DigitalTutors.com Founder Piyush Patel on How He Grew and Sold His Business for $45 Million of Cash + Stock

Audio Transcription

Clay:
Yes, yes, yes, and yes. Thrive Nation, on today’s show we have an incredible guest, my friend, Mr. Piyush Patel. Welcome onto the show. How are you, sir?

Piyush Patel:
I’m awesome, thank you.

Clay:
Piyush, for the listeners out there that are not super familiar with your background, could you walk us through your history building Digital-Tutors? Where it all began and then where it ended for you?

Piyush Patel:
Yeah. I was a sixth-grade science teacher turned college professor then entrepreneur, and started with a $54 personal investment, and grew it to $10 million with no investors, no debt, and then sold it for over 45 million in cash.

Clay:
Okay, let’s repeat-

Piyush Patel:
That’s the one sentence.

Clay:
Okay, step one, you got gather $54. Step two, sell for $54 million. Okay, now talk to me about this, though. How did you get your first customers at Digital-Tutors, and what product did Digital-Tutors sell to the world?

Piyush Patel:
Right. We were pretty much a online training academy, much like your business school online.

Clay:
Yeah.

Piyush Patel:
We were a video-based platform for people who make movies and videogames. The key there is niche, and then niche again, and then we niched one more time. Video-based training for people who make movies and videogames.

Clay:
Got it.

Piyush Patel:
And our first customer showed up at 9 o’clock in the evening, purely by word of mouth, and this guy was in Israel, so the word had gotten from Oklahoma City all the way to Israel in a matter of a day. And this was before YouTube, before Google, it was all a word of mouth thing.

Clay:
How did you create that word of mouth? Were you doing mailers? Were you cold-calling people? How’d you get that initial … to get the word out there, initially? Did you run around Oklahoma City with a megaphone? What did you do?

Piyush Patel:
I wish. I wasn’t smart enough to do all that. We followed this method of marketing called “cult branding”, and it was really around, “I just need to have one person who believes, and then I’m going to ask them, ‘Okay, introduce me to five people who also are your friend network. Introduce me to those five people,'” and then we just kept going. Really, that’s how we got to the first 100 customers, is we just asked our customers, “Hey, go tell your friends.” And we looked at it as, “If we build a product that people want, they’ll tell their friends.”

Clay:
That sounds so easy, but I think in execution and application, that can be very hard for people. Can you talk-

Piyush Patel:
It can, but I think, as an entrepreneur, though, Clay, you and I both agree it’s what you don’t know. I was too dumb to know what I was even getting into.

Clay:
True.

Piyush Patel:
So what did I have to lose to ask for a referral. “Hey, tell me some of your friends.” If they say no, “Okay.”

Clay:
Right.

Piyush Patel:
“Do you have any other friends?”

Clay:
Right. That’s a move, though, and that’s a move … I was just talking to Paul Hood and your team about this, Paul, probably two weeks ago.

Paul Hood:
Right.

Clay:
And I was telling you about an insurance agent that I worked with, and his whole thing, Piyush, was, after he had wowed you by saving you money and showing you all the holes in your coverage, he would just ask, “Hey, are you happy with what I’ve done for you so far?” “Yeah.” “Well, what five people do you know that I could help?” And this guy built one of the biggest insurance practices in Oklahoma by doing that. That right there is a knowledge bomb for somebody out there.

Paul Hood:
Absolutely.

Clay:
Now, Piyush, you are in Oklahoma, or you were in Oklahoma when you built this company, which is known more for Ag Tech, agricultural tech, not necessarily Ed Tech, educational technology. How did you recruit coders in Oklahoma?

Piyush Patel:
Well, we recruited amazing people. Half the company was local; the other half was brought in from out of state. But I’ll be honest with you, we built this $10 million business on two developers.

Clay:
Two.

Piyush Patel:
And when I hear people going, “We need 50 developers to get to a million,” it’s like, “No, you’ve got the wrong 50.” We only had two.

Clay:
Two.

Piyush Patel:
Most of our people were content people, so we also got there with no sales people. We did all of this completely organically, no outside sales people.

Clay:
I remember, one time I was talking to you about search engine optimization and how you were talking about the importance of just having your blog or constantly blogging. Constantly blogging. Just getting it out there.

Piyush Patel:
That’s right.

Clay:
Can you talk to the listeners out there about the importance of, if you have a website for your business, why it’s so important to just keep creating copious amounts of content?

Piyush Patel:
That’s right, it’s all about content-based marketing. That’s kind of the adage we took. We had a $30 thousand marketing budget, so that’s not a lot of money on the $10 million revenue business.

Clay:
Yeah.

Piyush Patel:
And really, the angle that we took was, we’re going to release two blog articles every day, no matter what. And it could be anything from a videogame review, to a really high-end technical technique that we’re going to give away.

Clay:
Two a day. Two a day.

Piyush Patel:
Yeah. What happened was, over the years, we became the experts. We were seen, not only by the search engines, but by the community that served as, “Hey, these folks are the true experts.” And it doesn’t matter if you’re selling plumbing services, if you’re doing electrical work, if you are a brick layer, or if you are a doctor, I think the more content that you have out there, the more trust you’re going to develop in your customer base.

Clay:
What was your wife’s role, Lisa’s role, in starting your business?

Piyush Patel:
Lisa took care of all the books and she was the House Mom. We hire a lot of young people, a lot of Millennials, and a lot of them kind of needed a House Mom.

Clay:
Right.

Piyush Patel:
She used her background in Child Development to help keep the office afloat in terms of emotionally.

Clay:
Now, what was the most challenging aspect of growing from 100 customers to 500 customers? As you began to scale, what was the most difficult aspect of doing that?

Piyush Patel:
I’ll just be dead honest with you, when I exited the business, we had 1.5 million people in the system.

Clay:
1.5 million customers.

Piyush Patel:
The first 500, 14 years prior to that, were just a blur. Like I said earlier, Clay, I was too dumb to know what I was getting into.

Clay:
Yeah.

Piyush Patel:
And I just kept showing up. We hit our first million dollars literally just by showing up and working hard. And I think that’s part of the base of any entrepreneurial journey, you just got to show up.

Clay:
Now, when you got approached for someone to purchase your business, when Pluralsight reached out to you guys and said, “Hey, we want to acquire you, merge with you, hostile takeover,” I’m not sure what the language was that was used, what was your initial reaction to potentially selling your baby, the great orange monster that you had built? What was your initial thought when you got approached to be purchased?

Piyush Patel:
The initial thought was, “It’s not for sale.” We had never had this conversation of selling the business. For us, we were serving our customer and having a great time, and we loved all our employees so we were doing what we were destined to do.

Clay:
Yeah.

Piyush Patel:
But really, the owner of Pluralsight said, “Well, look, if we don’t buy you, I’m just going to be really honest, we’re going to buy somebody just like you and we’re going to pump them full of cash,” and I thought, “Oh, my gosh, we’ve worked so hard to be in a space with no competitors. What’s it going to look like? Is this going to be an uphill battle every day, or do we merge and do something bigger?” And so we decided to be acquired.

Clay:
And when you … You said it was for $54 million of cash?

Piyush Patel:
It was 45 plus some stock.

Clay:
45. When you got $45 million of cash, for the listeners out there who aren’t familiar with this kind of transaction, did they bring by a briefcase and is it filled with ones and had rubber bands on it?

Piyush Patel:
Oh, I wish.

Clay:
How does that go down?

Piyush Patel:
You get a little alert on your phone that says, “Wire complete,” and that’s a bad as … Honest to God, that is about as dramatic as it is. It’s like, “Oh, okay. Wire’s complete.”

Paul Hood:
There it is.

Piyush Patel:
We gifted … We decided, instead of gifting 10%, which is something my wife and I like to do with our income, instead of gifting it in a traditional way that we would gift it, we decided to gift it to all of our employees.

Paul Hood:
Oh, nice.

Piyush Patel:
So they received a $1,000 for every month of service, and if they were on my executive team, they got another big bonus. Some of them walked in that morning with a house payment, car payment, and student loan payment, and then they left at the end of the day with no debt.

Clay:
So you’re out there, you help the employees … A lot of people say money changes people, but I’ve known you here for a while. You’ve been a kind and generous guy, and everyone I know who knows you says that you’re a kind and generous guy. Have you found that getting a big lump sum of money has changed you in any way? Do you find yourself going for walks, naked, in the woods? Do you find yourself getting odd tattoos? Do you find yourself talking in movies a lot? How has it changed you?

Piyush Patel:
Honestly, it has not changed me one bit.

Clay:
Okay.

Piyush Patel:
I’ve been this way since I was a kid. The only thing that it has made us do is become a lot more cautious because, all of a sudden, there’s a whole bunch of people who now want to be your friend.

Clay:
Right.

Piyush Patel:
And I love that hiphop song, “No New Friends”. Right?

Clay:
No new friends.

Piyush Patel:
My wife and I don’t need any new friends.

Clay:
You know, that’s interesting, but I read an article about President Obama and, again, the listeners know this isn’t a political show, but this is a thing. During his run for President, one of the things he and Michelle agreed to is, “We’re not going to meet any new people this year, because, henceforth, you can’t trust anyone’s motives. So we’re not going to meet anybody new as we’re running for President,” and he talked about how those friends he had from back in the day when he first … before he became a big deal are some of the same friends he has today. Most of the same friends he has today.

Clay:
One thing I have noticed, though, about the money, that’s changed you, is it’s allowed you to have some time and some space to create Piyush two-point-oh in terms of your career. You know?

Piyush Patel:
It has.

Clay:
Now, you’re writing books and such. Can you tell us about your book, “Lead Your Tribe, Love Your Work”?

Piyush Patel:
It’s really about how we built this culture, and really, I think culture has a very competitive tool in every entrepreneurs tool set. I think strategy is important, execution’s important, sales, market … All those things are important, but, for me, culture was my X factor and when I would tell people about our environment, how we only turned over 12 people in 14 years, they’d look at me and go, “Of tech workers?” I’m like, “Oh, yeah. And Millennial, at that.”

Clay:
What?

Piyush Patel:
And they’re like, “No way, there’s no way you did it.”

Clay:
No.

Piyush Patel:
So I decided I’m going to write a book about it.

Clay:
Yeah. Now, your book, you talk about a lot of really practical things in the book, but one of them is this concept called BAM! And we say “Boom!” A lot here, so first I thought, “Maybe Piyush has misspelled boom.” And I thought, “No, Piyush is a smart guy,” and I start reading the book and it talks about belonging, affirmation, and meaning. Talk to us about BAM!

Piyush Patel:
It’s the BAM philosophy. At the end of the day, people work for BAM. Every company is going to give you a paycheck and some level of security, be it through health insurance or life insurance, or some kind of retirement plan.

Clay:
Yeah.

Piyush Patel:
But really, people want to work for … they want to belong to something bigger than themselves; they just want to be told that they’re doing a good job; and at the end of the day, it can’t be meaningless work. Give them some meaning in what they’re doing. And people will stay with you forever because they want BAM in their lives.

Clay:
BAM! Now, BAM, belonging. You talk about making your own jerseys.

Piyush Patel:
That’s right.

Clay:
How to create that senses of belonging. Why do we have to create our own jerseys? Talk to us about this idea.

Piyush Patel:
Well, we’re all a team, right? I tell this all the time, we’re a tribe, we’re a team. We’re not a family because you can’t fire your family; you’ve still got to show up for Thanksgiving dinner, right?

Clay:
Got it.

Piyush Patel:
But you can be a great team, and great teams have a really instant way of knowing whose team you’re on. Are you the good guy, the bad guy? And it’s all about the jerseys. I was huge fan of spend as much money as it needs to make enough shirts and sweaters and sweatshirts to give everybody enough clothes to wear every day because they’re in the community wearing our brand, supporting our brand, and supporting our message. So yeah, your listeners, if they’re not investing in office clothing for their people, they’ve got to.

Clay:
Now, affirmation. You talk about meeting rituals. Talk to us about a meeting ritual. Are you burning some sort of incense and are you … What kind of rituals are we talking about here?

Piyush Patel:
No incense.

Clay:
Oh.

Piyush Patel:
I had too many asthmatics that worked for me to burn the incense.

Clay:
Nice, nice.

Piyush Patel:
But meeting rituals, it starts with core values. Every single meeting we have starts with, “Okay, let’s go around the room and share stories around our core values. What did you see in the past week or the past month?” It just sets the tone. And I get it, if you have 45 people and they’re all in a room for one hour telling stories, that’s really expensive.

Clay:
Right.

Piyush Patel:
But what about the money you’re going to lose when you don’t share those stories? I think you have to have some campfire time …

Clay:
I agree with this.

Piyush Patel:
… to get the group together and talk.

Clay:
This was a move that I’ve learned from many entrepreneurs who talked to me about the importance of doing this. And Piyush, I was 24 or 25 with the largest wedding entertainment company in the country, and I thought this was a complete waste of time. So I didn’t do it, you know? And I kept having turnover in all the wrong spots.

Piyush Patel:
Yep.

Clay:
And now, I’ve just accepted that this is what you do, and this is going to be a move.

Piyush Patel:
That’s right.

Clay:
And so we schedule into our calendar. And think about it, if you have, in my case, you have, on a Friday, Andrew, there might be 50 people in that meeting on a Friday, 55 people.

Andrew:
Oh, yeah.

Clay:
And if all of them are making an average of, let’s say, 25 bucks an hour, that might have just cost you a $1500 meeting, a $2000 meeting, but it absolutely is vital. Paul, I want to get your take on this.

Paul Hood:
Sure.

Clay:
You help companies grow from an accounting perspective. What questions would you have for Piyush about how to create a culture or holding people accountable, because Piyush is the expert of culture development, my friend?

Paul Hood:
He’s the man. Piyush, I just want to know … I deal with a lot of very intelligent people. I deal with engineers and doctors.

Clay:
He never deals with me.

Paul Hood:
Well, and Clay. Clay is one of the most, obviously, intelligent people I know because he’s my coach. But anyway, you came from the education background, which typically, you don’t see a lot of financial success from people that are in the educational background, so you’re obviously very intelligent person. How did you bridge that gap? What kind of advice can you give me to get people to really work on their business in their business? Because a lot of my clients struggle with that. They are the best at what they do, but they’re doing it, so every minute they’re doing it, they’re not growing.

Piyush Patel:
Well, that’s true, but I can probably tell you, most of those folks are inefficient. Yes, they are in the middle of doing and it seems like they never have any time, but they’re still able to go on vacations; they’re still able to take the evenings off or go to a kid’s soccer game. A lot of that is boiling out enough time to work on the business, and for me, it’s as simple as just asking everybody, “Tell me some stories about our core values,” and I can tell you very quickly either they get it or they don’t.

Clay:
When you were growing Digital-Tutors, you became efficient, but you also had daily fires. You’re putting out issues, there. What time did you typically wake up and what did the first four hours of your workday typically look like when you were growing Digital-Tutors?

Piyush Patel:
Yeah. In the knee-dip of it, I got up about seven. Got to the office by nine.

Clay:
Yup.

Piyush Patel:
And I’m the key firefighter, right? So I thought, so I had to put out all the fires, and it really wasn’t until we started adopting the Traction System or the EOS system …

Clay:
Yeah.

Piyush Patel:
… that I really started to really work myself out of a job. My mantra in the shop was, “At some point, this business is going to outgrow everybody, including me.” And I will tell you, I was so proud. It hurt a little, but I was really proud that, after I sold the business and I exited, permanently exited, my phone never went off. I never got an email, “How do we do this? Where’s the password for this?” I had literally worked myself out of a job.

Clay:
Do you know Whitman’s System Traction is a great program. I hear a lot of people say, “Wow! That’s expensive.” But let’s take the cost out of it for a second, and let’s just talk about how it helped you with Digital-Tutors. What kind of principles and action items did you begin to … What kind of action items did you begin to take as a result of the Traction program that allowed you to work on the business and not in it?

Piyush Patel:
Right. Within the business, you have lots of processes. “How do we solve this customer’s issue? How do we close a ticket? How do we release a new product?” But rarely is there a system or a process on, “How are we going to actually run the business? Not just our product and our service.” It doesn’t matter if it’s Traction from Gino, or if it’s Vern Harnesh’s Scaling Up, or Rockefeller … It doesn’t matter what system it is; using a system, because they’re all kind of the same. They’re all a little inbred from each other. Having a system means you’re going to have a system, and you can fall back on. “I’m not for sure how we do that.” “Let’s look at the system.” And it gave everybody a rallying call of this quarterly flow and not just a, “Oh, we’re going to pick a goal and then try to hit it.” It was real accountability, “This is what we’re doing,” and where we grew leaps and bounds because we just went back to the system, a process.

Clay:
Piyush, your system, BAM, we didn’t talk about the M. I want to talk about the M, now. Belonging, the B; the A, the affirmation; now, the M, the meaning. What is this meaning? How do you develop meaning in your workplace, where people don’t just say, “Ah, frick, all I have to do all day, every day, is code this,” or, “All I got to do is fix mufflers all day”? How do you keep the sarcasm and the cynicism and the pessimism out of the business, and how do you add real meaning to somebody’s job?

Piyush Patel:
Well, that’s a two-part question with a simple answer. First, it starts with the leader. If the leader is pessimistic and unvalue of the … have no value in the people that work there, then it’s going to flow downhill, as they say. But the second, really, is this simple question that you can ask your employees. Next meeting, even on one-on-ones, if you just ask, “Hey, what’s the most important thing you’re working on?” They’re going to tell you exactly what the meaning they want out of their work. They’re going to tell you, “This is what’s important to me.”

Piyush Patel:
We developed this thing called “Three Happys,” which is two work happys and one personal happy in the last 24 hours. And we do it every morning at 9 o’clock on the dot. Let me tell you, that little piece of … We’d do it on a Post-It note. That little piece of paper will give you all the BAM information you want on any person in your organization. It tells them what’s important to them, what’s meaningful; and by writing and sharing it, they create instant affirmation. It’s an amazing little tool set. They can get it off my website for free. It’s really simple to implement.

Clay:
Could you tell listeners out there the best domain to learn … to gain this information, to gather this from you?

Piyush Patel:
Sure. It’s my personal website, so patelokc.com. P-A-T-E-L-O-K-C dot com.

Clay:
Okay so-

Piyush Patel:
Lots and lots of material there.

Clay:
Now, you’re speaking all over the world, right now. You’re speaking all over America. You’re doing speaking events where people are hiring you to come in and teach about … do keynotes about how to build great company cultures. Could you share with us a little bit about the kinds of things that you would talk about during a one-hour keynote or a 90-minute keynote?

Piyush Patel:
You bet. It goes not only from the story of building this organization and kind of the rollercoaster ups and downs, but really key takeaway practical information. Things like the Three Happys. We teach everybody how to do a GROW Meeting, which stands for Goals, Reality, Options, and the commitment is the W, “What Will You Do.” It’s a great way to diffuse conflict and to get to the point of, “How do we get this thing done?” For us, it was really about, “How do we take these creative tech workers and get stuff done? We’re so small. We’re in the middle of Oklahoma. We’re not cash-rich. We’re scrappy. We just got to get stuff done,” and so we tried to really eliminate any of the garbage of running a business and focus on, “How do we move the needle?”

Clay:
Let me ask you this. You-

Piyush Patel:
That’s a lot of what we share.

Clay:
After you began to move the needle with Digital-Tutors, it took off, and it created, obviously, some financial freedom for you, some time freedom for you. You’ve gone on to have some financial success there. Can you talk to us about your love for the Oklahoma City Thunder and just how close you sit to that court?

Piyush Patel:
I love the Thunder. I’m there almost every game, and the funnest thing that I’ve gotten to do in my whole career is sit court-side. And I love sitting at the baseline because they’re running at you, and it just feels very different than TV.

Clay:
Does Russell know who you are? Do you and Russell talk a little bit, you and Russell?

Piyush Patel:
Russell and I don’t talk but I feel like I’m giving him some play tips with my eyes.

Clay:
Okay, because-

Piyush Patel:
We’ll lock eyes and he’ll know, “Oh, yeah, okay. Piyush wants me to pass more.”

Clay:
I’ve only seen Russell play very … I’ve only sat really close to the court twice, but watching Russell Westbrook play basketball, it kind of feels like watching an adult varsity basketball player playing dodge ball against second-graders. The intensity … His intensity is like two or three more times more than that of the average player. Do you agree with that or am I out of my mind?

Piyush Patel:
No.

Clay:
I mean, that guy’s intense!

Piyush Patel:
No. The speed goes from zero to 1,000. I don’t even know where it comes from, but he’ll … There’s a fire in him that’s very different than the rest of us humans.

Clay:
What is your favorite Oklahoma City Thunder moment so far, sitting court-side there where you go, “Oh, that, that right there, that was worth the ticket price”?

Piyush Patel:
Oh, my goodness, there’s been a whole bunch. I mean, Clay, that one’s a tough question, buddy.

Clay:
Are you a good heckler?

Piyush Patel:
[crosstalk 00:23:10].

Clay:
Are you a good heckler? Do you heckle the other team?

Piyush Patel:
No!

Clay:
They’re shooting free throws, do you have a lot of tips you give them? Like, “Boo!”

Piyush Patel:
Nope. No.

Clay:
Okay.

Piyush Patel:
I have lived by this adage that, “The most heckling comes from the cheapest seats.”

Paul Hood:
Ooh!

Clay:
Ooh!

Paul Hood:
Nice.

Piyush Patel:
And I believe that. I sit and I’m respectful of the other team. If one of our players gets traded or goes to another team, I cheer them on in the opening. I’m proud to be there. I love watching the game.

Clay:
So you’re not the streaker.

Piyush Patel:
[crosstalk 00:23:43].

Clay:
You’re not that streaker guy. You know, Piyush, I’m glad to know that you’re not that streaker guy.

Piyush Patel:
I’m not the streaker guy.

Clay:
I remember when I used to go to the Timber Wolves’ games, there was one guy, he was legendary. He would walk up and down the baseline. He had tickets right there on the court, but he would basically just heckle people the whole game. He’d hold the program and just heckle people. Do you have any good hecklers out there, where you go, “This guy has got a mental disorder”? Are there any hecklers that are kind of infamous hecklers at the Thunder stadium, or is it just all good people?

Piyush Patel:
The Oklahoma City Thunder, they’re all good people.

Clay:
Okay.

Piyush Patel:
I love the guy who … Mega Thunder, whatever that guy’s name is.

Clay:
Yeah.

Piyush Patel:
Who doesn’t wear a top and has the suspenders. Big guy. I think he heckles for everybody in the stadium.

Clay:
Mega Thunder. Nice. Nice. Now, talk to me about … Talk to the listeners out there about your shared love of the winery, the whole winery game here. Where did this love for the having a winery come from and how have you gotten involved in the alcohol business or the … as an entrepreneurial endeavor now?

Piyush Patel:
Well, everybody seems to enjoy alcohol, so I don’t think that’s going to be going away any time soon. The winery was a unique situation in that we had just sold the business and I overheard my son telling a group of friends that … He said, “Wow, what does your mom and dad do? You’ve got all these videogames in this house.” And my son said, “I don’t know. My mom just hang out at the house all day.” You should’ve seen the look of just horror on my face because I just don’t want to raise a young man to think that’s what adult life looks like. I need him to go, one day, be a great dad. So I told my wife, “We got to find something. This honeymoon of retirement is over. We’re too young. We’re 40 years old; we’ve got to get busy.”

Clay:
Yeah.

Piyush Patel:
And so I bought a winery because it was … it wouldn’t affect my non-compete. It has really no computers or anything like that. And I didn’t know much about the wine business, and now I know a lot about the wine business.

Clay:
Yeah.

Piyush Patel:
It’s a sexy agricultural manufacturing thing, right? At the end of the day, a lot of hospitality, which I enjoy, but that endeavor has lead me to be one of the key investors in the Angry Scotsman Brewery here in Oklahoma City.

Clay:
The Angry Scotsman!

Piyush Patel:
Yeah. It’s a super fun brewery here in town.

Clay:
I’m going to Google search that, real quick. I’m going to put that on the show note, The Angry Scotsman. Did you come up with that name, or who did come up with that name?

Piyush Patel:
No. He’s a Scottish guy. I’ll be honest with you, Clay, I hated the name.

Clay:
Really?

Piyush Patel:
I absolutely hated the name, and he was like, “Really?” And I was like, “Look, I don’t want to get involved. Which group of young females want to go to a pub or a brewery called The Angry Scotsman? That just sounds scary.” He’s like, “Really, because I think people like it.” I said, “Well, let’s do this. Let’s just let the numbers decide.” And so I hired a virtual assistant to go pull 100 college-aged females, and it was overwhelming. They loved the name “Angry Scotsman”. So I was like, “Hey, you’re onto something. I’m in.”

Clay:
Now, how do you decide, for the listeners out there, because … There’s a lot of listeners out there that are looking for investors, and I know that you do some investing. How do you decide what kind of businesses you’re going to be an angel investor in, and what kind of businesses where you go, “That’s a great idea but I’m not going to get involved”?

Piyush Patel:
Well, they have to be past the idea stage. There’s enough gambling money out there that people can raise money with an idea. I look at execution. Can you execute the money that I give you? Can you be respectful of it? Can you grow it? It really follows my own core values. And I’m betting on the person; I’m not really betting on the company or even the idea or the product. I’m really betting on that entrepreneur who can go solve that.

Piyush Patel:
This young man at the brewery, he’s got a Ph.D. in chemistry. He knows how to brew beer because, in a can of beer, if you put it in the fridge and you go buy a new one six months later, those cans have to taste the same. That takes a lot of chemistry knowledge to do that. And so for me, I’m betting at him.

Clay:
If there’s a listener out there who’s trying to get in touch with your organization about a funding, is there a certain way, is there a certain website they go to and they submit their business to, or do you reach out to people? How does that process work, or for someone to get in touch with you about raising investment capital?

Piyush Patel:
Yeah. I don’t do much retail. I really stick with the reoccurring, online. I’ve kind of gone back to, “What am I good at?” And I know how to sell online and I know how to do marketing online, so I’m finding myself going back to that model.

Clay:
Yeah.

Piyush Patel:
We have a form on the website that they can reach out to, and form, and we can set up a time to meet. I say no more than I say yes. That’s just how I am, but I’ll tell people no upfront so I’m not going to lead anybody on. For your listeners, if they’ve done pitch meetings and they hear things like, “Wow, that’s really interesting. I’m going to have to take it back to my partners,” that’s a no. Or if they hear, “Oh, I’m going to have to do more due diligence,” that’s a no, because more than likely you’re like a “yes” the minute that you hear where they’re at and what they want to do.

Clay:
Dr. Z has often said, “It’s either a hell yes or a no.”

Piyush Patel:
That’s right.

Clay:
Everything is either a no or a hell yes; there’s nothing in the middle. Do you agree with that idea?

Piyush Patel:
100%.

Clay:
Okay. So the listeners out there, if you have a business that exists, that is making money, it’s not just an idea, and you go to patelokc.com, there you can learn more about your speaking, learn more about the investing, learn more about your book. And in your book, you talk about how people don’t quit jobs, they quit people. I want to ask you this question …

Piyush Patel:
They do.

Clay:
… and then I know Paul has a hot question for you. Again, if somebody out there is listening, they’re taking notes, and they go, “Okay, people don’t quit jobs, they quit people,” what do you mean by that?

Piyush Patel:
Think of all the nasty, terrible jobs that are out there, and people do them. And it’s not typically for a whole bunch of money. People do the work that they feel adds value, that creates BAM. But when you put a manager or a leader in place that does not create BAM for that person, now they’re looking at that job as purely a transactional.

Clay:
Sure.

Piyush Patel:
And it’s essentially, “I don’t make enough money to do this job, but really I don’t make enough money to deal with your garbage.” Because it’s more than just the job. And I really think, if you’re not investing in your people’s emotional wellbeing and creating BAM for them …

Clay:
Yeah. True.

Piyush Patel:
… you’re missing out. You’re totally missing out on the opportunity.

Clay:
Piyush, Paul Hood has a hot question for you. Now, Paul’s been known to paint our guests into the corner as sort of his favorite pass-time, as one of our show sponsors. So Paul, what’s your question for Piyush Patel?

Paul Hood:
Piyush, I don’t know what he’s talking about. I am a very sweet man. I don’t have any-

Clay:
You’re very sweet. The sweetest man ever.

Paul Hood:
[crosstalk 00:30:47]. You mentioned “cult marketing”. We do a little bit as referral-based marketing. I’m a financial advisor, as well.

Piyush Patel:
Yeah.

Paul Hood:
When you were in the middle of growing this, did you just use the wow factor to motivate people to refer to you? Or did you … For instance, we do at our offices, once we set up a planning session with people and they love us, which they generally do, thankfully, we say, “We’ll give you a $25 gift card.”

Clay:
I have one caveat, Piyush, before you tackle this question. Just one caveat for listeners out there that don’t know Piyush Patel.

Paul Hood:
Okay.

Clay:
Piyush Patel is a man that, if he says he’s going to do something, Piyush Patel does it.

Paul Hood:
Boom.

Clay:
Piyush, you always own it. You said, “If Digital-Tutors is going to do this,” then if you say, “I’m going to do it,” you did it. I just want to make sure the listeners out there get this because, as a business coach, I’ve discovered that a lot of people drop ball all the time.

Paul Hood:
Right.

Clay:
I would say just, yes, from my experience, I know that Piyush Patel’s team was wowing people. Back to you, Paul. I just want to make sure, because I know that he was wowing people.

Paul Hood:
Yeah, and so we do, too, but I just wanted to know …

Clay:
Yeah.

Paul Hood:
We offer a little token, $25 gift card or something for referrals, and with the knowledge that that’s just the little tip that gets them over the hump, because we are going to over-deliver. So did you ever have any kind of carrot, if you will, to get referrals, or was that just straight up, the carrot was how you guys delivered?

Piyush Patel:
Yeah. No carrots. I never wanted customers to feel like they … a friend of theirs recommended them, they signed up, and then when they signed up, one of their friends just out of altruistically, they got a card in the mail that had $25 gift card in it. It’s like, “Whoa. So did the other guys sign me up and recommend it, or were they genuine about it?”

Paul Hood:
Sure.

Piyush Patel:
This was a 14 year process to really nail down what worked for us. At the end of the day, it boiled down to building a product that people really wanted.

Paul Hood:
Right.

Piyush Patel:
And we get lost sometimes in jockeying for what would be better. We removed … No discounts. No sales people. We removed everything that wasn’t making the product better, and then our focus was on, “We don’t want product … customers to turn.” So we became obsessive about maintaining and growing the customer base, but by not by losing half and gaining a third, and losing another half, gaining a third, right?

Paul Hood:
Sure.

Piyush Patel:
Turn, in the online world, is just it’s destructive. And for us, turn meant we’re not doing the right thing by our customer.

Clay:
Now, how-

Piyush Patel:
So we really focused on wow.

Clay:
You said it was 14 years you grew Digital-Tutors?

Piyush Patel:
That’s right.

Clay:
14 years. If you’re out there listening today, you want to get rich quick, step one, work at something for 14 years. Then you can get rich real fast.

Piyush Patel:
Yeah.

Clay:
The wire came in real fast, right? It was a quick wire?

Piyush Patel:
That’s right. It was 14-year overnight success.

Clay:
There it is. Also in your book, you talk about hiring. You talk about making sure … You talk about this concept called the “Second Wake-up Call”. Let’s dive into hiring here. What kind of things do you teach readers, in your book, about hiring?

Piyush Patel:
Well, if you hire somebody and you put them in a desk and you say, “Ready, set, go. Do this thing called work,” you guys are all setting yourselves up for failure. The cost of replacing employees is upwards of 150% of their salary. And I’ve heard of that number even higher, depending on the type of work they do. So for us, it actually starts even before your first day. Two weeks before you start with us, you get a box in the mail. All of your paperwork, fill all your W2 stuff or W4, or whatever that stuff is, fill it all at home. Read all of our handbook. Do all that at home. But in the box also includes some clothes, some shirts to wear on your first day. I have a little book about your team.

Piyush Patel:
But I’ll tell you, Clay and Paul, the most important thing in that box was an empty picture frame with a note that said, “Bring a picture of your loved one, so your desk has … starts to feel like home.” People say that two of the most stressful days of any person’s career is the first day they take the job and the day they are let go. And I didn’t want their first day to be stressful, and so when they think, “Oh, my gosh, what have I jumped into?” And they see their loved one on their desk, it’s like, “Yeah, I get this.”

Piyush Patel:
For us, it starts before you even take the job. Then on your day one, you’re going to spend half a day with me. And some of your listeners are going to say, “Well, I’m too busy for half a day.” Okay. Well, just take how much of that salary you’re going to pay and throw some of that away.

Paul Hood:
Right.

Piyush Patel:
[crosstalk 00:35:41].

Clay:
I agree with what you’re saying. Strongly. But I know that there’s probably 95% of our listeners … I know our listeners, Piyush; I know these folks. These are great people. Some of them are going, “Really? You’re going to have someone shadow you? You? The owner? The guy? You’re the dude! Really? Really?” We have these entrepreneurs out there, and they’re inquisitive people. For somebody out there who wants to ask the question, “Really? You have them shadow the boss?” Again, did you really do that, Piyush?

Piyush Patel:
Horses mouth. I need every employee to hear it from me. “This is why we started the company. This is how you play your part.” A lot of people, we’d teach them the game of business. You’d be surprised how many people don’t know the simple game of business. Right?

Clay:
Right.

Piyush Patel:
And when I ask things like, “We’re paying 100% of your health insurance. Why would I do that?” “Um, because you’re nice?” “Well, I like to be. Why else?” “Because you have to?” “Nope, don’t have to.” And then when you explain, “Oh, it’s because I don’t need to you sick, and if you’re sick I don’t want to making everybody else sick, because we’re running a business,” they look at you like, “Oh, that’s why you do that.”

Clay:
Right.

Piyush Patel:
And so we teach … We were open-book. We taught them how to read our financial statements. We taught them how the business … how the money flows and how the teams work. Then the other half of the day, they would spend with their team, learning about how the process works. And really, I’m not asking for any actual work for a couple of weeks, because it’s going to take you a couple of weeks to truly understand how we play before we throw you into the game.

Clay:
Now, Piyush, in your book you wrote, “Work is war, and good leaders are in the trenches.”

Piyush Patel:
Yep.

Clay:
Now, I want to provide some balance perspective to this. You enjoyed teaching people how to make videogames and how to do all these different kinds of creative skills, which you turned into your business. With my company, DJ Connection, I loved DJing and I was into DJing. I would bring people with me to shadow and to DJ. [inaudible 00:37:45] they’ve learned the DJ skills from me, and here I had the largest wedding entertainment company on the planet, and I’m still DJing because I loved it. Where’s the balance between still DJing, working in the trenches, or still coding, or still cold-calling, or still doing whatever you have to do and delegating? For a guy like Paul, still being a CPA versus delegating. Talk to me about getting in the trenches, and that balance, in this quote, “Work is war, and good leaders are in the trenches.”

Piyush Patel:
Well, every one of my managers was a working manager. The person who ran the curriculum had to create a course. Where everybody else may have created 12, 13 a month, they have to create one. If you were in charge of the customer success, well, you also had to take on a couple of accounts and not just manage your team. Every single manager in the organization was a working manager. They knew what they were asking of their people. And I felt the same way. And I will tell you, over time, over those 14 years, I went from chief janitor and doing everything to, towards the very end, I just really needed to have a once-a-month meeting with everybody, and then a once-a-week one-hour meeting with my team, and that was how far I’d gotten away from working in the business.

Piyush Patel:
And I think it’s that transitionary process, but it really starts with the people you start to promote inside your company, to make sure that they are all working managers. I think people respect those kinds of folks more because they go, “Oh, you’re not just telling me what to do. You’re actually helping me do it.”

Clay:
Now, Piyush, I have two final questions for you, and I know Paul has one final question for you, as well, here. I want to ask you about dysfunctional habits. You see a lot of business owners, and now you’re doing some consulting. You’re leading and organization where you’re helping entrepreneurs get some traction. I’m sure you’ve seen common denominators that cause dysfunctional businesses. Can you talk to us about the common denominators that you see amongst chronically dysfunctional businesses and business owners?

Piyush Patel:
Absolutely. Some of them are they’re thinking small. They’re not really solving a customer problem. I think the big buzzword for 2019 that you’re going to hear from a lot of investors is “product market fit”. That’s they’re not solving the customer’s problem. And they’re not focused on getting paid. There’s this idea of, “Well, I just need to raise some money and I’m successful,” and I think, in the music world, that would be like, “I got a record contract, so I’m successful, so I don’t need to make any songs or go into a studio and record, or even go on tour, because I got paid from my contract.”

Clay:
Bam!

Piyush Patel:
And I think that that’s a mistake, right?

Clay:
True.

Piyush Patel:
You’ve got to solve a problem. And people don’t understand, when they take on an investor, they’ve just taken on a massive customer, right?

Clay:
True.

Piyush Patel:
Because that investor has an expectation and a communication. Most people don’t need an investor; they just need to get to work solving a customer problem. Let the customer fund their business, like mine.

Clay:
I tell listeners this all the time, but I want to use this as an opportunity to share it again. When you take on an investor, you’re going to take on what I call the Three Cs. You’re going to take on the Counsel, the advice of the investor, whether you want their advice or not. If someone’s giving you a million bucks, they’re going to give you advice. You’re going to get their connections, whether you want it or not. If they’re affiliated with good people or bad people, if they have a good reputation or a bad reputation, you take that on.

Piyush Patel:
Yeah.

Clay:
And then, the third C is, yeah, you do get the cash. But those are the three Cs that you get with a investor. Paul, you had a tough question for Mr. Piyush Patel, your final question of the day, my friend. What do you got.

Paul Hood:
Sure. The question is, Piyush, a lot of times, people see people that are successful and, like Clay says, it was a overnight success that took 14 years.

Clay:
Overnight.

Paul Hood:
How did you deal … There had to be adversity in there. How did you deal with that? Who did you turn to? What was your go-to move to get back up and push forward?

Clay:
The move.

Piyush Patel:
Well, for me, the Godsend was joining the Entrepreneurs’ Organization, so EO. There’s a chapter in Tulsa and one in Oklahoma City. There’s 14,000 members all over the world. Like I said, my background’s a sixth-grade science teacher, so that’s what I’m good at, that’s what I’m trained at. To run a business, every day was new. And like I said, I was just too dumb to know. I just kept showing up. Good or bad. Plan, no plan. I just kept showing up. It wasn’t until I got involved with the Entrepreneurs’ Organization that I got to be around peers who, some were in my situation, some were a few years behind me, but many were ahead and so I got to see what exiting a business looked like and how to structure that deal before mine came along. At an intimate level, otherwise I would’ve just been lost.

Piyush Patel:
How to grow the business. How to … transfer … We went from physical CDs in the mail to 100% online. Can you imagine? We were at about $3 million in revenue. One day, we had $3 million worth of customers, and the next morning we fired all of them and said, “Okay, now you have to buy it completely online.”

Paul Hood:
Oof!

Piyush Patel:
But in that year, we went to five, so I mean, it was well worth making these transitions.

Clay:
Now, for the listeners out there, I have purchased a copy of your book, “Lead Your Tribe, Love Your Work: An Entrepreneur’s Guide to Creating a Culture that Matters”. It was definitely worth the read, definitely worth the money, definitely worth the investment. For the listeners out there who are saying, “Piyush, you’re a well-read guy. Do you have another book you’d recommend, too?” Do you have one more book, or a couple of books, that you’d recommend for all the listeners out there?

Piyush Patel:
Yeah, I’ve got two. One is Simon Sineck’s “Leaders Eat Last”. I’m a huge fan of Simon Sineck. I’ve met him a few times and I love the message in the book, and it resonates with my style of leadership.

Clay:
Okay.

Piyush Patel:
And for all of your Oklahoma listeners, or those of your listeners who have an Oklahoma tie, I am in love with Sam Anderson’s book “Boom Town”, which is Oklahoma history mixed with Oklahoma City Thunder history and stories of how it all happened. I’m listening to the audiobook because I’ve heard it was better than the print, and I’m just in love with it. I think I’ve bought 20 copies already.

Clay:
You actually recommended to me the book “Innovator’s Dilemma” by Clayton Christensen, which then led to me interviewing Clayton Christensen here about a month ago, and hopefully you heard the Piyush Patel shoutout in that podcast, because you were the-

Piyush Patel:
I did. That was a great interview, too.

Clay:
He’s just a living legend. Piyush, I thank you so much for taking time out of your schedule. I know you could be doing anything right now. You could be court-side, preparing yourself mentally and spiritually for the next game. You could be chasing your wife around. You could be at your winery. You could be meeting with someone about investing in their business. You could be doing a keynote speech out there, but thank you so much for investing in our listeners.

Piyush Patel:
My pleasure, Clay. I really appreciate what you’re doing and, all these years I’ve known you, I’ve always wished you nothing but the best of success.