July 6, 2026 – Third Federal CEO Marc Stefanski and 6 Exits Mike Grossman

Intro 1 0:04
Broadcasting from AM and FM stations around the country. Welcome to the Small Business Administration Award-winning School for Startups Radio, where we talk all things small business and entrepreneurship. Now here is your host, the guy that believes anyone can be a successful entrepreneur, because entrepreneurship is not about creativity, risk, or passion. Jim Beach.

Jim Beach 0:26
Hello, everyone. Welcome to another exciting edition of School for Startups Radio. I hope you’re doing great today out there, riding the roller coaster life, and making some money, and helping the economy grow, and helping by employing people, and giving them good salaries, and having a product that people like and are willing to pay for. Thank you so much for all of your entrepreneurial efforts. And if you haven’t started your business yet, you are in the right place to get motivated and educated about all of the tips, the tricks, and the techniques to be successful. We have a great show for you today. First up, we have Mark Stefanski. He owns a bank, and will tell us that story. He has been the owner of Third Federal Bank his entire life, and it was a family business, and it’s an amazing story about his success, his family situation of owning a bank with your family. It’s just a great interview. I’m excited for you to meet Mark. And then after that, we have Mike Grossman. He is going to talk about failure as an option, that failure is not necessarily the worst thing ever. And we’re going to play some quick 10. So we got a great show for you today. And thank you so much for being with us. We will be.. yeah, we’re gonna get started. Just a second, we are back. And again, thank you so very much for being with us. Very excited to introduce my first guest today. His name is Mark Stefanski. He is the CEO and president of Third Federal Bank. It is an Ohio-based bank that his parents started, and he has grown it to be one of the largest players in Ohio and in Florida. I discovered, and therefore in the nation, as well, specialized in mortgage and savings, that kind of thing. Mark has taken all this and put it into a book talking about his career. It’s called People First, the third federal way. Mark, welcome to the show. How you doing, sir?

Marc Stefanski 2:38
I’m fine. I’m fine. Thank you for having me. It

Jim Beach 2:40
is our pleasure. Buy a book now. What’s your goal with this? Is it for your grandchildren?

Marc Stefanski 2:48
Yeah, my kids and grandkids. And I started the book 10 years ago, but life gets in the way, you know. I had a business to run, and I had some family issues. My wife passed away of pancreatic cancer, and so, yeah, lost a few brothers and sisters, so you know it wasn’t a priority in my life, but I wanted to get it done at some point, and finally finished it more recently, last year,

Jim Beach 3:14
with the help of the good people down there at Forbes. I know them, they’ve been on the show several times.

Marc Stefanski 3:21
Yes, they were terrific, great

Jim Beach 3:23
work. So, and that’s also very prestigious to have your book published by Forbes. That’s, I think, quite an honor. Tell us, let’s start off by, well, first, sorry about your wife, but you did get remarried, right? So, you,

Marc Stefanski 3:38
I did, yes,

Jim Beach 3:39
okay,

Marc Stefanski 3:40
married Vanessa 11 years ago. Now,

Jim Beach 3:44
fantastic. Tell us about your parents in the beginning of the bank.

Marc Stefanski 3:47
Well, you know, they, they were a product of the Depression, 1929 and my father actually was running an old building in loan that closed its doors in 1929 and he spent the next seven years paying back any depositor 100 cents on $1 He managed, managed the real estate, collected mortgage payments and rent payments, and went back out into the community, and whoever had an account, he made everyone whole, 100 cents on the dollar, like I said, and along the way, too, he had a little bit extra money when he was dating my mom to take her out on a date every once in a while, so in 1937 they got married, and on their honeymoon they applied for the charter, they went to Washington DC, and before they got on a boat for the Bahamas, they applied for the charter, so it’s really a family business, and a family-supported business for the last almost 90 years.

Jim Beach 4:56
Briefly, to interrupt, How hard was it back then? To get a charter ago, now it’s not impossible. There are new banks that pop up every once in a while, but certainly takes $50 million or so. What was it like back then?

Marc Stefanski 5:12
Well, they had to come up with seed money from the community commitments from community people that would actually put a deposit in the bank, and it was 50,000 was the requirement, and then from there there was a lot of paperwork, and my mom, who was highly educated at the time, she had her master’s degree in business in 1920 I’m sorry, 1932 she got that, then you know they made a great team. My father knew the business, and my father was the promotional person, the salesperson, and managed people’s money, and my mom was sort of the brains behind the outfit to be able to get all the paperwork together, and it truly was a marriage, not only from a husband-wife perspective, but also a team to start and begin a business.

Jim Beach 6:07
Why third federal? I’ve never understood the numbers of this, and churches, you know, third Peach Street Church is Fifth Third out of Cincinnati. Yeah, Cincinnati. Cincinnati, yeah. What’s up with Third Federal?

Marc Stefanski 6:26
Well, you know, at the time we applied for our charter, and if you were a federal charter at the time, you, you could get federal insurance, and my father wanted federal insurance, and you had to be a mutual association, you know, not a stock company, and so there was already a first federal and there was already a second federal, so we were the third federally chartered savings and loan in Cleveland, and that’s how that came about. There wasn’t any huge marketing, you know, Blitzer nuances. It was just basically we were the third federal chartered in the city of Cleveland.

Jim Beach 7:12
And what about number one and number two? Are they still around?

Marc Stefanski 7:15
Oh no, they’re

Marc Stefanski 7:20
gone.

Jim Beach 7:21
Good, we outdid those guys, all right. So, your father then built the bank on a particular niche, the Slavic community, is that true?

Marc Stefanski 7:34
Yes. Well, actually, it was actually, it was a Polish community originally, and back then my father would lend to people that were for two reasons, one, if the house was brick, and second, if the people were Polish, that assured him that he was going to get, he’s going to get people to pay them back, but, of course, you know, all kidding aside, that’s all gone away, especially with the advent of the internet, and you know we’re practically dealing with people in every state of the union now, with our headquarters still in Cleveland, and with the beachhead, literally speaking, and in Florida as well.

Jim Beach 8:18
Florida, from what I’ve heard, is a very difficult market with the condos going bankrupt because they’re not up to code and the volatility of the market and then on top of massive floods and the hurricanes, you know. Thank God the mudslides are putting out the fires. Um, why Florida? What’s the.. I thought it was a dangerous place to do this company.

Marc Stefanski 8:41
Well, originally there was another company in Cleveland that set up shop in Florida as well, and we found that the deposit base would pay – we didn’t have to pay out as much for deposits in Florida, so this was before the internet, and so the market was, was very, very good in terms of garnering up savings, and then the housing market began to explode, and you know that’s one of the fastest growing states in the union in terms of housing, and again we lend still based on my mom and dad’s philosophy on lending on single family owner occupied homes only, and you know we do first mortgages and second, so we’re assured of people paying us back because they usually live in the property, and you know that’s usually the last thing to where the people stop making payments, so they can keep their homes,

Jim Beach 9:44
of course. Makes a lot of sense. And so then, what was the transition like when you became the boss? You were the youngest of five.

Marc Stefanski 9:58
Well, it’s interesting. Thing family dynamic, and you know every family has them, and especially in family business, and my brother, oldest brother, and my father really never got along, and my brother had one way of running the company, and my dad had another way, and so unfortunately that didn’t work out, my brother, oldest brother worked for my dad for 25 years, so then I had a sister, and my dad was old school, although my mom was part of the business. My father felt that my sister, actually both my sisters, had, yeah, kind of men first mentality, and then my other brother, my dearest closest friend, brother, he was three years older. He and my father did see eye to eye, and you know, he was.. we were a product of the late 60s, early 70s, and you know, there was some radical views that changed the family dynamics, and so when I came along the caboose, I had learned a lot from my brothers and sisters, and I credit a lot of my success to watching them interact with my mom and dad, and watching the family business kind of, you know, move in some great directions, and at the same time kind of erode the family structure, and you know, Thanksgivings and Christmases just weren’t the same, and I said, my gosh, I said, you know, there’s certain things I can do and should do, and there’s certain things I’m never going to do, you know, like trying to kind of go toe to toe with my father was just not a smart thing to do. It was his business, and you know, my mom supported a minute, and there was no future in trying to make those changes until the time was right. So I was, I was like the last resort, and so far it seems to be working out. And the one thing I want to point out is when, when the son takes over for the father, who is the founder, if the son does well, the father had a good business. If the son doesn’t do well, the son screwed it up. So I’ve been spending the last 40 years trying not to screw it up.

Jim Beach 12:12
Interesting family dynamics. I’m sorry you had to go through all of that. And thank you for sharing. And you’re right about the second generation, that’s just the luck of the draw, I think. The pro and the con of that. So, yes, it is the natural way. My brother came on when I was running my business, back in my first business, back in my 20s, and he went off and got an MBA and all that fancy stuff, and then came into my company at about year five. At that point, we doing, I know, 10 million a year or something like that, and I brought him in with sort of no title, but certainly high up, and he was just clueless, and every idea he did had was John. Just shut up. Just, it was horrible. We shouldn’t have done that. Shouldn’t have mixed in family. That was a big mistake.

Marc Stefanski 13:13
Well, it’s always a challenge. It’s a blessing and a curse. And if done the right way, it can be terrific, but you know there are family businesses that don’t succeed, you know, a business called Fidelity Investments, that’s a family business, and that they manage 3 trillion over $3 trillion so it can be done, it can be done, but again, you have to put your egos aside, and we figure it out now, moving forward with the next generation who is in the family business. Now we figure it out, it’s family first and business second. So, no matter what, we want to make sure that we maintain our family relationships, because, like I said, Christmases or Thanksgivings can be hell.

Jim Beach 14:02
Yes, they can. What’s been the secret to your success since you took over? What was that, 8789 something like,

Marc Stefanski 14:10
yeah, 1987 Yeah. Well, you know, my father had a stroke, and then he couldn’t work any longer, and the board put me in as chairman, CEO, and president, actually, how

Jim Beach 14:24
old were you?

Marc Stefanski 14:24
I was 32

Jim Beach 14:28
Okay, and

Marc Stefanski 14:30
already it was a multi billion dollar company, and so the two things that were important to me, one was to maintain the continuity in the business from a people perspective, and again stick with the product line that I knew was successful, because, like I said before, I didn’t want to screw it up, and and so I was blessed with with two fine gentlemen executives that decided to stay on after. My father couldn’t work any longer, so I had some great continuity going forward, and then as I saw fit to hire people and to fill the holes of the organization, as we were growing and growing fairly quickly, I hire people from the outside, and it’s been a nice success story, but it’s been based on the value system that we have, and the values of love, and we say love is a genuine concern for others, so we have love, a trust, commitment to excellence, treating one another with respect, and having fun, and hopefully we have fun with one another, not at someone’s expense, and so a lot of companies do have a value system, and they post it all over the company on the walls and everything, but they don’t really make decisions, or they don’t really run the company with those values in mind. And we made a conscious decision a long time ago to evaluate our personnel, evaluate the folks that work with us and for us based on the values, not necessarily on production. Now, we, our expectations are high. We expect everyone to produce, but we also expect that during the course of the day that they’re going to have love and respect for people that they’re working with, and it’s worked out great because you get a beautiful synergy out of it, and you know our turnover rate is only 3% in the banking business, it’s upwards of 30 35% so we’re doing something right in retention, and because of that we get a great synergistic effect that people pick up after one another, and they help one another, and you know, at times, when times are trouble, if someone has some personal things going on, the team around them, or the company, actually a lot of times rallies to raise money for the family, or to give them the kind of support that can help them through a tough, difficult time.

Jim Beach 17:06
You mentioned earlier that this is a mutual association, not a stock company. Can you explain that the employees basically own the company, or the customers do, and I noticed on your website, the Third federal.com that you have a message up right now talking about the vote coming up for the Mutual Holding Company. Explain all that for us third graders, please.

Marc Stefanski 17:37
Oh my gosh, I’ll try. It’s a little complicated, but a mutual association basically is owned by the depositors and the people that have loans. They have voting rights, so there’s no stock in the company. So annually, you have to get these people to vote on various different things, and we used to have meetings, but in 2007 we did an IPO, so we technically we are a stock company now, but it’s a mutual holding company, and that evolved out of a 1987 act by Congress. It was called Fire REA, and what the acronym means, I’m not exactly.. yeah, I can’t exactly remember, but it allowed for mutual associations to issue stock, but not necessarily have to sell the entire company out to the general public, because what happened to many, many companies that were mutuals back then, they would raise all this money, and then they would do stupid things to try to improve their return on equity for the shareholders, and they would get into products and services they knew nothing about. They would take excessive risks, and so Congress actually – this is one of the good things that Congress actually came up with, and the regulatory environment did – they came up with this idea that if you give a, if you do a partial stock sale, then you can have, you can judiciously get that money out into and employ it, and and do that without taking excessive risks, and then if you want to issue more stock, you can do that, or do a full, full conversion, but right now we are a mutual holding company with 20% of the company stock outstanding to the general public, and the 80% is owned by the mutual holding company, which is basically controlled by the board of directors.

Jim Beach 19:40
All right, I think you described that very well for us third graders.

Marc Stefanski 19:44
Best I can do it. It’s complicated, but and it’s different, but we find that it’s been well to our benefit, you know? Right before the mortgage crisis, and that’s all we did was we’re mortgages, and still do I. Um, we got our litmus test because we survived that, but one of the reasons why we survived it is we did the IPO and raised over a billion dollars in capital in 2007 as we know, 2008 and 2009 the mortgage crisis hit pretty hard in the mortgage area, so consequently we we weather that storm, we made money every year during that crisis, and had a huge capital base, a 20% capital base to carry us through,

Marc Stefanski 20:34
which is

Marc Stefanski 20:35
high, most most companies have a five and 6% capital base, we had 20 going into that mortgage crisis, so we’re strong, stable, and safe, as our, as our motto says.

Jim Beach 20:50
So, when do I create the culture? My company, do I.. you know, there’s four of us now, and we sell the best chitlins anywhere around, man. Our chitlins are just amazing, world famous. People drive from two, three miles to get our chitlins. That’s how, and we’re really growing, you know. When do I start caring about culture? What do I write it down on the eighth employee? On the ninth employee. Do I have a culture committee? Tell me about instituting a culture across time.

Marc Stefanski 21:28
Well, it starts right at the top, I think. If you’re the business owner or the president of the company, how you treat people is going to evolve and disseminate throughout the organization, and I’m a believer in people, and you know you have experience, you get burned, but for the most part it’s been a wonderful life in that respect that I love people and I have faith and trust in people, and we decided to write that stuff down to make it our value system. How we’re going to run our business, and so it’s got to start the keeper of the values would be me, or in your case, yourself. And whether you have one or 1001 people working for you, that sets the tone right there. It’s the top notch people in the organization are living by the values, making decisions that way, that’s going to materialize in such a way that it’ll seep into the organization, and it’ll be a tremendous benefit, but if you give it lip service and you don’t truly live by those values, and you’ve seen this happen in many, many businesses throughout time, people taking shortcuts or stealing from the company or having affairs, extramarital affairs, something like that erodes, and that that that cancer spreads throughout the organization.

Jim Beach 23:03
All right, very true. When you have a broken culture or a company that you are thinking about working for, and they’ve given you a great offer, but you can already tell that the culture is something is askew or asunder. You take the job if you need it. I need the job.

Marc Stefanski 23:25
Yeah. Good, good question. I would say, if you can find a better alternative, that’s even better. Although, if you’re getting hired for a top position in the company, you may be able to change the culture, because, like I said, that starts from the top down, and there’s nothing better than to have the CEO living the values, or the manager of that particular area living the values, or the owner living those values, and it’s, you know, it’s much like having children, you know, you could talk to them till you’re blue in the face, but you’re going to find that they’re going to, they’re going to copy what you do more than what you say, and you know you have to be able to live that, that good clean life if you want to set the example, and it’s not perfect, don’t get me wrong, you know, I’ve made many, many mistakes, fortunately, I’ve had a great team around me in my young career and my old career. Now that if there is a slip up in some way, shape or form, it’s, you know, we get back on track.

Jim Beach 24:36
What do you see at the macro economic level for the next six months year, something like that.

Marc Stefanski 24:44
Boy, that’s a loaded question. Because I was darn sure that interest rates were going to come down, gas prices would be below two $2 a gallon again, and things would be much better. I never counted on a war with Iran. So that just shows how much I know, and I’d say we’re still going to see interest rates, for example, kind of stable where they are. They might dip a little, and they might go up even a little bit, but I don’t see any dramatic changes, and you know, for a company like ours, which I think actually is true with many companies, if the interest rate environment, the economic environment, is kind of stable. Companies do really well, interest rates go up quickly, or they go down quickly. It’s very tough to manage your business, no matter how insulated you think you might be, and how many safeguards you have, it’s still a rocky road, and especially for small and mid-sized businesses, you know, multi trillion dollar businesses may not be affected as much because they have such diversity in their portfolios, but you know, if you’re selling what you’re selling, if prices go up and down real quick, people, people get jittery, they get nervous, they get scared, and that, that in itself evolves into kind of a stalemate in the economy. So stability is what we’re looking for,

Jim Beach 26:22
oh, yes, very well said. How do we find out more? Get a copy of the book, get a mortgage, all that, please.

Marc Stefanski 26:28
Well, we’re at Third federal.com not to be confused with Fifth Third, but Third federal.com and my book is on Amazon, People First, and and the third federal way, and it’s actually just on audio too on Amazon. Yes, we do home mortgages, first and second home mortgages. We compete on price on both the savings side and the mortgage side, and we usually have the single most competitive rates for any particular product that we offer for savings, and you mentioned about these 10 things that I should be asking you about. Are we still, we still have time for that? Those 10 questions.

Jim Beach 27:19
Say goodbye first. Thank you for being with us, Mark. We love the information, and we’d love to have you back. Thank you, sir.

Marc Stefanski 27:25
Okay, it was my pleasure. Thank you for having me.

Jim Beach 27:28
And we will be right back, you

Marc Stefanski 27:45
Well, that’s a wonderful question.

Intro 2 27:48
Oh my gosh, I love the opportunity to do this. Thank you, Jim. Wow, that’s that’s that’s a great one. You know, that is a phenomenal question. That’s a great question, and I don’t have a great answer. That’s a great question. Oh, that is such a loaded question, and that’s actually a really good question. School for Startups Radio.

Jim Beach 28:08
We are back, and again, thank you so very much for being with us. Boy, am I excited to introduce Mike Grossman to you. He is a Silicon Valley executive entrepreneur and has now become an author as well. Get this, this is amazing. He was the CEO of six early stage companies, and they were all acquired. That gives him 1000 batting average, the way I calculate things. He’s author of a new book called Failure Is Not an Option: Reflections of a Silicon Valley CEO. That I’m adding this, that never failed. Mike, welcome to the show. How you doing?

Mike Grossman 28:44
Oh, thanks a lot. I appreciate the chance to be on.

Jim Beach 28:48
Have you ever failed, Mike? You’re six,

Mike Grossman 28:51
I have. And actually, just to be clear, the title of the book is Failure Is an Option, as opposed to Failure Is Not an Option, and really the point is that failure is a constant condition of these crazy early stage startups, even ones that end up having a successful outcome. You’re constantly confronting adversity, you constantly have things that go wrong, and it’s unavoidable. And so, for all the things that worked out pretty well in the end, there were many things that didn’t work out along the path,

Jim Beach 29:25
all right. So, all the companies I’ve ever run, we’ve always had catastrophes and disasters and bad things happen, and I always thought that that was us screwing up, that was, we, we did wrong here. We didn’t deserve that victory. We hadn’t planned well enough. It seemed like I don’t know where I was going to go with that.

Mike Grossman 29:47
My experience is that failure is just part of the process. I mean, I’ve certainly made some good decisions and bad decisions in my career. I’ve made lots of mistakes. I’ve also done things. All, and sometimes things just happen. I was in one case, the second company I was running was doing extremely well, and then Congress abruptly passed a law that legislated our business model out of existence, and so what was successful suddenly became much less successful, and yes, we did have an exit, but it wasn’t for very much money. I had a different company that was on the verge of going IPO, and then COVID happened, and the IPO blew up because of that. It was put permanently on hold, and it looked like we had, you know, not very good opportunities. And then along came a big company, swooped in, and spent a lot of money to acquire the company, so I just seen that timing luck, it all has kind of a random quality and has an enormous impact on what actually happens, and I think it’s actually a mistake to assume that, and I’ve made this mistake that if you work really hard and you do a really good job, the outcome is going to be good, it’s much less predictable than that in real life.

Jim Beach 31:04
Well, I’ve certainly found that to be true. You don’t necessarily get a reward you deserve based on how much time you put in

Mike Grossman 31:11
fact.

Jim Beach 31:12
Yes, so that is very, very true. Okay, I’d love to hear some of your history, Mike on the board of Intuit. I’m sorry, Quicken and Film Hub, a lot of names that I recognize here. How did you make the distinction from vice president level material to, oh no, he’s a CEO level guy. When did you notice that you were going to have a super successful career. Was it the Harvard-Harvard degrees? Were you the smartest kid in the class when you were 12? You automatically, you just knew then. Tell me some of the history of your brain.

Mike Grossman 31:54
Okay. Well, I probably was the smartest kid in the class when I was six. I’m not sure by the time I was 12 that that was true anymore, but no, I mean, I realized when I was about seven or 17 or 18 that I wanted to pursue entrepreneurship and be involved in starting companies, and I was always interested in technology, my father is a technologist, and so the idea of going to Silicon Valley was very appealing to me. I think I assumed early in my career that if I worked really hard, that the outcome would be good, because that’s what my experience had been in a school context and my initial jobs, and so off I went. I embarked on this entrepreneurial career, and to my, I guess, surprise in some ways and chagrin in other ways, I found out it’s not so simple, and it doesn’t matter just how hard you work, you have to work hard, but, but a lot of strange things can happen, and I ended up in a career that I never specifically intended, running these crazy early stage companies that have big highs and big lows, and you fail a lot along the way, and I made a lot of mistakes, and you also work with great people, and you figure things out, and now here it is, 30 years later it has turned out well, but I don’t think it had to. Just sort of, I kept at it and kept trying to adapt, and sometimes things worked out better than I expected, and sometimes they worked out worse than I expected. And I tried to reflect that in the book.

Jim Beach 33:38
I read an article last night about how Mackenzie’s model is failing was McKinsey the incredible training that they say it is, was that the launch pad of your career?

Mike Grossman 33:51
It was the launch pad, but I think in a different way, the training was good, but the main benefit to me was that I spent the first year mostly with one client, and that was Apple, and it was at a time when Apple was a long time ago, but Apple was doing very well. They had just kicked out Steve Jobs, and no one realized yet how bad a mistake that was. The company was still doing well, and it was such an exciting place to be, and it was then that I realized this is where I want to be. I want to be in Silicon Valley. Technical innovation, entrepreneurship is is what I want to pursue. So that’s really what I got out of the McKinsey experience. I’m not surprised that they’re not being disrupted by AI and other factors, that’s sort of the nature of innovation.

Jim Beach 34:45
That’s an interesting time to be there at Apple, right after Jobs was fired. We, I had a Jobs biographer on the show a couple of weeks ago. It was really interesting how important. Those years away from Apple were when he was with Next, I think. I don’t want to.

Mike Grossman 35:05
Yes, yeah, that’s right. I think that when he eventually came back, he had had learned a lot by being away that he was able to apply, but even the Apple that I saw when I got there, it was so exciting. I mean, people were rushing around the hallways, they were.. it was such a sense of passion and enthusiasm, it was.. it was electric, and I thought I got to be in an environment like this, and so I made an enormous difference in my professional trajectory,

Jim Beach 35:42
and then he started a company called Rim Pacific. I am a.. I’m sorry, that’s right. I am a Ren Spooner collector. I’m sure you know Ren Spooner.

Mike Grossman 35:57
I don’t actually

Jim Beach 35:59
go the original Hawaiian shirt.

Mike Grossman 36:02
Oh, that’s cool. Yeah, that’s great.

Jim Beach 36:07
He was the guy who figured out to flip the fabric and show the backside of the fabric to make it look aged, and they now are a really unique company. They introduce seasonal things, and college related, and movie related, and sports related, and things, and then they pulled them back, and there is a huge collector base on eBay and other websites just trading those shirts, so they claim to be the most collected shirt, and they have a place on their website where Crazy Bald Ben will send in their collection of 500 Ren Spooner shirts.

Mike Grossman 36:50
Yeah, that’s great.

Jim Beach 36:52
So I know this space. I used to live in Hawaii, actually, when that company was active.

Mike Grossman 36:59
So Rimpus, Rim Pacific was my first company. I co-founded it with a friend of mine from college, and it was right at the time when T-shirt technology had gotten good enough that you could actually put pretty high-quality art onto fabric for the first time, and so it ended up being a really art wear t-shirt company. We had licenses to a bunch of Australian indigenous artists on the one hand, and we also had the exclusive license to Norman Rockwell’s Art on the other hand. I asked, it’s kind of.. it’s a funny story. We got the license, it was exclusive, and it didn’t cost very much. And the question I was subsequently asked was, How do you, how do you get that? I called up, and I asked, and they said yes. So it was sometimes there’s a benefit of just, just asking, because the worst thing that somebody can say is no. And it was great, you know. We, we ended up selling T-shirts in the 10s and hundreds of 1000s to retailers all around the world, some of them big retail chains that don’t exist anymore, thanks to the internet, but some of them still exist. Places like Macy’s and Saks Fifth Avenue sold to United Nations gift store, the Baseball Hall of Fame, depending on the image, there were certain retailers that fit best, and in many respects, that was, I think, my business education was that company that was not a technology company, it was, it was different than that, but I learned an enormous amount that I ended up later being able to apply when I got to Silicon Valley.

Jim Beach 38:41
Why did you exit? Was it just a good time?

Mike Grossman 38:45
The business that business had a certain life cycle to it. So you’d introduce these images, and what we found is that there was a surge of interest, and you did a lot of business quickly, and it grew fast, but then it would level off and start declining, so you always needed to find new properties, new artists to leverage, and there just weren’t that many that I was able to identify that I thought would have commercial interest, and so eventually the decision was, why don’t we just wind it down, and this was always done on a part-time basis. It wasn’t my full-time job, I had bigger company jobs as

Jim Beach 39:29
a product manager.

Mike Grossman 39:31
Yeah, correct. And and it was around that time also that my wife got pregnant with kid number one, and so some decisions needed to be made as to how I would allocate my time, and the conclusion was that the T-shirt business would be wound down, and I would leave my job, and I would try to start a technology company, and that was that’s where really my career started in many, in many ways.

Jim Beach 39:55
Well, they are our shirts on eBay right now. Say they are Pacific Rim, are those yours?

Mike Grossman 40:03
If it’s Rim Pacific, they might be. If you find Norman Rockwell T-shirts, there’s a reasonable chance they came from that company. And there was another company, another line we called Outback Originals, perhaps they’re on eBay as well. I haven’t checked recently. They’re really great, though. The shirts I enjoyed that business a lot, because it also gave us an opportunity to give back. It wasn’t just art that people could appreciate and wear and enjoy, but also, for example, in the indigenous context, we were able to pay royalties back to indigenous communities in Australia, and so it was very interesting and rewarding, but I ended up pivoting in the technology direction, and I’m happy I did.

Jim Beach 40:51
So many listeners are pounding their head on the concrete, they can’t come up with an idea. It’s just the hardest part. I can’t, I don’t have an idea. You have six, probably throw ideas away with your napkins at the end of the dinner, doodle the new idea is gone. How do you have so many ideas?

Mike Grossman 41:12
Well, you, a lot of ideas end up being terrible ideas, that’s the answer. So I have a lot of ideas, and then you have to have a filled filtering process to figure out which ones are better and which ones are worse. I try to allocate time every day, every week, every month to brainstorming ideas, and I try to be very aware of problems that I experience in just regular life things that I see, like there’s got to be a better way to do that, or when I see something I haven’t seen before that I think might be appealing, I pay attention to it, I write it down, saying, “Oh, don’t forget this. So it’s an ongoing effort, I would say, to try to look for opportunities.

Jim Beach 42:01
Talk to me about that brainstorm that you do alone, pad and paper. What is it

Mike Grossman 42:09
like? It’s, it’s usually alone. It’s usually with my laptop, especially these days, sometimes with my mobile phone, but the main thing is allocating time to try to be creative and brainstorm. I’ve found that unless I’m very intentional about that, it doesn’t happen, at least not nearly as much. And so I essentially create meetings with myself and say, okay, 930 tomorrow, and the next day, and the next day after that, I’m going to spend half an hour, and all I’m going to do is think, and I’m going to try to remember and observe, and sometimes it’s ad hoc. I mean, I’m like out and out in the world, and something happens, and I think that’s kind of interesting. Is that the way that works? And then I’ll do research when I get home, but other times I’ll just reserve time just to think, type things up these days. I use AI a lot. When I have an idea, I’ll plug it in and see what other work is being done in that area, and every now and then you identify an opportunity.

Jim Beach 43:16
I love it. I’ve been using AI more and more, and I just had a great session two or three nights ago. We went about three hours just talking about my career and goals and problems in my life. It was unbelievable how useful it was in the insights that it gave me, and it was just really valuable. I can’t stress enough how I think everyone should be doing that. Everything you do, you should be putting into link into one of them, and let it just continue to learn about you. And it’s one of the most interesting things is, I said, “You know, tell me about my personality, and it wrote along.

Mike Grossman 44:02
That’s really interesting. Yeah, I’ve had the same experience. It’s, it’s very valuable now, and then it sometimes gets things wrong, and I think that’ll improve over time. But it’s, you feel like you’re talking to somebody, and it’s, I’m finding that it is helping me be very time efficient, and things that used to take hours can sometimes take minutes, and when, so it’s something I try to leverage a lot.

Jim Beach 44:30
So, let’s go back to the book. Failure is an option with the not crossed out or a hole punched in the page, where that would be, and you see coding behind it. I love the coding, I love the cover deep dive into what you want us to get from that. What are the takeaways? The book is the

Mike Grossman 44:49
book is a collection of 44 essays, each of which really stands alone, so it’s not written in a kind of conventional linear way each. Of the essays is a story based on my experience running these various companies, but in every case with a theme that I hope is maybe not expected or not obvious, and some of those themes relate to the importance of luck or the importance of timing, the importance of being very rigorous about managing the financial side of the business, which I think can often be neglected, and at the same time the importance of being, in my view, values driven and trying to not just articulate a set of values, but apply those values in an authentic way when building a team and managing a team, because if you do that, not only is it more fun, you’re also much better able to withstand adversity. I tell stories in the book about mistakes I’ve made. One example is the opportunity to sell the first company for a considerable amount of money at one point, and I overplayed my hand in the negotiation, and in the end we did sell some years later, but for less, and look at that as a mistake. Yeah, so

Jim Beach 46:21
overplay the hand, just got a little cocky. Tell me that story.

Mike Grossman 46:24
Yeah, there wasn’t so much cockiness. It was, we had identified a business opportunity. It was in small business lending. We had built the first website for that, enabled a small business to apply for a loan and get evaluated by multiple banks in real time, so within five minutes you could get a small business loan, and it was, it was really interesting, and it was very valuable. And we got contacted not long after people started finding out about us by one of the top online mortgage companies, a company that had recently gone public, and they asked to meet with us, and they tried to buy us, and they offered a lot of money. They offered their initial offer was $40 million and is at a time when my, my dad, who was one of the founders, myself, and my best friend Scott owned most of the company, and I took a look at this, and I thought, well, that’s a lot of money, but this company that’s making the offer, they only got founded a couple years earlier, they’re worth billions of dollars. If they’re worth billions of dollars, we should be worth a lot more than 40 million, and I somewhat quickly counteroffered 200 million. and that was too aggressive, and it ended up killing the conversation. And the truth of the matter is, I should have taken more time. I should have reflected on it. The three founders should have reflected on it. I should have spoken to my wife about it. I should have been patient, and had I done that, we probably would have done a deal for I don’t know 60 or 80, would have been great, and instead that was the end of the discussion, and you know, I learned something from that. So that’s that story. I mean, I’ve had other stories that are reflected in the book as well. I had one situation where, for that same company, when we were first raising money, an investor who was very interested decided he didn’t like my business partner and said that he would be willing to fund the company, but only if I got rid of him, and he was my best friend. I wasn’t willing to do it. The consequence of that decision is that for a couple of years we couldn’t raise money at all, so we faced a lot of adversity along the path, and that’s the way life goes in this type of line of work.

Jim Beach 48:56
There’s some great stories. I was raising money one time, and it was Paul Allen’s group that we were talking to in this particular story, and we were introduced by John, and John seemed to be fairly aggressive with them, like would show up with no appointment and expect to still have a meeting, you know, and we was talking about the hundreds of millions that he had raised or made for them, which was true, he had made them hundreds of millions of dollars, but he was still just a jerk about it, and eventually John and I parted, and I was still raising money, and so I went back to the Paul Allen group, just to see if you know, just on a lark, more or less, and they were going, we were hoping you would call back without John one day, we just hated John, and we loved you and your company, and we’d love to talk to you, you know, so never know how it’s going to play out,

Mike Grossman 49:56
no, you don’t, it’s very unpredictable, it’s, it’s a crazy. Ride, I didn’t, didn’t realize any of that before I started down this path, and I’m glad I did, and I’m glad this is the career I’ve pursued, but it’s certainly been different, more unpredictable, and harder than I would have anticipated, and I tried to capture that in the book.

Jim Beach 50:19
Mike, I hear you’re willing to play our little game, the quick 10.

Mike Grossman 50:23
I am

Jim Beach 50:24
all right. Are you currently sober? I’m required by state law to ask.

Mike Grossman 50:28
I am indeed

Jim Beach 50:30
all right. You don’t have to be sober, we just need to know which

Mike Grossman 50:33
it is. I am sober. Yes. Do

Jim Beach 50:35
you want to accept the standard wager?

Mike Grossman 50:38
I suppose, what is the standard wager? Maybe I should ask that first. Else

Jim Beach 50:42
made

Mike Grossman 50:43
well, I’ve learned from my negotiating days I need to know the details before I say yes.

Jim Beach 50:50
Well, you can’t play unless you accept the wager, so

Mike Grossman 50:53
okay, I’ll accept the wager. Yeah,

Jim Beach 50:54
it’s not that, not that onerous. Number one, your favorite creativity hack:

Mike Grossman 51:00
traveling.

Jim Beach 51:02
Number two two, best bootstrapping trick.

Mike Grossman 51:07
Carefully create a reasonable budget, and then cut it in half.

Jim Beach 51:14
Number three, name your top passions.

Mike Grossman 51:17
My family, my cats, international travel, tennis, and science fiction, whether it’s in books, TV, or show shows, or films.

Jim Beach 51:31
Number four, the first three steps in starting a business are

Mike Grossman 51:36
coming up with an idea, researching the idea, and because I’m in the technology context, creating a working prototype.

Jim Beach 51:45
Number five, the best way to get your first real customer is

Mike Grossman 51:50
give the product away for free.

Jim Beach 51:52
Number six, your dreamiest technology

Mike Grossman 51:56
is well, dreamiest technology would be time travel, but that isn’t really possible, and so I guess I’d say real time health monitoring.

Jim Beach 52:03
Number seven, best entrepreneurial advice,

Mike Grossman 52:07
to quote Mel Brooks, “Hope for the best, expect the worst.

Jim Beach 52:12
Number eight, worst entrepreneurial mistake,

Mike Grossman 52:15
what I mentioned, being too aggressive in an M and A negotiation, causing the negotiation to fail.

Jim Beach 52:20
Number nine, favorite entrepreneur, and why

Mike Grossman 52:24
Walt Disney figured out how to create an amazing business while making 10s of millions of people happy.

Jim Beach 52:30
And number 10 favorite superhero,

Mike Grossman 52:33
traditional superhero, I’d say Batman. Untraditional answer would be Roy Hobbs from The Natural. All

Jim Beach 52:40
right, fantastic answers. While we calculate the score and find out the winner of the wager, how do we get in touch with you? Find out more. Get a copy of Failure is an Option.

Mike Grossman 52:52
Failure is an Option is available at Amazon and vnn.com and all other big book websites. I have a website, which is failure as an option.com Also, have a sub stack called Failure Is an Option.

Jim Beach 53:07
Fantastic, Mike. Thank you so very much for being with us. You were a great.. oh, I’m so sorry, I just got your score. You got a 94 which is an excellent score, but you have to have a 95 to when we had several judges from Yale and Princeton this time, and maybe that’s it. They just didn’t like you. That’s the reason.

Mike Grossman 53:25
Yeah, yeah, I think that’s probably

Jim Beach 53:28
what happened. So you owe us a Tesla. We always play for a Tesla.

Mike Grossman 53:33
Oh, okay.

Jim Beach 53:34
Look forward to receiving that soon.

Mike Grossman 53:36
It’s in the mail, I think. Yes.

Jim Beach 53:40
Great, great. Thank you. We’d love to have you back. You were great, Mikey. And thanks for being with us.

Mike Grossman 53:46
My pleasure. Thanks a lot.

Jim Beach 53:47
Well, thank you so much for being with us today. We are out of time, but I greatly appreciate you great listeners. Go out there and make a million dollars. Bye now,