Ep285: Rune Sovndahl – A Business Is Only as Strong as Its Weakest Link

Andrew Stotz 00:00
So Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that winning investing you must take risk but to win big, you've got to reduce it. This episode is sponsored by a stance Academy which offers online courses that help investors, aspiring professionals, business leaders and even beginners to improve the finances of their lives and their businesses. Go to my worst investment ever.com right now and to claim your discount on the course. that excites you the most fellow risk takers. This is your worst podcast host Andrew Stotz, and I'm here with featured guest rune Sylvan doll rune. Are you ready to rock? Yeah, I'm

Rune Sovndahl 00:48
ready to rock. It's really nice to be here, Andrew. And it's such a big topic. This is not something that's taught in school.

Andrew Stotz 00:56
Exactly. And that's what makes it exciting. Let me introduce you to the audience. So rune is the co founder of fantastic services and international brand with 10 plus years of experience that combines technological innovations with this bespoke customer care to deliver services for the home, office and garden. Rooney is Danish, but moved to London 20 years ago to study for a BA in Business Information System Design at Southbank University. Following completion of his degree, he was accepted into the graduate program with British Telecom, in 2003, also established the European young professionals committee in London, and was involved in its website creation as well as the recruitment of more than 200 new members. Most recently, he has worked for last minute.com as head of SEO ruin take a minute, and Philly further tidbits about your life.

Rune Sovndahl 01:52
My life has always been an entrepreneurial life. Yes, there's a couple of corporate jobs in there. And there's a couple

01:57
of big

Rune Sovndahl 01:59
blue chip companies say what the business I'm in now is about matching people with their gardeners and the cleaners. It's like an Uber for services consulting services is global now, we're opening in more countries and opening more franchises. As a person, which is what we're going to be discussing today, I think, because we're going to talk about what you do on a journey upwards. I mean, I can tell one little amazing thing about fantastic services is that we bootstrapped the company with about 3000 pounds in cash each when we started, and we do more than 40 million in turnover now 10 years later, it's actually 12 years. But still, it's amazing. It's a detriment to some of the things I think that what I wanted to share today is quite an interesting, quite interesting story. Because it's about trust. It's about belief.

Andrew Stotz 02:50
Okay, fantastic. And I mean, bootstrapping is such an underrated thing. These days, everybody thinks they got to raise capital and all that. But I think most people never realize beginners, particularly never realize all the pressures and obligations that that brings. And if you can bootstrap, the other thing means you're getting the profit as fast as possible. No choice. So I'd love to learn more. So let's get into it. Well, now it's time to share your worst investment ever. And since no one ever goes into their worst investment, thinking it will be. Tell us a bit about the circumstances leading up to it, and then tell us your story.

Rune Sovndahl 03:29
So the circumstances was, you know, like, obviously, we had made, we, we actually within the first 12 months of fantastic service started making profit. So we started putting a little bit of money aside. And every year we put a little bit more money aside, you know, we, we had a very good rule about investing 80% of the profit back into the business because that's something that I think drives a business growth. Because it's very easy for ourselves to go into a level of saying, well, you become complacent, right? You don't create a multimillion pound brand, overnight by not investing in it, right. And we knew that we didn't necessarily have to do more than living of it. Right? So we were scraping through making very little salaries and so forth. And you know, we actually lived in a shared apartment, the first three years, you know, we were sitting on the sofa, this is how you do it strapped, right. You know, everything was done, you know, like bootstrapping, bootstrapping everything else and it's a whole other story. And you can follow that on my other podcast and you can follow that on my LinkedIn but the situation was this that so over a couple of years, I had amassed some money, not particularly a lot of money. But I knew that you know, we were banking so much on fantastic and so you know, I before that I dabbled in property I dabble in a lot of other investments I'd trade you know, is this is my 12th startup. You know, and most successful to date, but I wanted to disinvest I wanted to say like let's put a little bit of money on it. I came across this thing and I think a lot of people look at This stuff because I was looking at what are the so not get rich quick, but what are the passive income businesses? So I was looking at this stuff was it property, property or something that I was already in. So it wasn't really the case. Then I came across this Fulfillment by Amazon or Amazon reselling. Which, in theory, I think a lot of people moving on to this, and there's a couple caveats with it. And actually, it's not about business. I don't think it's a business. And I think I'll explain that when we go through it. But it's, I don't think it's a business. And I think the lesson is about that it's not a business, it's a temporary thing. I also know of a lot of people who've done the investment and sold hand sanitizers and actually bought the stock and have to buy the back. It's, it's, I know a lot of people in that business. And I call them traders, it's the same as day trading. So I got into this and I had a friend who I'd worked with for a couple years of a lot of other things. I'm running a little bit of an agency for me, I had a couple of employees that was running some of the services we do for whether it was SEO and so forth. And we said, okay, well, let's train these people up, and then do this Amazon optimization, do this growth in it. And we started with, I put a little bit of money in cash, because the business needs cash. It's, it's the same as investments, you need cash, you put money into it. And I was like, Okay, well, let's do this the proper way. I said, Okay, let's sign a contract instead of a company, you know, you know, it's like, before that there was a couple of other investments where it's like, okay, we'll lend you some money, those are smaller ones, and they just disappear, right? So I always recommend getting your papers in order. But this was actually on the paper, everything was okay.

06:40
Um,

Rune Sovndahl 06:42
what happened was that we put more money into it, and we could see that there was a return. So now, as you might understand, is like, I'm, I'm busy, and I'm running another company that's doing successfully well, and is drawing and so forth. I have two other companies that I own, that are all profitable, and all generating income. And so they will, this one here is like, first, it was like a little bit of a help. But it also turned out that when you're thinking about cash, it seems like I was generating cash was coming into the bank account was like, Okay, well, let's transfer it over there. Because the percentage was between 10 and 10 and 14% return, which is not bad on cash. And that's really the quarter. Right? So you're looking at that over a year combined. You know, that should in theory, you know, like, wow, I'm amassing wealth here. I'm like, you know, where can Where else can you get that return? And, you know, when things sounds too good, they might be too good. So what happened was that, that grew into a bigger thing. And I was constantly checking the account, and everything was looking great, and so forth, then, you know, and everybody who's done this, Amazon knows that once in a while Amazon blocks the account, they're doing something wrong, they're either sitting too much, or the customer service isn't good enough and blah, blah, blah, right? You know, this is a business that some people really take serious I for me, it was just, I was just a side investor on it. Right? So it's like, I wasn't into it. I didn't know what was being sold and so forth. You can't get shut down, then we set up another account and another account, what happened in that period. And that was what I didn't know that when we were setting up the new account, of course, we were referencing that with a new company name and everything else. So you can imagine that the money went from that to the other company. And suddenly, I didn't have the logins anymore. Now, we had all these guys working in there. Right? You know, this is where I'm saying like, like, it was a business, it was set up as a business. And, and things were set up correctly. But during that process of, you know, you're in something that's obviously great, right, you're in something that's great. You reselling products on Amazon, you're doing this stuff, it's a profit margin, you get something out of the shipment, and so forth. When those changes happened, what happened over time was that suddenly my login access was not the same. And it's like, Okay, well, I've got the spreadsheet, it was working, right. So I wasn't looking. So what happened was that that money over time, started not going into the Amazon account anymore. When it came back, it was transferred to another account, which wasn't the bank account. And it was transferred to another account. And suddenly there was no more money in the Amazon account. And I was told it was shut down. And I was like, This is strange, right, try to log in said, shut down. The money is gone. They have been siphoned out of it. And this was with someone I trusted a lot. This was a friend of mine was running this stuff, and because the return was so good, but some what happened was that she had apparently done a deal on something else. Outside of this, you've done a deal and was trying to buy something in order to generate even more profits on it. And he had taken the money out in cash and disappeared. And, you know, answer the phone calls a couple of times, then, you know, things got serious got the bailiffs over windover repossessed this car, certain things when this stuff here. So this was like an, personally, what happened was that, you know, I had Baby coming. I had a marriage coming. I had a, I had a I was trying to do these things. And not only that, you know, we had a year where we were investing more than 80% back in the business. So I was a little bit strapped for cash. Let's put it this way. Yeah. It was hard. And it was it was personally it was very, very demotivating. Because remember, this was 12 years of cash, right? That had been put aside that was generated this profit, those earnings that was like, Okay, I can either put it into property, I can put it into this, instead of this again, waiting for this, then this seemed like a safe way. And I said, like, there's a lot of good things you can do on it. I said, like, did you know there's a million things I learned from this?

Andrew Stotz 10:39
Huh? Why don't we go through those.

Rune Sovndahl 10:43
And one of the things that I learned, and this is where, you know, this is one thing that I've learned in, in all businesses, like, whatever paperwork you have, at the end of the day, it doesn't matter. It's best to have the paper works. But if the person that you're working with doesn't have the assets, if he doesn't have anything, you can repossess, or anything else that has something of vested interest in it. He can disappear. I have so many friends, and we're all talking about it. This is it's really hard to talk about because, you know, I got conned. Yep, yep. It was theft, right? That's we talked about, we talked about somebody who has to go to prison for it.

Andrew Stotz 11:20
It really is really a sin. And to highlight, you were as you know, you were successful up and coming businessman who was making good decisions, and generally felt good about that. And then all of a sudden, this type of thing happens. It can shake your confidence, too. And Andrew,

Rune Sovndahl 11:36
I know, we just talked about one story of this one here, but it's like, but I realized the same pattern was the same. I kind of had that because we were successful. I think what happens is that you very quickly think that because you're successful. And somehow it seems easy, right? Um, from, from your own perspective, because you know, you're working hard. But I think that it blinds you because you're successful, I was doing very good things as being very profitable. I was constantly making this back. So it's like, well, if I can do it, you know, your self doubt or your self confidence says, If I can do it, anybody can do it. Yep. You realize later that that's not true. And you realize that, you know, 90% of something companies disappear, which is one of the reasons why I'm doing franchising now, which I hope to alleviate that's one of my biggest passions is to help others to become co millionaires. And that way in a safe way, right? You know, I'm not talking about being billionaires. But in a safe place, I'm trying to really make it make it a safe way to move upwards.

Andrew Stotz 12:35
But the idea of paperwork doesn't matter. Trust is what matters. And the other one is, beware of overconfidence. Because if you build confidence too much, and you carry that into another area, that you may not actually it's not deserved in that area, because you just haven't had the experience, but the overconfidence kind of carries.

Rune Sovndahl 12:56
And then there is the trust, right. And this is where, you know, I like that, that Gary Vaynerchuk talks a lot about trust at the moment as well. And I'm a big, you know, it's like I'm Generation X, and this stuff here, and we were growing up to trust people first before you, you distrust stuff, I think the world's completely changed up anyway. But that's a different story. And what happened on the trust side of things is like, you also have expectations of others to deliver something for you, or you believe that they have the same integrity. Right. That's, that's like I like to go into businesses. What I wasn't prepared for. And I think that was my mental note to myself is that any investment that you go in for Be prepared to lose it all. I had not prepared for the loss. And I think that I have seen that in the others where I've been prepared for the loss. And it never touched me, right? It's like, Okay, I'm investing in this. I'm doing, I'm spending, you know, 50,000 trying to build this service, or I'm spending 100,000 on this. And I was like, Okay, if it goes down, that's my, that's my stop loss. I hadn't had a stop loss on this. I hadn't put it was safe. It was like, Okay, well, the money's in the bank, right? It's either in Amazon or in the bank. It wasn't right. But I didn't know that. So that was one thing about the mental side of things, the physical side of things and the security side of things was like, I think that anything you have to do where it's about login and accounts, you know, the number one thing is chicken verify and sit on it

14:19
right now

Rune Sovndahl 14:20
I've run 10s of thousand domains websites over the last years, so forth and so forth. I've got a very good grasp of how not to lose a website, how not to get hacked, how not to get something stolen from me how not to get this stuff here. And I think that because I haven't had these losses before. And this is why I'm like I'm really pleased to talk about it as always because it's the losses that makes us stronger. Right now I haven't had these losses because I just you know, by some reason my father has always been about insurance, keep this integrity and and make sure your accounts don't get locked. You know, I never had an email account. I never had a Facebook account, I never had a LinkedIn, I never had any of these things hacked because, you know, it was just I grew up with this right? So from day one is not seen password and everything else. So the whole thing for me not to suddenly have access to an account and like I have access to every single one of the domains that's run on this one here I have the access, I have dual authentication and everything else. Yep. And the same for the banks and everything else. And in this case here, I just didn't do it because I was so used to. Yeah, yeah, I didn't do it. I didn't set up the jewel account stuff where if you want to transfer from one account to the other, you press this stuff. Amazon doesn't have it. Right. And I think it's a big problem. But I was used to that, like with a Google account, you log in, you know, your AdWords account is run by the agency, they can't suddenly transfer the money out of the account. So I think I got complacent. Yep. Yep. You know, in my, in my sense of security. I mean, you know, this is, you know, you said it. So right. In the beginning, Andrew is like, you know, you've got to take risks, you've got to do these things. You've got it, you've got to learn. I mean, I have no plan of making 100% success record and everything you do. I mean, if you have that plan, and good luck in life, you know, it doesn't happen. There's nobody who's going to get 100% strike record and so make this stuff here. On the contrary, it's about consistently avoiding half of the losses you'd have otherwise the same. When you look at McBain, when you look at principles read dahlias book, great book, it's about you will have losses, right? It's about protecting those losses. Yeah, but the mentality I'd set up in this entry was what what hurts so much because this was a friend, this is someone that you know, is at dinner with you at a birthday party with yet you know, other things with you, we're hanging out, you know, it was we've been friends for this time here. And that was what hurt.

16:39
Yeah,

Rune Sovndahl 16:40
but I hadn't set up for that it's a possibility of losing. It just just wasn't in my mind. So that's why I think that it hurt more than in other things. I mean, financially, I recovered, did a lot of other things and recovered, you know, it's like I, I have a good thing is, is, in some ways, these losses always make me stronger. Yep. Right. It's like, it's like, you know, it's like a chip off your shoulder. Now you're going to show someone else? So I'm like, Well, okay, you know, it's like you go out, I remember that the back in my old days when I was in sales, and like, like I would, back in my old days, like my 20s, right, there's a made a good sale, we've made the money, I sometimes would go out and blow the money that I made my commission on a cup of champions in the club, because that made me go like, okay, I can spend that as fast as I've made it in that way to, to get get back into that. Right. So it's like, I wouldn't say that I'm a good investor in any ways. But I said like, I, I think you've really got to balance that.

17:35
Yep,

Rune Sovndahl 17:36
I think I think, yeah,

Andrew Stotz 17:38
let me, let me summarize some of the things that I take away from your story. The first thing is that there's a difference between being a business operator and an investor. And I've seen a lot of cases of people who are very confident and very successful as business operators, but then they take their money, and they invested in something, and it doesn't go the same way. And so it's a real, it's a real red flag or warning sign that, particularly for CEOs and entrepreneurs, and people who have been successful is that Be careful, because that is where overconfidence can can spill over into an area where you just may not have had things, you know, set. I think the other thing is the idea of preparing for loss, you know, having, you know, looking at everything, and I challenged the listener now today, right now, think about the investments you have, think about the investments, you're considering making an ask the question, how can we lose, not, don't say, we're not going to lose, there's no way to lose? How can we lose in this situation. And once you start to list that out, and you know, set it up as separate events, set it up as a separate meeting, where all you're talking about is ways that you can lose from this event, or from this investment. And it's one way to separate it from the excitement of winning because, you know, we need the excitement and confidence of winning. But that's a second thing It reminds me of is what you mentioned. And then the third thing is, you know, giving access, a lot of times in the world of finance in the world of investing, one of the biggest mistakes that people make is that they give their advisor access to their accounts. Now in business, it's a little bit more complicated, because you know, people have you have to trust that a manager is going to have access and do the right thing. But just remember that the act of giving access is a extremely high risk, you know, act and therefore, you need to make sure that trust is in place, but it's not even trust because even good people can be seduced by cash sitting in front of them. And so you need to put the securities in place which you know, explain that you already have. And then the last thing is friends You know, Friends With friends are the worst as someone once said to me, but you know, businesses, business, friends or friends, it sometimes can cross over. But it really requires a high level of maturity. I have a business in Thailand called coffee works. It's a factory. And it's a coffee roasting factory. And we've had it for 25 years, and my best friend Dale runs it, we're co owners in it, and co founders of it. And we've never really had a problem between the two of us in 25 years. That's very rare. So those are some of the things I take away anything you'd add.

Rune Sovndahl 20:32
I think it's the best summary I've heard. And it's like, it's like hearing it back again, I look at I look at, you know, because when we started talking, it's like, it's not my only failure, right? He doesn't think we could, we could all list a list of them. But I see the pattern again. I mean, I see the pattern in what I'm doing. And I think your view on this stuff here is like look at, and I think the COVID also did that to a lot of people's, like, we looked at every single thing we had out there that wasn't generating return. Right? But also, even if it is generating return, you might have a lot of cash pile up in it. What if that disappeared, because I think the lower of this stuff here, what what we, what we sometimes build up, you know, when we're going up to the boom, that confidence that everything goes up, right, we also know that the index is going to go up, the tax is gonna go up forever, right? Because that's what we were taught, right? It's like, you know, it'll have some drops, but it'll gonna go, you know, Tony Robbins will tell you money master game, it'll go up forever. It's like, Yeah, but it's gonna have some drops. Right? And it's like, looking at those, I think it's very important because you, you know, as well built, it's like, you don't sit on the cash, right? Nobody wants to have it in the bank sits in different places. So I think that idea of looking at where is your cash, actually? And where's it actually sitting and who's got control over it? I think that's one of the things that I learned very, very quickly is like, you know, because we all know that you can't have a liquid, I'm not gonna be able to seal that property. And then I, in this situation, you know, like, I've, I've had a lot of good friends who's gone down, like really gone down vertical with restaurant stuff and stuff, you actually know your coffee, coffee. But the funny thing, but the restaurant stuff has has been suffering so much. And I know people who've done 20 years and they've built change, they've got 25 restaurants instead, right? Very quickly, you'd find even though you find success, then when it's not liquid, you don't have that, even though you're worth money, even your net worth is high. You don't have that liquid. And if one or two of them starts to failing, how exposed are you for that domino effect to happen? Yeah, that's a very important thing. And I think your assessment there, Andrew is spot on, like, what were you? What if four of them failed? Is like unthinkable situation? What if four of those eight things failed? Because the other ones might need a boost later might need a boost this?

22:45
Yep. Yep.

Andrew Stotz 22:45
So I want my next question. I'm gonna preface it a little bit. By, you know, your story is interesting, because I think a lot of listeners out there want to do something like let's say, you know, Fulfillment by Amazon as an example. And they want to do these type of side businesses or full time businesses, they're going to, they're going to come across these things, and they're going to try them, and they probably should try them. And they may be successful, and they're going to fail in some cases. But let's just think about that one man or woman out there right now, today, who's just about to do what you just did, you know, in your story. And I want to ask you this, setting it up that way, I'm going to ask you this question, based upon what you learned from this story and what you continue to learn what one action would you recommend that person take to avoid suffering the same fate? Well, I

Rune Sovndahl 23:34
mean, I think I think the number one thing. And I think it's the same as like, you've got to realize that your Amazon, for example, I'm just talking about Amazon, because I got a ton of other advice. But I'm just just one thing. So mad Amazon is you've got to manage your account. You've got to be the one having it. As I said, it's a side hustle. You know, you and as operator, I could run it myself, right? If it's a side hustle, the moment that you give that over, you're practically having a bank account, no matter what, and you said it as well. It's like, it's not necessarily the person that you trust, or your friend, it could be someone next to that person who will say this stuff. Anything can happen out there. Anything can happen out there. It's not as though the person is not necessarily employee is the cost of an employee, or is the friend of an employee who says like, Oh, she's sitting on the password of that, let's take it.

Andrew Stotz 24:23
That's a great point.

24:25
At any moment.

Andrew Stotz 24:27
I think about you know, we use in my businesses, we use a service called LastPass. And it allows us to check the integrity ultimately of the passwords. And I was talking to a friend of mine, he's like, I'm not worried about being hacked, because I'm really good at making passwords. And I'm saying, it's not you. It's the seventh employee in your business, that's using a password called ABCD 1234. And that's where the hacks going to happen. So I think it's a great reminder For all of us that it's not, it's not only the person that you're trusting it's people all around. And that's why you need the infrastructure, you know, necessary to have the checks and balances. So if some money is moving, it can't move until there's a second confirmation or something like that.

Rune Sovndahl 25:18
That's a really good thing. And then I think this is where my dad comes in, and actually having programmed ATM machines. And back in the 70s, and 80s, when they were launching them, right. And he taught me this is like, you know, and it's such, it's such such such a simple thing. But it's like, if I can give you one thing on it, a chain is only as strong as its weakest link. Right. So if you thinking about your company being protected by a chain, only one of them, there's no chain, it's, it's very clear, and you can look at that. So you were interlinked with your employees, your employees, with the staff, and the advisors with everybody else. So that like, like, having that in mind physically, it allows you to understand what we were up against in IT infrastructure, and I think it's a very good analogy. rune, I

Andrew Stotz 26:02
think that I'm gonna get, I'm gonna get myself a chain and put it up behind me here with all of my other trinkets to remind myself that we're only as strong as our weakest link. Now, last question, what's your number one goal for the next 12 months?

Rune Sovndahl 26:18
Well, my number one goal is, is we are going heavily on the on the on the on the franchise side of things, and majestics. What my ultimate goal in the next decade is to create 1000 millionaires, right, which is a very big, very big, thousand billion billion pound franchises, and in the next decade, so the next 12 months is like, we've got the packages, right, we've got everything else, right. And fantastic services, we've got the websites off, we've got the systems up, we've got the online training up. And so my biggest goal for 2021 is to attract the right people for candidates for that progress. Hmm. And it doesn't, doesn't matter. See, I come from an origin background of you know, my father was a blue collar, white collar background of everything else. My mother was flour decorator, my dad was a programmer, and, and so forth. So I have that strong as doesn't matter whether you have an MBA or whether you have xy set a PhD or whether you just come up and we're doing this with plumbers, we're doing this with godness doing this with cleaners. And we're doing that using technology. So that's it's very exciting. The next 12 months is going to be the most exciting we've had was already rolling it on one by one, you know, you seeing every two weeks now it's going so yeah,

Andrew Stotz 27:34
it's very exciting. Yeah, it was and, and for the listeners out there, just go to the show notes, and you'll be able to get the link and get to it. But you can also just type in fantastic services. And you'll be able to get there. And that is there any other way that people can follow what you're doing? What's the best way for them to either get in touch with you or listen to more of what you talk about? Well, my

Rune Sovndahl 27:56
LinkedIn is quite up to date. And I publish the winner whenever we're doing the podcast and stuff you have published a lot. So I'm using LinkedIn more and more now. I think India is kind of having its comeback. So I'm using

Andrew Stotz 28:06
LinkedIn a lot. Fantastic. So reach out and get rude. Please don't LinkedIn. All right, this is there you have it another story of loss to keep you winning. Remember to go to my worst investment ever.com to claim your discount on the course that excites you the most. As we conclude room, I want to thank you again for coming on the show. And on behalf of a Stotz academies, 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? No, thank

Rune Sovndahl 28:38
you so much, Andrew. I mean, I enjoy talks. It was really good. It also summarized it for myself, because we got to remind ourselves of some of our losses and some of our failures in order to get stronger.

Andrew Stotz 28:50
It's a great point. And I would say one of the things that a lot of my guests says that they didn't think that they would gain so much by going back through that story. But really, once you go back through it, it kind of forces you to think and so I appreciate the fact that you brought that to the audience and they are going to enjoy it. So that's a wrap on another great story to help us create, grow, and most importantly protect our wealth. Fellow risk takers, this is your worst podcast host Andrew Stotz saying. I'll see you on the upside.