Ep778: Chris Kendall – Don’t Underestimate the Funding Needed to Go Big Time

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Quick take

BIO: Chris Kendall is the CEO of the Australian outsourced accounting group Aretex. Aretex helps businesses grow and scale with best-practice accounting, bookkeeping, and real-time access to accurate financial information.

STORY: Chris invested in the idea of a reality TV show piloted around finding baseball players. Chris believed in his friend’s vision and was so caught up in the emotional attachment that he didn’t do any due diligence on the idea.

LEARNING: If you’re going to fail, fail quickly, be honest about the failure, figure out what happened, and then move on to the next step. Don’t underestimate the funding needed to go big time.


“There’s a balance between raising enough money to reduce dilution and raising enough money to ensure you can get to the next hurdle.”

Chris Kendall


Guest profile

Chris Kendall is the CEO of the Australian outsourced accounting group Aretex. Aretex helps businesses grow and scale with best-practice accounting, bookkeeping, and real-time access to accurate financial information.

He is also the host of The Anti-Failure Podcasts, which examine the lessons from failure in business and life that ultimately allow us to succeed.

Worst investment ever

Chris’s worst investment is the one he didn’t make, which was not buying property in the ’90s before he left Australia. His advice to anybody out there is to find a way to get into the property market as early as possible, go through the struggle of pulling together all of the resources you’ve got access to, and put them in a property.

Chris shares one investment he made through passion and emotional attachment. The investment was a reality TV show piloted around finding baseball players. The TV show was created by a friend who envisioned creating a reality show intended to describe how professional athletes look through the ringers to determine where they end up playing a professional sport. The friend had some of the big names in baseball. He needed money to make the pilot, and his friends (including Chris) and family put some money in and gave it a shot. But he couldn’t get the traction to turn it into the TV show that everyone thought it was capable of.

Chris believed in his friend’s vision and was so caught up in the emotional attachment that he didn’t do any due diligence on the idea.

Lessons learned

  • When looking at property, ask yourself: Does this appeal to you? Does it meet your immediate needs? Is there an opportunity to leverage that in a growing market?
  • There’s a balance between raising enough money to reduce dilution and raising enough money to ensure you can reach the next hurdle.
  • If you’re going to fail, fail quickly, be honest about the failure, figure out what happened, and then move on to the next step.

Andrew’s takeaways

  • Don’t underestimate the funding needed to go big time.

No.1 goal for the next 12 months

Chris’s number one goal for the next 12 months is to continue working with small business owners and helping clients get the best information they need to run their businesses.

Parting words


“Have the courage to turn up and give your best.”

Chris Kendall


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of laws to keep you winning. In our community. We know that to win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And I want to thank my listeners in Sydney, Australia for joining that mission today. Fellow risk takers this is your worst podcast hosts Andrew Stotz, from a Stotz Academy, and I'm here with featured guest, Chris Kendall, Chris, are you ready to join the mission?

Chris Kendall 00:38
Yes, I am. Let's bring it. Yeah,

Andrew Stotz 00:40
I'm excited to get you on. I'm particularly interested in your business. So I look forward to learning more. So let me introduce you to the audience. Chris is the CEO of Australian outsourced accounting group's era tax, helping businesses to grow and scale with best practice accounting and bookkeeping, and real time access to accurate financial information. He's also the host of the anti failure podcast, go and check it out. I've been listening to his episodes there. And he's examining the lessons from failure in business and life that ultimately allows us to succeed. So we're on the same wavelength. Craig, Chris, take a minute and tell us about the unique value that you are bringing to this wonderful world.

Chris Kendall 01:24
Yeah, great. Well, thanks for having me along. Andrew, it's good to speak to you. The idea behind error text came from a career spent in CFO and financial services for small and big businesses. And I wanted to bring a model that would disrupt the way traditional bookkeeping and operational accounting was delivered. There was a time when Xero had entered the market in a big way. It gave the promise of real time information, but that access to that information was limited by the bookkeepers who could deliver the work. So I've got a lot of experience in shared services. And I've also had a lot of experience in the Philippines. And I teamed up with a former colleague of mine, and we created Airtex. We're now 450 clients working with 220 employees, and delivering accurate financial information and data analysis to our clients. That's

Andrew Stotz 02:25
amazing. Um, and for those people that don't know zero, you're talking about X E. R. Oh, yes. Correct. And I believe it was originally from Australia, New Zealand, New Zealand, New Zealand. Yep. And I can say that, from my experience dealing with accounting and finance, in my own businesses and with my clients. Xero has, you know, it was a game changer when it came out, because it really started to think about it from the perspective of a, you know, a true Cloud based accounting system that was also not overly complicated. So, you know, we use Xero. For some of our clients, we use Xero for our own business. So if those people out there who are not who are looking for an accounting software, the one problem I've found with Xero, that I haven't been able to fully resolve is that if it's a manufacturing process, with bills of materials and all that, yes, I generally have had to go to another software, though they may have components now in Xero, that can handle that. What is your experience with a manufacturer? Yeah,

Chris Kendall 03:27
so I would describe Xero as a business platform, it's not an accounting platform. It's intended to drive information back to small business owners in that small to medium space, make it easy for advisors and businesses and accountants to share information in a single ledger. But it's really not a fully baked accounting system, or what we would traditionally call an ERP system that handles manufacturing handles inventory, and natively handles all of the controls that you would expect with an accounting system. And what they've done is develop an ecosystem of apps that sit outside of Xero and connect through open API's to be able to communicate between an inventory app or a payroll app or any of the number of point of sale apps or payment platforms, so that you have an integrated app stack that ultimately feeds through to zero as your source of financial truth.

Andrew Stotz 04:28
And is there a good app for a manufacturing company or is that something? How do you handle a client that is manufacturing?

Chris Kendall 04:39
Yeah, we have a number of clients that are using dia. I think it's since seven now they've changed the name but that basically allows you to build the bill of materials you mentioned, create the inventory items, and it automatically integrates to zero so but there's a whole number of them out there that are industry specific.

Andrew Stotz 05:01
What's that? Like? What's the name of that one you just mentioned.

Chris Kendall 05:04
So it started its life as dia systems D. But it's been rebranded to Sim seven CDI N seven. And like many software applications, they are 90%. Good. But the 10% forces businesses to change the way they behave in order to meet or put up with workarounds or things that aren't quite fully baked.

Andrew Stotz 05:28
Hmm. I'm just curious, how do you handle I mean, I'm interested in your business just because I do some limited outsource CFO business compared to what you're doing? How do you handle like, let's just imagine now that we've got a listener that has a business, they have a factory, they have a trading business, they have a service business, and they need help. You know, they know their accounting is kind of, you know, out of control. And they're not, obviously they're not in Sydney, let's say they're in Mumbai, they're in, you know, London, they're in Bangkok. And how do you work with them? Like, where's the first interface with you? They're coming to your website, or where do they first interface with you? And then how do you work with these guys? Yeah,

Chris Kendall 06:15
so I think if we break it down into the three common components of any outsourcing or external expertise that you gain from people who have experience or other advantages that they can offer you, there's outsourcing. And that's basically taking a task or a specific project out to a business or an individual who has expertise that you don't necessarily have internal, you might not need a full time you go out and you find somebody projects specific task driven, that's what we call outsourcing, then you've got offshoring, which is taking the task or the opportunity to a different cost structure, or, or access to different talent pools that you don't have available locally. And then you have what we call managed services, where we take the problem from the client, and we solve it. So let me give you an example. We call it operational accounting, operational accounting and our world starts from the point of data entry, and goes all the way through to the point of reconciling a trial balance, and understanding the key drivers in the business so that we can prepare accurate financial reports. So we combine a lot of people process and technology to get from the point of data entry through to the point of financial information. And essentially, we're an outsourced accounting department in that application of our services. Another example might be that we have a technology that is specific to an industry, we build the expertise that sits around that technology, so that we can take it out to a broader set of clients and say, Alright, we can make it efficient using technology, we can make it even more efficient by using trained professionals, who then deliver you a solution. And so you're getting a combination of people process and technology to get to an outcome. So often what happens when it's when a software technology comes to market, the client may not have the necessary expertise within the business to understand and leverage that technology investment. So what we'll do is we'll come in, and we'll make the technology work for its intended purpose. So you get a combination of skilled experience with the technology delivering new and efficient outcome.

Andrew Stotz 08:44
I mean, what I'm hearing from you is kind of end to end from the bookkeeping, aspect, trial balance, but you beyond financial statement, financial information, you know, like, for instance, the idea of, you know, what's the gross margin of your various products? Where do you need to adjust pricing? You know, that type of thing? Is that? Is that what you're talking about?

Chris Kendall 09:04
Yeah. And I think the key differentiator for us is that if something goes wrong, my clients pick up the phone and call Chris Kendall and say, fix the problem. I've got an issue, you figure out how to fix it. And so we put together the solution, and we come back.

Andrew Stotz 09:21
And one of my questions is How do you manage let's say, you've got your workforce, they've got their your clients have their workforce, and you're you're probably being brought on, not because their workforce is amazing, and they want to outsource that, but probably because they're their workforce is struggling with getting the accounting and the finance, right. So the first initial period that you have is this onboarding, where you're trying to figure out their systems you're trying to get, you're trying to maybe redesign some of their flows of how they're keeping data, bookkeeping and all the information so that it feeds into what you need. How do you manage that? That seems like that's a hard thing to do remotely?

Chris Kendall 10:03
Yeah, that's a great question. I'll answer in two ways. The first is that I was lucky enough to team up with a very smart operational delivery person, Chris corpus, he runs our operations in the Philippines. And Chris has a unique ability to distill down the business requirements into a delivery platform. So he uses a combination of a business process outsourcing approach, to build a shared services team. My role in this engagement is to understand the business context. And because I've worked in small business, big business, and in a number of different industries, I can pretty quickly identify the elements of the business context that are important that Chris then translate into operational delivery. So all of our team in the Philippines are set up in a BPO structure. We have director of ops, who is Chris, and then we have team leads, who are all responsible for different portfolios of clients. And we try to align those, those client opportunities with the skills and experience that we have on the team. And so the team leaders are responsible for day to day delivery of their portfolio. They're supported by a senior accountant, a junior accountant. In some cases, interns, in some cases, accounts payable, but they're all working together as a dedicated resource to that client delivery. So over time, the client gets to understand them and their capabilities and get to know them as humans. And over time, we get to know the client business. So by bringing a combination, again, of people process and technology, we document what's important in the client context of that specific engagement. And then we use our methodology and our infrastructure to be able to deliver it consistently and accurately. The second thing is COVID was devastating for many, but in our world taught businesses that the opportunity to outsource offshore or get managed services is possible in a remote way. So a lot of resistance in the early years, I've been doing this 10 years now. And we met a lot of resistance about the offshoring element, I need somebody on site because you know, I need to explain the invoice or I need to explain the revenue or whatever it is, well, COVID taught us that we actually don't need to, for this delivery of the type of work we're talking about. It can be done remotely. And what sets us up for success is making sure that our people have the infrastructure, and the methodologies and the process documentation in order to deliver what we're what we're working to give our clients, which is accurate information.

Andrew Stotz 12:57
And so let's, let's just one other thing I'd love to understand is like, what's the ideal business for you? And what are types of businesses that, you know, don't work for you? And I believe most of your clients are in Australia, if I'm correct, right, yeah. Okay, we

Chris Kendall 13:14
have we have several clients in different parts of the world, but primarily here in Australia, our sweet spot really is, is the small to medium. We have seen an increase in demand for augmented accounting departments where they come to us and say, I've got internal expertise and maybe a financial controller role or a CFO role. But I can't find access, or I don't have access to local resources for whatever reasons. And can you build an accounting department for me, that serves as part of our team to give the business the information that it needs. So it's, that's how we work in an augmented accounting department. And we could have upwards of seven or eight people sitting there doing all sorts of internal AR, AP GL, or whatever it is that they need, or a traditional accounting department would deliver. And then we start with very small businesses in hospitality. You know, it's I'm very passionate about small business. So what I'll always look at an opportunity, where I have a passion that can help them be better in the way that or free up their time so that they can focus on the things they want to do in their business.

Andrew Stotz 14:36
And I don't know about Australia, but in Thailand, the accounting and let's say bookkeeping slash accounting services have been commoditized in prices have been pushed down. And it's like the first question I ask people when I talk to them is like, how much are you paying for your accounting? And then they say, you know, I'm paying In 500 bucks a month or whatever, even less, and I'm like, okay, so what are you expecting to get from that? You know, and you know, in the end, people don't realize it, whether that's sales or marketing or operations you want good. You know, you want good service, it costs money. I'm just curious, you know, what's happening with pricing, and how do you remain competitive?

Chris Kendall 15:21
Yeah, it's a great question. Globalization has hastened the speed to low cost. So you can go out and find yourself a bookkeeper. Who will work, I don't know, pick a number $5 an hour, $10 an hour. But in that, in that delivery model, you're responsible for all of the risk associated with it. So you get a warm body who has a set of skills may or may not be competent, you don't know until you engage. And then after spending six months or 12 months, training them and getting them up to speed, they say thank you very much. Now I've moved on, and you're starting over. So when you engage in a firm, like aerobatics, what you're getting is our methodology, you're getting the Director of Operations, you're getting a quality team, you're getting a team lead, you're getting redundancy, you don't have a single point of failure anymore. Whereas if you go direct, and go for the cheap option, and let's call it inexpensive, rather than cheap, but if you go for the inexpensive option, you've got other costs that you're going to incur as a result of taking that option. And what we pitch to our clients is you get, we remove the single point of failure, we give you a level of skill experience, and people who match your requirements. And when we make mistakes, we document what happened and we understand it and 99.9% of the time, it's a process failure rather than people failure. And we fix the process and we keep moving on. So clients who understand that delivery model, and that we're actually part of the business that is going to market are the ones that we are most successful with. And

Andrew Stotz 17:10
my last question about, you know, I'd say I find your business interesting in particularly the advanced way that you're doing it. My other question is, what's the promise? In other words, let's say, you know, it's gonna take us X number of months. But by the time we're done with this, and we get to this point, here's what you're going to be able to do that you couldn't do in the past, and that's going to make a difference for your business.

Chris Kendall 17:40
I'll answer that by saying the traditional model for bookkeeping and accounting was compliance driven. It was to get to a tax return, or it was to get to here in Australia business activity statement, which is the reporting of GST. It wasn't about information. And the concept of compliance driven bookkeeping is that it is done on the bookkeepers terms, when can they get to the office? Rather than when do I need the information. And so what you get with us is a dedicated team of people who give their best every single day to give you the information, you need to run your business. So we can turn the paradigm and say, right, if we get the data entry, right, and we've got all the disciplines and the reconciliations and the work that we do around that data entry, then compliance is a push of a button. And we should never have to add a fee to process a tax return. And if we, we don't do tax in our business, but we can take what we've got pre processed, fully supported with documentation for so we've got a single source of truth in Xero, with all of the documentation attached, so that if there is any audit, or if there is any compliance matter, you've got all the information in a single point, single place. So we'll bring the process we'll bring the discipline, we'll bring the people to make sure that you've got fully compliant on financial records in your accounting system of choice. 95% of our clients are using XERO.

Andrew Stotz 19:24
Fantastic, well, it's great to learn about what you're doing. And you know, it's so valuable. I think, when I started my own, one of my businesses is a factory and we really struggled to get the accounting. And that was 30 years ago and all the old software that we had to use, you know, I just nightmare and of course, nothing could be downloaded out of it. And you know, there was no API connection or anything like that. And you can only key it into one computer and all of that. And then

Chris Kendall 19:52
swapping data files rather than someone will have done something one file that isn't replica was I remember one of my first dog but I turned up Have a client and I said, you know, the checklist, asked me to ask you what is the accounting software? And they said, mind your own business? And I said, No, well, that's not the right answer. I really need to know what? So early days of auditing.

Andrew Stotz 20:12
Yes. And some people out there may not even know that there was an accounting software called mine your own business?

Chris Kendall 20:19
Oh, exactly. Things have come a long way. They

Andrew Stotz 20:22
definitely have. And I think one of the lessons that I've learned here in Thailand is said, you know, I work a lot with mid size family businesses, and you know, friends and other people. And what I see is that, you know, I wrote down something that you said that I haven't really been able to articulate it, as well as what you just said, which is compliance driven bookkeeping. And really, it's tax compliance driven bookkeeping that they're focused on. And, you know, and you, you, once your business starts to scale, very hard to make decisions without good accounting data. Yeah, and I am. So

Chris Kendall 20:58
that's my, I've spent a year as a CFO with small and big businesses on what the key is to make sure you understand the drivers in the business, and you know, how you're performing against them. And when it's compliance driven, you just want to check in the box for the tax return. But how can you course correct, if you don't have information at your fingertips?

Andrew Stotz 21:17
Yeah, when I, my career, I started as a financial analyst in the stock market here, and I did that job, you know, all of my life basically. And what I explained to young people in particular is as, as a financial analyst, most 99% of financial analysts never look below the audited financial statements. And the auditors and the accountants never look beyond the financial statements. And so it's like this, it's an event horizon, one hands off to another. And when I had when I was an analyst, you know, since 1993, and I had my business which we were setting up in Thailand, so my best friend was running in and I was working on it in the evenings, and on the weekends, you know, trying to fix the accounting, and the finance and all that stuff. All of a sudden, I realized this whole ecosystem below the audited financial statements, and all that can go wrong, and all the issues of that, and it really made me a much better analyst to understand. And I really advise everybody out there, a lot of business owners and business leaders put aside accounting, I was in a meeting with some client of mine, and one of the members of family said, I don't know, finance, I give that to someone else, you know, and I say, you can't make a great, financially great company, if you don't pay attention to finance, you know,

Chris Kendall 22:42
for sure. And I think you could also extend that application to the number of examples we have, where financials have been audited, but the actual underlying business is fundamentally flawed and fails.

Andrew Stotz 22:57
Totally, yeah, in fact, I just, I just had a person I was talking to said they, they had a big for accounting, they hired a big four accounting service to come in and audit their books, and it would cost a lot of money. And they didn't know much about their accounting. And after four years of the them auditing the books, in the fourth year, the big four firms said to them, we made a mistake in the calculation of your cost of goods sold in the margins, not this and that, and you know, and it just goes to show that, you know, even when you go out to the big guys, in fact, they probably have less attention, you know, to put on a medium sized company to fix it. And a lot of, there's not a lot of places that go, you know, I need help with accounting, and I need to run my business, I do not have time, and you think you're gonna go to a big four. They're just not going to be able to provide the resources, but they will charge the price, of course. Yep. Exciting. Well, it's a great intro to you and your business. But now it's time to share your worst investment ever. And since no one goes into their worst investment thinking and will be tell us a bit about the circumstances leading up to it, then tell us your story.

Chris Kendall 24:07
Yeah, well, I was thinking about this as I was heading in here today. And I'm pretty conservative. I'm an accountant. I've been trained on debits and credits and the application of those principles in different business environments. I think my worst investment is the one I didn't make. And that was buying property back in the 90s before I left Australia, and if I had my time again, and my advice to anybody out there is find a way to get into the property market as early in life as you can go through the struggle strains of pulling together all of the resources that you've got access to and put it in property. Most of my financial successes have been in property. So I wish I had done it earlier. One investment I made was one through passion and emotional attachment. It was even to a reality TV show that was being piloted around finding baseball players, it was out of Atlanta, Georgia. And it was a friend of mine who had this idea, called up at bat and a shout out to Dave Chambliss still a very good mate of mine. And he had this vision for creating a reality show that was intended to describe the way professional athletes look through the ringers to determine where they end up playing a professional sport. And what he wanted to do was create a whole reality TV program, and he had some of the big names in baseball, and it's a brilliant idea. Yeah. And so he needed some money to, to make the pilot and friends and family I often the excess of capital when you've got an idea that you want to try and test out. So we put some money in. And we gave it a great shot. But we couldn't get the traction to turn it into the TV show that we all thought it was capable of. And it's not what I would describe as my worst investment ever. I think the differentiator was it was a friend of mine, I believed in him, I believed in his vision. And I thought why not? Let's have a go. And I think the lesson out of it probably is that I should have thought more about the financials and how we're going to turn this into a model that makes money for everybody. And because I was caught up in the emotional attachment to David and his idea, didn't really put it through any sort of due diligence, we had a great time we turned up we did the filming of the pilot, we met some great people. I was pretty proud of it. But we just couldn't really get it off and running. It's very competitive and difficult market in the US to do something like that.

Andrew Stotz 27:05
So how would you describe the lessons that you've learned from what you've shared?

Chris Kendall 27:09
Yeah, I think it's. So the application of those principles. When I'm looking at property, is it something that appeals to me? Is it something that I think there's either does it meet my immediate needs? And then is there an opportunity to leverage that in a growing market? And we've been very fortunate here in Australia with a very hot real estate market? So a lot of people making money out of real estate long burning? Yeah, yeah. And I think, yeah, it's the application of principles to you know, it's not just the case of buying property, it's buying property in a market that's changing, or is it the trying to figure out where the down markets? And what are the investments being made around that community. But I really just, you know, my wife, and I have, I've been lucky in the way that we've identified property found a way to get in, and then through no real effort on our own, we've just, we've just been able to take opportunity in those markets. Great.

Andrew Stotz 28:23
There's a couple of things that I would share, from listening to what you've said. And I'm going to talk about the second story just because it hits home. And it actually was my worst investment ever, which was investing in a good friend who I trusted and still trust and like, and his idea, which was, you know, it was related to language learning, and he was developing, he was, you know, a real savant in that area. And so he was developing software to improve that. And what ended up happening was that what I underestimated, and I felt it when I heard your story, what I underestimated was the funding needed to go big time. Yes. And, you know, at some point, you've got to move from your garage to the big time. Yep. If you're gonna really make it and make it successful, you know, and, and what happened was, once we got to that point, I realized, I mean, I can go out and raise money. But I wasn't convinced that we were going to be up if I could raise 5 million bucks to do the necessary marketing that needed to be done to compete in the big leagues. I also wasn't convinced that he was going to be able to deliver on that. And so it just kind of got to this there's just a breaking point where you it's it's it's go no go. And that's kind of what your story reminded me of is that we just hit that point and it was an obvious no go even though If it was a good idea, he was a good person, it was trying my best. So that's what I'm, that I'm I'm thinking about anything you would add to that? Yeah,

Chris Kendall 30:09
I think it's an interesting dilemma in that I've been very lucky to work with some early stage companies in both medical device and technology. And in those environments, there's a balance between raising enough money to reduce dilution, but raising enough money to make sure you can get to the next hurdle. And often, the discrepancy between founder valuations and willingness to take dilution, and the professional investors willingness to put money in that's a very wide gap. And so you find a compromise. And often neither, right? The small amount, if you could, if you are willing to give up more dilution, you can have a smaller piece of a much bigger pie. And the same thing with the VC or the professional investors, if they give enough money to the business to allow it to get to success, then everybody wins. But the dynamics of that relationship and in raising professional funding means that it's often compromised on both sides of the equation,

Andrew Stotz 31:19
each putting in a minimum, yes, pushing towards try their ultimate goal is to kind of give away the minimum amount of this company and the other side is to give away the minimum amount of capital to make this work.

Chris Kendall 31:30
And then and then you've got all sorts of different conflicting agenda that comes with professional money being managed, or or used in a way that is very different to a found a passion led business. And so the conflict and how do you resolve that conflict. And I've sat on both sides of that. And that's a very painful process for founders to go through and for professional investors to go through. But this idea that a business has this requirement to get to success. And I'm predicting what that looks like, with imperfect information is very difficult, right? But we put together business plans, we put together timeframes, I mean, David had a full business model on how much money he was going to need in order to take the pilot to the show, and then what was production. But it was all uncertain information. And so as you unfold that investment trajectory, you start to gather more information. And actually, what I thought was going to cost 10 grand is going to cost me 30 grand, not because I'm doing it poorly, but because I didn't understand the full requirements at the time I put together the business plan. So you go out, you raise 50,000, from friends and family, you then get into the experience of that investment process. And you find out actually, there's a few things you hadn't thought about. And now you need 150,000 to take that out and find the next 100,000 becomes very painful. Alright, so through no fault of anybody, right? It's just that we have imperfect information at the time, we look to raise money, and then the plans to execute those strategies get derailed. And so how much dry powder do I have in my backpack that will help me get through the bottleneck? And to the next point of funding, where I can demonstrate actually, the milestones are there just cost me a little bit more?

Andrew Stotz 33:27
Yeah, and unfortunately, we can't live life in reverse, because then we know the outcomes. But absolutely, we have to live it with that in perfect information. And then you look back in hindsight, and it's easy to, you know, I've interviewed almost 800 People now on their worst investment ever, and it's easy to go back and beat yourself for that. But you have to remember that I was making the best decisions I could with the information and knowledge I had at the time. So I think that's a great reminder. And

Chris Kendall 33:59
I don't think there's any one person that I can think of is an example of making the best investment the first time. Yeah, it doesn't, it doesn't exist, right. So we're all and that's the concept behind my anti failure podcast is talking about those missteps or those if we loosely call IT failures, what happened? What were the circumstances around that? And then what did you do differently as a result of that, and there's something about small business owners who have this courage or this resilience or this determination that despite the failure, I was talking with someone on my podcast recently, she created a new product out of chickpeas for people who were allergic to peanuts. Her entire first shipment was spoiled. Everything she had built to this point in time. Gate came in a box from her supplier overseas, and it was all spoiled. That would destroy many people. But for her, it gave her more determination. Once she got through the shock of unpacking this box, she was then determined even more so to find a way to get product that she could get to market. And now she's got a great distribution business. And she's solving her mission, which is to bring a healthy product market. So I think that that, for me, is where I get my passion for small business owners the courage, the resilience, the determination that in the spite or in the face of failure, they find a way to take one more step and move on to success.

Andrew Stotz 35:37
Yeah, it's such a great, you know, great concept I was just thinking about I'm kind of a US Civil War buff and Ulysses S Grant. And, and William Tecumseh Sherman were quite a pair from the union side. And there was a battle at Shiloh. In this battle, basically, on the first day, the Union Army just didn't have enough men on the field. And the Confederate Army, woke up early in the morning and attack them aggressively, and they pushed them back and it was raining. And it pushed them back hard. And far until, you know, it was a disaster. And in fact, Grant wasn't even on the scene. And so we had to get on a boat get down there. And he arrives late in the day. And grant knew one thing that the other generals that were fighting all day didn't know was that he had reinforcements coming, that were marching. And he knew the timing based upon the information, you could get that they would arrive in the evening and be ready to fight the next morning. And so it was raining rain all night that night. And grant slept under a tree, like in a hammock. I mean, everybody was wet. And it was a disaster. And Sherman went to grant and Grant was, you know, smoking his typical cigar. And he said, it was the devil's own day, is what Sherman said to grant. And grant famously said, we'll look him in the morning.

Chris Kendall 37:06
Yeah, I mean, they're resilient. Right? Absolutely. And that's what I'm passionate about Intel in telling those small business owner stories, because I think it takes enormous courage. And I'm interested in 800 interviews, have you found a common theme so that I can avoid making a bad investment?

Andrew Stotz 37:24
Well, I think there are some common themes, you know, that I've seen, and, you know, one of them, the first one that's the most common is that people fail to do any research. And I would say that is the absolute common theme. And then I would say that the second one is that people are driven by emotion. And that causes them to, you know, to make mistakes. And then the third one is what I would say is, you know, the faulty logic or reasoning, process, you know, those are some of the most common ones that I've seen. And

Chris Kendall 38:08
I'm interested to see that I've seen on it a few examples where people are not willing to make the hard decision soon enough. So they know they're on a bad ride. And they keep trying to either kid themselves or holding on to the original without being able to pivot and course correct. You see, I mean, we talk a lot in our podcast about, you know, if you've got if you're going to fail, fail, quick, be honest about the failure, figure out what happened, and then move on to the next step. Do you see that making those decisions? On bad investment strategies delayed?

Andrew Stotz 38:45
Only delayed? Yeah, they get stuck in a rut, and they can't get themselves out. Yep. And they don't, you know, the other thing is that people didn't plan for failure also, and, you know, my expertise is also in the area of investing. And I know that for a lot of the investors that I got on, you know, they had no, no plan. For what if this stock goes down? What do I do? No plan for that. Yeah. And it's, it's sacrilege, you know, if you go into a business and you go, Alright, so this is my idea, we're gonna do this, we're gonna, you know, this, this documentary and stuff, but if it goes wrong, we're gonna do this and nobody's gonna listen to that.

Chris Kendall 39:30
Interesting, you really need,

Andrew Stotz 39:32
you know, one of the ways to solve that is to get a, what I would call a disinterested third party, and, you know, get them to give you some feedback. But I

Chris Kendall 39:42
think this is what the professional investors, certainly my experience of being CFO of small businesses, is their brutal Yeah, they don't they don't tolerate nonperformance and they don't tolerate just not making a decision that they've got a mission. They've got a No they won't want intend to be successful, but they also want those other nine to figure out their way. But if they can't, they're willing to make that decision that they're devoid of emotion. Yeah.

Andrew Stotz 40:11
And it's also that it's in their face, you know, most decisions and financial people are making are reflecting on a daily basis that they can see. And it may be bad information that something's going down, when in fact, from a long term perspective, it was a good, it's good investment. But it's much more in your face, when you're in this in the trenches in the small business world, you are oftentimes can deny something without you know, you're not, you can deny evidence. So I do have a blog post that I wrote and a presentation I give called, six ways to lose your money, the six and six strategies to win the six lessons I've learned from interviewing almost 800 people, it used to be 600 people. So it was an alliteration a bit. But yeah, maybe we'll have to go on your podcast, and we'll talk about that.

Chris Kendall 41:00
I'd like to do that. So we can talk about failure and how you used it on this row.

Andrew Stotz 41:05
Yeah. So what just just quickly about your podcasts? What should people expect? If they click right now they're in apple? And they're listening probably, or they're in their favorite Spotify or whatever, and they click to your podcast. What is it? What's the promise there?

Chris Kendall 41:19
Yeah, I think it's a genuine human connection with people who are doing remarkable things in their everyday life, the balance, the personal lifestyle, business, passion, and challenges associated with the combination of those three things. And the courage that they have shown in that journey, and the insights that they're willing to share. I mean, nobody has to share the insights of when we failed, right? I mean, that they can be very personal, they can be very hurtful. They can have long term scars, but the willingness of people just to engage in a way that allows others to learn from those insights is what gets me so excited about those discussions.

Andrew Stotz 42:04
Yeah, we have so much in common in what we're doing. And but what I always say about my podcasts, when I talk to people, I said, if there's one word that you can say, it's authenticity.

Chris Kendall 42:18
Yeah. You know, because for me, the podcast is not about Chris Kendall. The podcast is a platform for my guests to talk about their story loud and proud in a way that helps others. And if I can deliver that, then that's the only reward I need. Yeah, that's

Andrew Stotz 42:37
beautiful. So ladies and gentlemen, I'll have a link in the show notes. Just go or just go right now to the anti failure podcast. All right. Last question, Chris. What is your number one goal for the next 12 months.

Chris Kendall 42:53
I'm very lucky, I get to live with my three passions every day. I love small business. I love working with small business owners. I love working with people who care and who turn up and give their best. And most importantly, I love helping clients get the best information that they need to run their business. And if I can do those three things and keep doing it as best I can for the next 12 months, it'll be a great 12 months. Wonderful,

Andrew Stotz 43:16
well, listeners. There you have it another story of laws to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude, Chris, I want to thank you again for joining the mission and on behalf of a Stotz Academy, I hereby award you alumni status for journey, your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Chris Kendall 43:40
Know back yourself. Have the courage. Turn up and give your best. That's it. Thanks very much for having me. Yeah,

Andrew Stotz 43:46
I appreciate it. That's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast hose Andrew Stotz saying. I'll see you on the upside.

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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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