcome. I've always said that if I had an opportunity for one last thought, one last thought, and then I died, I would love for that last thought to be, whoa, that was spectacular.

Yeah, wow. That is one of the best all-time quotes that I've ever heard, the hell on earth quote, because I totally agree. It means a lot. It stands for regret.

It stands for the fact that you didn't believe in your potential or didn't have the courage to pursue it. And wow, that's just unbelievable. I'm glad we circled back on that for sure.

So this is going to be a bit of a transition from something that deep to something that's not quite as deep, but I still want to cover it. What are some examples of some of the businesses that you... currently run still? And I'd love it if you could talk about some of them that are here in Austin. Well, so I'll talk about it, but I'll do it in a very general kind of way.

We happen to like the car wash business. That's a business that we've been in for a long, long time. These are car washes that have 70 or 80 employees.

They have full service detailing. Full service detailing. They're extremely profitable.

Obviously, very weather dependent. But we like those kinds of businesses. We like businesses that are basic.

We love the pest control business. I don't care what happens on the internet. I don't care what 17-year-old kid is sitting in his parents'garage in Palo Alto, California with a six-pack of jolt.

If you have bugs and you want your bugs killed, somebody's going to have to walk up to your house. and they're going to have a spray bottle of some sort. Now, what's in that bottle may change, but if you have a dirty car, you're not going to get it washed on the Internet. We like service kinds of businesses where we can differentiate ourselves, not based on price, but rather based on the service or the intimacy that we can create with our customers. None of the businesses we own are...

are the cheapest, including the work I do in teaching. We are not the cheapest, and that's not what I'm optimizing for. I believe that you can provide full value at full price and differentiate yourself from everybody else by not what you're doing, but how you're doing it.

You know, if I ask... If I ask everybody listening to this podcast to think about their favorite restaurant, the restaurant they would love to go to if they were really going to celebrate, the reality is nobody is thinking about McDonald's, and yet nobody has made more money in the history of mankind in the restaurant business than McDonald's. And it's not because they have a great product. It's not what they do.

It's how they do it. And the same thing is true with our business. It's true with every business.

Your success will have very little to do with what you do and everything to do with how you do it. And yet most business owners spend the majority of their time obsessing about what to do. You can name me any product or service.

I don't care what it is. It could be chewing gum. It could be shoelaces. It could be car washes.

It could be... seminar, podcast people. It could be anything. It doesn't matter. Give me one week, and in one week, I'll name at least one person who's made millions and at least 100 people who've gone broke doing the exact same thing.

It's never what you do. It's how you do it. And so what I'm looking for in our businesses is how do I build a moat?

How do I distinguish what we're doing from what everybody else is doing. And, you know, to give you an example, in the car wash business, it turns out that, as in every business, there's a big difference between what the product does and what the product offers. And most business people have not made that distinction. What our product does in the car wash business is it gets bugs off windshields. That's what it does.

And every other car wash out there, Spends all their time thinking about how do we get bugs off windshields? How do we do it consistently every single time? Well, I mean, look, that's important if you're going to get a car wash, but at the end of the day, that's not the most important. Our product, what it does is get bugs off windshields, but what it offers, the reason people wash their car has nothing to do with bugs on windshields.

The reason people wash their car is to feel better about themselves. It's the same exact reason why they shine their shoes. They want to feel better about themselves.

They feel better with shiny shoes. They feel better with a clean car. Well, good.

It turns out the business we're in is not the car wash business. We're in the self-esteem business. And most people have never made these kinds of distinctions, and so they wind up competing. based on what the product does instead of what the product offers. We just differentiate with all of our businesses from our competition, and therefore we have some very, very successful businesses.

You know, one of the primary questions that I try to get our customers and clients to think about is to acquire the ability to truly identify what it is that you're selling. which is what you just talked about. And it's not intuitive. That answer is not obvious. And for most new business owners, especially if they're brand new, they don't understand the difference between what you just mentioned, the product that you're selling and why people are actually buying it.

I have sold a lot of courses on marketing over the years, and nobody wants to buy a freaking course. Nobody wants to sit there and watch 25 hours of me on a screen flow, walk them through a marketing campaign. And I know that. I know that what they really want is to get rid of the financial pain that they have in life or to prove to their friends and family members who've doubted them that they have what it takes to become successful or to experience freedom and the freedom to do things with their family that they can't do at the moment.

And so really understand what you're actually selling is, I think, step number one to any successful business. So thank you so much for bringing that up. Thank you.

And those are two points that you've made so far today that have had to do with asking the right questions. And I think that's the perfect transition into the book that you're just coming out with. It's called The Road Less Stupid.

And I've dove into it. I think it's absolutely fantastic. And at least in the first few chapters so far, the primary theme seems to be... How do you ask yourself the right questions instead of the wrong ones so that you can get an answer that will, you know, help you achieve the goal that you're actually after? But if you could, let's dive into why you wrote this book.

I wrote this book because the dumb tax that I have paid over the years, which has been breathtaking, is at the root of all the... The misfires that I've had financially and in business, at the root of every single one of them, was a missed assumption or an overly optimistic assumption about the outcomes. I was all offense and no defense.

And yet, if you look at any championship team, look at who wins the Super Bowls. And nine times out of ten, it's the team with the number one defense, not the team with the number one offense. And yet, as business owners, we're not trained to think defensively.

It's actually the purpose of a board. A board is designed to help the business and the management identify risk and gotchas and what can go wrong. A board's job is not to help you design. how to grow the business.

That's up to the CEO and the management team. A board's job is to say, look, slow down here a little bit, cowboy. Let's figure out if there's something that could go wrong. My favorite question to ask when I teach business owners, which I have an opportunity to do literally all over the world, and I probably teach 30,000 to 40,000 people a year in my life. speeches and presentations, et cetera.

But my favorite question to ask is this, how much money would you have right now if I gave you the ability to unwind any three financial decisions you've ever made? And what most people will tell me is, oh my God, if I could unwind this decision or that decision, shoot, I'd have two times, I'd have five times, I'd have 20 times more money. And it turns out when you look...

Back in hindsight at those faulty decisions, more often than not, it's obvious the missed assumption or the overly optimistic, irrational exuberance that snuck in someplace. And nobody thought about the risk. And looking back on it, it's obvious.

But at the time, it wasn't. So I happen to my experience is I happen to believe that. The key to getting rich is doing fewer stupid things. If we could just do fewer stupid things, we'd have more money.

But what sabotages us is not that we aren't doing enough smart things. Shoot, we're doing enough smart things. It's just that we pepper in some incredibly stupid things that wind up sabotaging. So we go two steps forward, three steps backwards, and we wind up spending our lives financially treading water.

And it's not because there isn't an opportunity to be successful. It's because of the saboteurs. So this is another way of saying that business is an intellectual sport. Business and money and investing does not...

well to your emotions, your gut, and your glands. And most people are glandular when it comes to their businesses. They don't have the skills and tools or the intellectual discipline to really figure out, okay, what needs to happen here in order for this to be successful and what could go wrong.

I love the story of Albert Einstein. Albert Einstein was a professor at Princeton for 20 years and in his third semester of teaching, his fellow professors came to him and said, dude, you're going to have to change it up a little bit. And Albert looked at him and said, what are you talking about? And the fellow professor said, look, you're given the same exact final exam question every single semester and the students are on to you. They're smart.

They talked to each other, and they've all figured out, oh, Albert is not changing up the questions. And so the professor said to Albert, you've got to change this thing up. And Albert said, I'm not going to do it.

I'm going to keep asking the exact same questions every single final exam for as long as I teach at Princeton. And the professors looked at him and said, why? And he said, because the answers keep on changing. The answers keep on changing.

We miss that in business. A great idea five years ago could be a horrible idea today. A horrible idea today could be a terrific idea. 18 months from now. But we don't tend to think like that.

We are obsessed with finding answers. And so I like this idea a lot of smart people have really, really good answers. Geniuses have really, really good questions.

How do we design questions that give us insight that will allow us to produce the outcomes that we want? And we don't get that insight by finding answers. In fact, finding answers is what shuts the brain down. The instant we think we know the answer, we quit thinking. And more often than not, the answers, as you said just a second ago, it's not that obvious.

A lot of times you have to spend some time really thinking through. So, you know, I had a business associate that I... did some business with years and years ago who mentioned to me that he had a thinking time scheduled on his calendar for four o'clock in the morning two days later. I mean, four o'clock in the morning is ridiculous. But what was impressive is that he actually set aside time on his calendar to sit down and think.

And when I first heard that, I went, oh my gosh, that is brilliant. But I didn't do it. You know, all of us have learned things that we thought were really, really good, and then we don't follow up and do it.

Well, that all happened when I was in my 30s, and by the time I was in my 40s dealing with a bankruptcy, I had learned some valuable lessons. And so this idea of setting aside time for thinking is critical. And so for the last 28 years, I've had thinking time on my calendar.

And... You know, as many as three or four days a week, I'll set aside 45 minutes. I turn off the phones, turn off the computer, lock my door.

Everybody knows that I'm in a thinking time mode. I got a thinking chair. I got a thinking pen. I got a thinking journal.

And the key to thinking time is developing a very, very powerful question before the thinking time. And I spend 30 to 45 minutes. concentrating on this one question, attempting to come up with ideas or options or choices that weren't immediately obvious.

And sometimes the thinking time is on priorities, and sometimes it's on the machine that I need to build, the structure, organizational structure. I might have thinking time on marketing. I might have thinking time on customer customer. Service, I mean, one of my favorite questions that I ask is, how big would my business be if I still had every customer who ever tried me?

Turns out the reason our businesses are not growing has absolutely nothing to do with the fact that we're not adding enough new customers. We're adding new customers. Every one of us are.

The reason our businesses aren't growing is because we suck at keeping the customers we already got. It's crazy what we do. One of my favorite questions is, what don't I see?

What don't I see? And the one thing that none of us can see, and it's a reason to have a board, it's a reason to have a mentor, it's a reason to have a coach. The one thing none of us can see is our assumptions. So I think it makes sense to question our assumptions.

What assumptions am I making that give me what I see? These are incredibly powerful questions. And so sometimes they're bigger questions like that, and sometimes they're more blocking and tackling questions.

You know, a blocking and tackling question might be... What could I do to improve my situation or make things better? What must happen to cause customers to buy from me?

What must happen to keep them buying? What could cause them not to buy? Those are world-class questions.

Probably not answerable with just one or two thinking time sessions. So over the course of the last 28 years, I've developed hundreds and hundreds and hundreds. In fact, in The Road Less Stupid, I think there's over 700, I think there's 704 questions that are some of the best questions that I've developed.

And each chapter in The Road Less Stupid is, you know, two or three pages long. And... has some sort of story or some sort of runway that gets you to a thinking time mode.

And if you choose to adopt thinking time as a discipline, I think you'll wind up making more money and achieving your outcomes with a whole lot less brain damage. You know, one of the most important questions that you've talked about throughout your career as a teacher, and one that's brought up in the book as well, and And it's a question that I think about often personally, which is how do you move from the operator of a business to the owner of a business? And I was wondering if you could talk about that for a little bit. What a great question. Operators are doers.

Operators are, and most of us go through this stage. Unfortunately, most of us get stuck. at this stage because we don't have the skills and tools that will enable us to transition from operator to owner kind of role.

But operators think in terms of time and effort. They think in terms of controlling it. They think in terms of sweat.

They think in terms of doing it and are constantly in a reactionary kind of mode. There's never enough time. And the reason there's never enough time is because there's only one of you.

The motto of the operator is, if it's going to get done, then I guess I'm just going to have to do it. That's the motto that they live by. Nothing is ever good enough when it's done by someone else. And usually that's because the people that they've tried to hire in the past, they didn't know how to... hire.

They didn't know how to delegate. They abdicated instead of delegated. They did not hire A players.

They hired munchkins. They hired C players. They hired five footers and said, go dunk the ball.

Well, I'm going to tell you something. If you're five feet tall, a lot of things are going to happen, but dunking a basketball is not one of them. They're afraid to pay the money.

for an A player. And so the key in terms of skills and tools to transition from operator to owner are things like leverage. The big difference between an owner and an operator is that an owner has leverage and an operator doesn't.

And the leverage comes from A players, people that can dunk the ball, people that... that have got demonstrated execution intelligence. They're not people you're going to train. They're people that have been there, done that.

This is not their first rodeo. Leverage happens as a result of measurement and accountability. It's how do you build a dashboard with standards and measurements that enable the A player to be successful.

In other words, how do you build the yellow brick road that gets somebody from Munchkinville to Oz? I think owners have a desire to create a structure and a machine, and most operators abhor structure. It's structure is what's missing, but they don't want the structure. One of the reasons most people start their businesses to begin with is because they don't want to work for the man or have a job or have all that structure. I'll put this on a bumper sticker.

Opportunity without structure is chaos. Structure is the price that you have to pay for entrepreneurial success. Most people that are operators spend the majority of their time lurching and reacting to whatever the environment is in the moment and owners think and design and plan. Operators have no clue how to delegate. or how to hire somebody, make sure that there's clarity and engagement on getting the job done.

Most operators abdicate. They have a job to do. They hire somebody.

They throw the thing in the person's lap. 90 days goes by. The job ain't getting done. There's a missed expectation.

The culture isn't a fit, and the whole thing is a mess. Most operators are all about control. And that's what management does. Management is about control. Leadership is about inspire.

They're two entirely different things. And instead of me controlling the people that work for us and our businesses, I'd rather be the leader. So I've developed some processes, some tools that allow the dashboards to control. So it's not me having to control, it's the dashboards and the processes that we have that alert people to either hits, wins, or losses, misses, wins or misses on their performance. If you take a look, all of us can do this.

If you go back to high school, remember back to high school, junior high, some cases elementary school. There was always some kid in your class that made straight A's. I mean, it didn't matter what grade it was, what subject it was, they made straight A's. And these A players'favorite day of the year was report card day.

That's their favorite day. Now, for the C players, like me, report card day was the worst day. I hated report card days because I had to go to school, get my report card, had to come home, tell my parents, look, I made four C's, a D, and an F. And every time they'd look at me and say, oh, Keith, you can do better than this.

Dad, oh, man, I'm disappointed. A players go home and everybody says, oh, you're so smart. We love you. You're the greatest. Let me give you a clue.

This is for everybody. A players love to be measured. Anybody that doesn't want to be measured doesn't want to be held accountable. And accountability is critical for success.

It's critical for the transition from operator to owner. So there are skills and tools that are required in order to be an owner. And the problem most operators have is they're good at their profession, but nobody's ever taught them the skills and tools. And that's what all of my teaching, the four-day MBA, the board of directors, the books I write, the software I've developed, every bit of that is designed as skills and tools for the owner of a business so that I can facilitate the transition from operator to owner.

So I would... highly, highly recommend, guys, if you're listening to this, obviously go pick up a copy of the book, but also take advantage of 4 Day MBA and Keith's Boardroom program. Keith, I've got a few of my really good friends, Fernando and Tim and Matt, who essentially run my first business that I built today.

And they've been going through Boardroom. And the transformation they've seen over the last year from, let's just say, operators to owners has been phenomenal. And for the first time in their career as entrepreneurs, they're growing a real sustainable business with predictable revenue and a budget. And they're seeing their business grow substantially. So it's just been awesome.

Yeah, they're all stars. They are like most people that I work with, Mike. They want the outcome, but they lack clarity and certainty.

of the tools and the execution in order to create those outcomes and deliverables. And that's what I teach. I'm glad you said that.

The way most people start with me is they may have heard me speak sometime, like on this podcast. They do a little research on the internet and find our website, Keys to the Vault. They may read a book. And ultimately, they wind up coming to the four-day MBA.

And from there, it can transition into other things we do like the boardroom. And that's really what Fernando and some of those guys, it's really what the bulk of the people do that wind up studying with me long term. They get a taste and then they decide they want more than a taste. They want an entire meal. And so the people that do what I teach inevitably will achieve the success that they want.

It's not that hard. It's not easy, but it's skills and tools. And if you learn the skills and tools, then you can get the results you want. You just got to learn them and then apply them.

And you're right. Those guys have done a phenomenal job, and I'm very proud of them. Well, you know what the real issue is here, and I've just observed this in myself and in others, which is the fact that You can achieve some level of financial success as an entrepreneur in the online world without having any real actual business acumen. Meaning, you can figure out how to sell products on Amazon or you can write an e-book and figure out how to sell that or record a webinar and figure out how to sell something with that. And essentially, you can just make a seven-figure business learning how to sell something online with that particular skill set.

But what's never really being taught outside of what you teach, and honestly, I can't think of anyone else who teaches how to run an actual business, are the steps beyond that. Okay, great. I've figured out how to create an offer that sells.

And people will find out within two to three years that offer fades and then all of a sudden they're back to square one and they don't have a business anymore. Or they assume the money is going to continue to roll in as it is indefinitely and forever and they'll change their lifestyle. They'll change...

their offices and upgrade all of their staff and everything like that. And then they don't know how to read financial reports or through your software, how to look for patterns from a revenue standpoint that could be pointing to a really tough challenge in the months ahead. And they find themselves starting back over at square one and never really getting that education on how to actually build a real business.

And I think that's the difference between what you teach and what everything else out there being offered is about. I agree that there's a big difference between being professionally competent and being financially, from a business standpoint, successful. Having a successful business.

I know lots and lots of professionals that... They've learned the skills of the profession and they're competent. They're extremely competent, but they are missing the skills of building, designing, running, leading a successful business. I think both are required. It's not one is more important than the other.

Both are required. Somebody's got to know professionally what to do in your world, the online world. Somebody's got to know. how all this works. And since there's a limit to how much time any of us have, it's the one thing that you and I both have in common with each other and we have in common with Bill Gates.

We all have the exact same amount of time. And so the question is, how do I leverage and design a machine, a structure, an organization chart with A players that allow this business to grow beyond what it can if it's just a solopreneur. Some businesses operate just fine. I don't happen to be a believer that if you have a job or if you are a solopreneur, then you're somehow a failure or a loser. I think that's crazy.

I just think that if you want more than... The key is going to be to learn the skills and tools that will give you access to the success that you want. It's no different than golf or hockey or downhill skiing. Lindsey Vonn is not winning gold medals or any medals because she got her mind right. The's winning gold medals because she's extremely competent at what she does.

And she spent years and years on the practice field to get that way. The problem is downhill skiing is not particularly leverageable. The has to be the one to do the work.

It doesn't mean that she isn't successful or that she's a loser. It just means, okay, well, that's what she's designed. It's the difference between there's a Michael Dell model and there's a Michael Jordan model.

Michael Jordan, in order to make money back in the day when he was shooting hoops, had to be on the court, and he had to be the guy shooting the hoops. Tiger Woods has to be the guy making the putt. That's a lower leverage, not unleverageable, but it's a lower leverage opportunity. They have a different model than Michael Dell.

Michael Dell's model was he put together the first few computers, and then he figured out, oh, he can hire other people to do some of this. He just has to make sure they're A players. He has to put them in the right structure and the right culture with the right leadership, with the right metrics. build the yellow brick road so they can be successful.

And so I agree with you, Mike, that it's this idea of adding the additional tools is critical to making the transition from operator to owner. Absolutely. Well, Keith, we're coming up on our time limit here, and I want to be respectful of that.

This has been... Been such a treat. Thank you so much for the time today.

And obviously, people can go to Amazon and pick up a copy of The Road Less Stupid, advice from the chairman of the board. And guys, I'd also highly recommend Keith's other books as well, Keys to the Vault, being another fantastic one that I have on my bookshelf. But Keith, where can people go to connect with you, learn more about your coaching and boardroom and the other services that you offer? So you can easily go to our website, Keys to the Vault. dot com.

You can also shoot us an email at info at keys to the vault dot com. You can call us on the phone at 512-231-9944. And we're happy to talk to you and explain to you what we do and how our courses work. All of our courses are relatively small, maybe 50, 60 people.

I teach 100 percent of them. We don't have any guest speakers. I've always felt like if you, the people that come and study with me, Mike, want hay before it's been through the horse. And so I'm the person who does all the teaching.

So, you know, contact us. And if you feel like we can help you do a better job of learning skills and tools and designing your business, we'd be happy to engage with you. That'd be phenomenal.

Well, Keith, thank you so much. This has been fantastic. It's really a pleasure to have you on the show.

And thank you so much for your contribution to all of us entrepreneurs out here. My pleasure. Thank you, Mike.

All right, guys. Thanks so much for listening. As always, make sure you go check out the new selfmademan.com platform.

That's where this podcast episode will live as well. And if you loved this show in particular, please go leave us a review on iTunes, which would be unbelievably appreciated. So thank you so much, and we'll see you next week.

Take care.

Transcript for:Self-Made Man Podcast with Keith Cunningham

Transcript for:
Self-Made Man Podcast with Keith Cunningham