Hello Misfit Nation! Welcome to another edition of "Lessons for Hannah!" Many years ago, I introduced a new format that alongside our regular episodes called “Lessons for Hannah.” Hannah is my daughter and one of the main inspirations for the Misfit Entrepreneur. I wanted to have a place where she could go and learn from her daddy and his Misfit friends throughout her life….even after I am gone. If you haven’t listened to the first episode of "Lessons for Hannah," I urge you to as it gives some more background and tells the amazing story of how Hannah came to be in our lives.

Lessons for Hannah are short, very useful, and sometimes comical lessons, that I want to share with you and give to Hannah to help in your lives. Because I want Hannah to have these for her life, I’m going to speak as though I am talking directly to her. These episodes are a lot of fun and if you think there is a lesson that we should include in these episodes, please don’t hesitate to send it over to us at support@misfitentrepreneur.com. We’d love to share it.

This week’s Lesson for Hannah

Hannah, Between this Lessons for Hannah and the next one, you will turn 9 years old. Nine! It feels like it was just yesterday that I held you for the first time and saw your first smile. Time goes so fast, and you wake up one day and your baby has grown into an amazing little girl who is already making her impact on the world. Hannah, you have impacted your mother and I in so many ways (most of them good, ha ha) and I wanted to take this time to give you 9 ways you are amazing as you turn 9 years old. Here goes.

1. You have a beautiful and caring heart and are not afraid to show your love to all those around you. You are always there to put a smile on our face or give us one of your little notes telling us how much you love us. Never stop doing this.
2. You have a mischievous side that keeps you active, and yes sometimes get you into trouble, but keeps you curious and learning – and keeps us on out toes. Although, it sometimes frustrates me, this quality will prove so useful during your life. Never stop being curious or learning.
3. I love, love, love the sense of humor you have developed. It’s witty, yet sometimes sarcastic, but always playful. You’ve even started talking in movie lines like your crazy dad and mom do way too much. (Also, the occasional quote from The Office)
4. You are also strong, not just physically (amazingly, at 9 years old, you are just about a black belt), but also in the way you approach life. This isn’t surprising – you have always been strong and brave since the moment I first held you.
5. You have a talent for music and continue to grow and increase your abilities every day. I don’t say it as much as I should, but I love hearing you sing while playing piano or your Ukulele.
6. You are very comfortable in your own skin and being by yourself. You can keep yourself busy for hours and are independent in your way. Many people afraid to be by themselves and face who they are. You do it every day and can with ease because of your good heart and curiosity for the world around you.
7. You are very giving. How often do you whip out your little wallet and offer to pay for something like groceries or want to give to one of your family members? It’s like 10 times a week. And of course, even though you persist, I have to explain that you do not have to buy our groceries, but the act of giving and helping others is inherent in you and I love that you want to and are always look for ways to help.
8. You are personable. While you are very comfortable being on your own, you are also great with others and easily can adapt to new people and become fast friends. You can walk into a room full of people you’ve never met, and within a short time, almost everyone will know you and like you. This is just part of who you are – never lose it.
9. Lastly, you are an amazing blessing to your mother and I and all those you come in contact with. You are an incredible daughter, granddaughter, friend, cousin, sister to your puppies, and a bright light of goodness in this world.

Hannah, I could keep listing ways you are amazing, but you’ve got a lot more birthdays ahead of you and I need to save a few to add to this list each year. Just know that your mother and I, family, friends, etc. love you, are proud of you, and are so lucky to have your impact in our lives. Happy 9th birthday!

I love you,

​Daddy

Best Quote: Many people afraid to be by themselves and face who they are. You do it every day and can with ease because of your good heart and curiosity for the world around you.

Misfit 3:

1. Keep growing, learning, and being true to yourself.
2. Never stop doing to little things for those you love and showing you care.
3. The willingness to give to others is a wonderful quality. Never lose it.

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Misfit 3:

This week’s Misfit Entrepreneur is Matt Lohmeier. You may have heard of Matt as he has been in the news over the last year when he wrote a book and spoke out about the dangers of marxism and its effect on people’s lives, especially the military. He was a lieutenant colonel in command of a space-based missile warning squadron for the United States Space Force and was subsequently terminated after writing the book and speaking out.

While Matt’s story has been controversial politically – politics is not why I asked him to be on the show. No matter who you are or what you believe, at some point in your life you will need to take a stand to defend your principles and in today’s day and age with seemingly endless twitter mobs and cancel culture rampant, that is not an easy, no, an almost impossible thing to do. I want to explore what compelled Matt to take his stand and use his lessons learned to help you for when it’s your turn.

And lastly, while I know Matt has deep concerns about marxism and its danger to the American way of life – I think there is something that is even more dangerous and that is the loss of entrepreneurs. We are going to explore all this and more in this episode.

www.MatthewLohmeier.com

Book: Irresistible Revolution

The views that Matt expresses are his views and not those of the military. Matt has served in the military for over 15 years and has been a fighter pilot logging over 1200 hours with F15s and other planes. Most recently, he was in command of a space unit in the Space Force. During 2020, as he saw what was happening in the culture and the woke culture, he recognized the seeds of marxism behind a lot of it. And he saw how much it was polarizing society. He recognized many of the talking points of marxism from his studies in the military and on his own.

At the 5:30 mark, Matt talks about the oppressor vs. oppressed mantra from Marx and the Communist Manifesto and started to see it being brought into and impacting the military. There were trainings being done in the military that re-enforced marxist principles. He saw it as his duty to speak up and wrote his book the Irresistible Revolution. He was fired a week later.

What was the catalyst that compelled you to take your stand?

• The military service member shoulders and important and large burden in that they have to be and remain un-political.
• Politics until recently have remained out of the military, but things have become much more politized.
• This started to create a climate in the military that stifled free speech and made service members fearful. It created a climate that hampered innovation and started to infringe on the oath he took to defend the Constitution.
• Matt believes that integrity and preservation of the individual and their rights and freedoms is paramount and could not let those things be infringed upon.

Can you explain why marxism is such a danger to the American way of life, entrepreneurs, and the individual?

• At the 13 min mark, Matt talks about the founding philosophy of the US with a focus on the individual and their natural rights vs. marxism’s goal of collectivism and removing the worth of the individual and instilling that worth in a group instead.
• Marxism can only survive by making everyone a victim and calling for violent force to overthrow the system and creating a collective run state that owns the means of production and is control or all – no private property, no natural rights, no entrepreneurship, etc.
• It destroys the individual and their potential.
• The principles the underpin the founding of the country are what have unleashed the potential of mankind and given them the freedom to reach it, especially for entrepreneurs.

Entrepreneurs are great at using logic and reason to succeed, but as a whole, society runs more on emotion – how do we get back to using logic and reason as a society to better manage the emotional reactions so many have in today’s world?

• There is emotionally induced illogic and the influence of emotion on the ability to think critically is important to understand. This has been studied and it has been proven, the more emotion, the more the ability to think clearly is diminished.
• At the 25 min mark, Matt explains this throughout history using examples and how we can get back to logic/reason and better tap into the entrepreneurial side of ourselves.
• Pay attention to rhetoric. For example, equality vs. equity. People have the right to be free of discrimination or roadblocks to equal opportunity. But equity means forced equality of outcomes, not opportunity. This is totalitarian. It ends up in inequality and discrimination of one group over another.
• If the state has to ensure outcomes, it chooses what people get and forcibly takes from others. It becomes a large authoritarian/totalitarian lust for power state.

Entrepreneurs are the biggest line of defense. Everything stems from entrepreneurship. To take an idea from nothing and do what has to be done to create something around it that creates benefits for others that impacts their lives and the lives of others. Capitalism and the principles of the US unleash this. What an incredible opportunity we have at our fingertips every day that most do not have.

What should entrepreneurs be doing to share and show the success of entrepreneurship and capitalism?

• You are a leader – whether leading a large or small group, or just impacting one person for your sphere of influence.
• You must do all you can to foster the creative impulse and spirit of entrepreneurship and keep forces that would destroy it away.
• Leaders influence culture and impact culture – this can be positive or negative.
• Dialogue is a good thing, but context in which dialogue unfolds is important.
• You must share ideas and the logical reasons for them, but not force ideas on people and lead out of fear.
• Everyone is uniquely situated to bring something to a team – discussion and free thinking is critical to a great culture and you as a leader must foster the kind of climate that can allow this and allow for disagreement without punishment.

What advice would you give someone to get over the hump and take the stand they know they need to take?

• Some things are worth falling on your sword over and other things just aren’t.
• You have to determine whether the issue you think you need stand on is really worth it.
• If so, you need to study and learn about the issue very well and be very well versed in it. You must understand it.
• You also must weigh the cost(s).
• The book Ordinary Men is an example of what can happen if a stand is not taken.
• Matt judged the issue to be worth the cost and it was important to speak up early before things became worse. ​

Final thoughts?

• The loss of entrepreneurship is a devastating blow to America and Marxist ideology directly threatens that. These are issues that should not be partisan.

Best Quote: The loss of entrepreneurship is a devastating blow to America and Marxist ideology directly threatens that.

Matt's Misfit 3:

1. Be authentic. Speak the truth. It will enhance your life personally and professionally and speaking the truth is courage which is desperately needed.
2. Determine your aim and pursue it vigorously by prioritizing your life consistent with that aim.
3. Learn constantly, but don’t be ever learning and never come to the knowledge of the truth of things. Seek truth to reason appropriately and use logic based on sound principles.

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This week’s Misfit Entrepreneur is Jeff Wald. Jeff is a serial entrepreneur and founder of WorkMarket, an enterprise software platform that enables companies to organize, manage and pay freelancers efficiently and compliantly. Jeff built WorkMarket from scratch and sold the company to ADP in 2018 for over $400 million. Jeff and WorkMarket won the Stevie Award for best HR software, were ranked as one of CNBC’s 25 Companies to Watch and received several other awards.

But as with any entrepreneur story, it wasn’t success out of the gate. Jeff had failures and learned a lot of lessons on his way to success. His story and the legacy he has created with it is truly amazing and I cannot wait for him to share it with you today, along with his best advice to succeed as an entrepreneur.

www.JeffWald.com

Jeff says he was fortunate to be born into his family and be born in the U.S. He started his career in finance as an M&A banker at JP Morgan working 100+ hours a week. He then went to business school and when he came back, he realized that it wasn’t the best fit for him or his life. He ended up at a venture firm and after a few years in, he really felt the call to entrepreneurship. He was helping people create their dreams and there was something about that was so amazing to him.

His boss told him that he needed to go after this calling. He did and funded the business himself. The business failed and he lost everything. In fact, his mother called and asked him if he needed to move back home. He had 30 days before he couldn’t pay rent and figured out how to create some income. Ironically, several years later, he restarted the business and ended up selling it for a nice profit. For a while Jeff wouldn’t tell people about the failure and the 2-year depression he went through. He didn’t want to own it. Eventually, he did and learned that sharing his story and telling the truth about his journey helped him find his true self and become a more effective person. It was freeing.

At the 9 min mark, Jeff and talk about this process of freeing yourself, but realizing fear and those things are still there, but you learn to handle them better.

At the 14 min mark, Jeff shares the story or Workmarket…

• The idea had been around Jeff and his co-founder’s idea board for almost a decade.
• In 2010, they decided it was time.
• They raised $6 million for the business from VC’s
• The idea was to create a solution to help manage the Gig workers and contractors.
• After a year, they launched the product connecting the buyer and an on-demand labor force.
• They ended raising a total of $70 million and then ADP came knocking.
• At the 18 min mark, Jeff tells the story of how ADP ended up buying the business.

What was in the PowerPoint slides that landed you $6 million in initial investment?

• Looking back, the presentation/look was terrible.
• But the ideas and what they were setting out to do was spot on and exactly what they did. That was what people invested in and what they did.

What is the future of work nowadays?

• There are 3 broad trends
  • Remote work and flexible work are one bucket
  • The on demand/gig economy
  • The 4th industrial revolution of robots and AI and how it will impact the labor force.
• In Jeff’s book, The End of Jobs, he discusses these trends.
• A lot of people out there talking about this stuff want to be heard more than they want to get it right.
• Jeff’s goal is to present the trends based on evidence, so his framework in the book is looking at the history of work, looking at the data and the trends/patterns, and then looking at how companies engage workers.

What are the main findings from work?

• For remote and flexible work, the pandemic has rapidly brought forward a more flexible workforce and has broken the 9-5 paradigm. It has also changed the need for location proximity to work.
• As for on-demand labor, this is not something new and has been around for a long time. About 25% of the labor force is on-demand and it is growing slowly.
• As for robots and AI, it is important to understand that we have been here before. We have been through huge technological improvements that greatly improve productivity.
• Each time, we end up with more jobs from new ones being created where others are lost, people making more money and ultimately working less.
• The key challenge is how we help people transition to new types of work and how smoothly that can be done.

At the 33 min mark, Jeff and I discuss why it is such a good time to be an entrepreneur.

You’ve said, “Ideas are cheap.” Explain that.

• “Ideas are cheap, the will to execute is expensive.”
• The idea you have is not unique – someone else has had it.
• The difference is whether you act on it and bring it to fruition or not. The idea is super cheap. It is the will to do it that is expensive.

Top 3 lessons learned going through a process to sell a company?

• Bankers are useless.
• Going through a process is a huge time suck. It takes a lot of your time and you need to be prepared. It’s like having another full-time job.
• As you build your company, you need to be building it with the mindset of creating value in the capital window you have to sell or maximize its potential to investors or buyers.
• You should know what you potential buyers or investors care about for a business like yours and focus on those things. ​

What are the values you used to build the company that resulted in a lot of other companies being created by employees?

• Jeff would tell employees and encourage them to go after their own dreams and create their own businesses if that is what they really wanted.
• Core values were learning and transparency.
• He would share everything with his team about the business to be transparent and help them learn.
• Jeff would put on startup events for his team to help them walk their own journey.
• It helped make employees more well-rounded at a minimum.

"Best Quote: Ideas are cheap, the will to execute is expensive."

Jeff's Misfit 3:

1. Ideas are cheap, the will to execute is expensive. Get out there and start!
2. No one will care how much you know, unless they know how much you care.
3. The key to success is getting knocked down 7 times and standing up 8.

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This week’s Misfit Entrepreneur is Aryeh Sheinbein. Aryeh is the founder of Results Driven Advisory, a firm that has 2 primary focuses. The first is to help business owners value their business, then improve the value of the business. Second, to help business owners grow their own wealth while focusing on the business. Aryeh has and still works with Alvarez & Marsal as a Managing Director. The company is one of the premier advisory companies to the world’s biggest hedge funds and private equity firms on business valuation.

He’s maintained this while building multiple successful companies such as Results Driven Advisory helping clients throughout the world. ​

And I wanted to have him on to discuss a few topics, of course how to make sure you get the full value out of your business and maximize your wealth, but also how to successfully build companies while still working in a professional you love under a company.

www.Solutionadvisory.com

Instagram: @AryehTheBusinessMan

Aryeh went to college and got a degree in finance and wanted to be on Wall Street as an investment banker. After two years, he moved to a small private equity/VC firm that was more of a family office. They invested in early stage companies and small businesses that they grew and sold or took public. He did that for 4 years and it helped to shape his path. He was the only junior person on the team and worked with private companies. He then went back to Wall Street and spent time in hedge funds and equity firms, then ended up where he is today helping those firms in valuing businesses. He always had the drive to do other things on his own and built his own businesses or invested in them along the way.

What should business owners know about how to truly value their business? What do they get wrong?

• For most business owners, the majority of their net worth is tied up in the business, the asset. And most don’t think about maximizing that for themselves.
• The starting point is the value today and the ending point is what you take home when selling. You have run the business to get to the destination in the right way.
• Business value differently. Manufacturing is different than SAAS, etc.
• Buyers are interested in the future cash flow. What does the business throw off in the form of cash?
• If you are not generating free cash flow, you have to show how the growth with get there and how it will pay off. If you are, you need to maximize the cash flow as much as possible. Essentially, EBITA.
• Recurring revenue in addition to good EBITA is important for value. It is valued higher than one off revenues.
• If possible, you should work to have a recurring component to your revenues to help your with your value.

What should an entrepreneur do to start increasing their value? And how does recurring revenue affect the multiple on a business?

• You need to layer in a recurring or subscription stream of revenue and automate it as much as possible.
• Look for complimentary products or services to your core product to add a recurring component with.
• Increase net revenues (EBITA) by either strategically lowering the cost to deliver your solution or look at ways to increase your pricing – do both if possible.
• Look for economies of scale in where you can add more clients without adding cost. ​

How do you achieve a liquidity event without selling it?

• You can do this with debt as a cheap cost of capital.
• It must be debt as vehicle that the business can handle.
• In a similar way you can do a “cash out refinance” on a home, you can do the same with a business loan.
• At the 20 min mark, Aryeh goes through an example of this.

Thoughts on exiting a business?

• There are many different factors, but the first to understand is that there are two types of buyers: Financial and Strategic.
• A Financial buyer is buying with the intent of a future financial gain or return on the invest in buying the business. They will pay a fair market value in the middle range.
• A Strategic buyer is a competitor or a complimentary business and views your business as a good “add on” to their business and plug it into to their offerings.
• Strategics get more economies of scale and thus typically pay a premium value for a business as the sole purpose is not just a financial return, but there are other businesses or capabilities that the target brings.
  • Think of Dollar Shave club being bought because they created a niche and it was easier for Unilever to buy them and the niche than to compete.
  • Most business owners work on and in their business but have little time to focus on their own wealth. How can an entrepreneur maximize their personal wealth while short on time?
• Increasing the net worth of the business increases their net worth, so maximizing that is a start.
• If the business is generating good cash for the business owner, most business owners hire a financial planner or advisor. This industry is driven by limitations in that they sell financial products and/or are paid a percentage of assets, but these fees really eat away at the growth potential of your capital.
• Additionally, you are not able to see all the investment vehicles available to you.
• The #1 thing, if you want to be educated, is that whoever you are going to deal, you have to know, like, and trust, and they need to show they have a broad knowledge base.
• Look for true investors that are Fiduciaries if you are going to work with an advisor.

Thoughts on 401ks and other investment vehicles?

• If you are an employee, take full advantage of 401ks and the match.
• There are limitations in that you cannot invest in things like real estate, etc. in a 401k.
• 401ks stick mostly to mutual funds and ETF’s which over 90% do not beat the S&P 500 over time.
• Fees are also important to track and make sure you are on top of as it is surprising at how impactful they are to the growth of your 401k in a negative way. Keep fees as low as possible and limit them in every way you can. ​

How do you manage it all and do what you do? ​

• You need to have systems for things.
• Things need to be able to scale.
• Standard operating procedures that are documented and can be followed by team members is critical.
• Your goal is not to be needed in the day to day but be needed strategically.
• What is the trade of time? You have to see what it takes and is capable of doing before you can know if it is something you want to continue.
• You must personally develop and get to know your true strengths to find complementary strengths in others and fill your weaknesses.
• Staying healthy is very important as well.

Best Quote: For most business owners, the majority of their net worth is tied up in the business, the asset. And most don’t think about maximizing that for themselves.

Aryeh's Misfit 3:

1. People are super important in business and life, and it is a 2-way street. Your development in people skills and communication is critical to success.
2. Focus on things you enjoy doing and to do this, you need systems to help you do so.
3. Use systems to help manage and do the things you don’t enjoy. Always be learning. It really compounds your growth over time.

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