Smith Sense

How to attract talent, pick the right candidates, retain star employees and say goodbye

People are a business’s biggest asset and the thing most companies spend the vast majority of their budget on. So the question is: How do you get — and keep — the best people on the boat, when the boat is constantly being rebuilt? 

I think of entrepreneurship as an art form. You don’t know what combination of elements you need on the palette until you start creating, and things evolve over time. 

The best way to make sure your team evolves to meet your company’s needs over time is to hire committed, talented people who are capable of doing lots of different things based upon their experience, interests and talents.

Too often, though, business owners set themselves — and their employees — up for failure with haphazard recruiting, unstructured interviews, and ineffective onboarding. When they pick the wrong candidate, managers often take too long to fire an employee; and when it comes time to part ways, they botch that, too.

Here’s some advice on avoiding common pitfalls:

• To attract a talent pool, let people know what you stand for.
• Use a highly structured recruiting and interview process to pick the right candidate.
• To keep employees, allow talented employees to work where their passion lies.
• Remain on the lookout for opportunistic hiring. 
• When someone quits, remain empathetic, and ask, “Is this a problem or an opportunity?” 

Why I like structure

Especially for small organizations that are growing fast, the burden of hiring is substantial. It takes a lot of resources to hire effectively. And it’s extremely costly — not to mention painful and time-consuming — to hire the wrong person.

You can reduce the cognitive load if you create a clearly defined structure from recruiting all the way through to onboarding.

Decide who you want to hire

To hire the right people, you need to know what you’re looking for. That will vary to some extent for every company, though high-performing teams generally share similar characteristics: specialized talents that compliment each other.

Whatever characteristics are right for your company, decide on that first. Then set up a structured recruiting and interview process to test for those characteristics.

Beware of the culture trap

Companies sometimes fall into the culture trap, focusing so much on culture that they end up with a monoculture in which everyone acts and thinks the same.

At Music Exchange — just like most entrepreneurial companies — we are constantly innovating and testing new ideas, so we place a premium on a unique point of view and willingness to share it.

We look to build an A-Team of people with highly specialized and complimentary skills, rather than a team of generalists who are average at most things and don’t excel in any one.

Fly your flag

Once you figure out the type of team you want to build, get the word out about your company to attract the right candidates. This is a prerequisite for any advice on hiring and retaining employees.

Your company is only as good as your employees, and they are only as good as your talent pool — so focus first on filling that pool with quality candidates. Look for ways to communicate to the public about who you are and what you’re doing. 

In “The Secret to Successful PR” I shared tips on effective public relations, recounting my own experience working with the media. I first invested in PR in order to attract talent in the Denver area, where we’re based. Articles in the local business publication helped fill our talent pool with the types of candidates we wanted.

Personality tests

At Music Exchange we ask job candidates to take a test called Talent Insights, which draws from several of the leading psychological tests to get a read on someone’s disposition. This test has proven effective for determining three key qualities:

• Detail orientation,
• Independence, and 
• How quickly they make decisions.

We look to balance these three areas on our team, and the test gives us an idea of how a candidate might fit in and helps us formulate good interview questions. 

Interview process

The best way to make sure you get the best candidates is through a highly structured interview process.

You should be able to explain the process from beginning to end at the first point of contact with a job candidate. Anything short of that and you risk losing some of the best talent off the bat, because top talent expects a professional experience.

This is our process:

• First, a professional recruiter screens the candidate, allowing us to communicate expectations of the role and note any immediate red flags.
• Then candidates are invited to an initial interview with a small group of employees. This is a thorough examination of their past performance generally lasting 2-3 hours.
• Candidates that pass the first interview are invited to a second one with a new group of employees that includes at least one interviewer from the first round. 
• Following the second interview, the candidate goes to lunch with another group of employees to get even more perspectives, giving us a bit of a chance to “try before we buy.”

Your one chance to ask

During the interview process, try to understand the candidate’s motivation for major decisions in their life. We use Lou Adler’s Performance-based Hiring system, which focuses on an individual’s drive to achievement in prior roles. 

Ask about why they attended a certain school or took a certain job; ask about past work projects and decisions they made. If you ask a future-based question, you’ll usually get an answer you like. So avoid those.

If you don’t ask these questions during the interview process, the reality is you’ll never get the chance once they join your company. There’s never an opportunity for you to comfortably ask an employee about their entire work history and the core decisions they made over their life.

Onboarding

Once you make a hire, I recommend a deliberate onboarding process, which can drastically cut the time it takes a new employee to get comfortable and start being productive.

At Music Exchange we invest a lot of time getting new employees oriented to our people and processes to ease their path.

Dealing with an underperformer

Entrepreneurs have an obligation to their employees to create an environment where they can excel. Ultimately, if you really care about your employees, you want them to do the things that they want to do — in life and within the company, too. 

Your office should be a sanctuary for the people who work there: They should feel confident they will keep their job even if performance dips due to a personal issue or some other temporary circumstance. 

If an employee isn’t performing at a high level but they’re honest, have a good attitude, do reasonable work without major blunders and take feedback well, you owe them the right to try to find a place where they can creat

In a previous episode we discussed market friction, which I described as the heart of all entrepreneurial opportunity. This week we’ll discuss operational friction, which is central to profitability.

Theory of constraints

In the classic personal development book The Goal, Israeli management consultant Eliyahu Goldrapp outlines a “theory of constraints,” which essentially says that to achieve any business goal — such as profitability — you must first identify and resolve the operational friction in your organization. 

Friction can mean anything that slows your company down, impedes growth, or stymies innovation. Often, it’s seemingly small things that go overlooked until you start digging.

Friction is hindrance to the execution of strategy

A century a half before Goldrapp, the Prussian general and military theorist Carl von Clausewitz described a similar type of friction in his posthumously published book On War. He defined friction as the hindrance to the execution of strategy.

If your objective is to overtake an enemy, he wrote, the friction might be getting armaments to the frontlines: managing supply transport, keeping the horses fed, etc.

Work on the business, not in the business

How do you identify the operational friction in your business?

First, you need to free up time to think about the big picture — and the minutia. In the classic book E-Myth Revisited, author Michael Gerber wrote that the goal for leaders is to work on the business, not in the business.

Have a vision

You have to have a vision of how something might be done. Have a dream scenario that you’re trying to achieve.

Look for the chokepoints

Then scrutinize all of the things that may be causing friction along the way. Ask, “Why aren’t we able to do this today? What’s holding us back”

Look everywhere for the bottlenecks — the things holding your organization back from achieving your main objectives.

Essentially, you’re asking, “What’s wrong with the way we’re doing things today?” 

Understand your objectives

The key is understanding your objectives. For example, are you trying to increase the throughput of a specific system within the business or lower the costs of a certain process? Defining your objective helps you hone in on the chokepoints. 

The ‘little’ things aren’t always

When you do this, you end up paying attention to seemingly little things that are easily overlooked. It could be a policy that requires someone to take an extra step, which adds that much more time or cost to a process, and ultimately hinders your ability to hit your company’s objectives.

Often, it’s something put in place by accident.

Formula 1 now vs. 1950

There’s a great YouTube video, “Formula 1 Pit Stops,” comparing a pit stop from 1950 to one today. A process that once took 67 seconds now takes less than 2.

Pit crews removed friction across the entire chain: They adjusted policies, such as quadrupling the number of people on a pit crew; they invented new tools; and they started training like professional athletes. The result: faster pit changes than anyone thought possible in 1950.

Elon Musk’s ‘production hell’

Elon Musk was in what he called “production hell” recently. Tesla built an assembly line to automate the entire process, in order to reduce their operational friction and cost of production. But it didn’t work, and humans had to take everything back over. 

During this time, Musk slept on the factory floor working out small engineering problems to improve the efficiency of the line. In order to understand those issues, Musk felt he had to be there 24/7.

Get into the details

When you roll up your sleeves like Musk to investigate, it’s among that morass of small things that you find the one thing that matters and has an oversized effect on everything else. A lot of times it’s decisions that you made before that people take for granted.

Measure the right things

To do this well, it’s crucial that you track the right metrics. If a 1950 pit crew measured its performance solely by what their competitors were doing, they’d be setting their sights too low, compared to what’s possible. 

Knowing where things are today doesn’t help you understand what’s possible in the future. 

Low-hanging fruit

When you see a lot of capital — whether time or money — spent in one area of your company, that’s often low-hanging fruit for improvement. 

Don’t over-correct

Organizations can create their own friction by overanalyzing what went wrong and trying building elaborate mechanisms to ensure it doesn’t happen again. So you have to put things into perspective.

The biggest thing

The biggest thing is asking questions about why something can’t be so much better than it is — and not incremental better, but transformationally better. 

It’s an automated assembly line.

It’s instantaneous auction listings on Music Exchange.

It’s a pit stop in less than 2 seconds. 

These are the types of things that reduce friction within an organization and lead to sustainable profits.

Resources

E-Myth Revisited, by Michael Gerber

The Goal, by Eliyahu Goldrapp 

Every entrepreneur needs to develop skills managing teams.

Your management style will evolve over time, and you’ll find some styles work better than others depending on the environment (the nature of the industry, the makeup of the team, your own level of experience as a manager, etc.).

There are two basic approaches: managing by design and managing by intervention.

Managing by intervention

Managing by intervention is common, especially among larger companies. This style relies on highly structured environments. It’s all about systems and structured feedback.

An example is situational leadership, which we discussed  in our “Wartime CEO” episode. It’s a framework to analyze an employee’s development and apply the right leadership style. I’ve also used Goals Setting & Review, a series of highly structured one-on-one meetings for goal setting.

Especially for companies with inexperienced employees, these systems can accelerate the education curve and minimize failure.

The downside to these systems is twofold: First, these systems are hard to implement. They require time and attention to implement, which gets exhausting over time.

Second, they limit your team over time. If you take a systematic approach to hiring and managing, eventually you’ll end up with a homogenized team that’s neither resilient nor very dynamic.

Managing by design

On the other hand, managing by design allows your team to explore — and capitalize on — the unimagined. This style relies on people and environment, rather than systems and structured feedback.

When you manage by design, you allow failure to happen in order to learn and improve. The manager’s job is to create an environment where employees might succeed, and allow things to evolve organically.

This approach requires you to focus on:

• hiring the right people, 
• creating the right environment, and
• giving the right feedback.

Why managing by design 

Managing by design is a better fit for Royalty Exchange because we’re constantly innovating and exploring new ideas. We’re not a widget factory that runs well with a rigid structure. We’re a group of individuals who are constantly learning and adjusting.

This approach requires strong, independent thinkers with innate curiosity who are willing to disagree. Great ideas come out of the creative friction that comes from employees with strong points of view disagreeing.

If you thoughtfully construct an environment where failure is embraced, the results of your team can surprise you. Things happen that you couldn’t imagine before. 

This process also leads to a more resilient company.

Giving feedback

In either approach you pick, giving valuable feedback is critical to success.

With management by intervention, you follow a structured process for providing constant feedback. With management by design, that process is just as important — though it looks different.

With the intervention approach, feedback tends to be artificial. It’s often driven by a key performance indicator (KPI) the company decided on, which may be leading them down the wrong path. With the design approach, you provide feedback differently, looking instead for friction among your team.

Evolving your style

Even if you start with a structured process, that may loosen over time as you and your team gain experience.

There’s a natural transition from a very tight to much looser style. At first you give employees explicit instructions of what needs to happen. Then, over time, it evolves to delegation and you become less involved in the day-to-day. You give employees more of a free rein with some structured feedback along the way.

Resources:

Radical Candor by Kim Scott.

Market friction is at the heart of all entrepreneurial opportunity.

When you’re looking for a business idea, consider the things that keep people from doing what they want to do. The current product or service might be too time consuming, too expensive, or too confusing to use. Often, there’s a technology solution.

You can find friction in markets with lots of uncertainty and ones that require specific knowledge. Internal deadlines — like an upcoming wedding — can be a strong motivational currents that lead to market friction.

Be-do-have

To identify market friction, examine consumer motivation.

I use the “be, do, have” framework: People are motivated to be something, do something, or have something.

Apply this framework to your customers to figure out what motivates them and what keeps them from achieving their goals.

Strong vs weak currents

The best entrepreneurial opportunities have strong motivational currents.

Something that a customer needs — not just wants — by a certain time is the recipe for a strong current. 

It could be a customer’s need to get taxes filed by Tax Day, or fit into a dress in time for a wedding. When you identify the internal deadline, you can now focus your marketing on it.

Why me?

Once you’ve found market friction with a strong motivational current, ask yourself: “Why me?” 

Why are you the person to solve this particular problem? Do you have any expertise? Do you understand the complexities of the market?

Will it grow your identity capital?

Next, consider whether the opportunity will grow your “identity capital,” a concept coined by Dr. Meg Jay in The Defining Decade. This is the accumulation of knowledge and skills you need to be successful over the long-term.

Your calculation depends on where you are on your entrepreneurial journey. When you’re early in your career, gaining identity capital matters more than anything else you can do. Under a big mountain of hard work is the only place where you’ll find your passion.

Is it worth it?

The next question to ask: “Is it worth it?”

Is this worth devoting the next decade of your life to? Because that’s how long many businesses take to become successful. 

With Royalty Exchange, we saw that, in the U.S. alone, artists were collecting $3 billion a year. If you put a 5x multiple on it, that’s a $15 billion market, large enough to spend many years pursuing.

Do you understand the constraints?

Just as importantly, you must understand the natural constraints in the market: What are the limiting factors to success?

The market opportunity may be gigantic, but if there are major hurdles to being successful — government regulation, for example — then it may not be worth it.

Do you have a plan to attack it?

Next, do you have a plan to attack the opportunity?

When I get most excited about a business opportunity, it’s usually because I can see how I’d attack the market in a new way. Often, it’s a unique approach to distribution. It could be a sales or marketing advantage.

What’s the first step?

For many people, this next step is the hardest: What’s the first thing you’ll do to drive customers to your door?

A lot of entrepreneurs get excited about solving problems — especially when the market is significant — but fail to see their vision through. You have to be able to define your plan of attack. Be specific. Write down the first thing you’ll do.

Ideally, start small and grow.

As with any business, a side hustle boils down to creating recognized value for others. When you create obvious value for someone else, you can get paid. The more value you create, the more you can make.

When thinking about a new business or side hustle, people make the mistake of focusing on what they want to do, rather than the value they can create for others. You want to flip that: Ask yourself what you can offer that’s valuable to others.

Side hustle vs. employee

As an employee, you sell your time for a relatively fixed value in exchange for a level of certainty.

That’s really no different than driving for Uber. As a driver, you’re offering a service for less than you could get on your own, in exchange for Uber’s distribution to customers who want your service.

If I’m a farmer, I know the value of my products can swing wildly depending on supply and demand factors when I bring products to market. I can gain some certainty by selling all or part of my crops in advance for a fixed price. I might end up being worse off than if I’d waited and sold at harvest time.

The customer decides your value

I usually take issue with the phrase “the customer’s always right” because people look at it like whatever the customer wants, a customer should have.

The intended meaning is that it’s the customer that decides the value that you’re creating in a free market system. If customers decide the lettuce you grew is only worth $2, then it’s worth $2. The fact that you spent 30 hours tending to it makes no difference to them.

Do things ‘beneath’ you

There are a lot of things that people think are beneath them that would actually make good businesses. Depending on the career stage you are in, you should probably focus on these types of things — opportunity exists in the things others don’t want to do.

Here’s a small example: Fewer and fewer people mow their own lawns these days. Rather, they hire big lawn companies that charge a premium price for a mediocre job. 

Those are the types of opportunities an entrepreneur can exploit.

Get as close to the customer as you can

With a business or side hustle, you ultimately want to get as close to the customer as possible — because that’s where the real value creation happens.

You might use someone else’s platform starting out, in order to start interacting with customers. You’ll make less money, but you’ll get valuable experience.

For example, if you want to be a tutor, platforms like Tutorme.com will connect you with customers. The site will pay you less than you could make if you found your own customers. But in return, you’ll learn about your customer and the problems they face; you’ll see how the service is delivered and where the holes are. 

Own your list

The end goal is to build your own list of prospects.

Starting out these, might be people who are interested in what you’re doing and want to follow you. You raise your flag and say, “This is the business I'm in. This is the kind of stuff I like to do. If it’s interesting to you, let me know.”

We talked in previous episodes about the beef business I’m pursuing here in Colorado. A local rancher had a product he wanted to get to customers, so he started with farmers markets. Once his list grew to 200 emails, he no longer had to go to the markets because he could build a business around those leads. 

He migrated from a very inefficient platform (farmers markets) to owning his own list and getting organic growth.

Lead magnet

You can offer a lead magnet to draw customers to you — some free tool or valuable piece of information that makes people want to engage with you.

For example, if you’re selling communications services, you might offer up a template for messaging matrix in exchange for an email address. Anyone who downloads that template is likely to be a prime target for your consulting business.

Courses are another way to attract a customer base. I helped create a management course for Early to Rise University that gets great reviews. I could offer that as a consulting service, but this way I can offer it to more people and focus on the things I really enjoy doing.

Content strategy

Once you have a list, you then have a responsibility of creating value for your customers on an ongoing basis. Great information markets you better than anything else you could possibly do.

Your content strategy gives you an opportunity to organically enter the conversation with potential customers on things they’re already thinking and talking about and the needs they already have.

When I run a newsletter, I create editorial pillars — messages that align with what I’m selling — and then look for conversations happening around that topic. For example, one of the pillars for one company was resilience, so we’d look for news stories about people put in situations where they needed to show grit.

Charge dramatically more

Once you’ve drawn in enough people and convinced them of the value you deliver, you can consider charging dramatically more for your services than is typical. 

Instead of charging $2,500, maybe you charge $25,000.

You won’t get as many clients from it, but the ones you do get are willing to pay it because of the credibility you developed.

Resources

The Reluctant Entrepreneur by Mark Ford (who writes with the pen name Michael Masterson), the founder of Early to Rise and a mentor of mine.

Ryan Deiss at DigitalMarketer.com offers extremely helpful advice for anyone looking to market themself or their business.

In this conversation with my friend and mentor, Doug Casey, we discuss the money system, it's history, and how it's set up to the detriment of most Americans. We talk about how the prospects for real war have increased dramatically over the last few months. And we talk about what Doug Casey's investing in right now and so much more.

Look closely at just about any successful enterprise and you’ll see gambits they made along the way — small bets on an unclear future that, however unlikely, would produce outsized gains if they paid off.

Gambit comes from the Italian gambetto, “tripping up.” It’s a device, action or opening remark, usually with some risk, that’s calculated to gain a future advantage. When you make an opening move, offer something, or start a conversation with something that seems self-sacrificing but is really a ploy for a later advantage — that’s a gambit.

In chess it’s when you sacrifice a pawn in your opening move to put yourself in a position for a future move.

When a gambit doesn’t work (which is usually the case), you end up losing a pawn and moving on. When a “gambit” results in losing your queen or king — that’s not a gambit. So it’s important to be able to tell what initiatives are gambits and follow rules to ensure you don’t sink the ship in pursuit of them.

Fundamental asymmetry

In my favorite of Nassim Taleb’s books, Antifragile, he writes about “fundamental asymmetry,” which happens when risks and rewards are out of balance. He offers the example of a dinner party invitation: If you go, the worst-case scenario is that the food and company are lousy and you waste a few hours; and the best-case scenario is that you meet your future wife.

When you go to the dinner party to expand the boundaries of what you know to be possible (in this case, in your love life) — that’s a gambit.

Bullet, bullet, cannonball

In his follow-up to Good to Great, author Jim Collins advises companies to “fire bullets, then cannonballs.” Bullets are like gambits: low-cost, low-risk, low-distraction experiments to figure out what will work. According to Collins, companies gain a line of sight by taking small shots. Once they have a calibrated line of sight (empirical validation of their test), they fire the cannonball: They concentrate resources into one big bet.

Collins uses Apple as an example: There was iTunes for Mac, then the iPod, then the iTunes music store. Bullet, bullet, bullet. Then came the cannonball: the iPhone.

That’s not quite right, though. I see them all as bullets: Apple achieved an improved position with the iPod and iTunes and fired more bullets in that direction, producing the iPhone. We just happen to remember the bullets that worked — and forget about the other 50+ products Apple launched between the iPod (2001) and iPhone (2007). We forget about Xserve.

Infinite game

In The Infinite Game, Simon Sinek writes about approaching business like there are no boundaries. Whatever map you’re holding is far too limited, because things are changing and expanding in ways that you don’t understand. 

You’ve got to continually explore the boundaries of what’s possible. If you aren’t constantly looking around to see where those edges are, you’ll find yourself stuck in a very small space that you’ve imagined. Meanwhile, people around you will be operating in a different world without the artificial constraints you place on yourself.

Gambits, by definition, are unlikely to succeed. But they will improve your map of the territory and help you get oriented.

Gambit - Feedback - Iterate 

Successful companies take gambits to get a basic map of the territory. Once they have the map, then they iterate. For example, Apple produced 24 versions of the iPod; so far they’ve built 25 versions of the iPhone.

The gambit is for invention and understanding. Iteration happens once you figure out how to capture the value of the market. It requires organizational discipline. It’s tinkering, making something better within a roughly known context.

At Royalty Exchange, we don’t really know what our product or marketplace will look like in the long term, but we know much more than we did four years ago because of the gambits we’ve taken. We’ve tested ideas knowing they’ll likely fail. Even when they “fail,” we learn something. When they work, they change the trajectory of our business. I think of every one of our hires as a gambit — each time we’re not fully sure where it will go.

Growth hacking vs. gambits

Gambits and growth hacking can look alike because they are similar in some ways. But they are different.

Similarities:

• Look for new ways to grow.
• Put out ideas or products, get feedback, and adjust. 

Differences:

• Growth hacking is mostly direct response marketing — it’s about optimization. 
• Gambits are non-linear bets designed to discover what might be possible.
• Growth hacking answers: How do we sell this? 
• A gambit invents the future.

Explore — but don’t overreach

The key is making gambits work is twofold: 

1) Gambits are exploratory. They should expand the overton window, to shed light on what’s possible. When they work, gambits provide a set of keys that might unlock that future.

2) Never overreach. Never bet the farm.

You build great companies by taking smart gambits and creating the environment for success. You’re not putting the company on the line with moonshot attempts. Rather, find the smallest step you can take to start exploring some new areas.

When calculating the cost of the undertaking, remember it’s the actual dollar cost and the time and energy it takes you. If you can move fast on a low-risk gambit, often it’s worth it. 

Create a hypothesis about the future — then test it

Create a hypothesis about the way the future might be, and then test it. Ask yourself: “What is the smallest thing I can do to test my hypothesis?”

A gambit can be a small advertising campaign to see what customers respond to, or a new hire in an area your company hasn’t explored before. Try something small and then look for a signal.

One of the best features of a gambit is that you get feedback very quickly. You put something small out and then you essentially look for any type of positive validation you can find. 

If you put out a small advertising campaign, are people talking about your company? If you made a new hire, are they changing the dynamic of your team in any noticeable way? If there’s no signal coming back, then the lack of signal is in itself negative feedback.

Either the idea was bad or the execution was bad. In either case, it’s time to readjust and make your next move.

The ancient Greek philosophy of Stoicism has enjoyed a resurgence in recent years, particularly among entrepreneurs, that’s only increased in the wake of a global pandemic. (The Times reports that sales spiked recently for works of two of the great Stoic philosophers, Seneca and Marcus Aurelius.)

While “influencers” like my friend Ryan Holiday, who’s written several books on the subject, have helped stoke renewed interest in these ancient teachings, they have stood the test of time because they work.

Stoicism is particularly attractive because it’s a practical philosophy created and taught by emperors, former slaves, and others who interacted in the “real” world.

The best possible life

The primary goal of the philosophy is to live as well as one possible can. Epictetus said the goal of a Stoic education was to create excellent people, not excellent philosophers.

Stoicism teaches us that rationality and knowledge are the highest virtues and will lead to a happy life. Modern-day philosopher Nasim Taleb defines a Stoic as someone “who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.”

To do this, we must train ourselves as observers of the world; understand the things that are in and out of our control; and act on the things we can control.

Correct use of impressions

It starts with understanding what things are in your control. You must constantly monitor your thoughts and responses to understand your own programming and then intentionally program them differently. 

The “correct use of impressions” was the cornerstone of Epictetus’s teachings.

An impression is anything that pops into your perception, either from an external event or your own internal thinking. (If you’re driving and have to react to someone standing in the road, your perception of that person crossing the road creates an impression in your mind. If you get an email with unwelcomed news, your mind creates an impression and labels this information as “bad.”)

Anything outside of your control cannot be “bad,” because it’s part of a natural order of things. Even when a pandemic happens, killing hundreds of thousands of people all around the world, Stoics view it as a natural part of an interconnected world—not something to consider “bad.”

Rather than immediately labeling things in your head and reacting, ask yourself: “What if this weren’t bad?”

We all do this in retrospect. We see the good in a “bad” situation after the fact and end up thankful it happened. The trick to Stoicism is doing that in the moment

Negative visualization

For a Stoic, thinking only about the positive things you hope will happen leaves you woefully unprepared to deal with negative things that could happen—and, in fact, are destined to happen (more on this in a moment).

The Stoic practice of negative visualization helps you prepare for external events outside of your control.

Epictetus suggests that, when kissing your child goodnight, imagine they will die in their sleep. As horrible as this thought process is, this would put you in a better position to respond if it really did happen. You wouldn’t be totally blindsided. And the act of thinking the scenario through will make you more appreciative of the time you have.

Imagine the things that you’re afraid of and what you avoid thinking about: What will happen if you lose your job, or if people discover you’re not as smart as they think? Whatever your fears are, imagine them to the furthest extent, in detail.

Predestination

The Stoics took this thinking a step farther. They believed all events are part of a destiny that’s laid out in advance. You might call it “God’s plan.” 

Marcus Eralius would say it’s nature, of which you are an appendage. Seneca taught that the world is connected. The universe is a tree, and we’re all branches on it. We exist for the purpose of the tree, not for ourselves.

If you believe in predestination, you believe you were put in whatever role you find yourself in for a reason. So, you must do that role well.

This sets up a paradox: Stoics believe in predestination (that you can’t change external events because they are meant to happen) and they feel a radical sense of responsibility to act when they are confronted by things that are in their control.

Responsibility to act

One of the major misconceptions about Stoics is that they are devoid of emotion or passion. While Stoicism teaches you to create emotional distance between the things you can’t control, it also teaches that you are duty-bound to act on things you can control. You have responsibility to act.

If you’re given the ball in a game, the thing that matters is what you do with the ball. That’s what’s in your control. Nothing else matters, not the game itself or the outcome.

Stoicism teaches that you have an obligation to strive for excellence, if nothing else.

There’s an idea in Stoicism that we’re all bartering for something throughout our lives and that the meaning of life comes from that barter. We’re bartering our life’s energy, trading it for things throughout our lives without even knowing it. For example, I consciously recognize the sacrifice and discomfort that comes with parenting; I intentionally trade my life’s energy so that my child can go do something in the world.

Stoics recognize that the point of life is to trade their life for something meaningful.

My views on PR have changed as I’ve learned to use it strategically for my business. Antony Bruno, our director of communications at Royalty Exchange and my co-host on this podcast, taught me a lot about how to do it well.

I first invested in PR with the goal of filling our talent pipeline. I wanted people in Colorado, where we’re based, to know what a great place Royalty Exchange is to work. Over time, as we got more and more impactful coverage—in places like CNBC, Forbes, The Wall Street Journal, and The New York Times—I got a more complete picture of the power of PR when it’s done well. 

PR can be a good strategy to drive new customers to your platform, product, or service. Positive news coverage can grow your pool of candidates for recruiting and boost your team’s morale. PR also has more leverage than other activities like advertising because of the compounding effect: Press begets more press. 

Take a long view

PR can pay huge dividends for your company—but it takes time. This is one area of your business where you have to take a long view. You’re not going to hire a PR firm and all of a sudden get rushed onto the set of CNBC.

People often label a company an “overnight success,” even though the founder’s been working hard at it for years. It’s like that with PR: You need a focused effort over time to build up the credibility that allows you to get breakthrough stories.

If you have a finance company, your first media coverage probably isn’t going to be in the Financial Times. It’s going to be in a trade publication or blog that covers your industry. Those smaller PR wins are important because they signal to bigger outlets that you’re credible.

Know what you want to say—then listen

First, you need to know what you want to say. Then, you need to listen for opportunities to tell your story.

Distill your messages into three to five key messages that you want to communicate. In any opportunity that you have, you’ll look to deliver at least one of those. Then, listen to the outside world and try to connect things you’re hearing to those messages. 

It’s important for founders to understand they’re not talking in a vacuum. The more your story connects with the things people already are talking about, the more effective your PR will be.

Many companies are understandably focused on what they’re doing in their day-to-day. You need someone who’s listening to the outside world and can figure out where your story fits in. You want to know things like where your customers “live” online and what they read. Read the publications your customers read to get a sense of what’s happening in the zeitgeist (and what your competitors are saying). 

For example, I’m considering investing in a business that delivers meat to homes here in Colorado. One of the strengths of the business is that it uses a very simple supply chain because the meat is grown locally. That’s a strong story for the moment because news organizations are devoting a lot of coverage to the food supply chain.

Solve a reporter’s problem

You have to earn the right to be covered in the press, which means solving a problem for a reporter. The reporter’s problem is that they need a story that’s useful and interesting to their readers.

Know what beat a reporter covers and what type of stories interest them. You’re in a much stronger position if you can articulate why you think your story would be of interest to a reporter’s readers, based on your knowledge of their past work. That’s a better approach than blindly sending things out and hoping someone takes interest.

Chum the waters. Send updates on what you’re doing on a regular basis. A reporter may take the information you give them and find a reason to include it in a story months later, maybe when they’ve picked up on a broader trend that your story falls into. 

Small hits can lead to homeruns

Coverage in smaller, more niche outlets can be valuable on its own. At Royalty Exchange we have a catalog up for auction for a popular metal band Slipknot. Mainstream media outlets aren’t interested in this, but niche music sites that Slipknot fans follow have picked it up. We got quite a bit of coverage out of it that led to a spike in new users..

Also, articles in niche publications also get picked up by larger publications, so a PR hit can turn into a homerun.

Are PR firms worth it?

Like anything else, before you hire a PR firm you want to define your goals. Make it very simple: “I want to accomplish A, B, and C.” When you interview PR firms, share those goals and have them recommend a tactical plan to achieve them. 

A lot of PR firms tout the relationships they have with reporters. The important thing is that the firm knows which outlets cover your space and has the channels to reach them.

For smaller tech firms, a large all-service firm may not be the right fit. Consider finding a boutique firm that specializes in your industry vertical. An idea of Antony’s that I like: If you have a relationship with a reporter who covers your industry, ask them for a recommendation based on their interactions with different firms.

When you hire a firm, your success will depend a lot on the direction you provide to them and how well you manage the firm. Provide an overarching strategy—and then hold them accountable.

As we’re seeing with the Covid-19 crisis, assessing risk and responding when things go wrong are critical skills for entrepreneurs. The problem is, this is very hard for us to do. We’re wired to think tomorrow will be the same as yesterday—until something happens that we didn’t see coming and we’re snapped into a new reality. 

Normalcy bias

A challenge we all confront is normalcy bias. This is a view that’s hard-wired into us, that tomorrow will look a lot like yesterday did. Thinking like this serves us well 99% of the time.

We all operate with a set of basic operating assumptions that create the foundation of our normalcy bias This is the foundation of how we view the world around us; it’s how we decide things like what’s possible and what’s impossible. It guides our day-to-day decisions, which then become automatic. We create a narrative about the world around us and repeat it in our heads. We flip the light switch, and the lights turn on. Before long, we can’t imagine a world where we flip the switch and the light doesn’t turn on.

Don’t assume tomorrow will be the same

You don't have to identify the 1% of the time when normalcy bias doesn’t serve you. Rather, examine your assumptions about things that fall outside of your control and ask yourself: Are you assuming those things will always be OK? 

One thing that’s helped me be successful as an entrepreneur (and survive several of these economic macro-shocks that we’re experiencing) is that I’m really suspicious of my own biases—and especially my normalcy bias. I’m constantly looking for new information or data to disprove the running narrative in my head that tomorrow will be fine because yesterday was.

We watched the largest quarantine in human history unfold in the Wuhan Province months ago—yet most of us ignored it because it didn’t fit with our narrative about pandemics. The narrative from previous pandemics is that the world makes a big deal about them and they don’t end up affecting us.

The ‘turkey problem’

Author and philosopher Nasim Taleb calls normalcy bias the “turkey problem.” He writes: “A turkey is fed for 1,000 days by a butcher, and every day confirms to the turkey and the turkey’s economics department and the turkey’s risk management department and the turkey’s analytical department that the butcher loves turkeys, and every day brings more confidence to that statement. But on day 1,001, there will be a surprise for the turkey…”

The more time goes by, the more anything can feel “normal.” 

I have a friend who works at a derivatives desk at a major financial institution. She graduated and started her career in 2008, the first year of the bull market. The market’s been going nonstop ever since. Because she’s never seen a downturn, she assumes things will always be fine.

Recognize what’s in your control (and what’s not)

Entrepreneurs, especially, need to be able to see the complexity in the world around them that most others take for granted. They need to anticipate where those systems may fail.

Like the Stoic philosophers teach, you want to recognize what is in your control and what is not. Try to expand the boundaries of what’s in your control and examine your assumptions about what’s not.

Be on lookout for things that contradict the narrative

You have to look specifically for things that could prove your narrative wrong. You have to be looking for information that’s not necessarily what you want to hear and doesn't fit the narrative you have in your head.

We watched the largest quarantine in human history unfold in the Wuhan Province months ago—yet we ignored it because it didn’t fit with our narrative about pandemics. Our narrative, from previous pandemics, is that they don’t pan out even as the world makes a big deal about them.

You can still act

When these types of events happen, entrepreneurs can get stymied into inaction. No matter what situation you find yourself in, there’s always some action you can take now—even if it’s merely putting a plan together.

A friend of mine had a physical products business in town that got overextended. He borrowed money to buy his partner out. He hit this huge cash crunch and the business was collapsing around him. It was slow motion train wreck. I told him, “You can still do something—but you have to move fast. You have inventory that you can turn into cash. If you wait, your choices narrow.”

Links:

• Influence, by Robert Cialdinihe

Full show notes: https://smith.substack.com/the-turkey-problem