August 14, 2026 – Output to Outcome Dr. Mik Kersten and Pitch to Payoff Brad Poulos

00:00 Jim Beach: Hello everyone, welcome to School for Startups Radio. We are so crampacked today that we do not have time for the introduction in the music. We need to go ahead and get started with our show. It a great one. Two fantastic guest up today. First up, we have Dr. Mik Kersten. He is talking about how to change your output through your, I’m not going to even try to say it. Output to Outcome is his new book, and it is talking about AI. I’m going to let him describe it.

00:30 Jim Beach: And then Brad Poulos is with us talking about being a confident operator. It’s a great show. Let’s get started right now. Here we go. Please welcome Dr. Mik Kersten. Kersten is the founder of Lymyt.ai. And Lymyt is spelled with Ys instead of the Is, L-Y-M-Y-T dot A-I. He is also author of a new book called Output to Outcome. I’m sorry, Output to Outcome: An Operating Model for the Age of AI. Very, very successful career.

00:57 Jim Beach: He is the creator of the flow framework, and has had an incredible opportunity to work with some of the coolest names out there. You have heard me talk about Xerox PARC, the Palo Alto Research Center. He was a research assistant there. You may remember that Park was in the famous Bill Gates Steve Jobs movie. Who was stealing more from PARC was basically the point of the movie. He has also done a lot of other things.

01:22 Jim Beach: He created a company called Tasktop, which he sold to Planview for $700 million, is what my note said. That’s pretty… I’m not sure I believe that number. So I wouldn’t quote that if I were you. Dr. Kersten, welcome to the show. How you doing?

01:36 Dr. Mik Kersten: Uh, I was doing very well. Great to be here, Jim. Thank you.

01:40 Jim Beach: All right. I’m obviously teasing a little bit. You didn’t sell it for 7 trillion, but congratulations on that as well. I want to ask you, this is a little bit rude, but I thought it’d be an interesting way to start. A guest we have had on the show, Cory Doctorow, is a very famous writer. He has written a book called Enshittification. I’m not allowed to say it, bad word in the middle. It’s the idea that the entire internet has gone to hell. Very interesting idea.

02:10 Jim Beach: He also has this new book out arguing that 100% of the Fortune 500 is lying about AI, that they honestly aren’t making any success with it, and that they would rather lie to their bosses than admit that because they know if they tell the truth, they will get fired. Welcome to the show. How are you doing, sir?

02:29 Dr. Mik Kersten: Doing very well. And yeah, a big fan of Cory Doctorow as well.

02:33 Jim Beach: What do you think of his new thesis?

02:36 Dr. Mik Kersten: I think there’s, I mean, the, the, the, Very an interesting thing is, I think there’s more truth to it than not, right? I think there’s been just so much, uh, momentum behind companies meaning to adopt AI and it’s, it’s really been for various reasons. Uh, first of all, you know, it’s obviously a complete transform of technology. I think we all use it day to day. But organizations are just not built to get the outcomes that they need from the technology without actually restructuring themselves.

03:08 Dr. Mik Kersten: So you’re in a situation where executives all have to say that they’re succeeding with AI. They have to make those statements publicly. They have to make those statements internally at the organizations. And when you actually dig under the covers, and when you look at what kind of productivity gains or gains for delivering customer outcomes they’re getting, they’re just not there yet.

03:28 Jim Beach: Do us small business owners have a bigger advantage than the Fortune 500 because for us, it’s easier to adopt tiny pieces of AI that make us a little bit more efficient. Whereas we don’t try to go for the glory and eliminate our entire company with AI, just little things on the edges. I think that we’re getting more overall benefit than the Fortune 500. What are your thoughts?

03:52 Dr. Mik Kersten: I agree. And I, I, yeah, I’m living that right now, right? I started a company over 20 years ago. I built it up to over a couple hundred staff, and, you know, we had a lot of people doing many functions that, with my new company, which is really just a consultancy around my new book, I’ve been able to do everything with agents, right? So all of the boring work, I get to focus on the interesting work.

04:19 Dr. Mik Kersten: Um, I don’t have any legacy structures to deal with and all the, all the, you know, boring work and a little bit of the interest work, work is done by AI agents. I think, AI native organizations, whether you’re a single founder, you’re a small team, you’re going to grow it to a few 100 people. You just have this massive advantage because you do not have legacy organizational structures that are really not made to harness agents and not made to harness all this amplification we get with AI.

04:47 Dr. Mik Kersten: Whereas, if you look at a large organization, an enterprise, they have so many processes and handoffs and so many things that get in the way of day-to-day work. I actually studied this for my thesis work, that enterprises were 10 or 100 times slower at building value than startups. So there was already that big mismatch. And now AI, I think, is going to amplified another 10 or 100 times.

05:15 Dr. Mik Kersten: So I think it’s, it’s an amazing time to be, to be building companies, and it’s a generally tricky time to, to be a large organization.

05:24 Jim Beach: Ah, very well all said. Very well said. What are you using it for? What kind of small agents have you been able to create for your own small business?

05:34 Dr. Mik Kersten: I use it. So I use it for everything that has to do with just all of the operational financial billing, all of those boring things that, you know, you’d have a bookkeeper and operations and administrative assistance do. Um, and I’ve always, you know, I’ve had the benefit of having those roles in my organization. I think it’s much more interesting, of course, as you scale, to work with people than just to work with agents, agents.

05:58 Dr. Mik Kersten: I find, you know, they actually feel more taxing during the workday than the kind of energy that you get from your colleagues, but I think it is amazing to be able to have all of those menial things done. And then for most of my day, to be kind of more interesting creative work. So, I think, again, it really depends what you’re doing. Obviously, I am also using Claude Code for a lot of the coding pieces and building infrastructure and websites that I need.

06:28 Dr. Mik Kersten: Um, but it’s, I think for me, the really big thing is, it’s definitely, shifted the course of my time, um, away from busy work, which I think is just an often thing.

06:40 Jim Beach: Yeah, it is. There’s nothing in the world worse than busy work or invoicing or any of that kind of junk. That’s very, very true. All right.

06:48 Dr. Mik Kersten: Now, babysitting the agents, I have to say, does feel like busy, and you kind of busy work, so there’s that, so it’s, I don’t think it’s all, it’s all rosy. Um, but I think it is, at least I think we’re able to, to get a lot more done than we were able to before, so.

07:06 Jim Beach: Right. My biggest advantage is I’m doing a ton of writing right now. I’m trying to get my both 6th and 7th book out at the same time. And I’m using it for writing. And this was really entertaining. I put my first or my 5th book in, uh, and asked it to score the book. And it gave it an 8.3. And I was so proud of the book and to get an 8.3 was devastating to me.

07:32 Jim Beach: And so when I started work on book six, I wrote the entire thing first and then put it into ChatGPT, and it gave it an 8.7, I think. And then I said, okay, I’m not satisfied with that. Let’s work on it. And then I put each chapter in individually and would work on it until each individual chapter got to a 9.9. Then I put the whole thing back together and the book got a 9.995 out of ChatGPT. I then threw it into Grok.

08:01 Jim Beach: It gave it the same score out of 10. And then I said, Grok, was this AI written or did a human being write this? And I was blown away. Grok came back and said, 100% certain that this was written by a human and then hyper-aggressively massaged. That’s not the word they used, edited by AI. And I was like, damn, that’s a great, I mean, you nailed it. 100% got it right. Human written AI massaged. And now my book is a 9.95, according to both of those AIs.

08:33 Jim Beach: What do you think about this? What have we learned?

08:37 Dr. Mik Kersten: So I think, first of all, I think it’s great that you wrote the whole book. My whole new book, I wrote every word of Output to Outcome. I used AI like crazy for all of the research, and I could not have done that same breadth of research, or it would have taken me not a year and a half but three years to do it all.

09:02 Dr. Mik Kersten: Um, and of course things are moving at a pretty fast, fast paced these days. But I think leveraging AI for, again, amplifying, um, extending, improving work is is amazing, right? Whereas I’ve had colleagues who are authors who’ve used AI as a core part of the writing process. And I think people are starting to get a sense for AI-written prose, especially longer prose. Uh, it, it just tends to lose, lose you as you’re reading, right?

09:29 Dr. Mik Kersten: It tends to have, you know, much more complex word and sentence structures and these various patterns. There has been some really good analysis on this recently. Of course, those evolve over time with all the models, but I think that’s exactly the right way to use it, whether you’re writing a book, or whether you’re coming up with your business plan, right? If you make AI do your business plan.

09:52 Dr. Mik Kersten: Chances are, it might not be as aligned to your passions and to, you know, to what you really want to see in the world, um, as if you iterate with AI on the business plan. So I think that’s exactly the kind of use that we want and and that’s the kind of use that’s aligned to, you know, our goals as as humans, rather than just kind of delegating the interesting work to AI, which I think is much more, um, much, much less fruitful and much more boring.

10:22 Jim Beach: Yes. All right, tell us about your book. It is a sequel to Project to Product, the new book Output to Outcome: An Operating Model for the Age of AI. What’s the thesis of this book? What do you want us to learn?

10:35 Dr. Mik Kersten: The thesis is that… [unclear phrase]. Every major technological revolution, we have had some constraint on producing value, right?

10:42 Dr. Mik Kersten: So, you know, back when you had a factory and you had a centralized steam engine, that steam engine was the constraint. Some companies basically put in an electrical engine to replace a steam engine and things moved a little bit faster, but some companies, like Ford, made assembly lines, and all of a sudden they were able to produce 10, 100, a thousand times more cars than the companies that did not change.

11:08 Dr. Mik Kersten: And so in the age of AI, the constraints that I had previously, which was basically knowledge work and things like coding and production of digital artifacts, that constraint’s gone. AI can do that, right? I spent a, uh, 2 decades as a programmer, um, AI is a much better programmer than or is about to be a much better programmer than any programmer on the planet. So the constraint on building value is gone. So the constraint of producing outputs is gone.

11:34 Dr. Mik Kersten: But the constraint of producing outcomes, actually delivering something to customers to the market, to your staff, is still there. So I think we basically now, as with every major technological revolution, we have to change the way our organizations are wired and the way that we manage, uh, that basically our management systems, uh, from being output focused, which is worrying about prioritization, the next feature, all these kinds of things, the next product, and to be outcome focused.

12:00 Dr. Mik Kersten: So it’s really a guideline how to rewire or build from scratch an organization that’s built for the age of AI where you have more agents than humans, but that actually provides humans with, you know, the true agency how to deliver value to customers.

12:15 Jim Beach: All right, how do you manage customer employees and AI? Do I ask them? I asked you to write a 5 page proposal. Did this proposal get written by AI or did you write it and then use AI to improve upon it? How do I manage my employees there? And make sure that they’re better off and that the company isn’t breaking any rules or laws or anything that I don’t know about? Right.

12:40 Dr. Mik Kersten: Yeah. So this, I think that’s a great way to kind of, to look at the, the shift because I think the shift from Output to Outcome is fundamental all the way from, you know, from managing a person to a team to an entire large organization. And so I, the book proposes that you do not manage outputs for your employee.

13:00 Dr. Mik Kersten: So it’s, you basically say, this is the outcome that we want, and what you’re trying to deliver, let’s say this, you know, this new article or this new software product or something of that sort, and you never stipulate how it’s done. Uh, you just say, these are the outcomes we’re after.

13:16 Dr. Mik Kersten: You work with an employee on what those outcomes are, defining those outcomes, making sure they are aligned to your strategy and your vision, and then how the outputs are delivered is entirely… you provide all of the autonomy for how those are delivered within guardrails, right?

13:32 Dr. Mik Kersten: You might say, okay, we can’t use these kinds of models or, you know, we, this is, this is, you know, where our, um, this is basically what we’re licensing in terms of the AI solution that we have, so please use that unless you have a better reason not to, but you provide all of the autonomy to the employee to the team for how they build the outputs.

13:56 Dr. Mik Kersten: And really what you’re managing is, is the outcome being delivered because it’s now possible to deliver things that, you know, at 10 times the rate, right? Instead of writing one article, they might write 10 in the same period of time is 10 better than one. Again, it’s, it’s, it should be up to the person um who’s delivering the outcomes.

14:16 Jim Beach: All right. I do want to mention that your team sent me a copy of the book. I really appreciate that. That was very nice of them. And I’m about, I don’t know, 40 pages into reading it right now. Enjoying it. And it is 5 star rated on that Amazon place with quite a few 5 star reviews. So congratulations. Tell me about how this AI is going to affect the product lifecycle that we all learned in NBA school with the beautiful curve and everything.

14:44 Jim Beach: How does it affect the curve and just the entire product lifecycle in general?

14:48 Dr. Mik Kersten: Right. I think this is fascinating. I think there’s nothing in a way, another way, it changes everything. So, and my first book on Project to Product was all about those product lifecycles, that when we’re delivering value to a changing market, a changing customer dynamics, we want to manage product lifecycles, not projects. Product life cycles are about iterating and learning, and then, you know, things start at an earlier stage, let’s say, your startup building, a new thing, you might pivot what that product is, then you’ll find your market fit.

15:17 Dr. Mik Kersten: You will go through that phase of [unclear phrase] development. And then, you know, that might become possible at some point and then when you move on to your next thing or you’ll keep scaling. So that, I think from the dynamics of product life cycles stick, but product life cycles are really around this concept of hypothesis testing, you know, testing does this work for the customer. Does this delight them? Does this, does this help us grow? Does this drive retention?

15:43 Dr. Mik Kersten: And when you’re not output constrained, all of a sudden, you don’t longer have to win 3 months to get that feedback. You can actually hypothesis test in parallel. You can have agents build 10 variants of a single product and test them with different parts of your user base. So I think that the really profound changes that you can now parallelize all of that hypothesis testing in all those parts of the lifecycle. So you can iterate much, much faster, but you’re so constrained by the market.

16:10 Dr. Mik Kersten: How quickly people can consume what you’re building, how quickly you can, you know, reach more users, more customers, but you can do all of that testing, all that discovery, all that design so much more quickly than you used to before. And that’s why, again, the management system can be all around. Do we prioritize this or that? Um, it’s, it’s really how quickly can we learn?

16:33 Dr. Mik Kersten: And this is where the book has this concept of of the outcome loop, how do we really make our outcome loop be this fast learning and customer discovery loop?

16:42 Jim Beach: That’s exactly what I wanted to ask you next. The outcome loop versus the outcome roadmap. And could you give us the teen wellness example that goes with the roadmap?

16:52 Dr. Mik Kersten: Yeah, absolutely. So, the outcome is, again, taking this strategy and vision that you create for your customers working with, you know, working with your team, and you basically want to make sure that that’s delivering on your goals, right? If you are an early-stage startup, you might have something like a Lean Canvas. I always use a Lean Canvas, and then these are assumptions. These were the channels we want to establish. These were the, uh, the customer met, you know, metrics that we were after.

17:18 Dr. Mik Kersten: And the outcome loop is really this, this much faster way of entering to that where you’re not learning every quarter every month. It’s definitely day in every week and of course then that rolls into the quarters. Um, and to do that, you actually, when you’re learning that quickly, all the work that you and agents are doing for you, you need to be connected with some kind of outcome. And so rather than having a normal product roadmap, right?

17:43 Dr. Mik Kersten: When you have this sequential thing, you create an outcome roadmap where everything is connected. Let us say your outcome is to go from one to $10 million of revenue in the next year or something of that sort. Um, things need to be connected to that outcome or in the teen wellness example in the book, uh, you want to create a wellness application that delights teams and has really rapid adoption. And so really, that’s the outcome that you’re after. That’s a business outcome.

18:10 Dr. Mik Kersten: And so all the work done by you and agents, you are really just monitoring: how is it improving that outcome? That is similar to how startups worked 10 years ago, 20 years ago. Concepts like objectives and key results help with that as well.

18:26 Dr. Mik Kersten: But again, the pace at which this is done means all work has to be connected to an outcome because of this much faster pace of iteration, and of course how that is translating into AI-native startups being able to deliver business outcomes much faster than I think any previous generation of startups could.

18:46 Jim Beach: All right. I also started off in coding. I had a TRS 80 model one and taught myself basic back in 1977 or so. And I was so proud I was able to draw my name, JIM in huge letters on the screen on my TRS 80 model one. It had 80 by 40 resolution, if I remember correctly.

19:06 Dr. Mik Kersten: Yeah, 80 by 40 resolution for graphics.

19:08 Jim Beach: And I was just so proud of myself. But back then, the TRS 80 model one was so fragile, you had to clean the connectors every day with a rubber, with a eraser to make sure it worked. And at our house, whenever the air conditioning came on or off, it would send enough of an electrical surge through the system that it would remake you reboot or just crash the system.

19:31 Jim Beach: And so I would be programming and I’d go up and secretly turn the air conditioning off so that it wouldn’t crash my stuff. And one time my mom turned it back on. She said the loudest yell she ever heard in her life. And she was an emergency room nurse was the yell that I did when I lost my program because of the air conditioning coming back on. So I love programming too. I just love getting down in programming. So how are we going to do that?

20:00 Jim Beach: You mentioned earlier that it does it so much better and we can’t deny that. How do I tell my clients that? Do I tell my clients that I’m going to AI program because it’s going to be better? How does that affect agile and the incredible advances that agile has made with programming? What are your thoughts?

20:18 Dr. Mik Kersten: Yeah, Jim, this is, I think, like you, so much of my own kind of professional satisfaction, like craft, it was programming, and also like you, it actually came from basic. That was the first language I learned as well, on my Sinclair ZX81, which is still sitting here beside me.

20:35 Jim Beach: I think they should teach it in school today. They should teach basic before they teach Python and all of that. But anyway.

20:42 Dr. Mik Kersten: Yeah, it made a huge impact, and then even Visual Basic made a huge impact because it brought programming to many more people, right? Um, and then some of those people really inspired and and coding and programming became their craft and and building those outputs. Like building Lego is fun, like coding is fun.

21:01 Dr. Mik Kersten: I used to love it, and I think, on the positive side, it is now possible through this vibe coding and agentic engineering, through these sorts of things, for many more people to build really interesting programs and systems, which is an amazing thing. At the same rate, the craft has changed completely. You know, it’s no longer going to be going to feel like building a Lego set. Is going to be like more like assembling entire city. So Lego modular buildings, right?

21:28 Dr. Mik Kersten: Um, and an entire kind of massive sets because of the agents are doing so much of of the, of the building for you. So it’s a bit bittersweet.

21:38 Dr. Mik Kersten: But I think the good thing about it is it is going to drive the pace of innovation, and that same kind of computational thinking that you and I got to enjoy by learning BASIC, of how things work together and what they do, is still going to be what many more people can do as they try things like Claude Code and OpenAI Codex and start playing and tinkering with these things.

22:05 Dr. Mik Kersten: But, you know, it’s, again, it’s no longer going to be about putting JIM on the screen, right? It’s going to be about delighting people by what you put on the screen because agents can do the simple stuff of all the coding. And really, I think this generation of entrepreneurs is going to have to find their passion in delivering those customer and market outcomes rather than just building. Now, that said, there’s, there’ll always, you guys can get interesting startups who are feeding the building blocks.

22:35 Dr. Mik Kersten: And of course, with AI, we’ve seen a lot of really neat like kind of developer technology startups as well. So I think we’ll have both, but over the next, over the next months and years, uh, really those those building blocks are going to start building themselves.

22:50 Jim Beach: And is that a good or bad thing? What about telling my clients about that? Do I come out clean with my clients?

23:00 Dr. Mik Kersten: I think with AI, my approach has been, it’s always clean, even if I like, I’ll stick, you know, if I’ve stuck to research notes in a blog post, I’ll say this part’s written by AI. Um, so I think, we’re now at the point where I think it is important, when it’s non obvious to be, to be clean. I think we’re also getting to the point where, uh, every, you know, clients will assume code is written by AI or contributed by AI, that those lines are blurring.

23:29 Dr. Mik Kersten: So my view is if it’s ambiguous, they, you know, make it clear, but we’re also, it’s, it’s just, especially for coding and software, it’s, it’s just now part of the table stakes.

23:40 Jim Beach: All right. What’s next? What are we looking for next? Does AI lead to something else that we haven’t even thought of? What do you think the retrospective 10 years from now will be? 100 years from now?

23:51 Dr. Mik Kersten: To start with 10, because one of the hardest parts of the exercise of writing this book was: Project to Product is continuing to help people make the shift to product management and the product operating model 10 years later, and that was kind of my goal with Output to Outcome. It is an operating model that lasts those 10 years, even though it is almost unimaginable how powerful AI, especially with the recursive self-improvement that is going to happen, will become.

24:23 Dr. Mik Kersten: Um, that’s already started happening. So I think we’re going to end up with, with models and AI solutions that are so powerful, they can do, you know, we can hardly comprehend what, uh, how much they’ll be able to do 10 years down the road. However, I think [unclear phrase], I am trying to completely flip this argument: regardless of how powerful they are, This is around us managing AI, not AI managing us, right?

24:47 Dr. Mik Kersten: The AI can be much smarter than we are, because people smarter than every human on the planet, but really what we want to do is create these organizational structures, because humans do great things when they organize themselves in these, in these effective organizations, and make those structures be like the control structure for AI. The way that we harness agents, for doing the things that we want done for our employees, um, for our, for our customers, for our market and our communities.

25:14 Dr. Mik Kersten: So I think we’re going to get, and I hope I’ll put the outcome is, you know, a start of the contributions that help make this easier, these mechanisms easier to adopt. But fundamentally, we are going to become much, much better at controlling AI to do the things that we want to do and want delivered within our organization, rather than us constantly worrying about whether it is going to [unclear phrase].

25:39 Dr. Mik Kersten: So I think it’s going to come up with create a whole new set of leadership mechanisms, but it’ll take time. And back to your point about Cory Doctorow, we are nowhere near there yet. Right? We’re fully in this AI productivity paradox where organizations are spending like crazy on AI. Large organizations are using that as an excuse to cut staff and realizing they’ve cut too many staff because They’re just not getting the outcomes. They’re not wired to leverage this.

26:05 Dr. Mik Kersten: So I think startups will run, and this happens with every technological revolution. We will have startups blazing the way. There is a huge opportunity for new companies right now. There will be a lot of disruption of the bigger companies, and then a decade out, what I hope is that we will have every size of company effectively adopting AI because some of the startups will have grown.

26:31 Dr. Mik Kersten: Uh, but we actually, I, I really hope enterprises, you know, do make that change, and uh, you know, stop saying that they’re getting benefits, AI, but actually getting, getting true benefit from it, because in the end, we, you know, we don’t want just a small number of tech giants running the whole world economy. We want this very diverse economy of as many companies as possible leveraging these productivity gains.

26:55 Jim Beach: Very well said. I appreciate it. Oh, I forgot. You wanted to play the quick 10, didn’t you?

27:02 Dr. Mik Kersten: Quick 10 yes.

27:03 Jim Beach: I hope I can remember the questions in a day, since we’ve had a player, let me, I have to pull out, uh, the questions here. While we do, while I find the questions, how do we find out more about you getting in touch, get a copy of the book.

27:21 Dr. Mik Kersten: Yeah, just go to outputtooutcome.org or Google Output to Outcome and you will find the book. The book actually has a prompt library with it to help you work with agents so you can apply the concepts of the book, and then you can find it at your favorite book retailer like Amazon or Barnes & Noble. So just outputtooutcome.org.

27:47 Jim Beach: Fantastic. All right, do you want to accept the standard wager?

27:51 Dr. Mik Kersten: Sure.

27:52 Jim Beach: All right, awesome. I love that answer. All right. Number one, your favorite creativity hack.

27:56 Dr. Mik Kersten: Writing and coding is such a big thing for me. I always I actually always write from the exact same chair. It gets me into that headspace. I wish it was a different chair, but right from the same chair.

28:11 Jim Beach: Number two, favorite bootstrapping trick.

28:13 Dr. Mik Kersten: Lean Canvas, Steve Blank’s Lean Canvas. I think it’s the most powerful tool.

28:17 Jim Beach: Number three, top passions.

28:18 Dr. Mik Kersten: Uh, writing, reading, um, skiing, surfing, and mountain biking with my with my wife and children.

28:25 Jim Beach: Number four, first 3 steps in starting a business are.

28:28 Dr. Mik Kersten: I think the biggest one is to find your passion for how you want to change a societal outcome, right? Then it’s just all about just putting in the sweat. So that is probably the biggest part, and then just [unclear phrase].

28:44 Jim Beach: Number five, the best way to get your first real customer is.

28:49 Dr. Mik Kersten: Just spend time on the road, via conferences, via customers, every opportunity. Um, just get on the road.

28:55 Jim Beach: Number six, your dreamiest technology is.

28:56 Dr. Mik Kersten: Right? It’s, it’s the agent. They’re just, I think, so helpful right now. The AI, the latest, the foundation model as an agent for just helping you scale and learn as quickly as possible.

29:11 Jim Beach: Number seven, best entrepreneur advice.

29:12 Dr. Mik Kersten: Exercise and sleep. Oddly, I, I, I was terrible at it for the first part of my career, and then I realized it actually does make a, a difference.

29:21 Jim Beach: Number eight, worst entrepreneurial mistake.

29:23 Dr. Mik Kersten: Ah, that’s promoting people based on hope, not based on outcomes.

29:26 Jim Beach: Number nine, favorite entrepreneur and why?

29:28 Dr. Mik Kersten: You know, it was, I think it’s actually Guy Kawasaki. I never met him. I have never met him. I have seen Steve, but that book, I love people who can actually tell their stories, and The Art of the Start inspired me so much so early in my career. It is Guy Kawasaki.

29:44 Jim Beach: Number ten, favorite superhero.

29:45 Dr. Mik Kersten: Uh, that would have to be Silver Surfer.

29:48 Jim Beach: Never heard of that. Who the hell is that?

29:50 Dr. Mik Kersten: Oh, he is [unclear phrase], and he has saved Earth. He uh, and he’s, he can surf through anything. Some black holes through hyperspace. He’s he’s like this silver guy on the silver surfboard. Google Silver Surfer.

30:02 Jim Beach: I have to do that.

30:04 Dr. Mik Kersten: Is a neat one.

30:05 Jim Beach: All right, well, I calculate the score and find out the winner of the wager, give us the URL one time again.

30:12 Dr. Mik Kersten: Output to outcome.org.

30:13 Jim Beach: All right, fantastic. I’m just kind of pausing it. Oh, oh. Mik, I am so sorry for you. I just got your score. You got a 94. Is an excellent score, but you have to have a 95 to win. Apparently, one of our judges. I don’t know what the answer was that upset them, but you have to have a 95. So you were just one point away. So you owe us a Tesla. We always play for a Tesla. I will look forward to receiving that soon.

30:41 Dr. Mik Kersten: Okay, in the mail. Or driving its own its way to you.

30:45 Jim Beach: Dr. Mik Kersten, thank you so much for being with us. We’d love to have you back. Great stuff.

30:53 Dr. Mik Kersten: Thanks so much, Jim. Great chatting.

30:55 Jim Beach: And we will be right back.

30:58 Jim Beach: We are back, and again, thank you so very much for being with us. Very excited to introduce another great entrepreneur. Please welcome Brad Poulos to the show. He is founder of The Confident Operator, board member of Bros Before Lows. Very successful career, has been an educator, and has been teaching at Toronto Metropolitan University about entrepreneurship, strategy, small business. He has written several books. I think the most recent one. It is called The Small Business Operator’s Manual: A Practical Guide to Running Your Business Profitably. Brad, very cool. Welcome to the show.

31:29 Jim Beach: How are you doing today?

31:31 Brad Poulos: Doing great. Thank you so much for having me.

31:34 Jim Beach: Is this your third fourth book?

31:36 Brad Poulos: Technically, it is my fourth, I guess, but one of them is just a short story about how my grandpa came here from Greece. I have written three books about business.

31:47 Jim Beach: Okay, fantastic. I’m glad I found all of them. All right. Let’s go ahead and start right there. Since that’s what we were talking about. Tell us about the book, small business operators, manual. What will we learn?

31:59 Brad Poulos: So The Small Business Operator’s Manual is actually the first book that I wrote, and it is exactly what it sounds like. No, that’s quite all right. It’s exactly what it sounds like. It’s a combination of some theory. You know, I am a professor, right? So I, uh, I like to impart, um, not just sort of practical knowledge, but also some theory.

32:19 Brad Poulos: So it’s a combination of theory and then stories from my, my business experience, you know, my, my life, uh, both in the corporate world and then running startups and then serving on boards and advising uh, both startups and uh, more established businesses. So that’s, that’s what that is.

32:35 Brad Poulos: It’s, uh, it follows a typical kind of, um, you know, sort of textbooky, format in the sense that it’s divided up into the various functional areas, you know, marketing, finance, um, operations, people, IT, all that kind of stuff, and so that’s what that is. Uh, it’s, you know, it’s, it’s the, all of my books have been designed so that you can, um, just simply digest the pieces that you want. So every chapter kind of stands alone.

33:02 Brad Poulos: So if a business operator felt that they were a little bit, you know, we can maybe finance or accounting or marketing, you can strictly focus on that part. Then the next book I wrote is called Most Problems Solve Themselves.

33:15 Brad Poulos: That is the one that came out this year, along with the other one, which I will briefly touch on in a second because I think it is of interest to startups. Most Problems Solve Themselves is actually a series of 52 different standalone articles, and I simply chose the most provocative title I could find among the 52 articles and put that on the front cover, so that is actually not what the book is about. The book is about very broad range of articles that I’ve written over the years.

33:44 Brad Poulos: Again, divide it up into logical groupings, like like leadership and entrepreneurship, and that sort of thing, each one is no longer than about maybe 4 pages. So very easy, easily digested and and very, you know, you can absolutely jump around and strictly read the ones that are of interest to you in the moment. So that’s that’s what that is. And then the last one and the latest one is actually a book I co-wrote with one of my colleagues.

34:10 Brad Poulos: And it would be of interest to startups because it is called From Pitch to Payoff. And what it is, is a venture finance book. So we found that, uh, I teach the entrepreneurial finance course at Toronto Metropolitan University, and my colleague and I who teach it, who also teaches it. We found that there are lots of books out there for corporate finance and there’s lots of books out there about startups, but there wasn’t really a book that was about raising money and managing money at the startup level.

34:39 Brad Poulos: So from pitch to payoff, that’s what that’s about.

34:43 Jim Beach: Okay, great. Wow, you have been very, very productive. I want to go back. I do want to talk Pitch to Payoff, but I want to point out this. You know, I my email processing system is this. If it’s an easy email to answer, I answer it. If it’s a problem email and it involves a lot of work, I just skip it and mark it as unread, and then answer it in the next day or week or whatever. Right now, let me double check.

35:12 Jim Beach: And go and see, I have 36 messages that I have marked as, I’ll deal with those later. At the end of the year, I always just clean it out, 0 it out. 99% of the time, Brad. Those emails that have been lingering for 11 months, 6 months, 5 months, didn’t need doing somehow in the first place. I got by with never doing those emails. What does that say about us or about me?

35:37 Brad Poulos: You are proving my theory, yeah. That’s exactly what Most Problems Solve Themselves is about. It’s about, it’s so I’ll tell you where it comes from. There are sort of two overlapping themes that run through that article. So, but where the idea came from is way back when and then dare I say it in the 90s.

35:55 Brad Poulos: I was doing a startup inside a big company, Telesat Canada, one of the largest operators of satellites in the world. And I was doing a startup inside that company, we were launching the, the first satellite based internet product in Canada, and I was really, really busy because I was doing that, but I was also having to do my regular job.

36:25 Brad Poulos: And so I adopted this philosophy. And a lot of people have criticized me for it, but it’s a little late now because it’s almost 30 years ago. Um, when somebody asked me to do something. If it was not my boss, or maybe his boss, or somebody who worked for me, I just kind of filed it away and made them ask at least twice. And um, I noticed that a lot of the times the second email never came, and that’s kind of what you were driving at, right?

36:55 Brad Poulos: The problem from my point of view. Solved itself. It just went away. And so, um, so, you know, that’s kind of the the genesis of that. But then the other, the other application of the same concept is that later on when I was running my own companies, and people would come to me with problems, I would often, uh, so I, I traveled a lot. And, uh, we were fundamentally a sales company, so I was traveling all around North and South America.

37:23 Brad Poulos: I was on the road at least a week, a week a month. And so somebody would come to me with a problem. Typically not a huge massive problem, you know, just a problem. And I would say, well, you know, like last week I was in Columbia. Um, what would you do if it was last week? And they’d say, well, I would do such and such. And so I would just look at them and I would go, well, you know what? I think we should do such and such.

37:53 Brad Poulos: And what I was trying to do is train them on a couple of things. So the first thing is that one, you have the autonomy to solve the problem. Uh, I trust you. And I, um, uh, I’m willing to accept whatever, you know, whatever, you know, whatever solution that that you come up with. Uh, and the, the power of that is that one, ultimately when people stop bringing you the problems, you save you, you, you free up some time.

38:19 Brad Poulos: But the other thing and the real impact is that high quality, you know, what I call A players, they eat that up. They want autonomy. They want to be able to, you know, direct their own job and and make decisions and all of that. And D players want to be told what to do. And so it just helps you, you know, sort of naturally, um, weed out the B players.

38:45 Brad Poulos: You, uh, you entice the A players to, you know, to stick around and to even work harder. And so, uh, I think it’s just a great, you know, great kind of management philosophy. Uh, now, it, it does require some courage because you, you have to be willing to allow people to make decisions. You have to be willing to accept that they’ll make possibly a different decision than what you would have made. Uh, possibly maybe even not as good of a decision, at least in your opinion.

39:15 Brad Poulos: And my attitude toward that and what I’ve said to many, many of my clients over the years is, so what? Who cares? Not every decision has to be perfect. And that, you know, if you want to perfect, if you want to perfect every decision, there’s a downside to that. It means you have to touch every decision. It means that the A players are not going to be all that enthused about working for you because you second guess everything they do. And so, you know, that’s kind of my general management philosophy.

39:48 Brad Poulos: Now, the, the art, of course, is in knowing what are those small fraction of decisions that you do have to jump on top of and be a part of. So.

39:58 Jim Beach: That makes good sense. Let’s move on to From Pitch to Payoff: A Founder’s Guide to Finance. Should we work our way up from family to friends to venture capital, Brad? Does that make sense?

40:10 Brad Poulos: That’s what the book does.

40:11 Jim Beach: Let’s start off with friends and family and fools, then. The F’s.

40:15 Brad Poulos: Yeah. Yeah, exactly. Well, actually, we, we, we, we do a little bit of discussion around uh, strategy as well at the front end, you know, so because if you’re going to ultimately be pitching, which will uh, typically precede the payoff, then uh, you better have a well articulated strategy. So we talk a little bit about how you, how you do that, how you, um. How you properly articulate a well crafted strategy, if you will.

40:40 Brad Poulos: And then, yeah, we work our way through the, um, all the different, various forms of financing, starting with the 3 F’s, right? Friends, family, and fools, and um, you know, then on to uh, angels, venture capital. Uh, we also, we assume that perhaps at some time before you actually exit the business or harvest, because it’s not always an exit. Sometimes you’re harvesting but you’re still around. Um, you know, you might go get bank financing. And so my my colleague actually who co-wrote the book with me.

41:09 Brad Poulos: He, he, he actually, you know, was once, once worked in a bank as an account manager, so he certainly knows, you know, he knows the ropes there as well. And um, a little bit in there as well about, you know, good quality, money management, treasury, uh, that sort of stuff as well. So, and then ultimately, we talk about harvesting and that can, that can be an exit, of course. And there’s lots of different forms of that. You know, you could go public. Not very many of us do.

41:39 Brad Poulos: Um, most exits don’t involve ever going public, so it’s either a strategic sale or it’s a financial sale or maybe it’s a, maybe you’re passing it along to the next generation or it might be a management buyout, so we can cover all that different stuff.

41:55 Jim Beach: All right. Let’s go through them a little bit more in depth now, friends and family. Do you approve? Is it a good idea? What are the rules and regulations that are around this that allow us to still have Thanksgiving and Christmas without hating each other and talking about business the entire time? Um, and I just want to point this out.

42:15 Jim Beach: I had a lot of guests on the show that have taken friends and family to the ultimate level saying what you should really do is pitch at the bar and, you know, have loud conversations and see who eavesdrops it all of a sudden wants in. And I tried that strategy, Brad, and it works very successfully. I can’t tell you how well it works. What are your sort of rules and thoughts on friends and family and fools?

42:41 Brad Poulos: Yeah, so we have to understand that friends and family, the fools part is, of course, just a joke. Friends and family, their rationale, their incentive for investing, is typically pretty much the same as yours. So it’s typically not, when you go to your uncle with a, you know, your great business idea and ask him to, to help you get started. Uh, they’re typically not looking at it as a financial transaction.

43:08 Brad Poulos: In fact, if they are smart, they are going to consider the money gone, right? So, um, and not expect it back. That’s the, that’s probably the best way for them to approach it. Uh, because of course, you know, many, many adventures don’t don’t ultimately pay off or, you know, certainly don’t pay off much. So even if you’re able to pay them back, there’s not going to be the massive. You know it’s not necessarily going to become a unicorn for them. So their their rationale typically is the same as yours.

43:38 Brad Poulos: You know, they do it because they love you or they care they care about you or they want to help you. Um, I, I do think that you take that money at your peril at, sorry, at the peril of your personal relationships. So it really depends on the dynamic in the family and how it’s positioned by you and how it’s positioned by them. So, um, you know, uh, are you familiar with Kevin O’Leary, the Canadian, the Canadian who’s on Shark Tank?

44:06 Jim Beach: Shark Tank? Of course.

44:07 Brad Poulos: Yeah, he is Mr. Wonderful. I know all about his boat as well.

44:10 Jim Beach: Oh, yes. Yeah. One of her family members. Not a great driver.

44:14 Brad Poulos: Yeah, um, so, you know, his his philosophy is, yeah, I’ll give you this money, but, but on, on, uh, 2 conditions. One, uh, I don’t expect it back. 2 Uh, don’t ever ask again. So, so that’s probably a good way to keep, you know, keep the peace in the family is to, uh, is to kind of consider it that way. Now, if you do go ahead with it though. I do suggest that you paper things properly. Right?

44:40 Brad Poulos: So if it is to be treated as a loan, there should be loan documents drawn up. If it is to be treated as shares, then there should be a shareholders agreement. And, uh, you know, that, that, that’s just a universal rule. I think that whenever you are bringing in shareholders that are not you, even if there are a bunch of founders, you absolutely have to paper everything, because memories can be very short. So, yes. Um.

45:17 Jim Beach: Okay, let’s move on to banks now. Am I going to get money out of a bank? For startup?

45:23 Brad Poulos: So the, well, well, actually, I should, I should maybe couch that a little bit. You can easily get money out of a bank for a startup if you have a house, and they will happily give you money against your house, and they do not care if you put that into your company. But it should be very, very clear to you that they are not investing. First of all, banks don’t invest, period, right? Banks are not investors. Banks provide a service called lending. And they charge you for that service.

45:53 Brad Poulos: And in both Canada and the United States, we’re lucky enough that we have pretty stable banking systems, and the advantage to that is that banks can provide this wonderful service called lending uh at relatively cheap rates. You know, so in the, in the single digit, you know, interest rates. Typically, especially if it’s, um, you know, if it’s, well, it’ll be a secured loan, if it’s a bank, at least in the early days, because that’s, that’s how that works.

46:20 Brad Poulos: So, yeah, if you have assets in the company, or if you’re willing to put your, so actually, let’s split it. So, well, back to the first case. Uh, if you have personal assets, you can borrow away with the bank and they will happily take those assets as collateral, but it’s, it must be very clear to you yourself that they’re loaning to you and you will have to pay that money back regardless of whether or not your company does well.

46:46 Brad Poulos: So, but, but then taking that off the table, because that’s more of a startup approach to things. Down the road, if you have a track record, if you have assets, typically receivables or inventory, you can usually get your hands on some bank financing. Um, they’ll probably start, you know, low and slow, uh, especially if you’re only a few years old, they’ll probably ask you for personal guarantees.

47:08 Brad Poulos: It was only after I sold my company to a publicly traded company that I got my personal guarantees off my line of credit, and I had that facility for about eight years. Now, I think Canadian banks are a little tougher on that stuff than American banks because we don’t have as much, I’m up in Toronto and we don’t have as much competition in banking as you do. So down in the states, so you probably could get better terms in the states earlier.

47:41 Brad Poulos: But, um, but yes, essentially, that’s how bank financing works, for at least for everyday, for everyday stuff, you know, like a line of credit, then you, you also, if you’re at asset heavy company, you can always borrow money for buying machinery or get a mortgage to buy a building, that’s, you know, that’s pretty standard stuff.

48:00 Jim Beach: Yes. I didn’t get loans from banks. I had a seasonal business. We were a summer operation, and so 100% of our income came in in May. Our bank saw that, and we were getting big, $10 million a year, before they gave us a seasonal loan, and they also required that we pay them off first. First of June, we had to basically get out of that. And they also, Brad, did things like call out of the blue and say, we’re calling the entire loan due now.

48:31 Jim Beach: Now, want the whole money back now, just to see what happened. And I was like, that’s, you know, you’re gambling with my life just to see what would happen.

48:41 Brad Poulos: They can be ruthless.

48:42 Jim Beach: Yes. And I was so glad when that bank went out of business, two, 3 years later, and the big fat CEO who said that to me ended up living in a 2 bedroom apartment in his 70s. Private airplanes, private yachts to living in a 2 bedroom. So.

48:58 Brad Poulos: Well, you know, they say, be careful who you dump on on the way up because you are going to see them on the way down. So.

49:08 Jim Beach: All right, angels. Are there many Canadian angels?

49:10 Brad Poulos: Before we move on to angels. I do want to tell you a story, though, about my banker. It’s a little different than the one that you just mentioned. So, um, we, yeah, so our, our line of credit kept growing because we were growing and we were growing really, really fast.

49:26 Brad Poulos: This was during the boom of the internet and the dot-com boom, and I was in telecom, which is kind of internet-adjacent, if you will. The internet, of course, pulled telecom along with it, and the company was growing like crazy. Of course, we were pouring back all the profits into the firm. We’re not really taking much out.

49:50 Brad Poulos: But even with that, the bank came to me one day and they said, you know, Brad, we really, we don’t, we were asking for an increase in the line of credit. And I said, we really don’t feel comfortable doing that unless you guys put some more money in. And I said, well, okay, you know, we’ll definitely look at that. And they processed the increase. And you know, I never bothered. I just never bothered talking to him again about us putting money in the company and he never brought it up again.

50:20 Brad Poulos: So it was another example of how sometimes problems do solve themselves, but I did consider myself to be pretty lucky on that one.

50:28 Jim Beach: That is interesting that they never got back to you.

50:31 Brad Poulos: Yeah. Well, the good thing is that account manager had over 200 accounts, which like literally is like one per day per year. So I think as long as he wasn’t, as long as our numbers looked good. He uh, he was happy. So, he was, yeah.

50:48 Jim Beach: Anyway, he wanted to talk about angels. Let’s go there. Canadian Angels, are there many?

50:53 Brad Poulos: Yeah. So yeah, for sure. Yep, there’s there are a lot of Canadian angels. I think they’re definitely more conservative than the their American counterparts, but they absolutely do exist and they’re an important part of the, of the funding ecosystems. They, they typically, you know, they get involved in more high growth companies. So they’re not gonna They’re not going to help you fund your, you know, your new landscaping firm or your, uh, you know, your restaurant.

51:17 Brad Poulos: Um, they they look at high growth, just, just like most venture capitalists do as well, of course. And they get involved relatively early. They’re going to be a little more hands on than many other types of investors. You know, your typical angel is uh, either an ex-entrepreneur themselves. Oh. Typically they’ve already cashed out and they’re, they’re out of their main business, but they might not be.

51:40 Brad Poulos: They might be, you know, might be a situation where perhaps the next generation is looking after the day to day, so they’ve got a lot of time on their hands and they’ve got some spare cash, so, so they want to both, um, look for investment opportunities, but also maybe a little bit to help, help other entrepreneurs out.

51:59 Brad Poulos: So they’re, they’re either that or I’ve, I’ve met many angels who are actually just, um, people who got very lucky with things like stock options and alike and have never been an entrepreneur, and I think you got to be careful about bringing those kinds of angels on because they, with all due respect to them, uh, they don’t know as much as they think they do about startups.

52:23 Brad Poulos: There is not a lot that translates from, say, being a vice president of marketing at Procter & Gamble over to a startup. You know, over to a startup. There might be a little bit, but, but they’re, they’re not going to be the best of advisors to you because they, they just came out of a totally different world. Uh, I don’t know about in the United States, but typically here in Canada, angels are uh, involved, sorry, the angels get involved through groups.

52:51 Brad Poulos: So they group up either by geography, like for example, the largest group of angels in Canada. Called Maple Leaf Angels. They’re here in Toronto, and they’re just, they’re not sector specific or anything. They’re just Toronto specific. And they’ll have a monthly or maybe a bimonthly meeting. Where they invite founders like you and me into pitch our idea.

53:11 Brad Poulos: Typically you get like 5 minutes, you know, um, after the lunch, they’ll have a dozen or so, different companies pitch, and then there’s a networking time afterward, and that’s when folks that are interested in learning at least learning more about you so that they can maybe down the road and that’s, well, have a chat, and that’s when you kind of close them on that next meeting, and then it goes from there. That’s, that’s typically how it works here in Canada.

53:38 Brad Poulos: And the angel groups are not always geographic. Sometimes they will be by sector. Uh, you know, like maybe one for AI, maybe one for, you know, um, blockchain or that sort of thing.

53:49 Jim Beach: Right. Brad, I just looked at the time, we have blown through this. It went so fast. We’ve already. Yeah unbelievable. Very great information. We didn’t get to the confident operator, but that’s more after startup, so we’ll have you back and talk about that in 6 months. How do we find out more about you? Get the profit book, um, pitch to profit. I mean pay off. And find out more about you.

54:15 Brad Poulos: Yeah, so the easiest way is just to look me up on the internet, Brad Poulos, P-O-U-L-O-S. My website is BradPoulos.com. Uh, if you, if you just, you know, search me on Amazon, all 3 books are there. There’s also linked to the books from my main website. So, and I’m happy to, if anybody wants to connect, collect, uh, connect on LinkedIn. Happy to do that.

54:39 Jim Beach: Brad, thank you so very, very much for being with us. Great stuff, and we would love to have you back. Thanks a lot.

54:46 Brad Poulos: Sure. Great talking to you.

54:48 Jim Beach: We are out of time. Be safe, everyone. Bye now.