Ep478: Anthony Iannarino – Startups Need Strong Execution Skills

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risks but to win big, you've got to reduce it, go to my worst investment ever.com and join our Facebook group to connect with our community of guests. And fellow listeners. Fellow risk takers. This is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guest, Anthony Annarino. Anthony, are you ready to rock?

Anthony Iannarino 00:37
I am ready when you said this is my worst investment. I thought you were talking about the time you're spending with me.

Andrew Stotz 00:42
Yes, this is definitely not my worst investment. In fact, as listeners know, the golden nuggets that we learn from guests like you turns out to be some of our best investments of time. So really excited to have you on the show. And let me introduce you to the audience. And you know, before I turn on the recorder, I even said, ladies and gentlemen, the reason why I like to have people from sales, marketing, and many other areas that I know nothing about or very little about, is because I want to learn what they know. So Anthony, Anna Reno, is a writer, a speaker, and entrepreneur, and an author of three books on sales. The only sales guide you'll ever need the lost art of closing and eat their lunch, he writes and publishes every day at WWW dot the sales blog.com. Anthony take a minute in Philly, for the tidbits about your life.

Anthony Iannarino 01:44
Oh, there's so many tidbits, I'll just give you the best story that I can tell you in 1992. I was in Los Angeles, California fronting a hair metal band. So there you go. There's no hair anymore. And I had a grand mal seizure, walking up the steps to my Brentwood apartment. And I was diagnosed with an arterial venous malformation, which is a big group of arteries and veins that go into a knot on the back of my front right temporal lobe. I was operated on two times one time where they glue that shut with the type of epoxy as an experimental procedure. And the next day they opened up my skull, cut out the two arteries and veins that were holding the knot in place. And then cut out a piece of the back front temporal right lobe without telling me like they didn't know that they were going to need to do that. So I woke up and they're like, Well, we had to cut a piece of your brain off and you're like, Wow, I did not expect that. You know that they were going to take out the AVM after that I went to college, I went to law school, I went to Harvard Business School became an entrepreneur and now I'm here.

Andrew Stotz 02:54
And how did that experience shaped your life and the way you look at life?

Anthony Iannarino 02:59
Like this fast, you recognize what's important, the only thing that's important other relationships you have with other human beings. Everything else is nothing. Hmm.

Andrew Stotz 03:09
That's great advice. I mean, a lot of people are like, how do I know what to focus on? It's so overwhelming these days and all that. But you just heard Anthony snap his fingers and say, it's about the relationships. So ladies and gentlemen, there's one piece of learning right there, who and who are the most important relationships? Where are they around you identify them? And take a piece of advice from Anthony right now and invest in them in some way. Right now, today? Well, let me just ask you a little bit more about sales. You know, as I said, not when I was young, I studied finance. And I thought to myself, Oh, sales is easy. It's common sense. But finance is hard, you know, formulas and calculations. how wrong I was. In fact, formulas are really easy to learn and memorize and apply. But sales is much more complex. There's just not that exact structure that's in finance. So tell us a little bit. I mean, I have a whole new respect for sales. But tell us about what your experiences with sales, what people will find by going to your website, reading and books. What is it about you and sales teach us?

Anthony Iannarino 04:28
Let me just try to pull these two things together. So finance is a set of rules, right? It's a set of rules. So you're doing calculations. Now it's good that you learned how to do them on paper when you learned that, but now it's a spreadsheet, right? You type in some numbers. It does all the math for you. That doesn't happen in sales. So sales is a dynamic complex discussion between two people, or maybe more than two people about significant change. And what we do when we sell is we go into someone's world. And we say, there's a way for you to get a better result than you're getting right now, in order to do that, I'm gonna have to teach you some things so that you can understand how you're going to need to make changes to be able to generate the results that you want. So I would say, Andrew, whenever you're teaching you're selling, and you're giving somebody the ability to get a better result than they could get without you. So your academy is about how do I help other people generate a result that they could not generate, without my help, and this particular information. So in the world right now, a lot of people think there's no more information disparity. But there's tremendous information disparity. So Andrew spent his whole life studying how people fail to know how to win. So I don't have that information. So Andrew was one up, I am one down. So for me to get better, Andrew has to depart his information to me so that I'm not one down anymore. Now, when it comes to sales, and we have a big b2b deal on the line, Andrew, you're gonna want me to go and handle that, because I've spent since I was 15 years old, I've been selling. So I'm one up in this particular area, because I have information that you don't have, but I'll give you the best school I can give you. Whenever you ask a client for anything, you're responsible for trading them enough value that they can say yes. So if I asked you for a meeting, and I say I just want to talk about me, and all the stuff I could sell you and you're like, well, that doesn't seem like a great way to spend my time. But if I said, I want to share with you the four trends that I think are gonna have the biggest impact on your audience as it pertains to the investments that they make during this post pandemic, and still pandemic time, you would go like, I'd be interested to know what you think those four forces are, because that would be useful to me. So if you just decide I have to be useful to other people, I have to be able to cover their information disparity, you're mostly on the right track.

Andrew Stotz 07:00
You know, there's two words that I took from what you just said, the first one is change. And the second one is value. Yeah. And I never really thought about it, you know, about how sales is change. I mean, somebody you're asking somebody to change. And, you know, in my online courses, you know, there's a statistic that you hear, and I have seen played out, and that is 10% of people who joined online courses finished them. Right? And what I see is that, you know, you could look at that and say, hey, look, I made good money on those 90 Because I didn't even apply any resources. But when I look at that, I feel like I really failed. I didn't get the information to them. And so I started something called the valuation masterclass Boot Camp, where I said, Look, we're going to set a six week schedule, I'm going to drip feed this information to you, I'm going to track your performance and announce it in the group, we're going to have group daily meetings where we're going to follow up, you're going to have a team, you're going to have accountability. All of a sudden, it changed the dynamic of the course, where people started to feel confident that I could change them that by attending this, they would change themselves. And I would provide the framework for that. So we call that transformation, this is the transformation you are going to go through. And that's the same as the word change. So right. What are your thoughts on that? Am I going in the right direction? What do you think?

Anthony Iannarino 08:24
Absolutely. I have this idea for a gym, like a chain of gyms. And it will be $75 a month for a membership. If you go four times a week, but if you don't go four times a week, and we don't swipe your card, it's $300 a month. I think that's the way it works. Because what happens is somebody they're like, I'm going to get in shape. I'm going to get a gym membership and they get the gym membership, right? And they're like, I got a gym membership. I solved my problem. I have a gym membership. Now, your problems just beginning. Robin's just getting started because you're not disciplined enough to go to the gym. And so it doesn't matter how many gym memberships you have. You don't even need one. I mean, you could do it with bodyweight and be okay. But that's the thing when they think they've solved the problem. Like they bought the course. So I solved my problem. No, you have to this is the difference between somebody buying something in somebody committing to something. Hmm, well, you say you have to be here every day. That's a commitment.

Andrew Stotz 09:29
We could start that gym together because I have another angle for that gym. Being a risk management expert. I have researched the top five injuries that happen at gyms. I know exactly what they are. I know how they happen. I have all the information about how they couldn't be prevented, presented, prevented. And I've even got posters that I've created to describe them. and how to prevent them. My idea is to put them up on the wall to say, when you come in this gym, you're going to be paying money. But the problem is 57% of people who come to gyms within three months of coming, they will have injured themselves and can never do it again. And these are the five most common risks that you're going to face. And we'll get our team is going to train you. And then from that,

Anthony Iannarino 10:22
boom, rotator cuff, you have a rotator cuff. That's gotta be one of them. Exactly. Yeah.

Andrew Stotz 10:28
Yes. And knee injury elbow. Yep. It's just very common thing. So we'll combine it with your payment structure and my risk management. And hopefully, at least we'll get some customers. Now, the other thing I want to just mention is the other thing I took away, I said two words, the first was change. The second was value. And you know, you've got what you were saying is that you got to offer enough value for them to say yes, and way I always talk about it with my team. As I said, Look, if we were if I was on this podcast, for instance, we talked about a lead magnet, we talked about how we attract people, I said, if I was to say, go to my worst investment, ever.com, sign up and get your $10,000 for free. Everybody's gonna come, and they're gonna sign up, I'm gonna make it really easy. They come they sign up, they get their $10,000 done. So don't tell me that people won't act, people will act when they see value that is worth taking the action. Now, ladies and gentlemen, I'm not offering $10,000 I am offering for you to join our Facebook group. But that is the concept of value. From my perspective, anything else you would teach us about? What you mean by enough value?

Anthony Iannarino 11:41
What does this decision maker do?

Andrew Stotz 11:47
has to make a decision, I guess,

Anthony Iannarino 11:49
right? So if you had to make a decision in a world of uncertainty, what do you think you would find valuable?

Andrew Stotz 11:59
Well, I didn't get it. If you can help me reduce my risk in making this decision.

Anthony Iannarino 12:04
That will be very, very valuable, wouldn't it? Yeah. And what if I could tell you all the factors you need to consider, and why some might serve you better than others? Because that'd be helpful.

Andrew Stotz 12:16
That would help me explain because I don't, let's say I don't understand the whole thing, what's available out there. And if you can help me to understand that, that's definitely valuable.

Anthony Iannarino 12:25
So I think that what you're doing when you're selling is decision enablement. I'm helping enable you to make a decision. So I don't know where to start your journey. But I know where I pick you up and your journey, and I figure out what you know, and what you don't know. And then I start imparting my ideas and my insights to you. So you no longer have the disparity and you go, Oh, I can see why this would be more important than that. And then I'm helping you make a decision. So for a decision maker, somebody who's buying and is going into change, they need certainty, that they can make a decision, they need to avoid risk. They need to be able to get their team to go along with it, and it needs to produce a better result that they want. So that is the game that we play in sales is how do we help them make the best decision and get the best results?

Andrew Stotz 13:12
You know, we inadvertently went into this process before we turn on the recorder, because I asked you about your camera. And you said I have a Canon five d, mark four, it costs about $2,500. And also, my lens cost about $2,500. Now I have a Logitech BRIO. And I've been thinking about replacing it with a better camera. And it's overwhelming. I don't have the interest or the time to look at 10 different, you know, options. And I don't have the knowledge to be able to do that. So whether it's you know, someone like yourself saying, Here's what I've used, here's what's worked. Or a YouTube video where a guy goes a top 10 cameras to look even then I don't want the top 10 I just really need to know, the top three or whatever the top one. That's the one I'm only gonna buy one. Yeah, yeah,

Anthony Iannarino 14:09
I'll send you, I'll send you a picture of the teleprompter. And the order sheet that I got it from in the camera. So you if you want to. It's very nice looking and like doing these kinds of shows, you know, in your talking to the person because they're on a teleprompter in front of you. And you got a nice camera. It's just a better experience.

Andrew Stotz 14:30
Maybe we can include that in the show notes so people can see your setup and what you're doing and get some learning right there. Boy, we're learning a lot and now it's time to share your worst investment ever. And since no one goes into their worst investment thinking will be tell us a bit about the circumstances leading up to it then tell us your story.

Anthony Iannarino 14:51
Okay, so I have some family businesses and one of the partners has a son who hangs out with interesting And he found some interesting people who were engineers. And they were at a very large college here in the city of Columbus, Ohio. And they were working on a project. And the project was around nanoparticles. So a very esoteric kind of thing. But something that is growing, it's a field that's growing right now. And they found out how to do something that no one was able to do. So this is the part that is going to get your attention. So you hear this, no one has been able to do this with nanoparticles, but they know it's possible. And what happened was, they figured out how to take these particles and put them in such a configuration, that you would be able to put them on the wing of an airplane, and you would not have the possibility of it freezing. Nor would lightning strike do anything to the Wing or the plane whatsoever. There's a whole bunch of practical applications when Mel's windows are down 30% of the time, because ice causes them to freeze and one of the blades falls off and somebody has to do something, if you were able to put nanoparticles on that and run 1% of the the electricity coming through the windmill, just use 1% of it. So you can capture the other 99 You would never have to the ice, they would run constantly. So there's tons of applications for this. It's an amazing, amazing discovery that they found. And no one believed them. But what they did is when they got our engagement, my team, we started bringing in scientists to show them what they done. And what they had done is they had put these nanoparticles in a plastic filament about this thick. And they would tell the scientists put your hand on this plastic. And whenever it gets too hot, then you can just raise your hand up. And they said, well, there's no possible way that you can dry a current through that in this plastic, they will never get warm. And they said, Okay, put your hand on it. Whenever you feel like you need to lift it up, lift it up, they're like lifting it up. Their hand goes right up. Because there's a current coming through there. And it's heating up to like 150 degrees in seconds. I mean, so they proved it. And so I watched scientist after scientist say, You can't do that. And we put your hand back on there and try it. Try it again if you want to. And they would look at it, and they would inspect it and they would go Wow, you did it. Okay, you did it. Well, we never told anybody how we did it. We never told anyone. But we started putting cash into this. And we started to build some equipment, then we started to move down the path of helping them do this. Okay, so that part's the happy part of the story. So you know, at some point, things go wrong. Well, what started to go wrong was we needed more money, because we needed to build something a much bigger structure. So the two brothers who had figured this out while they were in college, they decided what we should do is go find somebody that would help us with a real investment, far more than the million dollars that we had in our group had 1,200,000. But we needed somebody bigger. So I'm being the sales guy, right. So who should be calling and talking to people about money. Me, it's what I do for a living. So I talk about money all the time, it's not a problem. And I find a $10 billion company that says, we'll send a truck to get everything that you have, we'll bring it down here, we've got our scientists, we're going to give you all of the equipment, everything that you need to develop this. And we're going to give you a bridge loan, to make sure that everything is going to be okay for you guys while we do this process together. And at the same time, they were talking to another person here in Ohio. And that other person really wanted to own the whole thing. He really wanted to own the whole thing. And so what he did without our knowing was he went to the two brothers and said, I'm going to give you this giant amount of cash. And I'm going to give you $150,000 salary each guy, but you have to come up here to where we are in northern Ohio, so that you can be near all of the equipment. And so we have all the engineers and everything we need to do this. So I said I think the other way is a better way to go. It's a $10 billion company. They have no end of resources. They're not a small Ohio Company, but they liked the money. $150,000 very nice salary when you're 24 like and you're 24 That's a pretty good salary. You can make it on that. Now you got to be a little thrifty, but not that thrifty, right. So they move up there. We start building this thing and they decide that the quality of life is not what they wanted it to They, okay, they're 2425 years old. And their quality of life is not good where they are, they're making $150,000. And we got a half a million dollar piece of equipment being built. At the same time. When they decide, I want to spend more time with my girlfriend, I'm not going to live up here. Well, the deal was, they're going to live up there until we build this thing. So the thing is being built, there's a whole bunch of problems with it being built. And they're not there to handle any of the problems. So now there's a conflict because this person gave $500,000. And now he's paying these people, nothing is getting done. And we're not getting any closer. When they decide this is too much, we're bowing out of this thing completely. So at that point in time, everybody rushes in, everybody's got money. So what happens? I don't know if you've heard of this concept called the sunk cost fallacy. Maybe maybe, maybe you've heard of that one? No, yeah. People are like, no, no, no, keep them in, keep them in, we need them to get this thing done. And eventually, they gave up the whole thing. And there's still a half a million dollar piece of equipment sitting there that was designed to do this, that's never been able to be turned on or used appropriately. After this time went by so the what makes it the worst investment ever, is losing $1,200,000. So that's bad. But what's worse, is that they lost the time. So during that time, other people were working on these problems. And by the time we could do anything with the IP, somebody had already leaked from them, and had already created a way to do it a different way to do it. But an equally effective way to do it. So even the IP at the end was worth nothing. Ah,

Andrew Stotz 21:55
so how would you describe the lessons that you learned from this,

Anthony Iannarino 22:02
there should have been a very, very strong contract as to who was going to make any business decisions for the company. But these two guys had more power over most of the people that were invested in this, had it been my decision, it would have gone to the $10 billion company who would have had a much easier time than way more resources to do this. And it would have happened a lot faster. So I would have either insisted like we have board members, and the board members are going to make the decision. And then I would have avoided that. So the first thing that I learned was like when you have that much money in a single deal, you got to have representation there. And you got a very different type of contract that we had with them. So that was a terrible mistake, one that I would never make again. Yeah. And the second thing I learned, whenever you go into an investment, you're not betting on the horse, you're betting on the jockey. And so if the jockey is an unreliable millennial who wants to spend more time with his girlfriend, you got the wrong job. So I'm going to tell you, there's a guy here who came to me and he said, I want you to invest in my company. I didn't know him. But I've recognized a good jockey. And I gave him $5,000.02 years later, he gave me back $89,000. And like, I had to give him money. I never met him, but one time, but I'm like, he's going to turn himself inside out. He's going to turn himself. So he sold his business to somebody for $160 million. And that's the difference between the jockey and the horse, right?

Andrew Stotz 23:37
Yep, yep. Maybe I'll share it. Go ahead.

Anthony Iannarino 23:41
We would never go into the sunk cost fallacy again, like I did that. And all you're gonna do is just make it worse. All you're doing is feeding a fire.

Andrew Stotz 23:54
There's a lot to that I have a few things to say. First, on the sunk cost fallacy, one of the best ways to deal with is ask the question, knowing what I know now about this situation, if it came to me now, would I invest in it? Would I engage in it? You know? And if the answer is no, in the answer is no, you got to stop. And I just had a conversation with someone and I use this all the time in decision making. And I asked him, knowing what you know about this particular person? Would you hire them if they came to you today applying for a job? And the answer at that discussion was no. And I said, there's your insight. Now, what are you gonna do about it? Yeah, the second thing is, you know, what? Peter Schiff, one of my favorite guys who's got a podcast and all that he always talks about on Labor Day. He said, We should have an entrepreneur day. Why don't we have an entrepreneur day? We should be celebrating entrepreneurs. What do entrepreneurs do? They organize, they find, and they coordinate resources, right. And coordinating resources can often be like herding cats, you know, you, you know, this guy's fallen down and that one, you know, it's got other problems, this one's you know, someone's facing legitimate problems in their family lives and, and then there's these resources and then there's the cash that's needed and then there's getting the buy in, and then there's getting the new cat, you know, there's just so many resources that you have to manage. And, you know, I just like to remind ourselves that when we are investing in business, particularly startups, you know, it's a huge amount of resource management, and every decision really, really matters. And then the third thing I would say is, there's a structure I, my worst investment was an investment in a startup company in particular, like a tech company. And I developed a framework that I use, which is first trust, if I don't trust the person, I don't invest. Second, this is for kind of startup. Second is idea is the idea. Good. Now, in this case, you've described it, the idea is good. Third question, can they execute? And then the fourth question is, do they have the capital, and it's not necessarily them that has the capital, I may help them get the capital, but what I really want to make sure is I'm not the only provider of capital, right? So trust, idea, execution, capital, that is at least the foundation of whether I would get involved. And then you know, try to make value out of it.

Anthony Iannarino 26:33
I will change your order. I will go trust, execution. Idea, capital, I have an execution problem. So my, I had to reverse the order for me from now on, like, can they execute like, no matter how good the idea what your idea is? I don't care what the idea is, if you can't execute it, if you're not learning. You know, when somebody like the guy was telling you about that I had a good experience was he said, How many days? How many hours? 24 minus seven, so he's 17. Seven, he's working 17 He's gonna succeed. Amazon gave him money. A whole bunch of people gave him money he hustled. Yeah. I mean, he did a good job.

Andrew Stotz 27:24
So basil, I? Yep. So based on what you learned from this story, and what you continue to learn, what action, would you recommend our listeners take? When this opportunity face they face this opportunity? How are they going to avoid suffering the same fate?

Anthony Iannarino 27:41
Yeah, you're going to have to trust more than just the individual, you're going to have to trust that they're the right person to bring that product or idea to life. Sometimes, I mean, and I get to see things because I do some investing. And so people bring me things. But all of them are good ideas, right? They all look like good ideas. They all have value to them at some level. But when you're looking at that, you have to think is this the person that can bring this thing to life, and sometimes the person that has the idea, and I think you know, this probably better than I do, they're not the right one to do it. They're the right person to have maybe the IP and to own it. But that should have been taken away from those two guys. Like right away, it should have been taken away and given to somebody who is a reliable, trustworthy party that could actually execute it. Everybody would have made. I'm going to tell you, I think this was a billion dollars, I think it was a million dollar idea. Because it would eliminate so much other things that are used, that this could have been used for. But

Andrew Stotz 28:47
no, I think that's way to summarize the, your advice is what you said previously, which is you bet on the jockey, not the horse. Right. Alright, last question. What's your number one goal for the next 12 months?

Anthony Iannarino 29:05
My fourth book is on birthing it right now while we're talking. So I've got two more chapters to to just clean up and then that thing is going to come out February or March next year, and I'm going to spend a year teaching people how to be one up and help the clients by leading them to the better results that they need.

Andrew Stotz 29:25
Okay, that's fantastic. That's going to be I know how challenging it is to write a book. And my books are all kind of short, but I know that it takes a lot out of you, but um, it brings a lot to the world. What is the best way for the audience to engage with you? You've got so many different books, you've got your Sunday newsletter, you've got lots of different stuff, where is the best place for people to get the best of you?

Anthony Iannarino 29:55
Well, I'll give you two choices. So if you go to the sales blog.com So the sales blog.com forward slash newsletter, that's my best work comes to you every Sunday and an email. If you really like books, and you're interested in being a better human being and a more effective one, then the Red Book behind me over there, the only sales guide, you'll ever need a terrible name for a first book when you have a three book deal. Like I asked, like, why don't we name it this and they're like, it's a great name. And I'm like, but I'm writing two more books in the next two years. And like no one will remember everybody remembered everybody remembered it didn't work that Wait a minute. Yeah, did you just tell me it was the only sales guy. It's just the title of that book is about human effectiveness. So if you're into success and trying to improve, that's

Andrew Stotz 30:49
fantastic. I'll have links to that and all the other links in the show notes. Listeners, there you have it another story of loss to keep you winning. Remember to go to my worst investment ever.com and join our Facebook group to connect with our community of guests and fellow listeners. As we conclude, Anthony, I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Anthony Iannarino 31:25
I always have the same parting words for every audience. Do good work, like you're here for a short time. Make a cow

Andrew Stotz 31:33
do good work. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host Andrew Stotz sang. I'll see you on the upside.